Who is Dr. Elder and how can a doctor help you in your trading operations.
Even if you have a lot of knowledge and experience, for the trader “the moment of truth” is when you are in front of the screen about to execute your trading operations of the day, and here is elder to help us.
We know that the market behaves spasmodically, with movements that are hard to keep up with in terms of duration and direction. These movements are capable of overthrowing the plan you have made and they are literally out of your control, so many authors have broken their heads inventing strategies and ways to “predict”, estimate or better said, advise or accompany the trader to make fewer mistakes, lose less and not fail.
MOMENTUM TRADING, what is it?
On the great ideas are trend systems, but trusting in incorrect signals can be a death sentence for your capital.
Momentum trading is something that exist on trading.
This type of trading identifies the price as a pendulum: It swings back and forth, braking hard and accelerating hard at the extremes of the swing and reaching full speed halfway through before swinging back again, but then again, what does Dr. Elder have to do with it?
Who is Dr. Elder?
Dr. Alexander Elder, writer of “My Favorite Stock Market Book”; “Living from Trading” and others, characterizes two aspects of the price at every moment: its trend and its momentum.
- Trend is its direction In which direction is the price moving?
- Momentum is the thrust with which you move forward How much would it cost you to change course?
Elder’s idea is that, noting that it’s in one’s interest to enter the market in the direction of the trend when it is gaining speed, he created a system that, with an indicator, signals these changes in direction+speed.
What is the Elder Impulse System for?
The Impulse System indicator recommends buying when the price rises and gains strength on the way up; it recommends shorting when the price falls and gains strength on the way down.
Its most powerful use is as a failure inhibitor. And this applies in any type or market situation.
We explain below:
The important thing about the Impulse System isn’t that it recommends you to buy, but rather, it is that when it recommends you to buy, it is also prohibiting you from going short. The same happens when it recommends you to go short; it’s forbidding you to buy at the worst possible moment;
Tell me if this is not a great help in order not to fail in your trading operations!
What is the Impulse System?
The Impulse System is a very fast indicator. It doesn’t need to detect obvious trends at a glance to give an entry signal, but it is an agile indicator, which calculates candle by candle whether it is allowed or not to enter the market by buying or selling.
This indicator is not used alone (like no other), but you combine it with the rest of your system. What you do in practice is, when you locate a chart that you like and that is in a situation that seems convenient to enter, first, you wait for the Impulse System to remove its prohibition to enter (if it is showing it) and, if you want double security, you also wait for the indicator to recommend you to enter in that direction.
We recommend you to read: Trading from zero
One of the main benefits of this fantastic indicator is that, if you wait for its recommendations to enter, it prevents you from entering the market in sideways stretches.
How to read this indicator?
Although Dr. Elder designed the graphical presentation a little differently, as he colors the bars directly, he does not use Japanese candles.
The interpretation is very simple:
- If it is green, it not only recommends buying, but also prohibits shorting.
- If it is red, it not only recommends selling short, but also prohibits buying.
- If there is no bar (only blue horizontal line), then it neither recommends nor forbids you to do anything.
What is the Impulse System based on?
The indicator is constructed from the MACD histogram (a much brighter indicator than it may seem at first glance) and a simple moving average.
It represents through its slope whether the current trend is gaining or losing steam.
Una media móvil sobre el precio (por defecto, una EMA13) es el señalizador de tendencia.
Thus, when both indicators have a positive slope, the Impulse System prohibits selling (and recommends buying). When one goes up, but the other goes down, the Impulse System neither recommends nor forbids anything. When both go down, it warns you that, if you buy, you will be doing so at the worst possible moment.
How can I get this indicator?
In NeuronalTrader for a week we were explaining, implementing and trading live using this indicator to generate income, if you want to see it subscribe to the YouTube channel and be part of the Neurotraders community, because we have it available as one more of the many tools in BinaryTools and Trader Studio. Come and once and for all give value to your assets!
Important: The information and/or knowledge expressed in this article shouldn’t be taken as investment recommendations or financial advice. All investments and/or actions involve a risk and each person is responsible for researching, educating and analyzing before making an investment decision.
