Most traders pick a timeframe and stick to it. The problem is that a chart doesn’t exist in isolation. What looks like a buy signal on one timeframe can be sitting right in the middle of a larger downtrend on another. The Triple Screen Trading System, developed by Dr. Alexander Elder, is a multi-timeframe method built to solve exactly this problem.
Dr. Alexander Elder built the Triple Screen Trading System to solve exactly this, and his own writing on it makes the logic hard to argue with. You can learn much more from Dr Elder at Elder.com.
Full trading strategy PDF at the end of the article
The foundation is a factor of five. Decide which timeframe you actually want to trade — that’s your intermediate frame. The long-term frame is five times longer, the short-term frame five times shorter. This 5x relationship is the backbone of the Triple Screen Trading System.
A daily trader therefore watches the weekly chart for trend direction and the daily chart for entry timing. Each screen has a distinct job, and all three need to align before a trade gets placed. The Triple Screen Trading System works through three sequential filters, or ‘screens’.
The 3 Screens of the Triple Screen Trading System
The first screen examines the weekly chart to identify the dominant trend — the market tide. The slope of the weekly MACD histogram is Elder’s preferred tool: when it turns up, you may only trade from the long side or stand aside; when it turns down, you may only trade from the short side or stand aside.
Source: Dr Alexander Elder
Critically, the best buy signals occur when the histogram turns up from below its centreline, and the best sell signals when it turns down from above it — signals that cross from the wrong side carry less weight.
The second screen moves to the daily chart and applies an oscillator to identify the wave within the tide. Elder favours the 2-day Force Index here: it marks buying opportunities when it falls below its centreline during an uptrend, and selling opportunities when it rises above its centreline during a downtrend. When the weekly trend is up, you take only buy signals from the daily oscillator. When the weekly trend is down, you take only sell signals. The two directions working together is what creates the opportunity — not either one alone.
The third screen stays on the daily chart but shifts focus to the precise entry point. Rather than buying a breakout above the previous day’s high — which can mean a wide stop after a wide-range day — Elder recommends calculating an average EMA penetration.
Look back at the daily chart over the past four to six weeks and measure how deeply price has typically dipped below the fast 13-period EMA during normal pullbacks. Subtract that average from where the EMA is likely to be tomorrow, and place your buy order there. The aim is to get filled during a routine pullback rather than paying a premium to chase a breakout. For downtrends the logic reverses — measure average upside penetrations above the EMA and place sell orders accordingly.
The system is best understood as a censorship mechanism. That’s the complete Triple Screen Trading System in action. Here is the summary:
Get the full Triple Screen trading strategy PDF here
