Trade Setup for Impulsive Markets

The most profitable markets are those with Impulsive Movements.

A Market leaves the Trend mode and switches to Impulse Mode when there are no more pullbacks big enough to get into the trade, and when it finally happens the move is finished leaving just a small winner or even a loser.

On volatile markets, the switch from sideways to Impulse is so fast that we dont even get an entry on the first trending pullback. This is why it is so important to define when the Impulse Mode is starting so we can use an early entry.

The most volatile markets are crude oil, gold, silver, nat gas ( CL, GC, SI, NG ).

Cash Index Markets like S&P ( ES ) are mostly on sideways or trending mode. Some of these trend moves may sometimes change to Impulse Mode, allowing to the trend entries increase their profits.

We have several ways combining classic Indicators, to define when the market is Impulsing.

The most used ways to trigger an Impulse Signal are :

1)      A Fast Moving Average crossing outside a Slow Band

2)      A Fast Band crossing all outside a Slow Band ( similar to previous method but with an extra security margin)

In the following Charts we can see both Methods ; ( The vertical Red Line shows where the Impulse Mode Starts on each example )

     

 The Band can be a Bollinger Band, a Keltner Channel or a Fixed Envelope ( like on the examples shown )

We have to take into account that if we use Range Charts, all Bars will have same height, so volatility ( and ATR ) will be constant, turning Keltner Channels into Fixed Envelopes.

Now we have different ways to define the Impulse Mode Signals, now we just need to define the entry.

In a trend system, we use the slow EMA ( like on the PM_EMA setup ), but on Impulsive Moves, the Markets never come back to the EMA.

The entry can be defined again using an envelope ( Bollinger, Keltner, Fixed ) of lower size than the signal envelope ;

An entry for example 1 can be the lower slow band ( green) 

An entry for example 2 can be a 50% of upper fast band ( blue )

As shown, using EMAs and Envelopes to define signals and entries, we can get a big number of different setups. We just need to find the best combination for each Instrument.

Having all these rules automated is a big Help that let us backtest, optimize and even trade any configuration. We at The Indicator Store have a Strategy Pack called PM_Impulse, that contains several individual strategies following different combinations of the explained setups.

If you like this article please leave your comments and share with your firneds

Regards,

Pablo Maglio
www.TheIndicatorStore.com

Impulse Mode Setup

Impulse Mode

As we all know, one of the most profitable types of Market is the Impulse Mode.

Once the impulse mode is established, there are lower than average or not pullbacks at all, so it is very difficult to enter the market until the move is finished.

This is the reason why it is so important to determine when the market is ready to start an impulsive move and get into the last pullback.

The definition of this rule is critical to avoid to take a lot of fakes moves, but even taking several failures, the profit potential is so big that compensates taking several loses before the final winner.

The rule I use to define when a market is about to start a trending mode is the Bollinger Crossover and it works as follows ;

We need a fast moving average and a slow Bollinger Band. And the the settings we must find are those that make the fast moving average to stay inside of he Bollinger on sideways and even slow trending markets.

When we get a Bollinger crossover ( Fast moving average crossing outside of the Bollinger Band) , then the setup is trade ready in the direction of the crossover, and the entry is a limit order at the middle of the band

See attached picture :

I created a set of Indicators to trade this setup :
PM_Bollinger_XO : It draws vertical lines and triggers audible and text alerts at crossovers. It is possible to filter only the first signal on each direction ( like on the picture )
PM_Trend : It paints bar colors according to the setup

For those who like doing research ( like me ) or auto trading a setup, I also created the strategy PM_Impulse_v2 :

I will post my research on different markets here and if you want to share any setting, info , comment or suggestion, please feel free to do it...

Regards,
Pablo Maglio
www.TheIndicatorStore.com

Internal Fibs Indicator

It draws the internal fibs between Max and Low made during for the selected session time ( crossing outside it could be considered an impulse move start )

Dibuja los niveles internos Fibonacci entre los Máximos y Mínimos operados para la sesión seleccionada ( cruzar fuera de este rango generalmente implica comenzar un movimiento impulsivo )