No quite incorrect. Its pips that are totally without meaning. 2 systems with a 90R return and the same % equity risk per trade would have exactly the same $ return. The system with the 40 pip over 20 pip average would have half the value per pip if risk remains equal. Looks like you need to do a fair bit of reading in this area as its a critical concept
Your point 2 would show up as a different R return. For simplicity sake an average 1R return would be reflected as 150R and 200R for those systems. Think of it another way. If you took only three quarters of the possible Cowabunga trades in a year (assuming no bias to your selection) then your R return would be 75% of someone who took all trades
Hence it is this ratio not pips that has meaning. Imagine someone tells you they are making 3,000 pips per week. Is that good, how much money is it, what risk is being taken to achieve it - in other words what are the chances of a blow up. Pips tell you nothing
Hmmm, I see the value in looking at the R count for a system. Unfortunate I currently buy the same number of lots every time I take a trade, if I understand everything correctly I should probably consider risking the same dollar amount on each trade in order guarantee the average 90R for the system. Is this what you do? Do you know if this is how PS trades? (if you donât know I can just ask him on his blog) And is it actually less profitable to buy the same number of lots for each trade regardless of pips risked?
Yes absolutely. Think of it this way. Sometimes you open a trade with say a 100 pip stop. Statistically its much less likely to go that distance than say 20 pips. You risk 100 USD per trade and so you take a 1 mini position. Looking at the way this system performs you are probably going to get about 50 or so pips for a $50 return. On another trade lets say your stop is 10 pips. Now you can take a full postion and a 50 pip move gives you $500. Your risk was still only $100 (ie a 5R return). This is where this system makes its real money. When you get in with a tight stop you need to really try and let it run. As an example the trade on Dec 8 long off 4741 returned 4.7R
This months results so far illustrate a particular bug bear of mine. People blindly advocate following the 2% rule but in this system where the number of wins only just outweigh the losses over the long term this can be disastrous. The run of losses has halted (but perhaps only temporarily). Given that this is a proven effective system the 12 losses in 13 trades represents a drawdown of 22% using the 2% rule. If your trading float iat the start of this run was $200,000 how comfortable would you be entering a Cowabunga trade next week now down $44,000. Perhaps OK if you were already ahead for the year but what if this was your first month trading. Food for thought I hope
I have found it difficult placing trades with this system. i dont know if its something am doing wrong. These are my observations:
Its been difficult getting the 3 signals for the trade at the same time. Most of the time when am having the ma xo for let say short trade, the stochastic would have been in oversold region b4 i have a real xo with the RSI still in the middle and MACD still a bit futher up, likewise the reverse for going long.
This sort of mismatch is what iâve been having for quite some time now.
Is it something am doing wrong?
Some of this trade i refuse to take cos the 3 signals dont match go on to perform beuatifully, though i do not take the trade.
Will appreciate if someone can explain what is happening.
if you are waiting for the rsi to perform a crossover after your ma crossover, than thatâs what youâre doing wrong. after the ma cross, just check the direction of rsi and stoch.
regarding the stoch being oversold/-bought: are you sure, you have the same levels (20,80 stoch / 25,75 rsi) and you check them directly when you get your corssover signal (on the candle close)?
if nothing of that helped, try to look at pipsurfers blog and study his charts of taken trades - theyâre pretty self-explanatory, you will find your error there.
HI, thanks for your response. what i have on my chart is stoch:10,3,3 simple, base on close. RSI 9, based on lose and MACD 12, 26, 9. MA 5&10 (both exponential). Based on the instuction, i think taking a short will involve the 5 xo of 10 MA downward, with the RSI in the 50 region and moving down and the stoch not in the ovrbought region but moving down.
However, what i nearly always observe was that at the point of xo of the maâs the stoch would have been at the oversold region if it is a short and overbought region if its a long.
your settings sound right. what i meant with levels in my earlier response, is that oversold stoch is below 20 and overbought is above 80. looking at all ma crossovers today so far (not looking at the trend), there are three (8.15 / 14.45 / 17.00 on gmt+1). all of them had stoch between 20 and 80, so they were valid.
you can backtest your settings, comparing your crossovers with the ones, pipsurfer took and explained in his blogâŚ
maybe your platform doesnât display stoch correctly? compare it to pipsurfers chartsâŚ
Hi,
I am from India, I do day trading in index future(nifty), while searching some good & simple system I land to babypips.com & found your system. It looks nice & simple too(KISS). I have some question, suppose I want to apply this system to index future how can I apply means which time frame i should choose for day trading & what should be indicator setting.Our market run only 5hr 35 min. So what will be correct time frame & other indicator setting for day trading. Pls. suggest thanking you
Hey all, well i am new to FX trading, i do like the Cowabunga system so i decided to keep an eye on the charts and indicators to see if it works⌠well it does with hardley any fakeouts. ill be trying it out this week, hopfully i donât mess up.
I have a question though? Imagine all the signs are there, the EMAâS cross, Stochs, MACD⌠etc. ⌠My question is, if im long, obviousley RSI needs to be above 50, But say the RSI has been hovering above 50 for the past 2 hours but still not in the overbought section⌠Or does it need to be below or on 50 and move above 50 at the same time as all the other indicators give their signals off??
Iâm pretty new to forex. Have been using practice accounts for about 3mths, and opened a real account 2 weeks ago.
Anyway, since viewing your post about the cowabunga strategy, I decided to try it out. Awesome:D 400 pips in 3 days. Way cool:cool: Oh, and just a note, I have added a 21 ema to it, which helps to confirm entry (for me it does)
Thanks a lot!!
When you make posts like this you should ensure that you dont mislead others. Application of the Cowabunga strategy as published has NOT yielded this return in fact is barely break even over the last couple of days and is at 3R for this month. Good luck to you if you have adjusted the basic methodology to improve its performance for you (thats part of what its all about)
The results have been diabolical of late. Managed + 1.8 for April but as you can see we are down for this month and this follows the big losses in March
