The Cowabunga System

Trading Systems Free Forex Trading Systems
1228

Thanks for the reply MrAugustyn. I will backtest some more with the original system.

Then I will start demo trading it. During that time I might try out the trailing stops as well.

But I was thinking about it some more myself and I think I would miss more profit than I would with the original system. I think most of the time you won’t make siginificantly more profit than your first exit point (please correct me if I’m wrong) and than some of the times it goes back to your entry point and break even. The times it does go up higher, you only go up for half.

At this point I think the clean break strategy will do better in the long term. But I do have another question about the clean breaks:

Do you have to watch the candle an get out as soon as the candle goes below the exit point? Or do you wait for the close of the candle and possibly miss out of the exit point? (the candle could even close below the entry point after breaking the exit target, although that won’t come often)

1229

Hi MrPippiT,

Like many of us here I am new to Forex too. I like this system & have been ‘learning’ how to implement it correctly. In some quick backtesting (manual) I noticed that on many occasions the 00 / 50 exit left quite a few pips on the chart. So what I have started doing is entering the trade with 2 lots. The first lot I exit strictly by Cowabunga rules. With the second lot I move the SL to break even (entry +/- spread). This is now a ‘free’ trade. I am still playing with exits for this lot.

Up till now my favourite exit is to wait for the re-crossover of the EMAs. Sometimes I pre-emt this & exit earlier by judging the candle pattern - such as a Doji or evening star. This will keep those last few pips between the top/bottom of the EMA curve & where they finally cross. I reckon for every time I get this right I miss a continuation of the trend. On one lot of backtesting data this continuation was over 100 pips!!

I am more of the opinion that just letting the EMAs cross back & exiting on the close of that candle may lose a few possible pips per trade but will allow for some longer continuations.

Unfortunately I have little opportunity to trade as being in Australia means my best trading time is around 9pm - 4 0r 5am. And I still have to get up the next day!

I am in the process of creating a trading log that will have separate entries for each of the 2 exit methods. After some time (maybe 2-3 months) I hope to have enough data to give me an indication as to whether 1 exit is better than the other. My guess - both methods will probably work well together, sort of complement each other. Sometimes the EMAs cross back but the 00 or 50 level has been reached, so original exit method would earn more pips. Sometimes the opposite happens. At least by keeping accurate records I take my can take my feelings out of which method is better & just look at the actual numbers.

The downside to having 2 lots in a trade is obviously the we then stand to lose twice as much. But as I am only demo trading it doesn’t hurt. So after a while I will determine which method is better & go with it.

At this stage I will be trading 5-8 currency pairs. I’m not so worried about whether the trade wins or not, but more how the 2 exits compare. So I need to place as many trades as possible to get some numbers of exits to compare.

These are just my ideas. I hope they may help.

Cheers.

1230

Thanks for the info Madpipa. Keep us posted on the results.

Do you test the strategy realtime on the demo account? How do you do it when you have to trade at night? Set up some signal service or something?

How are the other pairs doing on the Cowabunga system?

I am backtesting march and comparing it with the results of BigPippin. Unfortunately he misses a few days and I seem to be losing much on those occasions. I am 10 days into march, but I am a tiny bit down from my starting point. Was march a bad month?

1231

Hi MrPippiT,

I am starting to keep records but not accurate enough. I am practicing with a couple of different trading platforms & with different strategies, so my records are a mess.

I do use on a demo account. If I have a trade going overnight I look to see what I think is best at the time. If I have a decent profit I sometimes take it - to wake the next day & see the trade hit my previously set profit limit. Sometimes I set a trailing stop to lock in some profit in case of a reversal - sometimes to see it hit & then the trade bounce of my stop to reach my previous profit limit. :mad: Other times I think “just let it go & see what happens”. You guessed it - it reverts & hits my SL.

You wouldn’t believe how often I can get it wrong. I read an article last week about a trader who tossed a coin to take a trade compared to using the MACD. The coin won! :eek: This might be my next method.

Each pair seems to have its day. I don’t know that any would be better than GBP/USD. I am more interested in just getting a number of trades to go my way so I can practise different exit strategies. Once I feel comfortable with exiting I will be more rigorous in logging my trades & will endevour to make ‘good’ trades. If I have a few hours spare I have tried taking 12 trades on different currencies, killing the bad ones after a while & trying my exit strategies. Hence the bookkeeping is not very good. :stuck_out_tongue:

I just took a trade on EUR/USD before starting to write this. All criteria for trading were met, but I didn’t like the ‘look’ of the trade as it was in a sideways movement of the Bollinger Bands. And the candle that caused the cross was 16 pips high. The preceding candles were mostly small for the 8 hours before that. It will break out, but in which direction? Already -15 pips in 15 mins. We will see where it goes.

Are you manually backtesting or do you have an automated method?
And yes, March was a bad month. But so are all the others.:stuck_out_tongue:

1232

I am manually backtesting. It could be march, it could be me, it could be the system, but I see many times that the entry is a bit late into the action.
Now I’veb een reading some more and just using indicators might be laggy from the start, so maybe it is the system that’s not making the pips (for me).

I am trying to read up some more about price action and trends, mostly here on babypips forums and mostly they are of a member called tymen, and they seem to have lots of valuable information.

I also came across a master candle method which seems to be working ok, but for that one to work out for me, I need to learn a lot more about price action and support/resistance to get good exit points.

And I have to take the dive and set up a demo account to try it with something more ‘real’.

1233

When it comes to the laggy behaviour of the system, that’s just part of the deal when using ma’s.

I’m wondering what the results will be using 5/8 ema crossovers, read a thread about it on ff… although that was a 1h tf if I recall correctly…

Could you post a link to this candle system you’re referring to.

thanks

1234

Here’s my interpretation and methodology for the system;

Charts as BigPippin suggests, with the addition of a fibonnaci retracement on the last big trend swing (normally one or two of these a day in GBP/USD)

I am using FXCM Trading Station, and so I have an automated fib indicator which finds the higher highs and lower lows over the last number of defined periods. I also have a custom signal that plays an alert sound when all the parameters are hit (EMA’s cross, RSI is + or - 50, STOCS between 80 & 20).

I have trading station open and running in the background while I work;

Upon hearing my alert signal, I go to it and check the following;

MACD is in the right place
STOC lines are heading in the direction of the trend
FIB Retracements are in the right place (it is automated after all)

A quick glance at the chart also just to confirm that the alert was in the correct place and that the current candle is behaving as it should (in the direction of the trend reversal)

Once I am happy that all these things are good, I’ll watch for the candle that closes above the first fibonacci retracement level, and i’ll enter on the next candle to begin trading.

I use the fibonacci lines as both take profit and stop loss levels and I am happy to walk away with 20-30 pips. My last trade I closed out at 20.4 pips profit after watching the candle struggle to break resistance at a fib line. I set a close on the fib line, which it hit and closed.

The trend continued, but hey, i’m not greedy and there will be another opportunity tomorrow and if I can do 20 pips on that i’ll be very happy.

I backtested this method by selecting random periods in time and doing 4 days of trend reversals and it all looked good, I have also been monitoring without actually trading and written down the decisions i’d have took and I am confident that you can take a good few daily pips from it.

I’m giving it two months and if I can work an overall profit that justifies the time, I’ll go live and probably blog my results.

1235

Try a google for MasterCandle to find it somewhere. It’s a free pdf on a site having paid services as well. (which isn’t the best you can get I guess).

Before I started looking at the charts with Cowabunga I was thinking about the 5/8 MA’s too, because those are Fibonacci numbers, or 8/13, but those wuld lag way too much.

But for now I want to learn more about PA, SR and trendlines.

1236

thanks!

I assumed it was a bp post, I believe it’s not tolerated if u post links to external sites if ur under 50 posts… so maybe it would be best to remove it again.

cheers

1237

Hi MrPippiT,

As others have said, indicators must always lag behind PA. I have also read Tymen’s thread - every post. Great read!! I was trying to adapt his entry into the Cowabunga method. No wonder I’m getting confused.

In fact I am going to try trading Tymen’s method exclusively for a week or two (or more). Chopping and changing from Cowabunga to BB DNA has caused me to jump in to trades without looking closely at the charts, with obvious consequences. So from now I will stop trading this system, but I do intend coming back to it as I believe it still can produce profits.

If you haven’t caught up with the latest Tymen has just posted his exit strategy. Once I learn how to use it correctly I will probably try using it for the Cowabunga method, just to get a comparison with the original exit strategy.

1238

@madpipa: which of tymen’s strategies are you trying out? The oldest one with over two years of refining is the candlestick method. He replied to me in a thread that the second pdf of that method should give all the insight one needs for that method.

The other strategy thread is newer and is about trend trading. I think you are referring to that one? It is still in progress.

1239

@MrPippiT: Yes, The Finest in Trend Trading thread. He stated to a post in that thread that he no longer uses the candlestick method & that you need to be very precise for it to work well. He now uses the BB DNA CBL - at least his revised version. Many people are having wins with this system, so it seems to be a good place to start. He also has what appears to be a top exit method using PSAR & mid BB to trail stops. Its not perfect but on manual inspection it does appear to be as good or better than anything else I have seen. I want to learn & become comfortable with his system, then I will probably incorporate some of those methods into my version of Cowabunga.

If you haven’t read Graviton’s thread on Multi Time Frame Trend Trading then I suggest you do. It is complimentary to Tymen’s thread. It has many great thoughts & working ideas from a guy who has traded for 20+ years. Grav also has a strategy for introducing multiple lots into a trade, which is something I might also consider for Cowabunga. If effective, it would maximise return & improve the R/R.

Cheers.

1240

Does anyone still use this system?

I have looked back over this month and it’s been nothing short of terrible, if you use this system have you found the same?

1241

Hey fellow pip hunters, let me start off by saying that although i have been researching fx strategies, indicators and risk management for 5 years and demo trading for a year i still consider myself a novice since i have not traded live yet.

I decided to try out the Cowabunga system because of it’s simplicity and the fact that its power is rooted in tried and tested indicators vastly used by global traders.

After a month of following the system with a few of my own intuition trades i’ve made [B]1125.65[/B]pips…atleast this is what the forex center report tells me after importing from my mt4 interbank platform.

I risk 2% of my account on all trades with a stop loss on latest low/high swing or 50pips away and trade off a $10 000 mini account with an initial lot size of 4. I use a lot of candlestick analysis and pattern charting to determine reversals and trend movement. I trade all major currency pairs, being particularly fond of the GBP/JPY pair. I also managed 30 consecutive wins.

From my understanding this is a really good monthly result, consistency will obviously be the true test for me but i believe that the attached report from Forex Center (reporting software) shows the success of this trading system.

My goal is to turn my demo mini account into a standard account while adhering to my money management plan before i trade real money. I aim for 40 pips a day and plan to increase my lot size monthly.

My calculation for increasing lot sizes:
Pip value x stop loss pips = stop loss value($) x 2% risk capital($) = Required Lot size.

The 40 pip daily target and lot size calculation gives me roughly 33% return a month…however with my first month of trading the system i achieved approx 50% return.

My biggest question, is there any limit on lot sizes for a mini or standard account? if so what is the limit and how is it calculated? Also, after i achieve turning my mini account into a standard account (if i were trading real money) would i need to ask my broker to convert my account to a standard account? ($10/pip- $100 000 contract size apposed to $1/pip - $10 000 contract size)

Would really appreciate some input on my questions and constructive feedback on my monthly result. I am here to learn and grow as a trader.

1242

het hey

forex wales

1243

I’m sure it’s been rehashed, but I really couldn’t find a specific post on it. What is truly the difference between trading this system at night and trading it during the day hours? Based on EST.

1244

Hi all

Sorry if this is a dim question, but can anyone tell me on the 4 hr chart does the candle have to be closed to be valid. What i am getting at is lets say the 4hr was tellig us we were only looking to short however the candle that is still open the moving averages have crossed what do i do…wait for this candle to close before changing the direction of my trading ??

Any help would be appreciated.

Dave

1245

Hi Dave,
Technically speaking, I guess yeah. The moving averages set to be based on the close of the candle.

Best

1246

Hello friends,

This system is too good to have when we had some other backups ,because what my analysis and interpretation say’s that the proportion of the profitably trade and the losses is something around 95:1 something is also according to the teaser report when it will be loss…then always a possibility that it will double the lot size,so there must a limitation to avoid such consequences losses and this can make it more profitable…for sure.

Thanks:
Albert:)

1247

huuh?
what are you saying?