Way back in 1985, Dr. Alex Elder came up with the idea of the triple screen trading system which was designed to give a comprehensive picture of the market forces using 3 screens. The first looks at the the slopes of a Histogram. When sloped down, it’s a buyer’s market. When sloped up, it’s time to sell. Any change is recorded. Screen number 2 is used to calculate factors working against a current trend, such as marketplace weather, so to speak. Any trader knows that there are many factors which can effect the market, so this screen registers many of them and puts them into a readable format. Trends are shown by oscillators- which provide buying and selling signals. These are otherwise known as force index, or Ray/Elder indices. A less common version is call the Stochastic or Williams percent(R) oscillators.
Screen three is what is referred to as the action screen where buying and selling can take place. This is often done automatically based on factors calculated on the above mentioned screens and sis sometimes called the stop technique. The technical term for this is “a weekly decline in the oscillation and the weekly trend is up. The stop occurs until prices decline, and then a purchase is made.
It’s clear why this system became (and still is) so popular. Although it takes practice and know how to use the software correctly, it does allow for someone with a relatively small understanding of how the market works to grasp and use it to make money.