Third Screen Strategy - Dr. Alexander Elder

Hi ReigningPips,

You're very welcome and thank you for the response. I definitely agree with the first part of your post in regards to using more than one indicator before entering a trade. On the contrary, having too many indicators can cause confusion which is why I typically stick to my MACD and Williams % indicators along with Auto Pivot Indicator. Another thing that I make sure to do is plot out major support and resistance "zones" on the monthly / weekly charts so I can get a better idea of where price may stop and reverse.

If you're interested I was thinking about posting charts whenever I open a trade to show how and why I opened a particular trade. I'll probably post 2 charts for each trade:

1) D1 using MACD showing overall trend
2) H1 using Williams % for entry point.

I'll also post SL & TP parameters so that others can follow this strategy real time.

As far as FXCM Web Trader goes I really don't have much knowledge as I solely use MT4 platform for my trades. I also use FXCM as I prefer the safety provided by a reputable broker with a long standing record so you are definitely in good hands in that regard.

With that being said, I wish you the best of luck and be sure to trade safe. Let me know if you have any questions and I'll do my best to answer them.

Regards,
100PipsADay

Hey Everybody,

I wanted to bring the following to your attention. If you have been following this thread then you will have read about Japan's current situation and the need for a weaker Yen.

I, along with many other analysts, believe that a long term trend reversal in regards to the JPY is in the making and it is literally right around the corner.

The articles above do an excellent job explaining the fundamental reasons why the JPY should / will weaken in the very near future and I am going to post a few charts for the technical reasons why JPY is about to weaken.

Weekly JPY Charts Include: USD/JPY, EUR/JPY, GBP/JPY, & CAD/JPY

**It is important to remember that US elections are coming up next week so it might be wise to wait until after elections before planning entry points assuming weekly trend lines are broken and confirmed. Also, wait for a Weekly close above TL's before looking for buy opportunities with JPY cross pairs.

Good luck to everybody and be sure to trade safe!

Regards,
100PipsADay

100PipsADay,

So far it has been difficult to find any forum where people journal their entries using the triple screen strategy. I like learning by example so I am certainly interested in seeing your logic behind your trades. I too will try to post as much as possible but at this point I see myself having more questions than trades.

Quick newbie question: I see that you use Williams %R on the daily screen. What advantage do you find by including this on your first screen?

Thanks,
ReigningPips

Took a small (bullish) trade just to let it "wander around" for awhile. Doing OK for now.

Hi Jack,

Just wanted to make a friendly note on this... there is a lot of misunderstanding about sovereign "debt" and the euro-crisis and I often feel compelled to straighten things out!

The problems in the Eurozone are not comparable to the sovereign debt arrangements in Japan, or the US or the UK... or any other nation that remains in control of its money supply.

The reason that the Eurozone is in crisis is due to the flawed nature of their monetary union. During times of recession, particularly now when caused by a slump in aggregate demand, the nations of the Eurozone do not have the fiscal capacity to respond in the way that the US, UK or Japan does.

You also mentioned that "Japan is able to run huge deficits and sustain such high debt-to-GDP because it has used its vast savings over the last 50 years to fund government spending." This is a general misunderstanding... you see sovereign debt is not debt in the sense that a person or business might see it. Sovereign debt represents (as you pointed out) the savings of the people... the reason the “debt” is so large is because government deficit spending is directly linked to private sector savings. When it comes to the national accounts the deficit of government is equal to the current account deficit plus the private sector balance.

Anyways I just wanted to make that note as there is an awful lot of mis-education about macroeconomics!

Regards,

Dan

Most of what you stated is true but I must humbly disagree with the above. One could say that the reason the deficit is so large is because the GOV can't control spending. Aside from that, debt is debt. Unless (just maybe) it's money printing.

Anyway....
"Debt held by the public is the value of all federal securities sold to the public, i.e., investors outside of the federal government. When the government's spending exceeds its revenue, it must borrow to finance the difference. Thus, debt held by the public essentially represents the amount the federal government has borrowed to finance cumulative cash deficits. This debt is owed to a wide variety of investors, including international investors, domestic private investors, the Federal Reserve, and state and local governments."

http://www.gao.gov/special.pubs/long...ebtbasics.html

Of course, debt held by "citizens" is more representative of your post so let's not forget "ye' olde debt clock". Interesting when comparisons are made.

http://www.usdebtclock.org/world-debt-clock.html

Of course, I would feel honored if you were to enlighten me further. It's true that I'm not an expert in such matters.

Cheers

ReigningPips,

I keep the same template but switch to different time frames when looking to enter a position. For example, I first look at D1 and use MACD (i disregard williams % on D1) and then I switch to H1 time frame and use Williams %.

Hi Dan,

Thanks for bringing this to my attention. I want to let you know that these articles are not written by me, I subscribe to a few financial newsletters and bring over a few that I find interesting and choose to share with others. I just don't want to take credit for something that isn't mine...

I'm going to look a little more into what you presented to me. Thanks for sharing this information with me.

Enjoy your day Dan!


Regards,
100PipsADay

Hi Slim Buffett!

Welcome to this thread

The next two weeks are going to very interesting and should determine the direction of the Yen for the next 6 months or so in my opinion so keep an eye on USD/JPY!

Trade safe Slim!


100PipsADay

I agree.... thank you and
ALL the best

Japan is in worse than a deflationary trap
One-time powerhouse, it’s withdrawing from the stage
By Barry Wood

TOKYO (MarketWatch) — A couple years ago, an American journalist 10 years resident in Tokyo offered a provocative assessment: Japan, he said, had decided to gracefully withdraw from the world stage.

This month, during my first return to Japan in a decade, I put that assertion to an English friend who had lived even longer in Tokyo. “That’s about right,” he said, “battered by deflation and a overly strong currency, the Japanese have concluded that they can’t compete with a rising China and are withdrawing into themselves.”

These startling conclusions prompted a reflection to a visit 29 years earlier. In the autumn of 1983, I accompanied an industrial study mission of two dozen American executives eager to learn how America could combat the competitive threat posed by a resurgent Japanese economy.

In a whirlwind two weeks, the American industrialists were lectured by experts and visited export enterprises throughout the country. We toured auto plants, shipbuilders and, most interesting of all, the Yamazaki Machine Tool Co. in Nagoya.

There we found a new factory the size of a football field where 20 industrial robots did all the work. The mobile robots — lights flashing above nameplates of Disney characters — whizzed down aisles delivering materials to workstations where computerized grinders milled precision components for the auto industry.

In the entire facility we counted three workers. We were informed that not a single worker was assigned to the fully automated overnight shift. Company executives expressed pride that Japan had recently overtaken the United States is manufacturing machine tools.

On the bus ride to the hotel, one of our party declared, “Boys, the game is up. There’s no way we can compete with that.”

Fast forward to 2012 and the future didn’t turn out quite the way the sobered industrialists expected. Japan’s 27-year long dominance in machine-tool production came to an end two years ago. China, where production costs are 40% lower, has seized the top spot even though the Japanese emphasize that they continue to lead in quality.

Pummeled by a strong currency and two decades of deflation, Japanese companies are shifting production to China and elsewhere. Japan’s industrial core is eroding and threatened with being hollowed out, as happened in parts of the U.S. rust belt.

Japan long ago ceased being anyone’s economic model.


Per capita growth in Japan has fallen off since the boom of the 1960s, 1970s, and 1980s.
http://ei.marketwatch.com/Multimedia...c-002128040cf6
Growth figures tell the tale of relative decline. From 1953 to 1973, a still-rebuilding Japan grew by 9% annually. From 1974 to 1990 growth in gross domestic product slowed to 4.2% while from 1991 to the present growth has barely been positive, averaging a mere 0.5% annually.

What went wrong? How did a nation with world-class companies, a highly educated work force, and a well-deserved reputation for efficiency and discipline descend into protracted decline?

The high point of the Japanese economy appears to have been 1989 when property prices peaked and Tokyo’s main stock market index touched a record high of 39,000. By 2007 the stock market had recovered to 18,000, but since then it has fallen another 50% to the current 9,000.

Meanwhile, the exchange rate of the yen USDJPY +0.26% , regarded as a reflection of the nation’s economic health, has steadily appreciated from the 227 to the dollar that prevailed in 1983 to a mere 78 yen today. Phillip Suttle, chief economist at Washington’s Institute of International Finance, believes the yen is overvalued by half and should trade in the range of 130 to the dollar. At any rate, the currency’s rise has done little to reduce Japan’s chronic balance of payments surplus. Japan remains the largest foreign holder of U.S. treasuries.

Since Japan’s asset bubbles burst over 20 years ago, policy makers have persistently fiddled with the levers of monetary and fiscal policy but their efforts have spectacularly failed.

Meanwhile, the brutal deflation that accompanied the bust persists. Falling prices have translated into massive wealth destruction. Stop-and-go monetary and fiscal stimulus accomplished little. Consumer prices have declined for seven of the past 10 years.

There is no clear path out of the deflationary trap. Federal Reserve Chairman Ben Bernanke, then a professor at Princeton, counseled the Japanese in 1999 to open the monetary floodgates. “Japanese monetary policy,” he wrote, “seems paralyzed, with a paralysis that is largely self-inducted. Most striking is the apparent unwillingness of the monetary authorities to experiment, to try anything that isn’t absolutely guaranteed to work.”

Japanese officials counter that they’ve tried monetary stimulus, including zero interest rates and quantitative easing, but had meager results.

Richard Koo, chief economist at Nomura Research in Tokyo, argues that because Japan is stuck in a balance-sheet recession in which companies and households are retrenching, low interest rates are not stimulative because neither businesses nor households wish to borrow. He advocates massive fiscal stimulus, saying government spending is the only way to put a floor under sagging aggregate demand. Critics say past fiscal stimulus has ballooned the national debt to 200% of GDP.

Amid paralysis and debate, Japan drifts steadily lower, its share of global output shrinking while its GDP is eclipsed by China — a nation with 10 times its population — which is now the world’s second largest economy.

The most troubling aspect of Japan’s malaise may be psychological. Resistant to immigration and with a rapidly aging population, Japan seems to have its lost its self-confidence along with its drive for economic leadership.

The once-popular dictum of Mike Mansfield, the respected former U.S. ambassador to Japan, “that the U.S. and Japan comprise the world’s most important bilateral relationship, bar none” now seems hopelessly quaint. So too does the title of the best seller from the early ‘80s, “Japan as Number One.”

Columnist Barry D. Wood, based in Washington, is the international economics correspondent for RTHK in Hong Kong.

100PipsADay,

Ah, that's much more efficient. Thank you.

I've decided to go with Trade Station for now, and setup is almost complete. With the next several days looking hectic on the personal front, I plan to lay low, watch the markets, and browse the forums. I look forward to contributing to this thread as soon as I'm all set up!

For now, I've enjoyed reading the articles you've posted on the first page - very interesting and indeed some important things to consider. Thanks for the subscription links, I'll be checking them out!

P.S to all:
It makes me happy to see that more people are posting their charts. As a newbie to this strategy and FOREX in general, thanks for sharing your thoughts!

Happy weekend,
Reigningpips

GBP/AUD - EUR/AUD - AUD/JPY - CAD/JPY - GBP/JPY - NZD/USD - EUR/CAD

**I trade other currency pairs every once in a while but I find that the above pairs work best with my trend strategy.


Typical SL & TP Parameters:
Stop Loss: 160
Take Profit: 320

Max Positions Per Currency Pair:
4-8 (depends on strength of trend)

OK, new Month closed above the weekly down trend so I am taking this is a solid buy signal.

Right now MACD is showing we are still in an uptrend on the D1 chart.

So what I am waiting for is a decent pullback so that Williams % indicator shows "over sold" on the H1 chart.

I will look to enter a buy position at that time. I'll post a chart with entry point, SL, and TP once Buy opportunity arrives. It will also show up on my Trade Explorer as I will try to copy trades exactly as I do in my live account give or take a few pips.

We'll see what next week brings us in regards to my other frequently traded currency pairs.

ReigningPips,

I'm glad that you are getting yourself setup! I will try to keep posting articles that I find interesting for other traders to read and hopefully benefit from as well.

Posting charts with your analysis always helps people to understand where you're coming from so I will do my best to always bring charts whenever I open positions.

Thanks for the reply and I hope you enjoy your weekend as well!

Regards,
100PipsADay

As stated throughout the thread I use:

MACD on D1 - I understand there are different MACD indicators so I've attached the particular indicator I use to this post.

Williams % on H1 - I use the standard Williams % which can be found on any MT4 platform.

Auto-Pivot Indicator - I don't use this as much for my trading strategy but find it useful to have plotted on all of my charts. It is also attached for anybody if interested.

Subscribed

Welcome to the thread Bogus!

Just placed a buy order for GBP/JPY.

MACD: D1 showing up trend on GBP/JPY

Williams %: H1 just hit "over sold" territory. I may look to scale in one more buy position if price moves a little lower.

Buy: 129.16

SL: 127.56 (160)
TP: 132.16 (300)

Just placed a buy order for AUD/JPY.

MACD: D1 showing up trend on AUD/JPY

Williams %: H1 just hit "over sold" territory.

Buy: 83.36

SL: 81.76 (160)
TP: 86.56 (300)

**I didn't take a screen shot fast enough, right after I opened the trade H1 shot up out of over sold territory so no chart for this trade...

Edit: I've gone ahead and posted a D1 chart showing MACD in uptrend. Also, I took a screen shot of H1 Williams % ALMOST in over sold territory. However, it wouldn't have given a much better entry price.