Alexander Elder Impulse System
by Trader Rich
I've been reading Alexander Elder's popular book, "Come Into My Trading Room" and at the bookstore started to read his newest book titled, "Entries & Exits." He mentions the Impulse System a lot and most of the traders he interviewed for his latest book use it. It's great for momentum trading which is what I've been studying with Rob Booker. Yes this is yet another indicator but it really just incorporates what I already have on the screen, EMA's and MACD histogram. One measures inertia, the other momentum. What it does is quite simple.
When both the EMA and the MACD histogram point in the same direction, they recognize an impulse worth following.
For example, if the 13 EMA is rising (current bar is greater than last bar) and the MACD histogram is rising (current bar is greater than last bar), this is a signal to stick to long trades if you are trading. The opposite is true for short trades.
The impulse indicator that is sold everywhere colors the price bars green if the impulse is long, red if the impulse is short, and blue if there is no impulse (which means you could go long or short.) One method of using this is to use 2 time frames for confirmation. So if you are trading the 15 minute, if the impulse system is showing long trades, multiply your time frame by 5 and check that chart to see if the impulse system is also showing long. In this case, you would be using the 15 minute and 75 minute charts.
As I said, this is sold everywhere but to be honest is really one of the most simple of indicators to program. I did it in about 30 minutes. If you've read some of Elder's books, you may be interested in it. If not, read about it because Elder has a lot of great content plus he has some sort of big degree in Psychology.
Here is the indicator for esignal. If you are truly interested and use other charting software than esignal, let me know and I may be able to help.
Right click and save to your esignal Formulas folder.