A Brief Introduction on Triple Screen Forex Trading System

Forex Trading Systems

Triple Screen forex trading system was created long back in the year 1985 by Dr. Alexander Elder. It combines both the features; on one hand it follows the trend following technique and on the other hand takes into consideration oscillator technique. Before proceeding further, let me give you a brief on both the techniques. Well, trend following indicators give the buy signals whereas oscillators give the signals of selling. Within the range of forex trading, oscillators are believed to be a better option. However, when a particular trend sets in the forex market, then oscillators sometimes give premature signals.

Triple screen trading system was developed with the sole aim of overcoming the shortcomings of simple averaging. This system enables an average forex trader to take full advantage of the oscillators and trend following indicators. This system helps a great deal in determining the degree of complexity of the forex market.

This trading system recognizes the problem of time frame and the problem lies in the fact that the trend following indicators gives different signals at different points of time. The signals can be conflicting at different time frames. There is a possibility that in the daily forex chart, it might reveal an upward trend whereas from the weekly perspective, it might be downward. Thus, the results can be deceptive at different time durations. It gets all the more difficult relying on the trend following indicators when it comes to studying the intraday charts.

In light of this problem, the total time frame has been divided into several units. Also, the monthly charts have been divided into smaller time frame charts such as bi monthly, weekly and daily. In the monthly charts, in totality there are 4.5 weeks of trading and in the weekly charts; there are 5 days of trading. Daily charts are further broken down into hourly charts. Further, hourly charts are divided into 10 minute charts and then further into 2 minute charts.

The basic idea to be emphasized is that Triple screen trading system considers at least 2 to 3 time frames for analyzing the market situation. From the point of view of reliability, this trading system is quite a good one. On the whole, it is a sound forex trading system.