How to Master the Triple Screen Trading Strategy?

The weekly chart will confirm the direction of the trend, the second will show you the currency pair’s current situation, and the third will give you the entry point for your new trade. You can become wealthy if it is done correctly, but you can also experience significant losses. In that framework, the Elder Triple Screen Trading System is one of the most interesting technical strategies to complete winning positions. What if conditions in the market change so that your single screen can no longer account for all of the eventualities operating outside of its measurement? The point is, because the market is very complex, even the most advanced indicators can’t work all of the time and under every market condition. Since it has you trading in the direction of the market trend, it doesn’t give much room to losing trades.

As a trading enthusiast, I recently experimented with the AI strategy builder tool to create and test a triple screen trading system. I wanted to share my experience and results with the LinkedIn community, highlighting the importance of continuous testing, optimization, and adaptability in trading strategy development. The third screen is additional; it helps choose the moment for opening a position. According to the author, the third screen does not require a separate chart analysis or indicator signals.

The Triple Screen Trading System (by Dr Alexander Elder)

It works as a system of confirmations from one time frame to the next. This is done such that the evidence points to a suitable time to enter a trend in the likely direction the market is moving. It shows the short term pattern, and ensures that you do not buy into a falling market. The formula for entry is that you set a buy stop just above the recent high. The effect of this order is that when the price reaches the buy stop level, the buy order is executed. If the security decides instead to fall in value, then the order to buy is never executed, and you avoid an obvious losing position.

• The criteria for this screen is that the SMA 100 must be above its value 10 days previously, similarly to the first screen.
• A movement up- or downwards of the MACD histogram shows the direction of the current trend.
• None of them is designed to make a flawless interpretation or prediction of the market.
• Indicators to apply as oscillators are RSI or Stochastic RSI and MACD Cross-overs.
• This means that the period of each chart reduces by a factor of 3, 4 or 5 from the longest duration chart to the shortest duration chart.

Nowadays, many traders are also following the middle and short-term using different time frames. The strategy to open and close the trades is based on the smallest time frame. So if you want to decide in a weekly time frame (in this case 4.5-week time frame), you must monitor the monthly time frame.

The Triple Screen CFD Strategy

The triple screen system works with a trend following (momentum) indicator on the first screen, such as a simple moving average. It confirms the dominant trend that the asset is developing and https://currency-trading.org/strategies/how-to-use-scalping-trading-strategy/ the direction your position will need to be taken in. As you might have noticed, the trend for a specific asset can be both up and down at the same time, depending on what charts you use.

In conclusion, the Triple Screen Trading Strategy is a versatile and effective approach to trading that can help traders make better decisions by providing a comprehensive view of the market. While it has its advantages, such as flexibility and the ability to reduce risk, it also has its limitations, such as a need for patience and discipline. Ultimately, traders should carefully consider the pros and cons of the strategy and adapt it to their individual needs and preferences.

Alexander Elder Trading Strategy – The Triple Screen

On the other hand, you would buy the asset when the indicator is returning from an oversold area. The trigger would occur when the D line enters overbought or oversold conditions; it will show us a direction change. Your confirmation will be at the moment the D line crosses the K line.

Their long-term time frames will be weekly charts; hourly charts will be their short-term time frame. The trend is determined by the long-term time frame, and the signal to enter the market happens if the signal in the intermediate time frame trend is opposite to the long-term time frame. There is, however, another problem with popular trend-following indicators that must be ironed out before they can be used. The same trend-following indicator may issue conflicting signals when applied to different time frames. For example, the same indicator may point to an uptrend in a daily chart and issue a sell signal and point to a downtrend in a weekly chart.

Long Term vs Short Term Trading

The SMA 15 must be above the low, and the ADX must be above its value from 10 days previously. The ADX is included because it provides an indication that the trend is getting stronger. The Triple Screen Trading Strategy is a unique approach to trading developed by Dr. Alexander Elder, which aims to filter out contradictory trading signals by using multiple indicators. We define the trend by the methods of classical tech analysis and additional signals of trend indicators.

• The signal shows that the upcoming trend is changing from bullish to bearish.
• Check if the price is trading above the 200-day moving average to confirm the uptrend.
• This week all releases of statistics will in one way or another be related to prices and the situation with them.
• Once we decide on that entry, we place a pending buy stop order at that level.

When the 4h trend is down, then the 1h rallies point to shorting opportunities. Developed by Dr. Alexander Elder, The Triple Screen Trading System applies three tests (or screens) to every trade. Many trades that seem attractive at first are rejected by one or another screen. The trades that pass the Triple Screen test are much more likely to succeed. The stop loss for a buy order can only move higher and is never moved lower.

Once you have identified the direction of the trend, you move on to the second screen, which involves analyzing the middle timeframe to confirm the market analysis. This can be done using indicators such as the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI), or the Stochastic Oscillator. The goal of the second screen is to ensure that the analysis from the first screen is still valid and that the market is not showing any signs of reversal. The knowledge and experience he has acquired constitute his own approach to analyzing assets, which he is happy to share with the listeners of RoboForex webinars. After we have defined the direction of the trend on the first screen, we switch to the second one. On this screen, we will have a chart with a smaller timeframe, on which we will search for a trend counter the long-term one, and wait for its reversal.

The second screen of the Triple Screen allows you to take only those signals on the 1h charts that put you in gear with the 4h chart. The second screen is used to identify temporary corrections to the long-term trend. This chart https://trading-market.org/ally-invest-review-for-2021/ has three indicators plotted, the SMA 100, the SMA 15 and an Average Directional Movement Index (ADX). The criteria for this screen is that the SMA 100 must be above its value 10 days previously, similarly to the first screen.

For the triple screen trading strategy, the parameter for the Exponential Moving Average (EMA) is set in 2-period (EMA-2). In Dr. Elder’s opinion, EMA-2 in Force Index Indicator is very suitable to be combined with trend indicators such as MACD. Traders normally concentrate on the daily chart with only one indicator that is based on the trend direction from the weekly time frame (long term time frame).

The strategy became known to a wide range of traders in 1986 and, since then, has never ceased to be popular and, in one or another variation, is used by many traders to this day. A Stop Order https://forex-world.net/brokers/the-best-berndale-capital-review-in-2019/ is an order to the broker to close or open a position at a specified price. Such an order is triggered without the trader’s participation and is placed in the trading terminal in advance.

If you make the mistake of looking at the 1h (intermediate) timeframe first, you’ll be prejudiced by its patterns. First make an unbiased decision on the long-term 4h chart before even glancing at the 1h. Our Long-term Timeframe will be the 4h, and our Short-term Timeframe the 15min. Once you select your Intermediate timeframe, you may not look at it until you examine the longer-term timeframe and make your strategic decision there. With each buy signal triple screen creates, we accumulate the entire position up to a pre-defined risk limit. Finally, pull up the executional chart which is the 4-hourly chart in this case.