Alexander Elder built two things that get confused with each other. The Impulse System is a censorship rule that colours each bar green, red or blue and tells you what you are not allowed to do. The Force Index is a separate indicator that multiplies price change by volume. Both come from Trading for a Living and Come Into My Trading Room, both have published settings, and they are frequently described online as one system, which they are not.
This guide gives the settings for each, explains the unusual thing the Impulse System does, and shows how both map onto a backtest.
A note on integrity before we go further: InvestingPaths is an independent research site and is not affiliated with, endorsed by, or connected to Dr Alexander Elder or Elder.com. Everything below is our summary of publicly documented material, attributed as such. Trading involves substantial risk of loss, and nothing here is financial advice or a promise of any result.
The Impulse System: settings
Two components, both standard:
| Component | Setting | What it measures |
|---|---|---|
| Exponential moving average | 13 period | Trend direction, via whether the average is rising or falling |
| MACD histogram | 12, 26, 9 | Momentum, via whether the histogram is rising or falling |
And three bar colours:
| Colour | Condition | Meaning |
|---|---|---|
| Green | 13-EMA rising and MACD histogram rising | Bulls control both trend and momentum |
| Red | 13-EMA falling and MACD histogram falling | Bears control both |
| Blue | Anything else, the two disagree | No consensus |
Note that both conditions are about direction of change, not level. A rising histogram that is still below zero counts as rising. That detail is the most common implementation error, and it changes a meaningful number of bars.
The part that makes it unusual
Most indicators tell you when to enter. The Impulse System tells you when you may not.
- A green bar forbids shorting. It does not instruct you to buy.
- A red bar forbids buying. It does not instruct you to sell short.
- A blue bar forbids nothing.
Elder's framing is that this is a censorship system rather than a signal system, and the design follows from that. Two independent measures of two different things must agree before a direction is ruled out, and when they disagree the system stands aside rather than guessing. In practice most people use it as a filter sitting on top of whatever produces their entries, which is exactly what it is for.
That also explains why an "Impulse System backtest" is an awkward object: a rule that only ever forbids has no entries of its own. What you can test is the same rule used as a permission filter over a strategy that does have entries, and that is a genuinely useful test.
The Force Index: a separate tool
The Force Index measures the force behind a move by combining direction, distance and volume:
Force Index = (today's close - yesterday's close) x today's volume
Raw, that is far too noisy to read, so it is smoothed with an exponential average. Elder publishes two horizons and they answer different questions:
| Smoothing | Use |
|---|---|
| 2-period | Short term. Used for entry timing: a dip in the 2-period Force Index inside an uptrend marks a pullback worth buying |
| 13-period | Intermediate. Used for trend confirmation: above zero means bulls are in control of the move |
The reason the indicator exists at all is that price change alone treats a 1% move on huge volume and a 1% move on nothing as the same event. Weighting by volume separates conviction from drift, which is the same insight behind the Stockbee volume conditions and behind the pocket pivot, reached from a different direction.
Setting both up in TC2000
TC2000 ships MACD and exponential moving averages as built in studies, so the Impulse System's two components are available without any custom work; the bar colouring itself is not a built in, so you read the two conditions rather than seeing them painted. As scan conditions:
| What you want | Formula |
|---|---|
| 13-EMA rising | XAVGC13 > XAVGC13.1 |
| 13-EMA falling | XAVGC13 < XAVGC13.1 |
| Force Index, 13-period, above zero | Build (C - C1) * V as a PCF, then apply a 13-period exponential average |
Use XAVGC for exponential and AVGC for simple. Getting that wrong is the single most common porting error with any of Elder's work, since every setting he publishes is exponential. Custom formulas need the Premium tier; our pricing breakdown covers the tiers.
Testing both in our backtester
This is one of the rare cases where the mapping is nearly exact, because both of Elder's tools already exist in our free backtester as named rules:
| Elder | Our rule | Fidelity |
|---|---|---|
| 13-EMA rising | Moving average slope, set to 13, EMA, rising | Exact |
| Force Index, 13-period | Force Index, which defaults to 13 | Exact |
| MACD histogram | MACD, at 12, 26, 9 | Close, but not the same |
The MACD row needs its caveat spelled out. Our MACD rule's is bullish state means the MACD line is above its signal line, which is the same as saying the histogram is positive. Elder's condition is that the histogram is rising, which is a different test: a histogram can be rising while still deeply negative, early in a turn, and that is precisely the situation Elder's rule is built to catch. So a backtest assembled from our rules is a strict, later version of the green bar rather than a faithful one.
Which leaves an honest summary: the Force Index half is reproducible exactly, the Impulse System half is reproducible approximately. The most interesting experiment is to take any strategy you already like, then add Moving average slope (13, EMA, rising) as an extra entry condition, and see what filtering by trend agreement does to the result. That is the system used the way Elder intended, as permission rather than signal.
Frequently asked questions
What are the Elder Impulse System settings? A 13-period exponential moving average and a MACD histogram at 12, 26, 9. Green when both are rising, red when both are falling, blue otherwise.
What does a blue bar mean? The two components disagree, so the system forbids nothing. It is an absence of a verdict, not a neutral forecast.
Is the Force Index part of the Impulse System? No. They are two separate tools by the same author and are often described together in error. The Impulse System uses the 13-EMA and the MACD histogram only.
What are the Force Index settings? Two published horizons: a 2-period exponential smoothing for short term entry timing, and a 13-period for intermediate trend confirmation.
Can I backtest the Elder Impulse System? Partly, and the honest version is worth stating: the Force Index is available exactly in our backtester, the 13-EMA slope is exact, and the MACD component is a stricter approximation because our rule tests the histogram's sign rather than its direction.
Use it as a filter, which is what it is
The Impulse System was never an entry signal. Take a strategy you already run in the backtester and add Moving average slope at 13, EMA, rising, plus Force Index at 13, and you are testing exactly the question Elder built these for: does requiring trend and momentum to agree improve what you already do? Free, no account needed.