How I Made $2,000,000 in the Stock Market
Forex Trading Pro System
How I Made $47,692.27 In A Single Day
The Subtle Trap of Trading
Learn How To Day Trade Stocks Online
The Psychology of Price Movement
Find us on Google+
Alexander Elder is the author of two bestselling trading books, He is also known for many trading tactics including the Triple Screen Trading and the Impulse System.
I have come across many recommendations of his books for beginning traders once and again. And I would personally recommend them as well.
Being a trader with a background in psychology, he gives unique insights into the world of trading in a concise and readable way.
Without further ado, let’s introduce the Impulse System by Alexander Elder. This system combines a relatively short EMA with the standard MACD to find market momentum. When the two indicators align, they show an impulse move.
Alexander Elder advised that we should use the Impulse System on a higher time-frame to enhance the trading setup.
TRADING RULES – IMPULSE SYSTEM
LONG TRADING SETUP
SHORT TRADING SETUP
IMPULSE SYSTEM EXAMPLE TRADES
WINNING TRADE – IMPULSE SYSTEM
I also coded a separate indicator for the background color to show the Impulse System on a higher time-frame. Our trading time-frame is 20-minute. Alexander Elder recommends a factor of five. So the background reflects the impulse on the 100-minute time-frame.
LOSING TRADE – IMPULSE SYSTEM
REVIEW – TRADING THE IMPULSE SYSTEM
Combining multiple time-frame analysis with the Impulse System produces a solid momentum trading strategy.
However, some trading platforms are not friendly to multiple time-frame analysis. In that case, you can pay attention to pullbacks that do not overlap with the EMA.
For instance, price bars are above the EMA and they start to retrace down. However, throughout the pullback, price bars stay above the EMA. It means that the bullish momentum is strong. Given that context, it is likely that the higher time-frame supports the bullish impulse.
To improve on this trading strategy, you can seek confirmation from support and resistance like our examples above.
If momentum trading is your cup of tea, you should also take a look at the 5-minute Forex “Momo” trading setup, which also uses EMA and MACD. It will be an interesting exercise to compare the two trading strategies, but that’s for another day.
By Galen Woods
U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Trading financial instruments of any kind including options, futures and securities have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options, futures and stock markets. Don't trade with money you can't afford to lose. This training website is neither a solicitation nor an offer to Buy/Sell options, futures or securities. No representation is being made that any information you receive will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. Please use common sense. This site and all contents are for educational and research purposes only. Please get the advice of a competent financial advisor before investing your money in any financial instrument.
Copyright © 2014 DayTradingCoach.com