Elder Impulse System

The Elder Impulse System is Dr. Alexander Elder's momentum strategy for trending markets on daily bars. It takes a position only when trend and momentum agree — the 13-period EMA is rising and the MACD histogram is rising, both measured against their own values one bar earlier — and exits the moment the trend alone turns down. In Elder's original presentation the two conditions colour each bar (green when both rise, red when both fall, blue otherwise); expressed as a trading rule it becomes "be long only on green".

It is a medium, trending, daily strategy for swing trading.

How it trades

The two ingredients deliberately measure different things, and the entry requires both:

Buy (trend and momentum both rising):

EMA(13) > EMA(13)[1] AND MACDHIST(12,26,9) > MACDHIST(12,26,9)[1]

Sell (indicator exit — trend alone turns down):

EMA(13) < EMA(13)[1]

The asymmetry is the design: entry demands agreement from both, exit needs only the trend to fail. That makes the system quick to step aside — a rising EMA with decelerating momentum stops being a buy signal but does not force an exit, while a falling EMA exits regardless of what momentum is doing.

When it works best

Best on names that advance in sustained, accelerating legs — growth and momentum mid/large-caps — where trend and momentum stay aligned for long enough to make the double condition worth waiting for. Its stated weakness is that it can lag: both ingredients are smoothed (a 13-period EMA and a MACD histogram built from 12/26/9 EMAs), so entries come after the turn is established and exits after the top. In choppy markets the EMA flips direction on small moves, producing frequent short round-trips — a longer EMA, or requiring the impulse to persist for two consecutive bars, are the natural hardenings.