I love Alex Elder . . . . .!!

[techst]

Sperandeo - amazing books . The second book with the studies on Life Expectancy Profiles blows me away. Having the commitment to measure every move since records began. woah. And to think he got his first job in the markets by looking through the paper. Turning up at an interview, and completely blagging his way in!

 

[TheWolf]

I dont really go for divergences on indicators
mea culpa !

they seem to happen too rarely/unreliably.

btw, I dont use a simple rsi.
I adapted his sroc and used the concept for my rsi so I get very smooth charts

Divergences I have found to be one of the most reliable signals. It works well as long as you have good uses of stops.

Im looking forward to Elder's new book.

 

[Futures2005]

Triple Screen Method

I base my trading strategy, of FTSE100 stocks, on his "triple screen trading system" and it seems to work well for me (with a number of refinements I've learnt along the way). I also recommend his suggestions on trade diaries and on money management..

Hi Marben
I would be interested to know which charts you use.
For the big picture trend - do you use weekly charts or daily? What do you
use to determine the larger trend, MACD, moving averages?

For the overbought / oversold indicator levels?
Again what time frame and which indicators.

And for taking the trades?

What refinements have you made?

.Futures2005

 

[marben]

Hi Marben
I would be interested to know which charts you use.
For the big picture trend - do you use weekly charts or daily? What do you
use to determine the larger trend, MACD, moving averages?

For the overbought / oversold indicator levels?
Again what time frame and which indicators.

And for taking the trades?

What refinements have you made?

.Futures2005

Hi Futures2005

For the big picture trend - do you use weekly charts or daily? Weekly
What do you use to determine the larger trend, MACD, moving averages? MACD
For the overbought / oversold indicator levels? A combination of daily stochastic & Force Index (2Day EMA of FI). I found stochastic by itself to be a bit slow & can miss things but I'm using it as a "filter" on FI signals.

At the moment, I take 50% profits on trades after one daily stochastic cycle & the other 50% after another one. I cut losses (if they haven't already reached their stops) after one stochastic cycle. (i.e. if the cycle ends worse than when I entered the trade).

I don't move stops once they've been set originally: found I was being stopped out too often after tightening stops (as Elder & others have recommended) & missing big profits.

I also use some fundamentals & newsflow to filter out bad signals & to cut losses.

I keep my "trading rules" under fairly constant review, in the light of results (but without changing things too radically until quite a few trades have been executed with the new principles).

You really have to try things for yourself & find out what works for you & the instruments you trade in. I recommend starting with small trades, so you won't feel too bad about any losses & increase slowly if/when you feel your own methods are working well enough.

I think I've still got plenty to learn!

HTH,

Mark

 

[Fluke]

Marben.
I am pleased I have just found this thread because have read Trading for a Living and am about half way through Come into my Trading Room.
I want to ask you a question about screen No one and the use of the MACD Histogram.
On the other thread "Active Day Traders",you mention you found the MACD Histogram tends to produce false signals in strongly trending markets,I also have noticed this.
You mention,you have developed some indicators of your own that help filter out the noise& make trends more obvious.
Would you mind telling me what your new indicators are and how to apply them,because I am currently trying out Elder's three screen method and want to start off on the right foot.
I did not want to ask you this on the other thread because it is off topic and would take up too much time
Hope you will help.
Regards Jon.

 

[marben]

Marben.
I am pleased I have just found this thread because have read Trading for a Living and am about half way through Come into my Trading Room.
I want to ask you a question about screen No one and the use of the MACD Histogram.
On the other thread "Active Day Traders",you mention you found the MACD Histogram tends to produce false signals in strongly trending markets,I also have noticed this.
You mention,you have developed some indicators of your own that help filter out the noise& make trends more obvious.
Would you mind telling me what your new indicators are and how to apply them,because I am currently trying out Elder's three screen method and want to start off on the right foot.
I did not want to ask you this on the other thread because it is off topic and would take up too much time
Hope you will help.
Regards Jon.

Hi Fluke,

As the new indicators are experimental, I'm not really prepared to go into detail but will say this: I use two indicators, one based on averaged rates of change of weekly prices and the other being a sensitivity indicator, that shows when the rate of the chage of prices is significant relative to the weekly trading range. Used together, these indicators select a very small number of instruments with very strong trends.

I have also had a off-board discussion with Techst about MACD interpretation. From this, I am beginning to wonder whether the original problem was that I was not interpreting MACD correctly. Elder's explanation of MACD is fairly brief in Trading for a Living and I can see that I (and possibly others) could have got the wrong end of the stick from it. Techst has recommended the book "Technical Analysis: Power Tools for Active Investors" by Gerald Appel, the inventor of MACD, for a deeper explanation. I have this on order and will study it.

Best regards,

Mark

 

[timaru69]

Hi all

Interesting comments on Elder but ,not to rain on your parade, I don't view him as being anything different from the majority of other authors of trading systems/seminars etc, in that I am not convinced that he actually trades for a living.

Seems to me that he writes for a living and sells his time at $300 and hour. (from his website) , not that I begrudge him for it , but where are his trading records?

Each to their own I suppose

Good luck

 

[Fluke]

Hi Fluke,

As the new indicators are experimental, I'm not really prepared to go into detail but will say this: I use two indicators, one based on averaged rates of change of weekly prices and the other being a sensitivity indicator, that shows when the rate of the chage of prices is significant relative to the weekly trading range. Used together, these indicators select a very small number of instruments with very strong trends.

I have also had a off-board discussion with Techst about MACD interpretation. From this, I am beginning to wonder whether the original problem was that I was not interpreting MACD correctly. Elder's explanation of MACD is fairly brief in Trading for a Living and I can see that I (and possibly others) could have got the wrong end of the stick from it. Techst has recommended the book "Technical Analysis: Power Tools for Active Investors" by Gerald Appel, the inventor of MACD, for a deeper explanation. I have this on order and will study it.

Best regards,

Mark

Marben.

Thanks for coming back to me Re your new indicators.
I am currently experimenting with the weekly MACD Histogram set at the standard 12.26.9 on the first screen.I am using the histogram and looking for a single up tick to indicate a change of trend as fig 43-1 on page 238 TFL.
I then check to see if the 2 EMA's I use have tuned to confirm the change of trend.I then include a basic trend line to follow up below the price chart.
Elder recommends using weekly EMAS together with MACD Histogram in his second book"Come Into My Trading Room".
Hope you can understand the above .

Kind regards Jon

 

[pirx]

I adapted his sroc and used the concept for my rsi so I get very smooth charts

@TheWoolf: Hello! Do you use S-RoC in Metastock maybe? I´m trying to find the formula, but until now, with no success. I would apprechiate any help on this. Thanks.

 

[Fluke]

@TheWoolf: Hello! Do you use S-RoC in Metastock maybe? I´m trying to find the formula, but until now, with no success. I would apprechiate any help on this. Thanks.

PRIX.
Smoothed Rate of Change(SROC).
This is from Elders book "Trading for a Living".
I use this method with my Sharescope charting package,dont know about Metastock though.

To create this indicator,calculate a 13 period ema of closing prices on the price chart and then apply the 21 day Rate of Change as a separate indicator under the price chart. The Rate of Change Indicator identifies the important turning points of the stock.When it turns up it gives a buy signal and when it turns down it gives a sell signal.
When the ROC indicator changes direction and the price crosses the 13 EMA it's in gear and it's time to buy or sell as the case may be .

You really need to get the book if you do not have it already. Hope this helps

 

[pirx]

Hello Fluke,

thanks for your answer. I have the book, it was one of my first ones and it´s one of the best ones

But only now did I realize how should the S-RoC be used. You do not need a S-RoC indicator, you use simple RoC and compare it to the 13 period EMA! It´s the same as "13 day EMA and 13 day Elder-ray" thing.

I should read it more thoughtfully. Thanks for writing it down Next time I´ll just rather re-read the material I don´t understand

 

[Fluke]

Pirx.
Glad I helped lol.