MetaTrader

This article is taken from the Trader's Journal magazine (September 2008 issue)

The author, Charles ‘Chuck’ LeBeau, began trading his first commodity system in 1963 and has been an active systematic trader in the stocks and futures markets for more than forty years. He is the co-author of Computer Analysis of the Futures Market (McGraw-Hill, 1991). It is considered to be a classic work in technical analysis and is published worldwide in seven languages.


* Chuck LeBeau discusses the use of exit strategies in designing a trading system. In this installment, he discusses the use of the “Channel Exit.” This method takes a popular entry strategy and applies it to exiting the market with a trailing stop

The necessary precautions have been taken to avoid catastrophic losses by using disciplined money management stops. Now, it is appropriate to concentrate on strategies that are designed to accumulate and retain profits in the market. When properly implemented, these strategies are intended to accomplish two important goals in trade management – they should allow profits to run and at the same time, they should protect open trade profits.

While their application is extremely wide, we do not believe that trailing stops are appropriate in all trading circumstances. Most of the trailing exits we will describe are specifically designed to allow profits run indefinitely. Therefore, they are best used with systems that are trend following.

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