Elder Impulse System Indicator | Forex Blog Fx Blogger :: Forex Blog for Traders
Alexander Elder sometimes comes across very interesting ideas and tools built on their basis. Of course, they cannot be called ideal, but still they deserve to be considered. From previous reviews you are already familiar with the trading system for three timeframes (Elder’s Three Screens), in this review you will get acquainted with the Elder Impulse System indicator and the strategy based on it.
Elder Impulse System: essence, formula, indicator settings
Elder Impulse System is an impulse indicator based on a relatively fast exponential moving average with a period of “13” and MACD (oscillator parameters – EMA (12) and EMA (26)). The indicator makes a qualitative comparison of these two basic indicators, giving the result in the form of a histogram. EMA (13) identifies a trend, the MACD histogram evaluates its momentum. The result is a system that allows you to track the acceleration / deceleration of the trend and assess its momentum.
The Elder Impulse System bollards are available in three colors: in the basic version, green, blue and red.
- Green bar:
- EMA (13) (i) is greater than EMA (13) (i-1);
- MACD (i) is less than MACD (i-1).
If for the current candle i these conditions are met simultaneously, the color of the column is green. This is a signal of a growing trend.
- Red column:
- EMA (13) (i) is less than EMA (13) (i-1);
- MACD (i) is greater than MACD (i-1).
- Blue column… There is no simultaneous fulfillment of these two conditions, which is interpreted as uncertainty.
One of the strategies is to compare the data of two adjacent timeframes. Since short intervals are excluded, you can take M30 as a base and H1 as an additional one. Or H1 and H4. First, we look for a trend in the older interval, then in the same area we look for it in the younger one. For example, on the H4 chart, the candlestick changes color at 12:00 – a green column appears. Go to the H1 interval and look at the behavior of the chart on 4 candles until 12:00 and after. If we see a clear trend (1-2 green columns), open a deal. This is the general essence, the moments of the Elder Impulse System color change on a lower timeframe are analyzed separately for each pair.
The second option is adding MA (50) on the hourly interval. If at the moment of the appearance of the green column, the signal candlestick is above the MA, open a deal on the next candlestick. For short trades, it is mirrored the same, but only with red columns.
Patterns are clearly visible on the screen. A few points:
- The stops are required. For example, on the second signal, the downtrend nevertheless reversed temporarily upward. Ultimately, though, the deal was very successful.
- The signal is exclusively the moment of the Elder Impulse System color change. If the candlestick closes behind the MA later, when the color has already changed, we ignore the signal.
- There are false signals. For example, on the screen it is the moment before the second signal (the second single green column between two blue columns). Here one should take into account the fact that this signal would be a continuation of the first, that is, delayed. However, the profit from other trades would cover the loss.
We emphasize again: this strategy is just the basis for creating an individual trading system. You can’t just follow a rigid algorithm. Taking the principle of searching for signals as a basis, you should see the patterns for each pair, for each timeframe, run the strategy through the tester and only then experiment on a demo account.
And in conclusion, we would like to remind you: you need an Elder Impulse System indicator template for MT4, write in the comments. We will send it to your email for free!