Let's look at the scatter plot used in this explanation to show a trend line. The data is recorded below.

We're going to graph these points on a scatter plot. This graph has a positive correlation.

The y-value of each point generally increases as the x-value increases. We can add a trend line to this graph by adding a line that goes through the idea trading robot of the points.

Notice that the trend line has a positive slope.

I will try to explain the differences and when to use them.

This matches the positive correlation of our scatter plot. Line of Best Fit The line of best fit is the trend line that fits the data the most closely.

Take a look at this scatter plot with where is the trend line trend lines: The dotted green and dotted red lines are also trend lines. They generally go through the middle of our data set, and they are both positively sloping to match the correlation of the data.

However, the solid purple line is the line of best fit as it fits our data the best. It can be very difficult to calculate the equation for the line of best fit, but it can be made easier using programs such as Microsoft Excel or Google Sheets.

Interpolation and Extrapolation The line of best fit can be used for estimation. Interpolation is when we use the trend line to estimate a value that is already inside of our data set.

Extrapolation is when we use a trend line to estimate a value that is outside of the range of our data set.