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Three screen elder - description strategies for Forex
Alexander elder in his career came up with some trading systems, spent a lot of conferences, registered and forced to work his own company under the name "Financial Trading". He could well remain in obscurity if it had not published the book "How to play and win at the stock exchange," which once again considered its strategy of Three screens.
Why again? The fact that Alexander spoke about this system in 1985 In the famous magazine "Futures" even published an article dedicated to the strategy of Three screens of an elder, but since this edition was popular in the US and Europe, the system has not caused the furor.
But the book came "in the light" is already available in 12 languages, moreover, at the time of its publication the Soviet Union collapsed, the inhabitants of the countries which have become interested in stock trading. It is noteworthy that the elder himself had emigrated from the USSR (asked for political asylum in the US), so he quickly has earned the trust of his former countrymen as understands the psychology of the citizens of the CIS and their questions on trading.
But let's move on to the system, and let's start with "screens". Under the screen refers to the typical window with the price chart. For trading strategy Three Screen strategy, you have to open three Windows of the same instrument but with different time frame (TF), the choice of which Alexander recommends to follow the following rules:
In the Central main window, the custom timeframe on which to focus in transactions. Usually this is a daily chart.
In the window located to the left of the main chart time frame is multiplied by a factor of 5.
And in the third window, located on the right side, the main period divided by 5.
Of course, the calculation is approximate, since some terminals (including MetaTrader 4) it is forbidden to build their own timeframe due to the fact that they load the history of each TF separately, we do not create them on the basis of minute or tick price. In any case, to trade on the foreign exchange market can safely use discussed above, the combination (W1; D1; H4).
The first window – "Tide market"
At the first window on the strategy of Three screens of an elder is determined by the long-term trend in the direction of which to trade. To identify need indicators MACD (12;26;1) and exponential moving average EMA(13).
Indicators of strategy three screens
Elder noted that fluctuations in MACD like a sea wave, so the "influx of the market," he described a situation in which each bar of the histogram updates the previous (i.e., when the value of the indicator are rising in a bull market and fall on the bear).
The direction of flow and is the main criterion for determining the trend, taking into account only those signals whose direction coincides with the angle of the EMA(13). If there is contradiction, the trend is ignored, and is selected to trade different asset.
Looks like the system on your chart Forex
The second window strategy Three Screen elder "Wave market"
Search trends are only half the story, so next we need to find specific signals for opening orders. This task copes the standard Stochastic (5;3;3), the markings of which are searched for the overbought and oversold.
Stochastic trading strategy Alexander elder
Given that the strategy of Three screens elder includes trading with the trend, in a bear market contract is after touch stochastics overbought and the bullish trend position is opened only from the border of oversold.
Third screen – the noise filter
But that's not all, as for opening orders strategy Three Screen elder provides additional filter candles. It consists in the following set of rules:
After the stochastic line has touched the critical region, switch to the third screen, which shows a clean price chart (no indicators).
Waiting for the current candle to close. Notice in our example on the second screen is used daily chart, because the signal candle will be the last bar for 4 hours.
Set aside a "stop" order above the high of this signal candle for a bullish signal below the low of a bearish. Stop losses are placed on the opposite principle.
Schedule of the three screens
If the next candle of the orders has triggered and the price continued to move in a countertrend direction, recalculate our bid based on the updated data.
How to place orders in the strategy of Three screens
Fixed take-profit strategy of three screens of an elder is not assigned, instead the author recommends to close the profit after reaching the stochastics opposite extreme. For example if a trader bought the asset, the position is closed at the moment of reaching the overbought area, and if sold, the financial result is recorded after crossing the oversold.
I reviewed the original strategy proposed by Alexander elder, but each user has the right to modify its component elements at their own discretion. When trading on Forex, for example, instead of filter candles on the third window it is possible to apply a strong levels of support/resistance, as currency pairs news provoke volatility, resulting in the breakdown of the highs and lows of candles are often wrong.
I have focused on the technical strategy Three Screen elder optimized for the stock market, where trends are more stable and longer. Throughout the rest of the system is not satisfactory and can therefore be used as experienced traders and novice.
|Category: Forex | Added by: (30.10.2017)