Alexander Elder is an American investor, professional trader, and trader’s coach. He wrote titled, “The New Trading for a Living”, which was regarded as an outstanding book by traders. The book was published in 1993 and has become an international bestseller. It is available in over a dozen languages and has been used as teaching material for traders around the globe. (This was the first trading book we bought ourselves!)
Elder’s “Come into My Trading Room: A Complete Guide to Trading” received the 2002 Barron’s Book of the year Award. His “Entry and Exits: Visits to Sixteen Trading Rooms” also received the SFO Magazine Book of the Year Award in 2007. His latest published work is “The New Sell and Short: How to Take Profits, Cut Losses, and Benefit from Price Declines.”
Alexander Elder’s early life and career
He was born in Leningrad, was raised in Estonia, and went to medical school at 16. At age 23, while working onboard a ship as a doctor, he jumped a Soviet ship en route to Africa and escaped to the United States, where he received political asylum. Elder worked as a psychiatrist in New York City and also taught at Columbia University. His experience as a psychiatrist equipped him with an understanding of psychology in the trading process.
He is a full-time trader but still involved in running SpikeTrade.com, a trading club where trading members compete for the best trader of the week.
Dr. Edler developed his strategy, the triple screen trading system, in 1985. The name could be misleading, as it suggests that it involves trading with three screens, but it has nothing to do with that at all. It is not uncommon for Mr. Elder to use medical terminology in his trading. Elder also invented the Elder Ray Indicator.
For example, traders often adopt one indicator, screen, or filter to place their trade. There’s nothing wrong with using a single screen for your trade decision. There’s discipline involved in using just one screen or indicator; this discipline is perhaps the primary determinant for success.
“A loser’s true problem is not account size but overtrading and sloppy money management. He takes risks that are too big for his account size, however small or big. No matter how good his system may be, a streak of bad trades is sure to put him out of business.”
But what if the indicator or the filter used has a fundamental problem? What if the market is not the same as yesterday, last week, last month, and last year and your indicator or screen no longer works for today’s market condition. It implies that even indicators designed by successful traders may not work under some market conditions.
Elder has invented a trading system to solve simple averaging while it takes advantage of both of the best trend-following indicators and oscillator techniques. This system is designed to balance the shortfalls of single indicators simultaneously as it serves to identify the complexity of the market. The triple screen trading system does not apply to only one or two but three unique filters (screens) to every decision made during, combined to form trend-following indicators and oscillators.
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Alexander Elder trading strategy quotes
We end the article with some trading quotes from Alexander Elder:
Markets are actually set up so that most traders must lose money.
To win in the markets, we need to master three essential components of trading: sound psychology, a logical trading system, and an effective risk management plan.
Being simply “better than average” is not good enough. You have to be head and shoulders above the crowd to win a minus-sum game.
Remember, your goal is to trade well, not to trade often.
What is the triple screen trading system developed by Dr. Elder?
Dr. Elder developed the triple screen trading system in 1985. Contrary to its name, it doesn’t involve trading with three screens. It combines the best trend-following indicators and oscillator techniques, using three unique filters (screens) for every trading decision.
What advice does Alexander Elder provide for avoiding common trading mistakes?
Elder warns against overtrading and sloppy money management, emphasizing that a loser’s true problem is not account size but these behavioral issues. He suggests that risk management and avoiding large risks relative to account size are crucial.
What is the significance of using multiple filters in the triple screen trading system?
The triple screen trading system uses three unique filters to balance the shortcomings of single indicators and identify the complexity of the market. This approach helps address market conditions where a single indicator may not be effective.