Alexander Elder on Trader Psychology, Stock Selection, and Technical Rules
Summary
In this interview, trader and psychiatrist Alexander Elder recounts how early profitable trades gave him a misleading sense that trading was easy. He describes learning to work with uncertainty, limit the markets and stocks he follows, and use explicit rules to control impulsive decisions. His stock selection combines a small watchlist with trade ideas from a group; he says he does not use automatic screening.
Elder explains several technical practices: applying a pulse system as a directional restriction, avoiding buys near the top of a price envelope and short sales near its bottom, and looking for MACD Histogram divergence across timeframes in search of entries. He often uses envelopes to guide exits, with trailing stops among the tools discussed. He emphasizes keeping a trade diary and records to slow decision-making and expose behavioral patterns. These are personal methods and opinions rather than a systematic evaluation: the interview supplies no controlled performance evidence, and the excerpt is incomplete.
Key ideas
- Early winning trades can create overconfidence about how easy trading is.
- Elder recommends limiting the number of markets and stocks a trader tries to follow.
- He uses indicators such as envelopes and MACD Histogram divergence within rules for entries, exits, and directional restrictions.
- A trade diary can help traders slow down and examine how fear, greed, and other habits shape decisions.
- The interview presents personal experience and methods, not independently tested performance evidence.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.