Take a look at the attached chart of cable on 05/29/09. If we entered at end of crossover candle on right at 1.6140 our target is 1.5150 or 10 pips. The swing low is the candle immediately preceding at 1.6050 for our stop of 90 pips. So, if I have this right, we are risking 90 pips to gain 10 pips.
Somehow I think I’ve missed something. Can anyone advise?
If your profit target is very low, like 10 pips, the Cowabunga system says you should shoot for the same number of pips you’re risking. So in this case the SL and the TP would both be 90 pips.
Not quite Daz. The preceeding direction on the H4 is still good until the candle close
I dont agree Phil. The area of least certainty is profit take. With a stop of 90 pips you are going to get a round number challenge before you get to 90 which provides a potential profit take. I do agree you wouldnt shoot for 10 unless you had good reason
I don’t agree with it either… 
That’s why I stopped trading the system, but those are the Cowabunga system rules. Pip Surfer doesn’t have a blog entry from the day this trade happened, but here’s a quote from the May 22 blog…
[I]The entry was at the close of the candle at 1.5848 with a stop at the most recent low at 1.5754. Since I was only 2 pips away from the nearest 50 or 00 level (1.5850) [B]I decided to go for the same amount of pips I was risking on the trade, which in this case was 94.[/B] This put my initial target at 1.5942.
[/I]
And here are the Cowabunga Exit rules:
[I]Exits
Here’s where things get a little hairy. You’ll have to use your brain for this one. What’s that? A trading system that actually requires you to think?! But don’t worry; it’s really not that hard. Generally 50 and 00 levels will be your targets. What is a 50 or 00 level? It’s simply any price that ends in 50 or 00. For example, 2550 and 2600 are examples of a 50 and 00 level respectively.
However, [B]if you are too close to a 50 or 00 level you can also choose to set your target for the same amount of pips you are risking. [/B]For example, if your going long and your entry is at 2445 and your stop loss is at 2425 you would be risking 20 pips. You could then set your target for 20 pips away from your entry. So in this example your target would be 2445 + 20= 2465. [/I]
well I think you rather just proved my point. Assume an entry at 40 with a stop of 90, your profit taking possibilities would be 50 (only 10 profit less spread), 100, 130 + spread (1:1), 150 etc. If you look at PS blog over time you will see all of these decisions taken sometimes for reasons that are not obvious. My view is you look at the surrounding SR levels, consider where you are relative to the daily ATR and make a judgement re momentum. These things can then help you decide on your target.
From my ongoing review of this approach last month was the second losing month in the last 3 and the intervening month only just scraped in as positive. Hence its gone backwards since the end of February, just something for new followers to consider
Don’t get me wrong, I completely agree with your analysis I’m just saying this is the Cowabunga system thread, and Duitman was asking a question about the Cowabunga system.
Cowabunga is a trading system built for newbies. If you wish to deviate from the Cowabunga rules, that’s fine (and probably more profitable :D), but if you’re basing your exits off ATR and S+R levels then you are not trading the Cowabunga system. I may be wrong, but I have never seen Pip Surfer make a Cowabunga trade off an ATR or S+R line!!
As per the Cowabunga system rules and example that I posted, the TP level on this trade should have been 90 pips.
Very good point! Cowabunga is profitable over time, but it’s in a losing slump right now. To all the new traders out there I advise you to test it out on a demo account and not to trade it live until it picks back up.
That’s something about the Cowabunga that scares me a little bit, too…So I adjust my stop as soon as I’m in a 10-20 pip profit…I know it breaks the rule and I may miss more pips, but I sleep better knowing that I’ve locked in a profit. (My bills are small enough that 20 pips a day is an acceptable profit for me) Also, the Cowabunga rules tell you to stay OUT of a trade if you are not comfortable.
You’re right about that! The problem is that new traders don’t know when to be uncomfortable…
You missed the point - no problem. On such a trade PS would have a potential profit take well below 90 and if you dont believe this check out the blog for yourself. You dont know on any trade why PS stays in longer than others and I was offering some options that could guide peoples thinking. As I have said before I dont trade this method. Hopefully those who follow PS’s blog and have read this thread understand the point I am making
I just read every Cowabunga blog entry since the beginning of the year and I cannot find even one instance of Pip Surfer exiting any trade except via established Cowabunga rules.
Please stop giving new traders incorrect advice about the Cowabunga system. If you have new ideas about the system, or ways to improve it, then great! But mark them as such and don’t confuses new traders by expressing your opinions as Cowabunga rules.
I have proven, with actual evidence, that this trade should have had a profit level of 90 pips (or skipped altogether, as Pipsrgood pointed out).
Unless you have real data to back up your claim I respectfully suggest you follow your own advice from May 19th, when you said this to Andyibet:
[I]“Well you obviously know more than the systems creator. I care not whether you wish to listen to well meant advice. Have a nice life. For those who do want to learn rather than simply show their ignorance, check out pipsurfers blog for yesterday where the trading day is summarised”[/I]
Well you should perhaps read more carefully and take a chill pill. This entry was earlier this week with an exit clearly identified and taken at the round number of 6000 and well before a 1:1 ratio was hit. I say again that when there is a large stop then PS may or may not go for 1:1. There are many examples on the blog where it is clear you have to interpret whether it is too close a target or too far a target and whether you will use an intermediate round number as your profit take guide
Now I dont know why your response to me is so rude and ill considered. If you dont understand the point I am making - fine, if you dont agree - also fine. However accusing me of misleading new traders is perhaps something you might consider apologising for. This forum is for the debate and consideration of trading methods and their clarification, not for some hairy chest beating. Again new traders can consider your comments, can look at mine, can read the blog and go back through this thread. They will then see that there are many examples that contradict your statement that with a 90 pip stop the only profit target is 1:1.
I never said that with a 90 pip stop the only profit target is 1:1. I said that Cowabunga rules state that if a profit target at the next 50 or 00 level is too small, [B]then [/B]your profit is 1:1.
In the blog entry you posted Pip Surfer is using the next 50 or 00 level as his take profit. This is an exit as defined by Cowabunga system rules, which I will quote again, since you did not read them the first time…
[I]Exits
Here’s where things get a little hairy. You’ll have to use your brain for this one. What’s that? A trading system that actually requires you to think?! But don’t worry; it’s really not that hard. [B]Generally 50 and 00 levels will be your targets. What is a 50 or 00 level? It’s simply any price that ends in 50 or 00. For example, 2550 and 2600 are examples of a 50 and 00 level respectively.[/B]
However, if you are too close to a 50 or 00 level you can also choose to set your target for the same amount of pips you are risking. For example, if your going long and your entry is at 2445 and your stop loss is at 2425 you would be risking 20 pips. You could then set your target for 20 pips away from your entry. So in this example your target would be 2445 + 20= 2465. [/I]
I’m not being rude, but I am getting frustrated. He went long at 1.5980, and exited at the next 00 level, 1.6000. This proves my point, not yours!! Pip Surfer only exits via established Cowabunga system rules, not ATR or SR lines. Exits are 00/50 levels, 1:1 ratios, news events and nothing else!!
You’re right, the rules are clearly stated in the blog. Newbies can read it for themselves and see what they are.
This is what you actually said in your post
If your profit target is very low, like 10 pips, the Cowabunga system says you should shoot for the same number of pips you’re risking. So in this case the SL and the TP would both be 90 pips.
It is that statement of yours that is misleading. You did not mention the 50 or 00 level
The reality is that if you consider the profit level is too close then [B][U]ONE[/U][/B] option is to go for 1:1. Other options include the 50 or 00 levels. Are you having problems with admitting that your statement as shown above is misleading? In fact as stated it is wrong, pure and simple. As is your later statement that the profit target for that trade was 90 pips. Again that is only one option under the Cowabunga rules
How individuals decide what target to use is up to them ie whether to exit at 00, 50 or 1R
I dont understand why you dont get it. Your pasting of the rules from the blog means to me that if you understand them then your post is simply inadequate
Anyway what do others think?
Yes, that’s what I said in the post, but I also quoted Duitman in my post.
He said:
If you read his statement, then read my statement, you’ll see that we were talking about the next 50/00 level being only 10 pips away. There was no need for me to restate the first profit target option was the 50/00 level, because anyone that read my whole post, including the quote, can see that’s what we’re talking about.
It’s misleading to you because you only read half of my post The quote is part of the post, and sets the stage for what I’m about to say. If you ignore the quote and then can’t understand what I’m saying then that is not my fault.
He asked what to do when the 50/00 level is too close, and I told him that if 10 pips (the distance to the 50/00 level in his example) is too low the rules say to shoot for a 1:1 ratio.
We appear to be saying the same thing here… You just didn’t read the entire conversation and thought I was saying something I wasn’t.
I’m sorry for getting frustrated, but if you said, “grass is green,” and I replied, “no it isn’t, it’s green” then you’d probably get frustrated too.
Apology accepted.
I still say that’s not the way it’s done. The rules are clear about what to do in a case like this. I can’t understand why you don’t see it, but I’m gonna give in and say we just agree to disagree.
Thank you both for your spirited answers and opinions. I fully understand the rules now but am inclined to develop some other way of determining SL when the SL is a large number and the TP (according to the rules) is small. I fully realize this would constitute a violation of the rules but it seems to me that it is necessary in the type of theoretical mentioned. Any advice is welcomed.
One other question (and I have read the entire forum twice):
It appears that the only time a trade is entered is after a crossover. So even when the trend continues in a given direction, one is not supposed to enter until the trend reverses. Is that correct?
Thanks for all that you gentlemen and ladies do to assist newbies like me. It is extremely helpful and educational and certainly helps us to avoid making mistakes that are the direct result of inexperience.
Yes this is correct. The 15 min cross is the potential entry signal. I think with some sensible tweaking of the exit parameters you can do better with this method so good luck to you
