The Cowabunga System

Trading Systems Free Forex Trading Systems
407

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

408

Well said.

A

409

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

410

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

411

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

412

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%.

413

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

414

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

415

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.

fgetti.jpg700×525 46.8 KB

416

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

417

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

418

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

419

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

420

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

421

Thanks Jeff, one already have some info about swing and i’ll check the other one soon.

422

I replied to this message earlier but i don’t see my reply. Anyway, thanks Jeff helpful info., already tried one and will try the other soon.

423

hey,

There is nothing to say you cant adapt the system to a higher timeframe, a good system will work on any timeframe, the higher ones do tend to be more reliable.

Get up all the indicators as you would on the 15 min chart, but then switch over to the daily. Rather then trying to copy the system i would find another way of finding the trend. like a SMA 100 or 200.

all that you need to do now is backtest and backtest until you are happy with what you are seeing.

N

424

First, congratulations Surfer on a successful 2007.

I want to know how successful it really was. How can I calculate APY based on the statistics here? If you had started with a $5000 account, and traded two mini lots at a time (max 50p SL means never more than 2% at risk in any trade), you would have doubled your money. Not bad. Would that example be a 100% APY?

Cumulative Stats  	 

Total:              +2596 Pips
Number of Trades    234
Number of Wins 	     131
Number of Losses    98 (5 breakeven)
Win % 	             57%
Average Win: 	     36
Average Loss: 	     20
Average Pips/Month  +210
R-Multiple 	     131.64

Also, I understand that the R-Multiple is the reward:risk ratio, but why do we add it together from all of the trades? Why don’t we just take the average win:average loss? What does that 131.64 actually tell us?

If we take our average loss of 20p and multiply it by our R value, we get ~2600, which is what the overall pip gain was. Is this the correct usage?

Since our SL levels are based on different market conditions (i.e. where the latest swing high or low is,) what do multiple R-multiples of -1 really mean? Yes, we lost all of what we were prepared to lose on the trade, but what if this happened:

Three trades: two losers (R=-1) and one winner with R=2.2. We see that if we add our Rs, we get +0.2. How do we extract meaning from this, if we don’t know what our stops were? If we knew that the stops were all identical, we would know that we came out ahead (say, -202 + 44 = +4). Since we don’t know what the stops were, an R of 0.2 could mean two trades of -50 (R=-1 with 50p SL), and one trade of +44 (R=2.2 with 20p SL), which would be an overall loss (-502 + 44 = -56.)

So again, why do we add R-multiples over a long timeframe?

425

Thanx N, very good advice. A reminder to keep testing. I will do that

426

Wow Cosgrove, I got a headache just reading this, way to deep for my little mind, LOL. I just look at the bottom line 2600 pips gained over the last year avg 210 pips a month with only one loss month of -51 pips. 1 full contract brought in $26,000 for the year :slight_smile: If you trade mult contracts, hello Vacation land and good-bye JOB. Sound, simple system. Hope it continues in 2008 I’m already making plans to spend next winter in Hawaii :smiley: