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Elder Triple Screen Trading System; A Confirmation Plan 2020

As you might expect from the name, the Triple Screen Trading System works with a composition of three diagnoses for the same asset. It looks for short-term reversals about to end inside long-term trends in order to open positions in the dominant movement’s direction at the right time.

What is the Triple Screen Trading System?

As you might expect from the name, the Triple Screen Trading System works with a composition of three diagnoses for the same asset. It looks for short-term reversals about to end inside long-term trends in order to open positions in the dominant movement’s direction at the right time.

The system is based on Elder’s hypothesis that no single indicator can provide reliable signals or position plans. So, the triple screen is a mix of technical studies in different timeframes that proves one parameter each time, that when combined, offers an accurate trading signal.

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 the direction your position will need to be taken in.

The second screen works with an oscillator, for example the stochastic oscillator indicator, which helps us to identify turning points and entry areas. Every time that a pullback or a retracement occurs, it will give us an area to be ready to place our position.

The third screen works as an identification for the exact price for entry points. In the original system, it works with lows and highs that work as support and resistance. New versions typically add other indicators but using the naked eye to spot price action here is a completely acceptable method.

Essentially, in using this triple screen trading system, you look at the bigger time frame chart for direction and the smaller time frame chart for entry points when trading the triple screen strategy. After a trade entry is taken, the position will hopefully then move in line with the dominant trend.

How Does the Triple Screen Trading System Work?

Elder’s system can work for both long and short-term traders. The only thing choices you really need to make are which time frames and indicators to use for the screens. The largest time frame will be the first screen.

Samples of typical charts used in this triple screen trading system are shown below.

screen range

If you are a long-term trader, your first screen or long-term trend will be the weekly chart, the intermediate is the 1-day frame, and the third screen will be placed either in 4-hour or 1-hour charts.

In the case of short-term traders with a preference for 1-hour charts, the first screen will be the daily chart, the intermediate will be the 1-hour obviously, and finally, the third screen would be the 15-minute timeframe.

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.

Alexander Elder’s First Screen

Let us use a triple screen in Forex trading with the EUR/USD currency pair as an example. This is the screen used to identify the dominant trend in the asset and to decide in which direction we will make the trade.

First, watch the chart. If the EUR/USD is trending up, we will identify buying opportunities; on the other hand, if trending down, we would seek to sell the EUR/USD.

For this, we will use a weekly chart with two trend indicators, an Exponential Moving Average (EMA) with 13 periods, and a Moving Average Convergence Divergence indicator (MACD) with 12,26,9 settings.

The next step is to try to identify MACD movements away from the zero area. If the MACD is moving upward after crossing the zero area, it will be an uptrend. If MACD is crossing down from the area above zero, it will be a downtrend. The EMA will confirm the direction of the tide too.

Weekly Chart as First Screen with EMA and MACD

Elder’s Second Screen

Once we have identified the trend’s direction, we then switch to watching the second screen. This chart will help us identify the short-term situation and know when the dominant trend is ready to resume its run after a pause.

The first step is to identify short term reversals that are exhausted or finished. It would be a contrarian movement from the long-term trend or a smaller trend that goes in the opposite direction of the dominant one.

For this purpose, we will use the stochastic oscillator. Dr. Elder also recommends the Relative Strength Index (RSI) and William %R. You can choose your favorite one.

The second step is to identify the break. This signal will appear when the stochastic leaves the overbought or oversold areas and returns to more median values in the center of its range.

When reading stochastics, we follow the K line and the D line. The K line is faster than the D line. You should identify when the D line moves into overbought, over the 80 line, or oversold, under the 20 line.

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.

Finally, you would go short when the stochastic is returning from overbought conditions. On the other hand, you would buy the asset when the indicator is returning from an oversold area.

Now, you have a dominant trend identified and have identified the exhaustion of a reversal against that — the time has arrived to try to determine a precise entry point.

Second Screen with Stochastic Oscillator

Elder’s Third Screen

After identifying the dominant trend in the first screen, and getting a signal from the second screen, we move to the third screen. It will provide us with precise entry points.

In the third screen, you should ideally look for breakouts in the direction of the dominant trend. Elder uses a technique of trailing stops to determine specific entry points.

For example, if we are looking for bullish entry points in a daily chart used as our intermediate screen, we would use a trailing buy stop one point above the previous day’s high.

On the other hand, if we are looking for a selling entry point, we will use a trailing sell stop one point below the previous day’s low.

The theory says that if the market retakes its uptrend and hits your stop, your long position will be activated. However, if the market goes against you, then your stop will be deactivated.

In that case, you can trail your stop and set a new one by dropping it to one point above the maximum of the day that has just passed. According to Elder’s rules, you may keep trailing it until activated or until you decide to avoid the trade if you see the weekly trend has changed its direction.

Elder’s First and Third Screens

On the other hand, if we identified a dominant downtrend and watched a mid-term uptrend, the sell order will be placed one point below the low of the previous period from which the oscillator activated the signal. The stop-loss is then placed behind the two-day high price.

Elder’s Three Screens

Finally, the moment to take profits will be determined by your trailing stop once you are in a position. You can set it to protect 50 percent of your running profits or, in the case of shorter time frames, a fixed pip value should work just as well.

Another way to determine your profit taking level is to watch for oversold levels when you are short, and overbought levels when you are long and, therefore, when the oscillator begins to return to a normal level, exit the trade manually. 

According to Dr. Elder, the third screen does not need a separate chart or an additional indicator. You can trade the Elder triple screen strategy with only two screens, after all!

Alexander Elder Trading Strategy: Summary

Summary

Does the Elder Triple Screen Trading System Work?

Dr. Alexander Elder’s work has been trusted by thousands of traders around the world. It has been used millions of times since its publication in 1986, over 30 years ago. So, statistically speaking, yes, it has been found to “work” by traders. There is also evidence that following long-term trends in major Forex currency pairs has been a profitable trading strategy, and this is how the Elder triple screen trading system works.

Before you start to use this trading strategy, it is recommended to test it in a demo account and then a real money account provided by one of the best Forex brokers. You can also try to add another indicator or charting figure in the third screen in order determine more precise entry points.

Finally, keep in mind that the markets evolve every day, and situations and the environment can change any second. Keep an eye on fundamental data and pay attention to market sentiment, too.

Remember what Elder said in his book, The New Trading for a Living, “there are good trading systems out there, but they have to be monitored and adjusted using individual judgment. You have to stay on the ball—you cannot abdicate responsibility for your success to a mechanical system.”

FAQs

What is the triple screen trading system?

The Triple screen trading system is an investment strategy developed by Dr. Alexander Elder in 1986. It works by identifying the dominant trend over the long term and then using reversals to identify entry areas. Positions will always follow the trend.

Why do day traders have multiple screens?

Traders like to have different visions of what is happening in the market. They use bigger timeframes to identify dominant trends, and shorter windows to select entry points.

What is a system trader?

A system trader is an investor who has developed his or her personal trading system and follows it with all consequences. He or she trades only with those specific sets of rules.

How do I set up my triple screen trading system?

Open three price charts on the same trading platform on different time frames – one long (e.g. Monthly or Weekly), one medium (e.g. Daily or H4), and one short (e.g. H1 or M15). Apply your preferred technical indicators to each chart. For the Elder triple screen trading system, apply a trend following (momentum) to the long-term chart and an oscillating indicator to the medium-term chart.  

Does triple screen trading work?

Triple screen trading, if each screen is set up to represent a different time frame with a multiple time frame trading study, has been found to be one of the few technical trading strategies with a good record of success. This is because it ensures traders either trade in line with fresh waves in the direction of the long-term trend, or at rejections of key support and resistance levels when there is no long-term trend in force.

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Donald Trump blasts ‘fools’ who oppose good Russian ties

US President-elect Donald Trump has posted a progression of tweets censuring the individuals who contradict great relations with Russia as “‘dumb’ individuals, or nitwits”.

Mr Trump promised to work with Russia “to comprehend a portion of the numerous… squeezing issues and issues of the WORLD!”

His remarks came after an insight report said Russia’s leader had attempted to help a Trump race triumph.

Mr Trump said Democrats were to be faulted for “gross carelessness” in permitting their servers to be hacked.

In a progression of tweets on Saturday, Mr Trump said that having a decent association with Russia was “no terrible thing” and that “lone “idiotic” individuals, or simpletons, would believe that it is awful!”

He included that Russia would regard the US increasingly when he was president

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Bulls and Bears Took on More Currency Exposure in Week Through January

he most striking improvement among theoretical situating toward the finish of a year ago and the primary session of 2017 is not that modification were little. There was just a single gross theoretical position modification of more than 10k contracts. With sterling apparently not able to maintain even humble upticks, the bears added 13.1k contracts to the gross short position, lifting it to 120.2k contracts.

Or maybe, it is eminent that examiners for the most part added to positions, long and short, as opposed to close positions at the very end of the year. Examiners added to net long outside cash prospects positions, aside from in the Japanese yen and Swiss franc where 2.6k and 2.5k contracts were exchanged separately. Examiners likewise added to gross short positions. Here there was just a single exemption, the Japanese yen. Despite the fact that the dollar shut comprehensively higher in front of the end of the week, every one of the monetary forms we track here, spare the Mexican peso, picked up against the dollar in the three sessions since the finish of the CFTC reporting period.

Every once in a while it is helpful to review why many market members take a gander at the theoretical situating in the cash fates advertise. It is not that the outside trade is essentially a prospects showcase. It is principally an over-the-counter market in which every day turnover midpoints in abundance of $5 trillion a day.

Trade exchanged monetary forms and alternatives represented around 3% of the normal day by day turnover as indicated by the BIS study. Be that as it may, past reviews have discovered some contemporaneous connection between’s market heading and net position changes. We think it additionally offers knowledge into a specific market section of pattern supporters and energy brokers. It is not by any means the only device, yet one of a few data sources.

One ramifications of this is albeit theoretical positions in the money fates market are moderately extensive, it is still little contrasted and the money showcase. Along these lines, it is difficult to see the genuine essentialness of a record vast position, as though there is some market top. At some point, examiners are not driving the costs, possibly there is another fragment, national banks, enterprises, as well as genuine cash that is more essential at any given minute.

We invest some energy taking a gander at gross positions instead of just net theoretical positions, which is the more customary approach. We think a more granular look is frequently fundamental. There is a distinction between short-covering, for instance, and new purchasing, however it appears to be identical in the net. Additionally, the gross position is the place the introduction is not the net position. A net position of zero does not mean the market is nonpartisan. Net positions could be huge, which implies a short press or a negative stun could in any case troublesome. The positions that must be balanced are captured in the gross measure not the net figure.

We find numerous customers are likewise keen on theoretical situating in the US Treasuries and oil. The net and gross short theoretical Treasury position has swelled to new records. The bears added 23.8k contracts to the as of now record net short position, lifting it to 616.2k contracts. The bulls attempted to pick a base and added about 20k contracts to the gross long position, which now remains at 471.2k contracts. These modification prompted to a 3.8k contract increment in the net short position to 344.9k contracts.

The bulls delayed in the oil prospects toward the finish of 2016. They exchanged short of what one thousand contracts, leaving 608.1k gross in length contracts. The bears added 4.1k contracts to the gross short position, giving them 168k. These conformities trimmed the net long position by very nearly 5k contracts to 440.1k.

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3 ways to profit in the ‘year of the dollar’

In December, the Federal Reserve raised loan fees for the second time since the Great Recession and included the desire of a 2017 financing cost climb to its gauge. Furthermore, only a couple days prior, the abundantly anticipated minutes from the most recent Fed meeting demonstrated the most hawkish tone from the national bank in two years.

In the meantime, Europe has been dove into political turmoil after a year ago’s Brexit vote and the later abdication of Italy’s leader. Somewhere else, the Bank of Japan proceeds down the way of negative rates and forceful security purchasing.

Put it all together, and it isn’t astounding that the U.S. Dollar Index is up against 14-year highs.

Speculators may have missed so much discussion on account of babble about the Dow Jones Industrial Average at the end of the day almost hitting 20,000. Be that as it may, paying little respect to your assignment to stocks or your venture skyline, this sort of huge picture incline in the dollar implies right now is an ideal opportunity to position your portfolio to benefit and, maybe most critical, to keep away from a portion of the pitfalls that can originate from a solid local cash.

Here are a couple ideas dollar exchanges ought to consider:

Residential plays over multinationals

There’s a considerable measure of seek after shopper stocks in 2017 on account of an enhancing work market and any desires for a jolt under a GOP-controlled Congress and President Donald Trump. In any case, remember that not all retailers are made equivalent especially those with abroad operations that are adversely affected by the wide dissimilarity in monetary standards at this moment.

For example, retailer Wal-Mart Stores Inc.(WMT) said troublesome money trade rates shaved very nearly 2.5% off profit for each partake in the second quarter of 2016. On the other hand consider that in the monetary final quarter of 2016, athletic attire goliath Nike Inc.(NKE) saw its income development cut down the middle because of forex weights, from 12% year-over-year in consistent cash measures to only 6% including real money changes.

To take advantage of the “reflation” exchange that numerous financial specialists are counts on in 2017, you need to represent the headwinds that a solid dollar are making for multinationals at this moment. The most ideal approach to do that is to consider customer plays that do by far most of their business here in the U.S. – for example, Foot Locker Inc.(FL), which has been an uncommon splendid spot in retail throughout the most recent couple of years.

Supported money ETFs

Obviously, in the event that you need a steady portfolio, you can’t just purchase just local centered values. Geographic expansion is similarly as imperative as enhancement crosswise over parts and resource classes. Such a large number of financial specialists keep on holding worldwide plays in light of a legitimate concern for a balanced portfolio, regardless of the possibility that it implies battling a daunting struggle as a result of a solid dollar.

The uplifting news, notwithstanding, is that you don’t need to leave yourself to torment through a solid dollar and a powerless euro when you put resources into Europe. Nor do you need to stress over the yen-dollar conversion standard when you put resources into Japan. That is on account of there’s an entire group of cash supported ETFs to permit financial specialists to put their cash in outside business sectors yet keep away from forex issues.

Consider that Japan’s Nikkei 225 file is up around 25% from its July 2016 lows. The WisdomTree Japan Hedged Equity Fund(DXJ) is up 35% in a similar period on account of assurance from forex issues and a somewhat better-performing rundown of stocks – while the non-supported iShares MSCI Japan ETF(EWJ) is up only 10% in a similar period because of battling a difficult task against a solid dollar.

In the event that you need to differentiate your portfolio comprehensively, you ought to consider supported assets that incorporate the Japan-centered DXJ, the WisdomTree Europe Hedged Equity Fund(HEDJ) to play Europe or the iShares money Hedged MSCI EAFE ETF (HEFA) for developing markets.

Dollar list ETF

In the event that you are searching for an immediate play on a rising dollar as opposed to putting resources into stocks, figuring out how to exchange remote trade can appear like an overwhelming undertaking. Gratefully, there’s the PowerShares DB US Dollar Index Bullish Fund(UUP).

This ETF is attached to the U.S. Dollar Index, which is a measure of the greenback against a wicker container of other worldwide monetary standards including the yen and the euro. It’s a straight money play, however that doesn’t make it straightforward or hazard free. In the event that the dollar debilitates, you’ll lose cash similarly as though you’re putting resources into a stock that has fallen on difficult circumstances. Furthermore, obviously, PowerShares takes a little cut of your speculations en route that indicates 0.8% yearly, or $80 a year on each $10,000 contributed.

Still, in the event that you need to conjecture on the dollar or support against a solid U.S. cash keeping down other worldwide ventures on your rundown, it’s maybe the least demanding approach to do as such for generally financial specialists.

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