The Elder Triple Screen is one of the most respected multi-timeframe methods in trading: use a long-term chart to pick the direction, a shorter one to time the entry against a pullback, and only then pull the trigger. We coded a simplified version of Alexander Elder's system and ran it on daily Nasdaq-100 futures (NQ) from June 7, 2010 to April 16, 2026. It made money, just not much, and not in the way you might expect.
Alexander Elder and the Triple Screen
Dr. Alexander Elder, a psychiatrist turned trader, introduced the Triple Screen in a 1986 article in Futures magazine and laid it out in his 1993 book Trading for a Living. The logic:
- Screen 1, the tide: a trend indicator on a longer timeframe. Elder's classic choice is the slope of the weekly MACD histogram.
- Screen 2, the wave: an oscillator on the daily chart that finds pullbacks against the tide. The Force Index (price change times volume, smoothed with a 2-day EMA) is one of Elder's own tools for this.
- Screen 3, the ripple: an intraday or next-day entry technique, such as a buy stop above the prior day's high.
Our simplified Elder Triple Screen rules
To be clear up front: this is a simplified version, not Elder's complete method. We automated screens one and two and replaced his entry and exit craft with fixed rules.
- Tide (weekly MACD histogram): the MACD(12, 26, 9) histogram on weekly closes was rising in the last completed week versus the week before. No peeking at the current, unfinished week.
- Wave (2-day Force Index): the 2-day EMA of Force Index (close-to-close change × volume) is below zero, meaning a short-term pullback.
- Entry: when both are true, buy at the daily close. (Elder's third screen, a trailing buy stop, is not modeled.)
- Stop: 2 × the 20-day ATR below the entry price, checked against each day's low.
- Exit: the stop, or at the close after 5 trading days, whichever comes first.
- Long only. Costs: 1.0 NQ point per round trip.
All results are in NQ index points per 1 contract. A Micro E-mini Nasdaq-100 (MNQ) contract is worth $2 per point and a full NQ contract $20 per point, so MNQ dollars below are simply points × 2. Every trade has 1.0 point deducted per round trip to cover slippage and commission.
Elder Triple Screen backtest results
| Metric | Simplified Triple Screen (long) |
|---|---|
| Trades | 362 |
| Win rate | 57.7% |
| Avg trade (pts) | +11.25 |
| Total (pts) | +4,071.3 |
| Profit factor | 1.14 |
| Closed-trade drawdown (pts) | 5,654.3 |
| Avg win / avg loss (pts) | 157.54 / -188.6 |
| MNQ total ($, 1 contract) | $8,143 |
| Points 2010–2019 | +2,196.6 |
| Points 2020–2026 | +1,874.8 |
| Profit factor 2020–2026 | 1.08 |
Buy and hold NQ over the same period made 24,677.2 points.
A high win rate with a thin edge
The system traded 362 times and won 57.7% of them, a win rate that most trend followers would envy. But the average winner (157.54 points) was smaller than the average loser (-188.6). Net result: 4,071.3 points, a profit factor of 1.14 and an average trade of 11.25 points. On one MNQ contract, $8,143 over almost 16 years. The fixed 5-day exit is the likely reason: it cuts winners short while the 2-ATR stop lets losers run to full size.
The closed-trade drawdown of 5,654.3 points is larger than the system's entire net profit. That is not a ratio most traders could live with.
A note on drawdown: the figure we report is closed-trade drawdown, the worst peak-to-trough of the equity curve built only from finished trades. It ignores how far an open position sank before it was closed, so for a system that holds for weeks it understates the pain you would actually sit through.
Robustness: steady in the 2010s, choppy in the 2020s
Here's the surprise. Unlike most trend systems in this series, the Triple Screen was actually steadier before 2020. It made 2,196.6 points in 2010–2019, with only two small losing years (-28.0 in 2011 and -24.5 in 2018), when NQ prices and point swings were far smaller. In 2020–2026 it made 1,874.8 points with a profit factor of just 1.08, including back-to-back losses of -1,166.7 in 2021 and -1,131.8 in 2022, then a strong 2,537.3 in 2024. Relative to the size of the market, the edge clearly faded.
Our take: The concept of the Elder Triple Screen holds up: buying pullbacks while the weekly MACD histogram is rising produced a real, if thin, positive result for 16 years. But a mechanical version with a 5-day time exit leaves too much on the table and gives too much back. Elder himself never presented it as a push-button system; the third screen, trade management and money management are where he puts the emphasis. If you trade it, the exit is the part to work on. And if you want the weekly MACD idea on its own, our MACD settings test shows crossovers alone aren't enough.
For other pullback-based approaches on the same data, see the 9/20 EMA pullback and Connors RSI(2).
What this backtest does not model
- Elder's third screen (trailing buy stop entry), his Elder-ray and alternative oscillators, and his money-management rules.
- Roll gaps. The test runs on a continuous front-month NQ series, so quarterly contract rolls can create small artificial price jumps.
- Perfect fills. Signals are computed on the daily close and filled at that same close. In real life you need to act in the last minutes of the session or accept the next open.
- Overnight and weekend risk is in the price series, but position sizing, margin calls and psychological stamina through deep open drawdowns are not.
- No taxes or financing costs are modeled beyond the 1-point round-trip deduction.
This is a backtest on one instrument. Past results do not guarantee future results, and nothing here is financial advice.
Key takeaways
- A simplified Elder Triple Screen made 4,071.3 NQ points on 362 trades, PF 1.14.
- 57.7% win rate, but the average loss was bigger than the average win.
- Closed-trade drawdown (5,654.3 pts) exceeded total profit.
- It was steadier in 2010–2019; PF fell to 1.08 in 2020–2026.
- The 5-day time exit is the weakest link in this mechanical version.
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FAQ
Does the Elder Triple Screen work on Nasdaq futures?
A simplified version made 4,071.3 NQ points from 2010 to 2026 with a 1.14 profit factor. Positive, but a thin edge, and weaker after 2020 (PF 1.08).
What indicators does the Triple Screen use?
In our version, the weekly MACD(12,26,9) histogram slope for trend and the 2-day EMA of Force Index on the daily chart for pullbacks. Elder also discusses other oscillators such as Elder-ray and Stochastic.
Who created the Triple Screen trading system?
Dr. Alexander Elder. He introduced it in a 1986 Futures magazine article and described it in his 1993 book Trading for a Living.
Why did the backtest have a high win rate but low profit?
Because the fixed 5-day exit capped winners (avg 157.54 pts) while the 2-ATR stop let losers run to full size (avg 188.6 pts).
Loomi.Ai provides educational market research, not financial advice. Trading futures and options involves substantial risk of loss, and backtested results are historical and do not guarantee future returns.
Sources
- Loomi backtest: blog_strategy_tests.py + results JSON, Loomi research
- Trading for a Living: Psychology, Trading Tactics, Money Management, Google Books (Wiley)
- Alexander Elder Trading Strategies: The Triple Screen Strategy, QuantifiedStrategies.com