Strategy three screens

The Three Screen Trading Strategy is an authoring of the world-famous trader Alexander Edler. It is based on two principles. Firstly, trading is always conducted according to an active trend. Secondly, the market entry point is triple filtered on three graphs with different settings. Following the global market trends significantly increases the trader's chances of success. Like all ingenious, the Three Screen strategy is very simple and accessible even to beginners.

Alexander Adler, when developing his brainchild, took into account the basic laws of the market. So, it is easier for the price to continue moving in the direction of an already formed trend than to turn in the opposite direction. Therefore, the author of the strategy believes that trading in the opposite direction is akin to moving against a wind on a sailing ship. This formed the basis of the concept of the strategy "Three screens."

Preparation of the trading terminal

Strategy trading requires three charts. Therefore, the terminal must support multi-window mode, in Mobius Trader this function is implemented. We need three charts, one of which will be the main one, the second to find long-term trends, and the third to find the optimal entry point into the market.

Timeframes should be selected based on the duration of the main chart, so that one is about 3-6 times longer, and the second is as much as short. For example, if the main chart is set to interval M15, then the second should have a duration of H1, and the third should be M5. In this example, we will consider the periods M15, H1 (main) and H4.

Main Screen Setup

Transactions will open on this chart. Here you can use virtually any indicator from the category of oscillators or trend. This is not of fundamental importance. The main thing is that the indicator allows you to determine overbought and oversold zones. Most often, Stochastic or its varieties are used. Beginners are advised to do the same.

Setting up a second window

The second chart allows the trader to determine the active trend in the market. Its timeframe should be several times higher than in the main window (in our case, 4 hours). Any trend indicator according to the preferences of the trader should be superimposed on the chart. Most prefer MACD or Alligator.

Setting up the third window

This chart is used only to find the optimal entry point into the market. In the classic version of the strategy, its use is not even mandatory. The timeframe should be several times shorter than in the main window (in our case, it is 15 minutes). There is no need to use any indicators, but you can add any trend if you wish.

If everything was done correctly, the result should be the following picture:

The chart with the largest timeframe is located on the top right, with the lowest on the left of it, and the main window is open below, where the trade will be carried out.

The standard scheme implies a constant display of all 3 graphs. However, this is by no means mandatory. The second screen with the longest time interval can be minimized, having previously determined the active trend. The situation on it cannot change quickly, so it is enough to open it from time to time. The other two graphs should be visible all the time.

Vertical viewing mode is recommended for those with small display sizes. This significantly increases the scale of the graph.

Trend definition

At the first stage, it is necessary to determine the current long-term trend. To do this, go to the window with the largest time frame and analyze the chart. In this case, it is obvious that bearish prevails, i.e. downtrend. This means that all trading should be carried out only in this direction - Putt deals aimed at falling are allowed. After determining the trend, this window can be minimized for convenience.

Market entry

The condition for entering the market is the signal of Stochastic (or another indicator) about the passage of the overbought zone, which precedes the price drop. In the second picture from above, it is clear that the Stochastic line has come close to level 80, but has not yet entered it. In general, in this situation it is already possible to place an order. However, the situation on the third chart (M15) is clearly not conducive to opening a deal, as there is a short-term correction period in the form of price increases, but the main trend is a downward trend.

After some time, the situation has changed. Firstly, in the third chart with a minimum timeframe, the price moved into a downtrend, i.e. moved in the right direction. Secondly, Stochastic also gives a signal about the beginning of the fall. It's time to put a pending Putt order. The market entry level is set so that it is slightly higher than the maximum value of the previous candle. In the picture above, the moment the pending order is triggered is displayed with an orange line.

Important! If, after placing a pending order, the price continues to grow, then with each new closed candle it is necessary to move it to a position slightly below the maximum of the just closed formation. This should be done until the price drops and the transaction is open. In this case, the price did not rise, so the deal was opened almost immediately on a pending order.

Setting Stop Loss

According to the rules of the Three Screens strategy, the stop loss should be set at a position slightly above the local maximum. In the image below, it is displayed with a red line.

How to exit the market

After setting a stop loss, you should observe the price movement. Closing a transaction is carried out in one of two cases. Firstly, when the Stochastic in the main window enters the oversold zone (or overbought, if the trade is in an upward movement). Secondly, when the termination of the trend is indicated on the first chart (H4).

Many traders prefer not only to close their position, but to transfer the stop-loss to the breakeven level or, if the movement continues, with it, a part of the profit is fixed. This approach is more profitable, because under favorable circumstances, the position can not be closed for a long period of time, while receiving profits several times more than originally planned. However, this is allowed to be done only if a trend continuation is observed on the chart that is older in the timeframe.

Some amount of time has passed. The price has fallen by more than 30 points. In principle, by the time the price has reached the oversold zone, the deal can already be closed with a profit of 10-20 points, because Stochastic is talking about a price reversal (this moment is indicated in the picture above by the intersection of blue lines). However, in this case, on the H4 chart, there are all signs of a continuation of the downtrend, therefore it is most appropriate to just transfer the stop loss to the breakeven level and continue to monitor the development of events.

The price continued to fall. Stop loss after each update of the minimum price we drag over the previous minimum to take maximum profit from the market.

As a result, the order triggered by stop loss and took 88 profit points.

Bullish Trading Instead of Conclusion

The rules of the Three Screen strategy for trading in an uptrend are completely identical to the described recommendations for trading in a downtrend. All signals in this case are reversed. A pending order is placed a couple of points below the minimum value of the last closed candle, the signal of the Stochastic to open a transaction is to fall into the oversold zone, and to exit the market into the overbought zone.