The Cowabunga System

[pippy long stalking]

My first cowabunga trade was at 9:00 am est today and is not going very well at all. I traded EUR/USD on a buy signal and so far it's down 51 pips with 28 pips to reach my stop.

I know this is only one trade, but the problem I see with this one, is that the EMA crossover occurred at the top of short-term up trend. So when the signal came in (as all other indicators lined up), it turned out the trend was peaking. Shortly after getting in, everything went south and even the 4h chart is heading towards a down trend. Not to mention that I'm risking 77 pips to gain 21!

It aint over yet, but so far it's not looking too good. Screenshot attached. Besides just chalking this up to one of those inevitable losses, anyone see anything I did wrong?

[phil838]

Originally Posted by pippy long stalking

My first cowabunga trade was at 9:00 am est today and is not going very well at all. I traded EUR/USD on a buy signal and so far it's down 51 pips with 28 pips to reach my stop.

I know this is only one trade, but the problem I see with this one, is that the EMA crossover occurred at the top of short-term up trend. So when the signal came in (as all other indicators lined up), it turned out the trend was peaking. Shortly after getting in, everything went south and even the 4h chart is heading towards a down trend. Not to mention that I'm risking 77 pips to gain 21!

It aint over yet, but so far it's not looking too good. Screenshot attached. Besides just chalking this up to one of those inevitable losses, anyone see anything I did wrong?

That was not a valid Cowabunga signal, since there was no EMA crossover. It may have crossed over temporarily, but you should always wait till the end of the candle to make sure the EMA's really are crossing.

Also, you're trading on EUR/USD. Cowabunga was designed for GBP/USD, which is a much more volatile pair and will give you better result with the system.

[pippy long stalking]

I did wait for the crossover, which I did verify on the next candle, and got the cowabunga buy indicator. On the second candle from the cross up, it quickly cross back down again, which makes the chart now look like a flat or non-crossover. But live i'm pretty sure it was a valid crossover. Oh well. Next time.

[phil838]

It's a common newbie misktake, so don't feel bad, but that was not a valid crossover. Once a candle closes and generates a crossover it's set in stone, the next candle cannot erase it from your charts and make it appear flat.

Remember the indicator isn't a buy signal, it's a warning of a possible buy signal.

If you're trading this system on EUR/USD you're going to get fakeouts like that a lot. I highly suggest you follow the rules and move to a more volatile pair such as GBP/USD.

[dazza2]

Hello can any of the system experts tell me if we have to wait until the moving avergaes have made a clean cross over and then cross back again before we trade or can a touch and then break apart again be a vlaid trigger?

For example yesterday 24th June the trend was up all day so I was looking long. At 6:30 BST (1:30 EST) the 5EMA dropped down and touched the 10EMA (on my chart the values at close of candle were identical at 16465). The 5EMA then moved back above the 10 EMA on the next candle. Was this a trigger? Or would I have to wait for the 5EMA to clear below the 10EMA and then cross over up again to get a valid trigger (as it did between 12:15 and 13:45 BST (7:15 and 8:45 EST)) ?

I didnt trade the first one as I wasnt sure what the rule was on touches and obviously missed out on a great trade. The second one I did as the rules were met but it was a loser.

Thanks in advance.

[phil838]

Originally Posted by dazza2

Hello can any of the system experts tell me if we have to wait until the moving avergaes have made a clean cross over and then cross back again before we trade or can a touch and then break apart again be a vlaid trigger?

For example yesterday 24th June the trend was up all day so I was looking long. At 6:30 BST (1:30 EST) the 5EMA dropped down and touched the 10EMA (on my chart the values at close of candle were identical at 16465). The 5EMA then moved back above the 10 EMA on the next candle. Was this a trigger? Or would I have to wait for the 5EMA to clear below the 10EMA and then cross over up again to get a valid trigger (as it did between 12:15 and 13:45 BST (7:15 and 8:45 EST)) ?

I didnt trade the first one as I wasnt sure what the rule was on touches and obviously missed out on a great trade. The second one I did as the rules were met but it was a loser.

Thanks in advance.

As far as MA crosses go, that one was a tough one to call. On my chart the 5 EMA dipped 1 pip below the 10 EMA before crossing back up, so technically the MA's did cross over.

It still was not a proper Cowabunga trade though, because the indicators did not have the proper setup. The MACD was going sideways, not up, and the slow Stoch line was also going sideways, if not slightly down.

[dazza2]

Thanks Phil agree the indicators didnt signal a trade. Ive had a few of these touches and then pull aways where the indicators are good and never know what to do. Some I was glad to ignore and some I wished Id taken. Maybe I'll use MT4 as well as my brokers charts to confirm.

[weijen]

Hi tony, in your large R wins, could you tell me whether these are based on backward review or actual live trades?

To determine if the clear break is going to happen, because sometimes, it could hit the 50/00, then reverse 15 pips, then go straight through. But you'd definitely be out by then, though backward review could show that you held on.

Thanks! (and thanks for your work!)

Originally Posted by tonymand

Ignore my last post Dazza, I had the chart accidentally set on the daily so I agree there was no trade at that point

[pas]

can someone please clarify for me that on the 4hr chart are we looking for the the stoch and the rsi to be heading up or just looking for the main trend.lately a lot of trades have been going against. not sure whyhave had sucess until just recently

[tonymand]

Originally Posted by weijen

Hi tony, in your large R wins, could you tell me whether these are based on backward review or actual live trades?

To determine if the clear break is going to happen, because sometimes, it could hit the 50/00, then reverse 15 pips, then go straight through. But you'd definitely be out by then, though backward review could show that you held on.

Thanks! (and thanks for your work!)

Where possible I put the trade on live on a demo account. If I am not around then it is based on chart review. For that I dial down to a 5 min chart to ascertain my likely exit. Its a good point you make overall though. I would expect live trading to show poorer results than those I post and there are a number of reasons for this including what you have identified. Its nice to see COwabunga move back to profitability and just made a new high for the year