Alexander Elder: the three M of Mind, Method and Money
Alexander Elder, a psychiatrist and trader, is one of the most influential authors on trading psychology. His framework of three M makes clear why a good strategy alone is not enough: success only emerges when mind, method and risk come together.
Who Alexander Elder is
Alexander Elder is a trader trained as a psychiatrist and the author of the classic Trading for a Living. His medical perspective shapes the way he sees trading: he treats the psychology of the trader as the central theme rather than a footnote, which makes him one of the most important voices in the field.
The three M: Mind, Method, Money
Elder's best-known framework is the three M: Mind (the psychology), Method (the strategy) and Money (the money management). A trader rarely fails because of just one of them, but because one is missing. Only when all three come together does a good idea become a workable approach.
Trading is not a fight against the market
Elder compares undisciplined trading to a pattern of addiction: the real opponent is not the market but one's own lack of self-control. Once you accept that, you stop searching for the perfect indicator and start working on your discipline and your behaviour.
Keeping records
Elder places great value on careful records. For him a trading journal is not bureaucracy but a tool for self-discipline and learning. Whoever documents their trades and their state of mind can see their patterns and change them, instead of repeating them again and again.
What traders learn from him
Elder's three M are practically identical with what FlowTrader works on: psychology, method and money management together, with the journal as a discipline tool. The Discipline Score makes the mind and money side measurable, the side many traders neglect because they only refine the method.
Common questions about Alexander Elder
Alexander Elder is a trader trained as a psychiatrist and the author of Trading for a Living, one of the best-known books on trading psychology. He is known above all for his framework of the three M and for taking the mental side of trading seriously.
Elder's three M are Mind, Method and Money: the psychology of the trader, the trading method and the money management. His core message is that all three have to come together. A good strategy is of little use if psychology or risk control are missing.
Because for Elder it is a tool for self-discipline and learning. Careful records of trades and your own state of mind make patterns visible that would otherwise go unnoticed. Only once you know your patterns can you change them, instead of making the same mistakes over and over again.