One of the secrets to success in futures trading is not how much you win but how much you keep from losing. Almost any trading method will produce at least some profitable trades. Whether you are around to take advantage of those profit opportunities depends on how well you preserve your trading stake. Professional traders emphasize that you must minimize risk on every trade. Translated: Cut your losses quickly. Translated further: Always use stops.
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(This is the seventh in a series of articles on basic technical analysis originally published in Futures magazine.)
How to Trade with Linear Regression Channels
By Richard L. Muehlberg*
Posted: March 7, 2008
Have you ever seen a price move without having any idea why it moved the way it did at exactly that moment? There are moments when trading can feel like a throw of the dice. It is as if other traders are watching "invisible lines in the sky" that tell them what and when to buy and sell; they can see these indicators, but you can't. No doubt you are constantly looking for ways to improve your ability to know why and how prices move. You look to find these secret lines.
