Elder-Disk: Trading For A Living, Come Into My Trading Room, and Other Books, and Esoftrade, A Software
Elder-Disk: Trading For A Living, Come Into My Trading Room, and Other Books, and Esoftrade, A Software
for
MetaTrader 5
Thank you for purchasing this Elder-disk. It was developed by Dr. Alexander Elder, the author of
Trading for a Living, Come into My Trading Room, and other books, and eSoftrade, a software
engineering company, in order to apply Dr. Elder’s trading methods using MetaTrader 5
platform.
eSoftrade is a registered trademark of FVTools SAS. For more information, please visit
www.esoftrade.com.
To access the features of Elder-disk described here in your MetaTrader 5 platform, you must
have the password you received when purchasing this Elder-disk.
MetaQuotes provides help, documentation, videos and programming guides for their platform in
dedicated site at www.mql5.com. Please consult those help files for any problems using
MetaTrader 5 platform.
Our program, manual and CD are Copyright 2011 by Financial Trading Seminars Inc. and
FVTools SAS. Violators will be prosecuted.
INSTALLATION ................................................................................................................... 5
INDICATORS
Elder – AutoEnvelope............................................................................................................. 7
Elder – SafeZone Long Entries and Elder – SafeZone Short Entries .....................................26
SUPPORT ........................................................................................................................ 36
This Elder-disk is provided with its documentation in Portable Document Format (PDF) format
(this document) and in HTML format. It is also containing source code of all described
indicators.
This document is printer-friendly using captures of MetaTrader 5 screen with white background.
HTML version of the manual shows MetaTrader 5 screen captures with default colors.
Refer to next section to install indicators, libraries and documentation in your MetaTrader 5
environment.
Note: to find what version of MetaTrader you are running, start MetaTrader, go to Help menu
and select “About”.
Custom indicators, libraries and profiles will then be automatically installed in your MetaTrader 5
environment.
Indicators and libraries come in different versions: MQ5/MQH (source code in text format) and
EX5 (executable version).
Custom indicators, libraries and profiles are located in the following directories:
• Custom indicators are stored in the MQL5/Indicators/Elder-disk directory;
• Libraries are stored in the MQL5/Include/Elder-disk directory;
• Profiles are stored in the Profiles/Charts directory.
Each indicator come with a set of default values. You can reload them anytime by editing
indicator properties.
Parameters (defaults) – most indicators have parameters that can be changed. These are
marked by bullet points, listing their default values and giving brief descriptions. Parameter
values can be modified for each indicator using Indicator Properties panel (accessible via
contextual menu or via the Indicators list).
Format Tips: Many indicators contain multiple plots that must be formatted to provide correct
images. Some are simple and obvious, others quite complicated. This section tells you how we
have done it for our templates. You can easily modify the results by setting your own colors, line
widths, styles, etc. in the Custom Indicator window.
Each indicator is shown in a sample chart, so you can see how we intended it to look. The
charts are for illustration purposes only, and the stocks have been chosen at random. The
functions not referenced in this section of the manual are helper functions for other indicators
and/or screeners and are not intended to be used as indicators.
Note: some indicators use code libraries (DLL) during their execution. You must allow those
indicators to use DLLs by ticking the “Allow DLL imports” box in the indicator properties panel.
The AutoEnvelope is a custom indicator – an original tool that automatically selects channels
width by calculating a standard deviation for the last 100 bars. It is designed to use either a fixed
channel size or to change value at most once a week (once a month on a weekly chart), making
it suitable even for intra-day data (use the ‘Fixed_Channel_Size’ input parameter to switch from
one mode to the other).
The EMA is plotted in addition to the AutoEnvelope. This combination allows you to change the
EMA and have the envelope follow it without adjusting two separate indicators. If you do not
want to see the moving average, go into the indicator properties and change its color to None.
● Factor (27) – This is the number of standard deviations (expressed in the tenths) for
creating the channel. Statistically, 2.7 is the proper size to use, but that assumes a
standard distribution, which is not always present in the markets. We find that 27 works
for most stocks using daily data, but you may want to adjust this Factor to fit your trading
vehicle and style.
Format Tips: Auto Envelope has three plots – the central EMA and the upper and lower
channel lines. We use the same blue color for all, with a slightly thicker EMA in the center and
dashed lines for the channel lines.
● Factor (3) – This is the factor for multiplying the ATR when computing the Chandelier.
You may use fractions – this does not need to be an integer.
Format Tips: Chandelier Stops are plotted using discrete dots. Choose a moderate size, or the
dots will be hard to see. Use red dot for Chandelier Short and green for Chandelier Long.
One of the key rules in trading is never move your stops in such a way that your risk increases.
Our stop sequence shows the automatic tightening of stops. They appear as a series of
decreasing risk points until the trade is eventually stopped out. The problem is that if you enter a
trade at any other point than the initial dot of the sequence, you may be placing the stop too
close. Stop-entry plots show you the initial value for the stop for each bar. You can use them
when you put on a trade, and increase (or decrease) the value each day until you eventually hit
a stop.
● Factor (3) – This is the factor for multiplying the ATR when computing the Chandelier.
You may use fractions (i.e. 3.3 or 2.7, etc).
Format Tips: Chandelier Stop Entries are plotted as small dots that overlay the large dots for
the stop sequences. Note that the beginning dot of every stop sequence is always the same
value as an entry.
Elder-Ray is made of both Bull Power and Bear Power. As described into Come into my Trading
Room, it is tracking the relative power of bulls and bears by measuring how far the high and the
low of each bar get away from the average price.
Elder-ray is an indicator developed by Dr. Elder and named for its similarity to x-rays. It shows
the structure of bullish and bearish power below the surface of the markets. Elder-ray combines
a trendfollowing moving average with two oscillators to show when to enter and exit long or
short positions.
● EMA_Length (13) – This is the length of the Exponential Moving Average for both Power
lines.
Format Tips: Bull Power is represented using a green line, Bear Power is represented with a
red line.
● When both the EMA and MACD-Histogram are rising, the Impulse system colors the
bar green (no shorting permitted).
● When both the EMA and MACD-Histogram are falling, the Impulse system colors the bar
red (no buying permitted).
● When the EMA and MACD-Histogram are pointing in different directions, the Impulse
system colors the bar cyan (you may go long or short).
● MACD_Smoothing_Length (9) – The smoothing value for the MACD Signal line.
Format Tips: There are 3 plots – each is either 0 or 1 and only one appears at a time. Choose
medium size histogram style, color-coding its bars as appropriate: red for "No long allowed" ,
green for "No short allowed" and blue for "Both allowed".
• If one timeframe is in a buy mode and the other in a sell mode, the signal is “No Trade
Allowed”, a black bar.
• If both are neutral, then any trades are allowed, showing a cyan bar.
• When one is bullish while the other is either bullish or neutral, there is a green bar,
allowing traders to buy and prohibiting shorting.
• When one is bearish while the other is either bearish or neutral, a red bar signals that
shorts are permitted, while long trades are not allowed.
● MACD_Smoothing_Length (9) – The smoothing value for the MACD Signal line.
● TimeRatio (5) – The ratio between the two timeframes. For a system using daily for the
short and weekly for the long use 5. If you are trading 10-minute bars and using hourly
charts as long-term, use 6, etc.
Format Tips: There are 4 plots – each is either 0 or 1, and only one shows at any given time.
Choose medium size histogram style, color-coding its bars as appropriate: green for “No Short
allowed”, red for “No Long allowed”, blue for “Both allowed” and black for “None allowed”.
Default MACD indicator provided by MetaTrader 4 (third indicator in view above) is showing
MACD line as a histogram. However this is not the MACD Histogram. MACD Combo is showing
the MACD Histogram along with the MACD and Signal lines.
The MACD Combo overlays MACD lines on MACD Histogram. Putting both plots in the same
window enables you to change both with a single parameter change.
Use the same values as the MACD Combo which you want to anticipate. If you use the default
values for MACD Combo, then accept the values below.
● MACD_Short_Period (12)
● MACD_Long_Period (26)
Format Tips: MACD-Histogram XOver is shown as a symbol plot. Choose a medium weight
and a distinctive color. The timeframe is set at 5, showing a weekly histogram on a daily plot.
Note how the wide swings affect the Y scale of the chart and tend to compress the price plot.
● Spike_Alert_Factor (3) – If the Temperature exceeds its EMA by this factor, a visual
indication appears on the chart.
● Quiet_Alert_Count (6) – If the Temperature remains below its EMA for this number of
trading days, a visual indication appears on the chart.
Format Tips: The Temperature is plotted as a thick silver histogram, its average as a thin
dashed red line. The spikes are represented with a yellow star at the top of the bar. The quiet
zone is represented with dark blue bars.
In an uptrend, SafeZone defines noise as that portion of the current bar that extends below the
low of the previous bar, going against the prevailing trend. In a downtrend, SafeZone defines
noise as the portion of the current bar that extends above the high of the previous bar, against
the downtrend. It averages the noise level over a period of time and multiplies it by a trader-
selected factor. For long trades, SafeZone subtracts the average noise level, multiplied by a
factor, from the current low, and for short trades, it adds it to the latest high to compute the stop.
Stops are allowed to move only in the direction of the trade, always tightening. When a trade is
stopped out, this indicator reverses and starts a new sequence.
● Factor (2) – This is the factor by which we multiply the average level of noise computed
by SafeZone.
● Lookback_Period (99) – The number of days that the SafeZone looks back when
calculating an average market noise.
Format Tips: SafeZone Stops are best plotted using discrete dots. Choose a moderate size, or
the dots will be hard to see. We use red for SafeZone Short and green for SafeZone Long.
Format Tips: We plot the ROC as a blue line and its moving average as a red line. A single
horizontal line is also drawn at 1.
● A 13-week EMA in red and a 26-week EMA in blue. The shorter EMA is used to create
the weekly impulse. The longer EMA forms the basis of the AutoEnvelope indicator;
● The AutoEnvelope in blue to help define profit targets;
● The Impulse System;
● The MACD Combo with a double factor for the MACD Histogram;
● The Force Index EMA using a 13-week EMA.
MACD Combo
The MACD is a standard 12-26-9, using exponential averages. The MACD is also tied to the
weekly Impulse. We have added a histogram overlay in the MACD window. Its scale factor
is set to double the distance of the MACD lines, for better visibility. You can edit this by right
clicking the histogram and changing the Scale Factor.
● When both the EMA and MACD-Histogram are rising, the Impulse system
colors the bar green. Long positions are allowed.
● When both the EMA and MACD-Histogram are falling, the Impulse system colors
the bar red. Short positions are allowed.
● When the EMA and MACD-Histogram are pointing in different directions, the
Impulse system colors the bar cyan. You can go either long or short.
AutoEnvelope
AutoEnvelope is described below in the daily section. The 26-bar EMA is the centerline of
this plot. If you don’t want to see the Envelope, either set the top and bottom line color to
‘None’ or delete it entirely and replace it with a moving average.
AutoEnvelope
The AutoEnvelope feature helps you identify profit targets.
In an uptrend, set you target near the upper channel line. In a downtrend, set you profit
target near the lower channel line. In relatively flat trading ranges, you can use both channel
lines: buy near lower channel line and sell near upper channel line. You can also reverse:
short near upper channel line and cover near lower channel line.
• If one timeframe is in a buy mode and the other in a sell mode, the signal is “No Trades
Allowed”, a black bar.
• If both are neutral, then any trades are allowed, showing a cyan bar.
• When one is bullish while the other is either bullish or neutral, there is a green bar,
allowing you to buy and prohibiting shorting.
• When one is bearish while the other is either bearish or neutral, a red bar signals that
shorts are permitted, while long trades are not allowed.
Spikes are highlighted by yellow bars. Spikes are truncated at 6 times the Thermometer
EMA to prevent chart to be compressed because of a single extra-large day.
Quiet periods are highlighted with dark blue bars throughout the quiet period.
For information on other software, videos and books for traders, as well as Traders’ Camps,
please contact:
Tel. 718.507.1033
[email protected]
www.elder.com
eSoftrade
130 boulevard Haussmann
75008 Paris
FRANCE
[email protected]
www.esoftrade.com
eSoftrade experts are also available for private consulting and custom programming – please
inquire directly if interested.