Let's look at Alexander Elder in more detail and how his trading techniques can help you become a better and more profitable trader.
Alexander Elder Background and Experience
Alexander Elder, was bought up in Estonia and defected from Russia to the United States at the age of 23, by jumping ship and travelling via Africa! He has worked as a psychiatrist, university professor, and as a futures and stock trader. Alexander Elder's works are essential reading in terms of trading education, because he not only knows what it takes to build a successful trading system but also knows, the mental discipline it takes to turn a potentially successful strategy, into one that makes money by adopting the right mindset.
Any form of trading requires a good trading system but it also requires the right mindset to turn a potentially profitable system into one that makes money and Elder gets this point across in his books.
Alexander Elder Books
Alexander Elder is also the author of the book "Come Into My Trading Room", “Entries and Exits” Elder is also well known for developing the the Impulse System which uses EMA's and a MACD histogram to generate potential trading signals.
Alexander Impulse System
The system uses the slope of the moving average and MACD histogram to determine trends. When both the EMA and the MACD histogram are in the same direction, they generate an impulse in the price which can be traded for profit. When the EMA is trading up, it shows that odds are in favour of rising prices, when the EMA is trading down, odds favour falling prices. The MACD histogram, shows if the odds favour higher or lower prices. When slope of MACD histogram is up, the odds favour rising prices and conversely, when MACD histogram is sloping down, odds favour lower prices.
Trading for a Living Myth and Reality
While Elder is developed Forex trading strategies and systems, I personally like his refreshing approach to trading and while he contends that trading for a living can become a reality, he doesn't say it easy like many so called gurus or experts will tell you. Of course, making money is not easy in any market and the facts that 95% of traders lose in FX trading proves this point
According to Alexander Elder, there are three essential stages to trading:
1. The trader who is technically well educated but fails to understand the impact of human psychology on trading success.
2. The trader understand that knowledge or being clever does not guarantee trading success there is no guarantee to success. Elder refers to this as the awakening of a psychological understanding and that no matter how clever a trader may be, he must understand the key role the mindset plays in terms of trading success.
3. This trader knows that to be a successful trader in stocks, futures or FX, requires a disciplined mindset and the preservation of equity at all time – Money management is the key to success. He therefore bases his systems success on money management first above all else.
The "Three M’s": Mind, Money and Method.
Elder neatly sums up what it takes to make money at trading in the “Three M's” and its true, successful trading in any area is based on a sound, logical method, combined with strict money management parameters and last but not least, the discipline to apply your method for long term trading success.