The Triple Screen Trading System for EURUSD

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The Triple Screen Trading System was presented by Alexander Elder and described in details in his best-selling trading book, Trading for a living

The trading system can be summarised as follows:

  1. Suppose you are going to trade a daily chart. First use a longer time frame, namely, a weekly chart to assess the tide of the pair. Use MACD to assess the tide.
  2. Move to daily chart, use daily Elder-ray and Stochastics Oscillator to assess the wave of the pair.
  3. Use stop order to place an order.

After optimization, I have found that the best stratege of using the Triple Screen Trading System for EURUSD can be summarised as follows.

  1. If the last two weeks MACD(12,26,9,Main_Mode,Typical_Pric e) are negative and move upward, and the daily Bear Power is moving from negative to positve, set up a Buy Stop order at 1 pips higher than yesterday’s High. Stop Loss 100 pips and Take Profit 350 pips. (PS: I believe that “1 pips higher” is not important at all, but I used it in my backtest).
  2. If the last two weeks MACD(12,26,9,Main_Mode,Typical_Pric e) are positive and move downward, and the daily Bull Power is moving from positve to negative, set up a Sell Stop order at a certain pips lower than yesterday’s Low. Stop Loss 100 pips and Take Profit 350 pips.

Where
Bear Power = Yesterday’s Low - EMA13_Typical_Price;
Bull Power = Yesterday’s High - EMA13_Typical_Price.

If I use Traditional / Mainstream MACD Histogram as an indicator as Elder suggested, the annual trade is only 5, and it’s not very profitable. By contrast, if I use MT4’s MACD MAIN_MODE, the annual trade is 11, and the system is always profitable when you choose any STOP_LOSS between 50 pips and 250 pips, and any TAKE_PROFIT between 200 pips and 500 pips.

As STOP LOSS is 100 pips, if you want to control the risk of each trade under 2.00%, the actual leverage should be 2:1. As Take Profit is 350 pips, this means the potential reward of each trade is 7%. The annual trade is 11, and the over-all winning chance is 0.54. So the annual return is

11x0.54x0.07-11x0.46x0.02= 31.46%

I welcome your feedback. Many thanks!