[Benjimang]

I'll be honest with you Tonymand, I have never actually read through the Cowabunga system. Also, in all seriousness, this system is nothing earth shattering in that it uses only a few, very simple indicators. Where it IS earth shattering, in my opinion, is in the theory behind it.

Trigger:

Basically, this system trades around a 5 period EMA. Waiting for the 1 period EMA to cross the 5 is the same as waiting for a new candle to form on the opposite side of the 5 EMA. You don't need the 1 EMA, but it certainly helps me see what's happening. As Maurizio says, 'X marks the spot'.

What this does is it essentially seeks to find moments when the most recent candle has accelerated significanlty from the last 5 candles. Therefore, this system uses price action as it's trigger. This trigger is successfully finding points where trends typically start in currency markets. However, by using short period EMAs, the trigger may result in more false signals than using slower EMAs, so we need to filter out false signals.

Filters:

Stochs, more than anything, are an indicator of investor sentiment. A vast many traders use stochs to gauge overbaught and oversold conditions and act on them accordingly, bringing markets 'back into line'. This makes stochastic analysis a self-proving indicator. Maurizio has applied this indicator to guage when we might be looking at the start of a long run, already halfway through it, or just jumping in near the end of one. This filter helps us get into trades at the right time.

RSI tries to graphically show how long a given run has lasted and how quickly it it accelerating or decelerating. I personally think the RSI is the best thing since sliced bread for telling when a market is likely to turn back on itself as it reaches market extremes (usually around 80/20). As with stochs, many investors react to RSI values as they hit very high or very low values. This indicator warns us when we might be trading in the current direction, but at a time when most investors' confidence in the run is coming to an end. In other words, this filter helps us stay out of potentially disastrous trades.

Whilst I still haven't used Bollinger Bands with this system yet, I can certainly see it's value. So far I've only mentioned the idea of identifying trends. Well, a range is essentially made up of many alternating short term trends. This filter gives you not only an idea of whether you're facing a false signal or not, but it helps to set realistic profit targets, and effectively trade a ranging session.

So, having said all that, I hope everyone here can try to get an understanding of WHY these indicators work so well together. They each have strategic value. Now, in no way am I going to try to take credit... Maurizio put all the time and effort into selecting which indicators work well together. I would just prefer that people new to this system don't just trade it as a bunch of lines on a page, but to try to understand how these indicators help us to understand price movements.

-Benjimang