Trading Like Alexander Elder

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Alexander Elder is a Russian-American professional trader. He is the author of dozen books, including "Trading for a Living".. First published in 1993, this international best-seller considered a modern classic among traders. 

Alexander Elder

Life of Alexander Elder
Elder was born in Leningrad and grew up in Estonia. At the age of 16 he entered the medical school of Tartu University. At 23, while working as a ship's doctor, he jumped a Soviet ship in Africa and received political asylum in the United States. He worked as a psychiatrist in New York City and taught at Columbia University. His experience as a psychiatrist provided him with unique insight into the psychology of trading. 

He founded two firms: Elder (an educational company for traders) and SpikeTrade (an online group whose members compete for the best trades of the week). 

 

Alexander Elder's Trading Strategy
Elder trades actively on two markets — on the American stock market, and on the futures market. Very rarely, maybe once or twice a year, he trades options. Elder uses Technical Analysis to trade the market. To enter the market, Elder uses MACD Histogram, searching for  divergence of MACD Histogram and prices. He analyze in two timeframes – long and short. For example, a weekly and a daily. To exit the market,  he often use Envelope indicator and close a position as soon as the price reaches the Envelope bands.

Because of his medical background, Elder considers financial markets are like manic-depressive patients. Sell when they have euphoria, and buy when they have depression. He uses Envelope indicator to help determining where these levels of depression and euphoria are. With this strategy, Elder can benefit from the madness of the crowd.

 

Alexander Elder's Books

  • The New Sell and Sell Short: How to Take Profits, Cutting Losses, and Benefit from Price Declines (2011)
  • Entries & Exits: Visits to Sixteen Trading Rooms (2006)
  • Straying From The Flock - Travels in New Zealand (2005)
  • Come into My Trading Room A Complete Guide to Trading (2002)
  • Rubles to Dollars: Making Money on Russia's Exploding Financial Frontier (1999)
  • Trading for a Living: Psychology, Trading Tactics, Money Management (1993)

 

What can we learn from Alexander Elder?
To become a successful trader, Alexander Elder emphasizes on three trading components. He says: "To win in the markets, we need to master three essential components of trading: sound psychology, a logical trading system, and an effective risk management plan." These three components usually 3M (Mind, Method and Money). Master all these three components to make profit from the market.

 
References:
Interview with Dr. Alexander Elder: "I want to be a psychiatrist in the market"

Wikipedia : Alexander Elder 

Hope this article inspires

written by
Desmond Wira
http://www.bigwinforex.com