The Cowabunga System

[Archiphage]

One of the things you just have to accept about trading is that all exits are always unsatisfactory. If you don't catch the very last pip in a move, your human nature will nag you about it, and if the result is negative or breakeven, you'll be disappointed in that too. Proper trading is painful... just like proper weightlifting, marathon-running, etc. That said, one thing you can do about the way this trade worked out for you is to stop making your exits all-or-nothing. Consider breaking your exits into stages. Had you exited half your position at the first target and moved your stop to the original entry on the remainder, you would have easily caught the rest of those pips. Now, you have to consider also that you could easily have ended up with an even smaller profit had that breakeven stop gotten hit... but such is the nature of what we do. Any yahoo can enter a good trade. One of the several things that distinguishes a professional from the amateurs is how they exit. You can overly complicate the exit just like anything else. The first thing to do, as I said earlier, is to accept that no matter how you exit any particular trade, there would have been a more profitable exit. The next thing is to pick an exit strategy that is simple, but not so simple as you're currently using. A 2-stage exit such as the one I mentioned should be more than good enough for trading in the 15m frame. It's easy to calculate and simple to execute. Take care and Happy Trading!

[gryat]

Thanks for the input and tips

[sadesokan]

hi,
quite new to trading. been using ur setup on demo but lost a few virtual $. painful though not real. however my 4H period does not give corect timimg on the chat. i wonder if this is the reason behind the loss.
kindly update this blog often so we newbies cld stand up too.

[Cowaboi]

Does anyone happen to have cowabunga results since the last blog entry by PipSurfer? What was the pip tally for Jan and how has it been doing so far this month?

[grayghost]

Originally Posted by gryat

Hello

How can I know whether to place my exit on the nearest 50 or 00 price or to place it at the same amount i'm risking?

I think you people are selling yourselves short (NPI) when you enter a trade and set an arbitrary target. I would look for a logical target such as a measured move. Only if I couldn't find one would I depend on an arbitrary rule.

I ran a Fibonacci Expansion from the top of the previous wave, which I've labeled Wave and where I placed a X, to the bottom of the wave, where I placed another X, then to the top of the retracement wave, which I've labeled Wave B and where I've placed another X. Actually, I offset the bottom of Wave A to the left so that the Fib Expansion, shown in light green, would not run past the area of interest, but the result is the same. The Fib Expansion then "measures where Wave C is likely to end, at FE 100, at FE 100.

And lo, price hit that target before retracting slightly. Why does it do this? Because a lot of traders are looking for a measured move, so it tends to be a self-fulfilling prophecy.

In entering short on a wave down, I would look for an applicable Fib Expansion (MT4, click Insert, Fibonacci, Expansion), and I'd set a Take Profit at that level or slightly short of it. Then I'd try to let the trade run to that point.

[gryat]

Nevermind... just found it out

[Cowaboi]

Originally Posted by grayghost

I think you people are selling yourselves short (NPI) when you enter a trade and set an arbitrary target. I would look for a logical target such as a measured move. Only if I couldn't find one would I depend on an arbitrary rule.

I ran a Fibonacci Expansion from the top of the previous wave, which I've labeled Wave and where I placed a X, to the bottom of the wave, where I placed another X, then to the top of the retracement wave, which I've labeled Wave B and where I've placed another X. Actually, I offset the bottom of Wave A to the left so that the Fib Expansion, shown in light green, would not run past the area of interest, but the result is the same. The Fib Expansion then "measures where Wave C is likely to end, at FE 100, at FE 100.

And lo, price hit that target before retracting slightly. Why does it do this? Because a lot of traders are looking for a measured move, so it tends to be a self-fulfilling prophecy.

In entering short on a wave down, I would look for an applicable Fib Expansion (MT4, click Insert, Fibonacci, Expansion), and I'd set a Take Profit at that level or slightly short of it. Then I'd try to let the trade run to that point.

I also think using fib extensions for targets are very useful, albeit outside the rules of cowabunga. I haven't backtested the inclusion of extensions with cowabunga but i know how useful they are in trading my other methods.

I tend to work off an hourly chart fibbing the previous days range to identify support/resistance areas between the 38.2 and 61.8 levels, coupled with longer term fibs across daily, weekly and monthly TFs. This provides enough market flow information to make sure trades are with the trend/flow and I guess wouldn't be too far off the 4hr trend chart cowabunga uses. I use the 38.2 extension for target purposes, if you are trading with the trend/flow this level is invariably hit once there is a test and break of the day's fib levels resuming price action in the direction of the trend.

Using the 15min cowabunga rules to identify entries with the flow of the market but holding and sometimes building the entries as price makes it's way to the extension targets over a day or two (sometimes longer), could be a useful variation on the existing rules....but I stand to be corrected; I haven't tested the idea thoroughly yet.

[Cowaboi]

...as an example against today's action, the first chart represents the 4hr cowabunga chart (it's hourly and has transposed EMAs). The 4hr trend is down, we're looking for shorts today off the 15 min. The first chart also shows today's range so far, fibbed to give an idea of likely resistance on the current retrace, which price has already banged up against twice.

Notice the 38.2 fib extension @ 1.9307. The 2nd chart is the recent 15min entry chart and could well signal an entry short soon. The profit target would be set to 9307 (or thereabouts) and the initial stoploss set to last swing high (as per cowabunga rules) @ just above 9420.

Until the 9307 target is hit (or trade stopped out) leave alone and add valid 15min entries as they arise....but not beyond 12pmEST each day, as per cowa rules.

EDIT: NOTES/IDEAS only, i haven't backtested this. Usual disclaimers apply

[Cowaboi]

A cowabunga short was triggered around the time of the post below which stopped out for -27.

Fibbing yesterday's range suggests longs today, at odds with cowabunga's 4hr trend chart which still indicates shorts....the fibs indicate a counter trend bias which i'll exploit on the next valid cowabunga 15min setup, as long as price holds above the long fib level (c9450)....the target for longs being 9555.

[Cowaboi]

...the news already delivering yesterday's fib target, almost to the pip - i wasn't in the move, there's always next time. Now waiting for a pullback and a nice clean cowabunga long setup, if they'd be so kind