📘 Three-Bar Strategy by Alexander Elder – Full Overview (Part 4)

Advanced Entry Techniques, Psychological Filters & Market Conditions

In this fourth and final article on Elder’s Three-Bar Strategy, we will explore advanced applications of the setup, psychological reinforcement filters, and how to apply the method under different market conditions. This stage separates the casual user from the strategic trader.

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✅ 1. Advanced Entry Techniques

While the basic Three-Bar setup relies on identifying a specific candle pattern (bar 1 high, bar 2 inside, bar 3 breakout), advanced traders can refine their entries:

Entry on Confirmation + Momentum: Wait not only for the break of bar 1’s high/low but also for increased volume or rising MACD histogram to confirm strength.

Multi-timeframe Entry: Spot the setup on the higher timeframe (e.g., 1H), but enter on the confirmation from the lower timeframe (e.g., 15min) for better risk control.

Risk Compression Entry: Place stop-loss tight below bar 2 or even bar 3 to reduce R-risk and maximize reward.

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🧠 2. Psychological Filters by Elder

Alexander Elder emphasizes psychology in all his strategies. To avoid overtrading and false signals, apply these mental filters:

Check Your Emotional State: Avoid trades if feeling FOMO, anger, or revenge.

Three Trades Max Rule: If you’ve had 3 losses in a row, stop trading that day. Discipline beats revenge.

Keep a Trading Journal: Before entering the trade, write down why you’re entering. It adds accountability.

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🌍 3. Adapting to Market Conditions

The Three-Bar Setup works best in trending conditions. Here’s how to adapt:

Market Type Strategy Adaptation

Strong Trend Use aggressively with trailing stop after bar 3.

Range-Bound Filter out with ADX < 20 or MACD flattening.

News-Driven Avoid entry near major economic events.

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🔄 4. Common Mistakes to Avoid

Entering on bar 2: Never jump early; wait for bar 3 confirmation.

Ignoring volume: If volume is low, the breakout may be fake.

Overloading positions: Stick to your risk % rules—no “all in” trades.

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🛠️ 5. Elder’s Checklist Before Entry

1. ✅ Is there a valid 3-bar pattern?

2. ✅ Is the breakout accompanied by momentum?

3. ✅ Are you in sync with the broader trend?

4. ✅ Are you emotionally stable?

5. ✅ Is risk within allowed limits?

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🔍 This is insight, not financial advice. Always think, plan, and decide with your brain, not your emotions.$NXPC $C $BTC #TrumpBitcoinEmpire