Elder Triple Screen

The classic combination is Weekly (Screen 1), Daily (Screen 2), and trailing entry stop or 4H (Screen 3). Each screen should be approximately 4-5× the next. For more active trading, you can use Daily/4H/1H.

Yes. Dr. Elder prefers Force Index because it incorporates volume, but Stochastic (5-3-3), RSI (2-period), and Williams %R all work. The key is using an oscillator that identifies oversold in uptrends and overbought in downtrends.

No. The beauty of Screen 3 is the trailing entry stop - you set a buy stop above yesterday's high and let it trigger automatically. You only need to adjust the stop daily if not triggered. This makes Triple Screen practical for part-time traders.

If your buy stop isn't triggered by market close, lower it to today's high + 1 tick for tomorrow. Continue adjusting daily as long as Screen 1 remains valid and Screen 2 is still oversold. If Screen 2 leaves oversold before trigger, cancel the setup.

Primary exit is when Screen 1 reverses (weekly MACD histogram changes direction). Alternatively, use profit targets (2-3× risk) or trailing stops (Chandelier Exit, moving average). Many traders use partial exits: 50% at target, 50% on Screen 1 reversal.

The SLOPE is more important. Elder emphasizes that a rising histogram (even below zero) is bullish because it shows momentum improving. However, histogram above zero AND rising is stronger than below zero and rising.

Very deep pullbacks (oscillator extremely oversold for multiple days) can indicate trend weakness rather than buying opportunity. Use standard position size, not aggressive. Some traders add a rule: skip if oscillator stays extreme more than 5 days.

Not typically on the same instrument. But across a portfolio, you might have bullish Screen 1 on some stocks and bearish on others. Trade each in its respective direction. Avoid having long and short on highly correlated instruments.

UK market hours (8:00-16:30) work fine for daily Screen 2. For Screen 3, ensure your entry stop is active during market hours. If using 4H Screen 3, note that UK hours give fewer complete 4H bars. The trailing stop method works regardless.

It's an enhancement that combines EMA slope with MACD histogram for clearer signals. Green bars (both rising) = only take longs. Red bars (both falling) = only take shorts. Blue bars = wait. It's optional but can improve discipline.

Test a grid of parameters (MACD settings, oscillator thresholds, exit methods) on 60% of data. Validate on separate 20%. Walk-forward test on final 20%. Look for robust zones where neighboring parameters perform similarly. Avoid single 'best' parameters.

Use Screen alignment for strategy selection (directional when strong, spreads when moderate). Time option entry with Screen 3 trigger. Select 45+ DTE for adequate time. Exit options when Screen 1 reverses. Match strategy to IV environment.

Weekly: Scan for Screen 1 valid instruments. Daily: Scan those for Screen 2 setups. Rank by quality metrics (Screen 1 strength, volume, relative strength). Limit correlated positions (max 2 per sector). Track portfolio heat. Manage multiple positions systematically.

Volume filter (pullbacks on declining volume) adds most value. Others: Relative strength vs market, sector trend alignment, ATR filter (avoid very high volatility), and time filter (avoid first/last week of month or earnings periods).

Key challenges: Multi-timeframe data alignment and trailing stop simulation. Use end-of-day data for Screens 1-2. Simulate trailing stops properly (move daily, execute on break). Account for gaps and slippage. Compare variations with proper validation.