Background
Alexander Elder is a psychiatrist-turned-trader who wrote 'Trading for a Living,' one of the most influential trading books ever published. His Triple Screen system uses three timeframes and different indicator types at each level to filter trades. His background in psychiatry informed his pioneering work on trading psychology.
Core Methodology
The Triple Screen system analyses three timeframes: the weekly (tide/trend direction), the daily (wave/entry timing), and the intraday (ripple/execution precision). Each screen uses a different type of indicator: a trend-following indicator on the weekly, an oscillator on the daily, and price action on the intraday. This prevents the common error of using a trend indicator for timing or an oscillator for direction.
Key Trading Rules
- Screen 1 (Weekly/Tide): Use MACD histogram slope to determine the trend direction — only trade in this direction
- Screen 2 (Daily/Wave): Use Force Index or Stochastic oscillator to identify pullbacks against the weekly trend
- Screen 3 (Intraday/Ripple): Use trailing buy-stops or sell-stops for precise entry timing
- If weekly is bullish: look for daily oversold conditions to buy. If weekly is bearish: look for daily overbought to sell short.
- Never trade when Screen 1 and Screen 2 conflict — stand aside
- Risk management: the 2% rule (never risk more than 2% of account per trade) and the 6% rule (stop trading if monthly losses reach 6%)
Key Concepts
Books & Resources
Trading for a Living by Alexander Elder. Come Into My Trading Room by Alexander Elder. The New Trading for a Living (updated edition).