NOTES WHEN USING IMPULSE SYSTEM 

Impulse means to push, that is, push system, the idea is to find a force from the market to rely upon. Thrust will be shown through the MACD patterns.

More specifically, this system is a combination of EMA (acting as trend indicator) and MACD (acting as a determination of the momentum of that trend). When these two indicators are reinforcing the same trend, then it gives a "push" signal to enter the command.

Dr. Elder advises us to use this system for a high time frame, the higher the better.

IMPULSE SYSTEM

The best of this system is that the author has grouped the Buy / Sell rules into a specific color so that the trader doesn't get confused and can make a decision.

Buy Rules

  • The 13-period EMA is sloping up indicating the uptrend
  • Histogram MACD increases

Now if these two conditions are met, the candle will be green.

Sell Rules

  • The 13-period EMA is sloping down indicating the downtrend.
  • Histogram MACD decreases.

Now if these two conditions are met, the candle will be red.

If the current price doesn't meet these two rules, the candlestick will be green i.e. we don't Buy / Sell at all.

EXAMPLE IMPULSE SYSTEM

Here, these candles have been shaded blue, green, and red. Each color will have its own mission.

  • The green candle is a bullish candle (because the EMA is up, the MACD is also up), giving a BUY signal.
  • The red candle is a bearish candle (because the EMA is down, the MACD is also down), giving a SELL signal.
  • The blue candle also implies that the EMA and MACD are in the opposite direction, the price's movement is not clear at the moment, so don't enter the command.

One question is that maybe just green is BUY, red is SELL?

Not such a machine, you have to look at the overall trend. As in the example above, the trend is increasing, then we will prioritize BUY, ie BUY in green candles.

For BUY order is optimal we must know to choose the best BUY time which the system does not say. Specifically, we will wait for all the red candle and a green candle appears, which is the best signal for a BUY command.

That is to say, without such a chalice system, that is, it only provides information for us, the rest is that we must be selective and flexible.

IF THE IMPULSE SYSTEM DOESN'T WORK

Here they can not buy, sell, or sell.

First, there is a 3-peak pattern that gives a very strong Sell signal. But when the price moves to the neckline, the candlestick turns blue, showing the EMA and MACD disagree, the downside force has weakened, maybe this pattern doesn't work anymore.

If we enter the order at the red candle, the stop loss will be hit.

HOW DOES IT GET RED BLUE?

Currently, MT4 does not have an indicator that directly displays the color of such candles, but there is an indicator showing the color below like this:


As for MT5, we have a more complete indicator:


With tradingview also has its own code:


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