The Cowabunga System

I’m not sure about the dailies for this system. The risk:reward usually isn’t great. We’d have to come up with a different way of setting targets.

Today I had a buy signal which was a loser. Can’t win em all. However, GBP/JPY cowabunga gave me a short for plenty of pips.

Looks like a lot of action on the Cowabunga strat tonight


:slight_smile:

Hello Folks, i’m new here and i would really like to know much about this cawabunga system.

Can someone please put me through the necessary files or articles for this system.

Hope to hear from you all soon enough

Regards

Tolu:):cool:

Tolu,
What to do is simple,Go to babypips.com, select BLOG, then,What to do after you finish the school of pipsology. Before this time I advise you to read and study everything in the SCHOOL OF PIPSOLOGY. Thats the basics you need to kick start forex trading.

Prince.

Hi People

This is my first post here (I’ve had some diffuculty registering) but have been reading almost daily for a while.

I’ve been tracking cowabunga from January 1 2007 and have produced an excel spreadsheet of results, including an account balcance and a spread (fixed 3 pips).

I’ve put in place a money management system where I buy or sell x/500 mini lots, where x is the balance of the account.

Keeping in mind that this is only paper trading (for me) a $5,000.00 deposit on Jan 1 would be worth $91,361.00 as of today (12 Dec).

I realise that this is a fairly high risk strategy compared to most advice going around, the largest lost for the year would’ve been -18%, with most losses around 4-7%.

I’m happy to provide the spreadsheet to anyone who wants to take a look (I figure they’re a good way to test money management on a mechanical system), but what I’m really after is some pointers for going live early next year.

I understand that the phsycological aspect will make a difference, but what do you think of the money management?

Thanks!

I’d love to see the sheet. Please email it to <[email protected]>

A

And I, please also email to dandsins at yahoo dot com.

I think that anything you do with paper trading will only achieve 85-90% of that at best in real life. The reason is because you don’t get “perfect” in real trading. I mean things like you don’t get the same entry as the model sometimes, your platform won’t give the same signals as PipSurfer’s sometimes, you will miss an indicator sometimes, or you might be asleep and inadvertently sleep thru the alarm.

All of these things, and a dozen others or more, will cause your actual results to vary somewhat from the paper result. And particularly in systems where there are tight margins, that can be the difference between profit and loss. And while it might seem that a few percentage points might not matter at $91,000, don’t forget those few percentage points would also be there from the beginning too. And when the numbers are small, a few percentage points can mean the difference between whether it grows and compounds to $91k vs whether it loses a little ground every week until the account is gone.

Not to be discouraging at all. These are just the differences between plans and actual executions. It’s like that in everything, not just Forex.

Just my .02

Jeff

Well said.

A

Well your money management is flawed. Pay heed to what Jeff has said and that is your real life results will tend to be less good. Cowabunga has a variable stop so you must calculate carefully your trade size each time, it cannot be a fixed percentage as it will break all commonsense risk rules for some trades otherwise. Your current strategy of trading 1 full lot on a $5000 account would mean on a trade with a 50 pip stop you would lose 10% of it. Just 5 of those in a row would have you facing extinction at least psychologically. Although 2% is commonly bandied about I think this is way too much for a Cowabunga strat which even in perfect hands has only a 58% winning ratio

I understand that it’s risky, and I’m certainly not planning on jumping straight in with a full lot on a $5000 account (i’m thinking one tenth).

five 50 pip losses in a row with a x/500 system would look as follows: $5000, $4470, $4046, $3622, $3251

the same losing trades using x/5000 would be much easier to swallow with: $5000, $4947, $4894.56, $4842.68, $4791.35

I’m interested to hear further from you on a couple of points…

How do you (and others) calculate a trade size? Is simple matter of a percentage of your balance once the stop loss (in pips) has been calculated?

If 2% is way too much, how much would you think reasonable?

If anyone else wants to jump in and share some money management ideas for this (or other) systems, I’d appreciate it, after all, I’m here to learn.

THanks

Whatever percentage you plan to use. 3% is the one I see most commonly. 5% if you want to be aggressive, or if the amount in your account is small (relative to you). 2% or even 1% the larger your account gets?

Let’s pick 3% for right now. If you have 5000, then 5000*3% = $150. So you know that you can risk $150 per trade.

As a setup appears, determine how much stop you need. This varies on every trade with Cowabunga, because it is the last swing low/high, whatever that was. As the crossover is nearing, check to see the last swing low/high, and compare that to the current price. Whatever the pips of stop is for that trade, divide the 150 by that.

If that amount on the current trade is 35 pips, then you divide 150/35 = 4.28. That means you can go 4.28 minilots (or .428 standard lots).

If you have $3500 in your account, and the last swing low/high was 57 pips from the current price right as the crossover candle is closing, then $3500*3% = $105/57 pips = 1.84. So you can go 1.84 minilots on that trade or .184 standard lots.

Same $3500 account, but say the last swing low/high was only 17 pips, then $3500*3% = $105/17 pips = 6.17. So on this trade, you can put 6.17 minilots or .617 standard lots.

The targets on Cowabunga trades also vary, one with only 17 pips stop can often have a lesser target than one with a 57 pip stop. Granted, you can sometimes catch 100+ pip runs with Cowabunga, and if that happens on a trade you have 6.17 minilots on it, that’s a lot nicer than if it happens on one where you have 1.84 minilots on it.

To adhere 3% risk per trade strictly, some are going to be bigger than others with the Cowabunga system.

Hope this helps.

Jeff

That does help, thanks.

A quick look over the spreadsheet shows that out of 236 trades to date, only 12 would have lost more than 5%, even on this aggressive money management system.

Again, I’m not saying that I’m going to go out and trade full lots, but I’m looking forward to going live with cowabunga.

A few tweaks of the spreadsheet show that with some reasonable capital and safe money management, this year cowabunga could have netted you around $20,000.00, without having to risk more than 2%.

Interesting and would welcome others thoughts. Its profitable but if your return of 20,000 is based on 2% risk with 5000 starting capital I dont get it to be anything like as profitable (you are looking at 400% annual ROI). Pipsurfer does not include his spread or commissions, or at least if he does they always pretty much differ by 3 pips compared to the entry on my live platform. This equates to about 700 pips a year so it makes a BIG differcence. Anyway keep us appraised of your live results. I follow it but only occasionally trade it

sorry this has nothing to do with the thread, but this is a busy one…i just wanted to know that if i have to work during the day, if i have to trade starting at 5 pm eastern time (I live in toronto , Canada), what would be the most volatile and tradable currencies? Basically, what currencies are best traded at this time, and which currencies are quietest?

Thanks

way2muchtalent

Hello guys.
I think cowabunga missed a trade yesterday, he didnt wrote it in his blog anyway. I have atached a picture to clairfy the trade that i think he missed. The trade is at the vertical red line. at 2007-12-13 1:30 Pm est
Please coment.

Regards Leffe.


bigpippin, i saw how the setup is for the 4hour and 15 min charts, now can u let me know how to set a daily and weekly chart, thanks

Can someone please tell me what is a clean break of the target, in the cowabunga system?
Thanks Alot,
Dafna.

Cowabunga does not use daily or weekly charts; only 15min and 4hr.

A clean break is where the bar in which price hits the target closes above the target. If price reaches over the target but falls back below it, and closes below it, then that is not a clean break.

Sometimes price will go over the target, then come back below it and continue falling, and by the close of the bar you don’t ever get another chance to get out at the target. So if you are watching it and the price moves past the target with momentum and continues, sometimes that’s the only way to get more than the target. If you cannot be there to watch it, or if price is not moving quickly when it passes, you can choose to just set the take-profit trigger at the target. Or if you like, you can take half or 3/4 of your position at the target, and then trail a stop on the rest to let it ride. All have pluses and minuses.

Nothing is perfect in forex–

Hopefully helpful.

Jeff

Jeff thanks a lot for the reply. I would like to ask u if u know where i can find free information about swing trading, daily chart system setup, trend lines and entry and exits.

Thanks

Pato

I don’t use daily charts or do any swing trading, so I have no experience there I could offer you. However, I am almost certain that this forum has a bunch and the ForexFactory.com forum would have a bunch more. But I don’t think a lot about daily charts is there.

Jeff