Third Screen Strategy - Dr. Alexander Elder

Quick reminder about the NFP data being released later today. This will have a direct effect on USD/JPY, in fact, USD/JPY is the best pair to trade for this event.

I NEVER trade the "news" but just letting you all know that we will see some sort of impact later today.

NFP: USD/JPY

Better Than Expected: BUY
Worse Than Expected: SELL


NFP: EUR/USD

Better Than Expected: SELL
Worse Than Expected: BUY

With that being said, we actually had bad numbers earlier this week with the ADP NFP release so I am expecting to see similar results later on. So don't open all of your USD/JPY LONG positions yet. Wait for a potential sell off which will be short lived.

As for the cross pairs, they don't tend to have that much of a reaction but if we see a quick sell off I will definitely look to add more LONGS!

I would like to share some more results with the group here using the Third Screen Strategy.

EUR/USD Trade Results Since November 2011

Total Trades: 58

Total Pips: 6,237

Win Rate: 68.97%

Profit Factor: 3.52

Max Positions: 4

Max Draw Down in Pips: 1,032

*Note: I moved to a 200 Pip SL and 320 Pip TP with the EUR/USD

EUR/CAD Trade Results Since September 2011

Total Trades: 58

Total Pips: 11,609

Win Rate: 72.97%

Profit Factor: 4.23

Max Positions: 8

Max Draw Down In Pips: 1,049

SL: 260

TP: 320

AUD/NZD Trade Results Since August 2011

Total Trades: 48

Total Pips: 7,020

Win Rate: 70.83%

Profit Factor: 3.19

Max Positions: 8

Max Draw Down In Pips: 1,305

SL: 260

TP: 320

NZD/USD Trade Results Since August 2011

Total Trades: 104

Total Pips: 9,250

Win Rate: 60.58%

Profit Factor: 2.66

Max Positions: 8

Max Draw Down In Pips: 1,192

SL: 260

TP: 320

AUD/USD Trade Results Since March 2012

Total Trades: 26

Total Pips: 4,997

Win Rate: 76.92%

Profit Factor: 4.71

Max Positions: 8

Max Draw Down In Pips: 1,345

SL: 260

TP: 320

NOTE: AUD/USD roll over is horrible when you are trying to sell!

EUR/AUD Trade Results Since September 2011

Total Trades: 71

Total Pips: 12,222

Win Rate: 74.65%

Profit Factor: 4.26

Max Positions: 8

Max Draw Down In Pips: 2,133

SL: 260

TP: 320

GBP/AUD Trade Results Since September 2011

Total Trades: 113

Total Pips: 16,117

Win Rate: 72.57%

Profit Factor: 3.62

Max Positions: 8

Max Draw Down In Pips: 2,127

SL: 260

TP: 320


GBP/AUD takes the cake in terms of Total Pips with a grand total of 16,117!!!!

GBP/USD Trade Results Since August 2011

Total Trades: 158

Total Pips: 8,993

Win Rate: 57.59%

Profit Factor: 1.85

Max Positions: 8

Max Draw Down In Pips: 2,872

SL: 260

TP: 320

GBP/USD Trade Results Since August 2011 Continued...

As you can see, GBP/USD is a tougher pair to trade due to the volatility. It has a lower Win % as well as higher Maximum Draw Down. Still, pips are pips the system has done great in my opinion.

CAD/JPY Trade Results Since March 2012

Total Trades: 25

Total Pips: 5,033

Win Rate: 80%

Profit Factor: 5.41

Max Positions: 8

Max Draw Down In Pips: 1,053

SL: 260

TP: 320


This particular strategy also has 5 open positions (last chart) that are all in profit right now! If all TP targets are hit there is another 1,600 pips to add to the statistics

9 Pairs Since August 2011 utilizing this strategy has gained 81,478 Pips!

All confirmed and verified!

Great results ever seen .. . . ..

Folks, I wanted to share these results with you so that you know it is possible to be successful utilizing this strategy if you stick to the plan. Also, please note that most of these pairs are using a 260 SL and a 320 TP. They all used a total of 8 Max Positions at any given time.

I have been teaching 4 Max Positions with 160 SL and 280 TP but I actually prefer the 260 SL and 320 TP.

It helps me to stay in a trade even if we get unexpected moves against us for a short period of time. Obviously a larger SL and more positions could be a little more riskier, but it can also be more profitable!

I will say though that I do prefer 160 SL and 280 TP for most of the JPY cross pairs such as USD/JPY, AUD/JPY, NZD/JPY, and CAD/JPY.

If your balance and your risk tolerance allows you to use the higher SL and TP parameters then go for it, however, the choice is ultimately up to you.

Let us sort out 9 best pair to trade .. .

Thanks Khaled! I added one more pairs' statistics so the total is actually 81,478 pips... LOL

Just wanted to share with everybody here that this strategy works with different pairs but I still have my favorites!

Definitely not GBP/USD! LOL

I would have to say in order from BEST to WORST it would have to be:

1) EUR/AUD
2) AUD/JPY
3) GBP/AUD
4) EUR/CAD
5) CAD/JPY
6) NZD/JPY
7) EUR/JPY
8) EUR/USD
9) AUD/NZD
10) NZD/USD
11) AUD/USD
12) GBP/USD

Each pair has its own pros and cons but this is my order of preference from favorite (top) to least favorite (bottom) pairs to trade. Obviously there are worse pairs but I don't trade them so they are not listed.

I wanted to talk a little bit about "Profit Factor" and what it means. Profit factor is simply the profit generated by profitable trades divided by the losses generated by losing trades. The greater the number the better or ‘less risk’ your trading system has.

A profit factor lower than 1 means the system is not good, a.k.a it loses money. A profit factor of 1 means your system has no particular edge: it loses the same amount of dollars it wins. I would say a profit factor north of 2 is probably a good number that implies (over long periods of time, and statistically enough data) a possible real edge.

Take a look at the Profit Factors from the above statistics:

EUR/USD: 3.52
EUR/CAD: 4.23
AUD/NZD: 3.19
NZD/USD: 2.66
AUD/USD: 4.71
EUR/AUD: 4.26
GBP/AUD: 3.62
GBP/USD: 1.85
CAD/JPY: 5.41
AUD/JPY: 3.12

On average we stand to lose $1 for every $3 we gain! That is an excellent ratio especially when you take our average Win Rate % into consideration as well which is anywhere from 60% - 75% on average!

This guy says: A Profit Factor above 2 is outstanding. Obviously, the larger the number is, the better. For example: a Profit Factor of 3 means your net gains were 3 times greater than your net losses, and anything above 3 is unheard of.

AUD/JPY Trade Results Since August 2011

Total Trades: 139

Total Pips: 15,396

Win Rate: 64.75%

Profit Factor: 3.12

Max Positions: 4

Max Draw Down In Pips: 1,286

SL: 160

TP: 280