jon1971
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Presactly, these are two areas which I found Elder focused heavily on.
As a new member on this forum I'd liked to share my experience with The Elder Triple screen. Backtesting in Pro real Time gave rather good results if the price on weekly is above its 13 week SMA.
This is screen 1 for me. You might use MACD 12 26 9 as an alternative.
Screen 2 on daily I use MACD 24 56 9 which gives a better curve. When Histogram above 0 it is OK to use a trailing buy stop (entry on previous high) and trailing sell stop on the lowest of the low (last 2 days) As there is a lot of stopbusting I correct this values with a multiplicator of 1.03 or 0.97.
Results are quite good on ETF's such as L40 and BX4 although I never go against the main trend (L40 only if bullish market, BX4 only bull°
Hope to hear from of you!
This is screen 1 for me. You might use MACD 12 26 9 as an alternative.
Screen 2 on daily I use MACD 24 56 9 which gives a better curve. When Histogram above 0 it is OK to use a trailing buy stop (entry on previous high) and trailing sell stop on the lowest of the low (last 2 days) As there is a lot of stopbusting I correct this values with a multiplicator of 1.03 or 0.97.
Results are quite good on ETF's such as L40 and BX4 although I never go against the main trend (L40 only if bullish market, BX4 only bull°
Hope to hear from of you!
Understanding the method would help
I've read the Trading for a Living and Come into my Trading Room. But I'm still having difficultly pinning down the exact method Elder is trying to convey.
For instance in come into my trading room, he seems to suggest trading in line with the weekly (longer timeframe), by watching the EMAs. However in the example trades he gives at the end of the book. He trades against the long term EMAs on the weekly graph? I thought the ideas was to counter-trend on the daily (or smaller timeframe), not to counter the trend on the longer timeframe?
If anyone could clear up what the actual system advises I would be very grateful.
I've read the Trading for a Living and Come into my Trading Room. But I'm still having difficultly pinning down the exact method Elder is trying to convey.
For instance in come into my trading room, he seems to suggest trading in line with the weekly (longer timeframe), by watching the EMAs. However in the example trades he gives at the end of the book. He trades against the long term EMAs on the weekly graph? I thought the ideas was to counter-trend on the daily (or smaller timeframe), not to counter the trend on the longer timeframe?
If anyone could clear up what the actual system advises I would be very grateful.
Hey Newbie as i am,
Im Belgian so apologize for the poor English. Elder states to look for en entry when weekly MACD is rising from his lowest point. Then to look at the daily MACD if >0 then use a trailing buy stop. This is spring time.
Concentrate on his original book Trading for a living .. not the second one.
A usefull indicator setting might be STO 50 2 2 on daily on the usual frontiers OB/OS.
Elders'approach is a quite conventional approach. You won't loose a lot of money ... but in a trading market you should be carefull. Look at LRS(14) > 0,1 or O,2 and a R squared of at least 0,27 to have a confirmed trend.
The Chaikin oscillator 10,3 ia quicker entry.
Have a good trading.
To contact me directly [email protected]
Norman
Triple Screen Trading
I've just read a section of Dr. Elder's book published on the net by his publisher and i happen to be an approach I've been using for my reserach.
You use the weekly screen to determine if you should invest in the company.
The 6-month daily chart is where you wait for the crossing of Stochastic, and the confirmation of MACD lines (crossing), the RSI to make the purchases or sells.
The 10-day 15 minute chart help you to wait for the best time to execute the buy or sell decision.
In every stock that I research, I always have:
6-month daily chart of the company (screen 2) for
10-day 15 minute chart (screen 3)
5-year weekly chart (screen 1)
These are the needed components of technical analysis that I use for my research, and it's good to know that the various technical analysis all say the same thing about how to use the weekly, daily charts. This is an example of my technical analysis that I've posted before:
PART C: THE USE OF A COMBINATION OF TECHNICAL TOOLS FOR TIMING THE BUY AND SELL OF HOT STOCKS
The use of Slow Stochastic and MACD signals to maximize the trading gain
With modern technological tools, traders can make the buys and sells on a timely manner. The criticism that the signals from technical analysis tend to be late. Yes, it would be totally true if only 50-day moving average, or MACD was used as a single tool for stock selection in the good old days.
Nowadays, traders can use the combination of various tools such as: In the example below, MACD and Slow Stochastic signals guided the traders to a good buying point. However, the sell should follow the more responsive Stochastic signal to preserve the gains the traders “recognized” from the hot trade. Thanks for the modern technology, these technical tools are free to use and easy to learn.
Chart C1: DPTR 6-month daily chart with 50-SMA
1/ Stochastic gave a buy signal first
2/ MACD also gave a buy signal one day later
3/ Bullish sentiment with the MACD confirmation, prices started to move, volume picked up. In the next 2-trading days, prices increased to $2.28 & $3.03 and daily volumes increased to 11 & 64 MM. Prices kept moving up (4A) 5 of the next 6 trading days to $4.25 (See 4a) but the volume kept decreasing (4B). Since volume did not go up to follow the prices, we have a situation where technical analysts called: Price volume diversion and the effect is a price reversion is imminent.
Stochastic gave a signal to sell (5A) on Sept 15 when traders could unload their position at around $3.75 a share. Those who waited for MACD signal to sell (5B), it occurred later at the close of Sept. 21 where the traders could unloaded the shares for around $2.00 which meant most of the gain from the run-up was evaporated.
A person with some basic technical trading skills would have sold DPTR at the first signal that came up which is Stochastic signal due to the warnings of the price and volume diversion, also the gain of more than 100% in such a short period is another good reason for the traders to take the first exit. MACD has a weakness due to its nature as a trend follower. If there is a full automatic trading system, the computer would have programmed to use the Stochastic sell signal for the sale execution.
The general rule of technical analysis is traders should rely on more than one indicator to make the trading decision. While traders could be more safe to wait for the MACD bullish signal to place the trade, but waiting for MACD sell signal is always late, and follow Stochastic for selling signal is more proper.
http://www.trade2win.com/boards/trading-journals/72598-my-journal-78.html
This is where I read the free section of Dr. Elder's book tonight:
http://www.hep.wisc.edu/~pinghc/books/stock/Elder Alexander Come into my trading room.pdf
I've just read a section of Dr. Elder's book published on the net by his publisher and i happen to be an approach I've been using for my reserach.
You use the weekly screen to determine if you should invest in the company.
The 6-month daily chart is where you wait for the crossing of Stochastic, and the confirmation of MACD lines (crossing), the RSI to make the purchases or sells.
The 10-day 15 minute chart help you to wait for the best time to execute the buy or sell decision.
In every stock that I research, I always have:
6-month daily chart of the company (screen 2) for
10-day 15 minute chart (screen 3)
5-year weekly chart (screen 1)
These are the needed components of technical analysis that I use for my research, and it's good to know that the various technical analysis all say the same thing about how to use the weekly, daily charts. This is an example of my technical analysis that I've posted before:
PART C: THE USE OF A COMBINATION OF TECHNICAL TOOLS FOR TIMING THE BUY AND SELL OF HOT STOCKS
The use of Slow Stochastic and MACD signals to maximize the trading gain
With modern technological tools, traders can make the buys and sells on a timely manner. The criticism that the signals from technical analysis tend to be late. Yes, it would be totally true if only 50-day moving average, or MACD was used as a single tool for stock selection in the good old days.
Nowadays, traders can use the combination of various tools such as: In the example below, MACD and Slow Stochastic signals guided the traders to a good buying point. However, the sell should follow the more responsive Stochastic signal to preserve the gains the traders “recognized” from the hot trade. Thanks for the modern technology, these technical tools are free to use and easy to learn.
Chart C1: DPTR 6-month daily chart with 50-SMA
1/ Stochastic gave a buy signal first
2/ MACD also gave a buy signal one day later
3/ Bullish sentiment with the MACD confirmation, prices started to move, volume picked up. In the next 2-trading days, prices increased to $2.28 & $3.03 and daily volumes increased to 11 & 64 MM. Prices kept moving up (4A) 5 of the next 6 trading days to $4.25 (See 4a) but the volume kept decreasing (4B). Since volume did not go up to follow the prices, we have a situation where technical analysts called: Price volume diversion and the effect is a price reversion is imminent.
Stochastic gave a signal to sell (5A) on Sept 15 when traders could unload their position at around $3.75 a share. Those who waited for MACD signal to sell (5B), it occurred later at the close of Sept. 21 where the traders could unloaded the shares for around $2.00 which meant most of the gain from the run-up was evaporated.
A person with some basic technical trading skills would have sold DPTR at the first signal that came up which is Stochastic signal due to the warnings of the price and volume diversion, also the gain of more than 100% in such a short period is another good reason for the traders to take the first exit. MACD has a weakness due to its nature as a trend follower. If there is a full automatic trading system, the computer would have programmed to use the Stochastic sell signal for the sale execution.
The general rule of technical analysis is traders should rely on more than one indicator to make the trading decision. While traders could be more safe to wait for the MACD bullish signal to place the trade, but waiting for MACD sell signal is always late, and follow Stochastic for selling signal is more proper.
http://www.trade2win.com/boards/trading-journals/72598-my-journal-78.html
This is where I read the free section of Dr. Elder's book tonight:
http://www.hep.wisc.edu/~pinghc/books/stock/Elder Alexander Come into my trading room.pdf
Nice summary, ... I shall study it and comment later.
Did any one use the stochastic 50,2,2 on daily for swingtrading entry with ETF's and exit on Average True range (14) X 2 as an exit?
Try this settings on your favorite.
In practise I use Elder weekly Macd (settings 12 26 9)and daily Macd (24 52 9) on the leveraged CAC40 (ETF L40 on Euronext) but entry and exit as above.
To be sure it's a real trend I use LRS(14) > 0,2 % and R squared > 0,27 and Congestion index (28) not in the range of -20 and + 20 (Katsanos).
Hope to hear from you
Norman
Your comment??
Did any one use the stochastic 50,2,2 on daily for swingtrading entry with ETF's and exit on Average True range (14) X 2 as an exit?
Try this settings on your favorite.
In practise I use Elder weekly Macd (settings 12 26 9)and daily Macd (24 52 9) on the leveraged CAC40 (ETF L40 on Euronext) but entry and exit as above.
To be sure it's a real trend I use LRS(14) > 0,2 % and R squared > 0,27 and Congestion index (28) not in the range of -20 and + 20 (Katsanos).
Hope to hear from you
Norman
Your comment??
Hi Songcon,
Excellent post. But a couple of question:
"Use the weekly chart to determine whether to get into the trade". This is the part that confuses me. Elder seems to indicate following a strong trend by watching the EMAs (are the trending upwards). But in some of his examples the EMA are trending down, but MACD Histogram is ticking up and he uses this indicator to come into the trade as a buy.
So the question is how do we determine what is a good trade by looking at the weekly charts?
Secondly the use of Stochastic never usually shows up on Elder's graphs. Certainly in Entry and Exits he never seems to use this indicator but relies on the MACD and MACDH. He uses channels to determine exits taking profit at the upper channel line?
Excellent post. But a couple of question:
"Use the weekly chart to determine whether to get into the trade". This is the part that confuses me. Elder seems to indicate following a strong trend by watching the EMAs (are the trending upwards). But in some of his examples the EMA are trending down, but MACD Histogram is ticking up and he uses this indicator to come into the trade as a buy.
So the question is how do we determine what is a good trade by looking at the weekly charts?
Secondly the use of Stochastic never usually shows up on Elder's graphs. Certainly in Entry and Exits he never seems to use this indicator but relies on the MACD and MACDH. He uses channels to determine exits taking profit at the upper channel line?
Elder
To my opinion (based on the old version of Elder's book) He based his potential entry on the weekly MACD raising from below towards 0 axis as a long term movement upwards. Then you should look at the datily which is a shorter timeframe when that MACD goes above 0 then you have a possible upwards movement. This seems to work if the MACD does not whipsaw around the zero axis. Also look at the MACD curves and not only the histogram.
I recently replaced the MACD by the PPO (Percentage Price oscillator) which gives a better view of the importance of the difference between the long and short MA of the MACD.
You can use also the Stochastic. The problem is the settings. I define them by trying different settings. The one that gives a clear entry and exit for the past 3 or 6 months are choosen. The markets are dynamic and cycles change .. I don't think there is an universal settings. I'll look up the reference of the book I have found this approach and post it later on. Anyhow try the STO 50 2 2 on the CAC40 to see the clear message it gives to enter and exit the market.
To my experiences at that moment the EMA 10 and EMA 20 should be rising and a strong confirmation is a golden cross. (due to superstition I use EMA 13 and EMA 21)
Have a nice weekend.
Norman
PS if you have skype you can find me by my email adress. Usually on line after 20h30 in the evening
To my opinion (based on the old version of Elder's book) He based his potential entry on the weekly MACD raising from below towards 0 axis as a long term movement upwards. Then you should look at the datily which is a shorter timeframe when that MACD goes above 0 then you have a possible upwards movement. This seems to work if the MACD does not whipsaw around the zero axis. Also look at the MACD curves and not only the histogram.
I recently replaced the MACD by the PPO (Percentage Price oscillator) which gives a better view of the importance of the difference between the long and short MA of the MACD.
You can use also the Stochastic. The problem is the settings. I define them by trying different settings. The one that gives a clear entry and exit for the past 3 or 6 months are choosen. The markets are dynamic and cycles change .. I don't think there is an universal settings. I'll look up the reference of the book I have found this approach and post it later on. Anyhow try the STO 50 2 2 on the CAC40 to see the clear message it gives to enter and exit the market.
To my experiences at that moment the EMA 10 and EMA 20 should be rising and a strong confirmation is a golden cross. (due to superstition I use EMA 13 and EMA 21)
Have a nice weekend.
Norman
PS if you have skype you can find me by my email adress. Usually on line after 20h30 in the evening
HTML:
[COLOR="Navy"]So the question is how do we determine what is a good trade by looking at the weekly charts?[/COLOR]By studying the weekly long term 3-year chart I concluded that SDS is either a candidate for short, and it's not good for a long position. Sorry for my unclear expression previously, it should have been: Use the weekly long-term 3 or 5-year chart to determine if the stock is a candidate for long, short or there's nothing of interest here. I tried to say: Use it to determine whether I should say yes or no in term of further studying before buying (long) the stock.
How I study the daily chart:
Now just say that I've found that ANTS is a good company for further study, the 6-month daily chart shows that it's registered a positive MACD crossing yesterday, the current price is above the 50-day moving average, but I don't consider this is a good candidate for purchase "immediately" since the Slow Stochastic is in the overbought situation. MACD signal is normally behind Stochastic but this time the distance is a bit too far.
Buy at the arrow and sell at the gun
Stochastic & MACD:
The 6-month chart of MTLQQ shows how Slow Stochastic and MACD register the changes in the direction of the stock price. We see that Stochastic does a better job in register the crossing of line in comparing with the MACD
Secondly the use of Stochastic never usually shows up on Elder's graphs.
In the book Trading for a Living, Dr. Elder explains in details on Stochastic and MACD. MACD is a trend follower and while it is powerful and more reliable, its weakness is a little bit behind in generating the signals, Stochastic otherwise is more sensitive, that's why the Slow Stochastic to slow it down and to avoid the whip saws.
These are mentioned in detail in pages: 118, 119, 123. In page 135 he did mention Stochastic as part of screen 2.
He also mentioned that: A good system uses several tools, combining them so that their negative features filter each other out, while their positive features
remain undisturbed. (P 123)
Since he would rather teach the traders to use his system, he uses EMA to get more responsive signals (but it still a trand follower), normally Stochastic and MACD are working very well together, and some additional tools such as RSI would be perfect.
Well, my writing is always very long, I'm thinking about setting up My Corner so that I don't have to worry about my cumbersome and long writing.
Talking about various technical analysis tools, the best book to explain what they do, and what they are should be: Technical Analysis from A to Z (New York: McGraw-Hill, 1995) of Steven Achelis and now you can buy it on Amazon for more than 60% off.
Thanks Boydd_uk and NGB for reading and sharing your ideas,
SC
This is part of his book posted on the internet:
http://www.hep.wisc.edu/~pinghc/books/stock/Elder Alexander Come into my trading room.pdf
Last edited:
HI
I have read many threads on this forum..your's has been the most informative so far. I like the way you explain concepts clearly.
Thanks
I have read many threads on this forum..your's has been the most informative so far. I like the way you explain concepts clearly.
Thanks
The weekly chart give me an overview of the health of the company. SDS has lost about two third of its value but it still doesn't seem to be ready for crossing back to get above the 20EMA.HTML:[COLOR="Navy"]So the question is how do we determine what is a good trade by looking at the weekly charts?[/COLOR]
By studying the weekly long term 3-year chart I concluded that SDS is either a candidate for short, and it's not good for a long position. Sorry for my unclear expression previously, it should have been: Use the weekly long-term 3 or 5-year chart to determine if the stock is a candidate for long, short or there's nothing of interest here. I tried to say: Use it to determine whether I should say yes or no in term of further studying before buying (long) the stock.
How I study the daily chart:
Now just say that I've found that ANTS is a good company for further study, the 6-month daily chart shows that it's registered a positive MACD crossing yesterday, the current price is above the 50-day moving average, but I don't consider this is a good candidate for purchase "immediately" since the Slow Stochastic is in the overbought situation. MACD signal is normally behind Stochastic but this time the distance is a bit too far.
Buy at the arrow and sell at the gun
Stochastic & MACD:
The 6-month chart of MTLQQ shows how Slow Stochastic and MACD register the changes in the direction of the stock price. We see that Stochastic does a better job in register the crossing of line in comparing with the MACD
Secondly the use of Stochastic never usually shows up on Elder's graphs.
In the book Trading for a Living, Dr. Elder explains in details on Stochastic and MACD. MACD is a trend follower and while it is powerful and more reliable, its weakness is a little bit behind in generating the signals, Stochastic otherwise is more sensitive, that's why the Slow Stochastic to slow it down and to avoid the whip saws.
These are mentioned in detail in pages: 118, 119, 123. In page 135 he did mention Stochastic as part of screen 2.
He also mentioned that: A good system uses several tools, combining them so that their negative features filter each other out, while their positive features
remain undisturbed. (P 123)
Since he would rather teach the traders to use his system, he uses EMA to get more responsive signals (but it still a trand follower), normally Stochastic and MACD are working very well together, and some additional tools such as RSI would be perfect.
Well, my writing is always very long, I'm thinking about setting up My Corner so that I don't have to worry about my cumbersome and long writing.
Talking about various technical analysis tools, the best book to explain what they do, and what they are should be: Technical Analysis from A to Z (New York: McGraw-Hill, 1995) of Steven Achelis and now you can buy it on Amazon for more than 60% off.
Thanks Boydd_uk and NGB for reading and sharing your ideas,
SC
This is part of his book posted on the internet:
http://www.hep.wisc.edu/~pinghc/books/stock/Elder Alexander Come into my trading room.pdf
