Born 1950 · Stocks and futures · Psychiatrist and trader
Alexander Elder's Trading Method and Rules
Mind, method and money: a psychiatrist's complete framework, with Triple Screen entries and strict risk rules.
Who they were
Alexander Elder is a psychiatrist who became a professional trader and educator. His book "Trading for a Living" (1993) is one of the best-selling trading books and covers psychology, technical analysis and money management.
He introduced the Triple Screen system in the mid-1980s and created indicators such as the Elder-ray and the Force Index.
Principles and rules
1. The three Ms
Successful trading rests on Mind (psychology), Method (a system for finding trades) and Money (risk management). Weakness in any one ruins the other two.
2. Triple Screen
Use a long timeframe for the trend, an intermediate one for pullbacks and a short one for entries.
3. The 2% rule
Never risk more than 2% of the account on a single trade.
4. The 6% rule
If the account falls 6% in a month, stop opening trades until the next month.
5. Keep a diary
Record every trade with charts and reasons, and grade your entries and exits.
Key lessons
- Psychology is a skill you can train, not a personality trait.
- Monthly drawdown limits protect you from tilt.
- Grade your own trades honestly.
Strategies from this method
How to practise it
The Triple Screen strategy page has the rules. Candlemind's score already grades each entry and exit; use the profile statistics as your diary and stop for the day after a 6% simulated drawdown.
Frequently asked questions
What are Elder's three Ms?
Mind, Method and Money: psychology, a trading system and risk management.
What is the 6% rule?
Stop trading for the rest of the month when your account has lost 6% since the start of the month.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.