DEFINITION of 'Least Squares Method'
A statistical technique to determine the line of best fit for a model. The least squares method is specified by an equation with certain parameters to observed data. This method is extensively used in regression analysis and estimation.
BREAKING DOWN 'Least Squares Method'
In the most common application  linear or ordinary least squares  a straight line is sought to be fitted through a number of points to minimize the sum of the squares of the distances (hence the name "least squares") from the points to this line of best fit.
In contrast to a linear problem, a nonlinear least squares problem has no closed solution and is generally solved by iteration. The earliest description of the least squares method was by Carl Freidrich Gauss in 1795.

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