Good day, fellow traders.Newcomers in the forex often asked about the more than famous, three screens strategy Alexander Elder, which is mentioned in the book "How to play and win at the stock exchange."At the request of readers, video tutorial has been recorded, where the trading system is disassembled and examined in its classical form.
three screens strategy author is Alexander Elder.The strategy became known to a wide circle of traders in 1986 and since then has not ceased to be popular and, in some variations it is used by many traders to this day.
essence of a system of three screens to carry out transactions for the triple test: at one stage of a plurality of possible positions will be screened.We identify long-term, medium-term and short-term trends and enter the market only in the direction of a large "flow."
The strategy uses a combination of three screens trend indicators and oscillators.
not have any severe restrictions on the indicators used.The idea is to be determi
We need to determine: a long-term, medium-term and short-term trends.
Our main timeframe - the second screen.
order of magnitude larger timeframe - the first screen (on it we define the long-term trend)
order of magnitude smaller (relatively basic) timeframe will be the third screen
used factor 5. You can zoom around.
- If the main H1 timeframe, the long-term trend will H4 and short-M15.
- If the main M5 timeframe, the long-term trend is the M30, M1 and short-term.
Determine the long-term trend with the help of the indicator trends, such as EMA with a period of 26.
- Open trades only on the long-term trend!
- use the oscillator to enter the market, such as Stochastic.
There are 2 options:
- Login with Momentum movement in our direction.The third graph we actually did not even open.Option more suitable for beginners, so do not get confused.
- Use the third screen to better enter the market for technical analysis.Of the benefits - often you can put a smaller stop loss.A more sophisticated option for experienced traders.
- If the initial screen, the trend is up, and the second oscillator is in oversold territory, place an order BUY STOP for a couple of points above the High closed down last candle on the second screen.If the order does not work, move it a little higher hai should be closed candles.We continue to move the order (if it did not work), while the trend in the first screen does not change to bearish.
- If the initial screen, the trend is down, and in the second oscillator is in overbought territory, place orders SELL STOP at a couple of points below the Low of the last candle closed down on the second screen.If the order does not work, move it just below the low should be closed candles.We continue to move the order (if it did not work), while the trend in the first screen does not change to bullish.
How to trade pending orders
Stop-loss order is placed below / above the nearest local minimum / maximum.
- leave from the position when the oscillator on the second screen will go to the overbought area (out of the shopping) or oversold (out of the sales).
- possible to apply any other criteria to exit.
move the stop
translate the order into the black (move the stop-loss at the opening price of the position), after reaching about half of the planned profit.
system "Three Screen" Alexander Elder can serve as a very good basis to build your own forex trading strategy.The most important thing is to take out of it - this is a test of transactions in several stages, with following only for a long-term trend.Apply three screens in the "naked" form, with only one indicator on each chart will be marginally profitable pastime, after all forex trading - a complicated market that requires a thoughtful approach.Therefore this strategy in its classical form (as it is represented in our forex blog) require additional filtering.
Very good filtration can serve three screens strategy use in conjunction with the methods of trade Price Action.At the exit you get a very powerful trading system.