The Elder system: Triple Screen, Elder-Ray and Force Index
Alexander Elder, a psychiatrist turned trader and author of "Trading for a Living", built a complete approach around three pillars — Mind, Method and Money (psychology, system and management) — and several of his own now little-used tools. Here are the main ones: the Triple Screen, the Elder-Ray, the Force Index and the Impulse System, with what they're really worth and their limits.
By the TradingCalculator.Pro team · Updated on · About us
Start your 7-day free trial →What you will learn
The 3 Ms: Mind, Method, Money
For Elder, winning depends on three equally important legs: the Mind (psychology and discipline so you don't self-sabotage), the Method (a system with an edge and clear rules) and the Money (risk and position-size management). His core message is that the technical system is only one of the three, and most lose by failing at the other two. His indicators serve the Method, but without the other Ms they aren't enough.
The Triple Screen
His most influential idea: analyse across three timeframes so you don't trade against the current. Screen 1: on the HIGH timeframe (e.g. weekly) you define the background trend with a moving average or the MACD. Screen 2: on the intermediate frame (daily) you wait for a pullback against that trend with an oscillator. Screen 3: on the low frame you enter when the pullback fades, with the higher trend. Trend above, timing below.
The Elder-Ray (Bull/Bear Power)
The Elder-Ray measures the strength of buyers and sellers by comparing each candle's extremes to an exponential average. Bull Power is the high minus the EMA (how much bulls push above the "consensus"); Bear Power is the low minus the EMA (how much bears sink it). Divergences between these forces and price warn of possible exhaustion. It's a simple X-ray of the market's pulse.
The Force Index
The Force Index combines into a single number the three things that define a move: DIRECTION (up or down), MAGNITUDE (how much) and VOLUME (with how much force). It's calculated as the price change multiplied by volume, usually smoothed with an average. Spikes and divergences of the Force Index help confirm real breaks (with volume) versus false ones (without it).
The Impulse System
The Impulse colours each bar according to two conditions at once: an EMA (trend) and the MACD histogram (momentum). Green: both rise → buying allowed (shorting forbidden). Red: both fall → selling allowed. Blue: they disagree → no clear permission. It's not an entry signal but a "censorship" system: it tells you what you may NOT do, letting you trade only with the inertia.
Limits (honesty)
The Elder system is classic, sensible and very educational, but it's from the 90s and its indicators have no magic edge: they're combinations of averages and momentum like so many others, and they lag. Its real value isn't in the Force Index or the Elder-Ray but in the mental framework (the 3 Ms) and the discipline of trading with the higher frame. Take it as a complete management method, not as infallible indicators.