HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Elder's three screens strategy


As a rule, it is very difficult to analyze the market using just one indicator. However, there are many facts when different indicators used simultaneously give conflicting signals to start trading.

The “Elder’s three screens” strategy is applicable not only as an auxiliary filter that determines the trend, but also as a separate trading concept. This method is relevant in all markets and trading sessions. Elder’s trading strategy is a comprehensive approach to applying the three charts of the asset selected for trading with different time frames.

Method Features


The method is based on filtering trading operations by the largest time interval and identifying the correct entries by the smaller. This approach helps a trader to achieve a large profit with the least risk. The “three screens of Elder” system combines trend indicators and opposite oscillators. It is this set of tools that makes it possible to successfully filter disadvantageous transactions.

The founder of the Three Screen trading strategy compared the forex market with the ocean, which waves form the tides (uptrend) and low tides (downtrend). The period of prevalence of the uptrend in the market is the time of purchase of the asset. When the downtrend dominates, this is the time of sales. A peculiar market “calm” is a flat price movement. In such a period, it is better to refrain from trading.

The first screen should display all of the above market conditions. The second screen serves to determine the initial wave motion in the current trend. In other words, this is the determination of the moment when the correction ends and the next trend movement begins.

The third screen is used by the trader to accurately enter the transaction with setting the minimum safety stop loss.

Timeframe Selection


What is the optimal time period to choose for trading? The Three Screens trading strategy is universal - the timeframe should be determined depending on the trading style. The main thing is that the time interval of each subsequent chart should be five times less than the previous one.

The graph in the center is the main one. For long-term trading it is D1. It will display the price movement in this time interval. On the screen on the left there is the price movement with the time frame W1, on the right - H4. The monthly number of open transactions is no more than 3. However, the profit received is to be expected very significant.

Traders who prefer medium-term trading should analyze the screens displaying the asset’s price on H4, H1, M15 screens. In this case, the number of transactions will be much larger, which can increase profits several times. But this also increases the number of false signals to enter the market.

Scalping enthusiasts should choose M30, M5, M1 timeframes for this strategy. The above set of intervals is advisory. If desired, using personal trading experience, each trader can choose other timeframes for himself.

The essence of the strategy of Alexander Elder’s "Three screens"


This trading method provides for the initial determination of the direction of price movement on the first screen with the highest timeframe. The indicators set here serve as a filter, giving initial signals for transactions. As an indicator, MACD with average settings is used. The decline in its columns determines the downward trend, especially when the MACD crosses the zero mark from top to bottom. Rising bars indicate the presence of an uptrend, in particular, when the histogram crosses the zero mark from bottom to top.

The strength of the trend is determined by the angle of the histogram to the zero mark - the larger it is, the faster the trend is growing (decreasing), and the greater the profit margin. From time to time, MACD may give false signals to enter the market. To minimize them, an additional filter is effectively applied - EMA 13:

It happens that conflicting signals come from MACD and EMA 13. Then moving average signals are considered more priority. However, it is better to wait until the signals of these indicators coincide.

The second screen in the Alexander Elder’s trading system serves to monitor the end of the trend correction on a smaller timeframe. This occurs after the identification of the main trend movement in an older time interval. Therefore, using the second screen, a trader who has decided on purchases (sales) is looking for a moment for optimal entry into the transaction by setting a safety stop loss at a minimum. It is for this timeframe that a stochastic oscillator is installed.

If you are looking for a favorable moment for purchases, you should wait until the "stochastic" leaves the oversold zone.

When selling, you should wait for the oscillator to exit the overbought zone. Beginner traders can very well use two screens for transactions. The third screen usually suits experienced traders. On it, traders determine an even more accurate moment of opening orders. Indicators are not required here. In this case, the shifted purchase or sale method is rational.

Its essence can be considered with a specific example. After analyzing the market situation on the higher timeframes, the trader concludes that there is an increasing trend, and the "stochastic" has already left the oversold zone. Then on the third screen you should set the pending Buy Stop slightly higher than the maximum of the previous candle.

If it does not work, you need to move it to the next maximum of the newly closed candle. This procedure can be repeated until the order is triggered. As soon as this happens, set your stop loss just below the low of the last two bars.

In the case of sales, everything happens exactly the opposite. A Sell Stop order is similarly moved until it becomes active, after which a safety stop loss is immediately set.

The amount of profit from transactions is calculated in several ways. One of the most popular is when the distance between the open price and stop loss multiplied by 3 is measured on the chart of the asset from its current price. Thus, goals are three times higher than possible losses. After about half the price traveled to the target, the safety order is transferred to breakeven. Some traders use a trailing stop for this.

Among others, there is another option for fixing profit using the Stochastic Oscillator. Orders are closed at the moment the “stochastic” leaves the overbought or oversold zone on the second screen.

A number of traders who prefer long-term trading close profitable transactions, focusing on the first screen. This happens immediately after the opposite signal has formed. Although the number of successful trading operations is reduced, the profit is a pleasant surprise for traders.

Conclusion


The trading strategy “Three screens of Elder” has a minimum risk level with a rather high profitability. For many years, this trading method has retained its popularity. It is tested by time, because it complies with the main rule of the foreign exchange market - following the trend.

Author: Kate Solano for Forex-Ratings.com

RELATED

Top 10 Forex Strategies for Profitable Trading in 2021

The estimated trading volume of the foreign exchange (Forex) market stands at $6.6 trillion, a figure that exceeds even the volume traded across all stock markets...

Martingale Trading Approach: Employing It With Controlled Risk

Within the intricate and volatile domain of financial markets, strategies promising rewards are invariably intertwined with substantial risks. One such strategy is the Martingale approach...

Unlocking the Potential: Navigating the Dynamics of Day Trading the EUR/USD

In the realm of financial markets, day trading is emblematic of the fluid nature of investment horizons. Among the vast array of trading instruments, the EUR/USD currency pair reigns supreme...

The7 Strategy - Grail for Beginner Traders

Among the various trading systems available for free, only a few of them are effective in practice. For the successful application of such strategies, it is enough...

The Rollercoaster of Day Trading: Navigating Financial Downfalls and Crafting Success

Day trading is a world rife with both exhilarating highs and sobering lows, embodying the essence of the classic risk-reward paradigm. Within its tumultuous landscape, tales of day traders and hedge fund maestros...

Effective Forex strategy with a high profit potential

The information presented in this article is aimed at training beginners and intermediate traders. This information will...

Top Gold Trading Strategies and Tips

Trading gold is much like trading forex if you use a spread-betting platform. A gold trading strategy can include a mix of fundamental, sentimental, or technical analysis...

Deep Dive into Low-Spread Scalping Strategies for Forex Traders

In the realm of Forex trading, where rapid price movements and market dynamics are the norm, scalping stands out as a popular approach that leverages minute fluctuations....

Choose a Trading Style That Suits You Best

When you are headed to become a trader with a thorough strategy, it is wise to learn as much as possible about how financial markets work, collect any information about assets of your choice...

Backtest a Trading Strategy: Can you apply it to Forex Market?

Backtesting is a way to look at how a trading plan or idea has been done in the past. A trader can either physically backtest an approach or use backtesting software...

Crypto trading strategies for cold coins this winter

In this article, we’ll explore three crypto trading strategies that are common to experienced crypto traders. None of them are a magic formula or bulletproof cryptocurrency investment strategy for all coins...

Trading Strategies for Volatile Markets

In this article we explore different types of trading strategies for volatile markets like forex...

Steps to a successful forex trading strategy

Are you an aspiring trader on the cusp of diving into the world of trading forex but unsure how to go about it? Or are you a seasoned forex trader perhaps who’s become a little too complacent...

Top 5 Successful AMarkets RAMM Strategies in July

Today we’ll review the 5 best performing RAMM strategies of the past month. The Copy Trade Archer strategy proved to be the best performing strategy in July...

Three Popular Gold Trading Strategies When Trading Gold CFDs

Trading gold has long been a favored avenue for investors looking to navigate the world of commodities. The precious metal's status as a store of value has endured for centuries...

Bill Williams' Trading System

Bill Williams is a world famous trader, developer of analytical indicators and creator of Profitunity strategy. In 1987, his first works on trading in the stock...

Best Hedging Strategies - 4 pillars of Profit

Hedging strategies help traders mitigate risks and protect trading accounts from losses. Discover the best hedging strategies to profit from forex. 6 May 2010 was a normal day...

Why trading strategies fail?

Imagine you've thoroughly examined a set of rules and an algorithm of actions that should lead you to a profitable trade. You make sure that every...

Top 10 forex trading strategies for beginners

If you’re a forex beginner, learning how to better manage trading in the forex market is key to achieving success. This is because the forex market is an incredibly volatile financial market...

How to use macd indicator in forex trading?

To make the trading process easier and more successful many brokers and traders prefer to use forex economic indicators. These are half-automatic programs and aim at depicting this or that criteria...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.