Cowabunga System Daily Update: Thursday, 01/10/08

If this is your first time visiting this blog, read this first!

Main Trend

trend2

Current Trend= The trend remained down the entire day.

Today I only looked for short trades.

Today’s Surf

1:45am EDT- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down, and MACD was positive and losing value. This was a valid entry. The entry was at the close of the candle at 1.9563 with a stop at the most recent swing high at 1.9588. Since I was only 13 pips away from the nearest 50 or 00 level (1.9550) I decided to go for the same amount of pips I was risking on the trade, which in this case was 25. This put my initial target at 1.9538

Entry: Short at 1.9563

Stop: 1.9588

Initial Target: 1.9538

4:15am EDT- My target wasn’t hit at this point. I knew that the GBP Trade balance was coming out at 4:30am EDT. According to my rules I don’t hold trades over important news events. I exited my trade at 1.9582.

7:45am EDT- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down, but MACD was already negative. This cancelled out the signal and I did not enter.

10:15am EDT- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down, but MACD was already negative. This cancelled out the signal and I did not enter.

entry2

Trade Result: -19 pips; R-Multiple: -0.76

News events to watch for Monday :
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  • jmoney

    I noticed that many of your readers can not imitate your MACD and I was having trouble with that myself. But then I saw you could apply the MACD to another indicator (on XTICK)changing the results. So I think your MACD is applied to either the RSI or Stochastic. Could you comment on that? Thanks again.

  • aircom

    jmoney: seems like this is the OsMA with the same parameters.

  • jmoney

    I noticed that many of your readers can not imitate your MACD and I was having trouble with that myself. But then I saw you could apply the MACD to another indicator (on XTICK)changing the results. So I think your MACD is applied to either the RSI or Stochastic. Could you comment on that? Thanks again.

  • aircom

    jmoney: seems like this is the OsMA with the same parameters.

  • Pipslinger

    Me too, jmoney. I tried coding my own MACD based on the formulas given on the XTick forum by the site admin, Arthur, which also agrees with the formulas on Wikipedia’s MACD page. However, I can’t get it to look like the MACD I see here.

  • mondavie

    I have the same problem reading the MACD , also tried the OsMa with the same parameters as MACD as well, similar but not always generate the same signal as the MACD on XTICK. Any charting Software (free preferably) that produce the same signals as your’s.

  • Pipslinger

    Me too, jmoney. I tried coding my own MACD based on the formulas given on the XTick forum by the site admin, Arthur, which also agrees with the formulas on Wikipedia’s MACD page. However, I can’t get it to look like the MACD I see here.

  • mondavie

    I have the same problem reading the MACD , also tried the OsMa with the same parameters as MACD as well, similar but not always generate the same signal as the MACD on XTICK. Any charting Software (free preferably) that produce the same signals as your’s.

  • PipSurfer

    I’m not sure which softwares can imitate the MACD that I have but I do know that the MACD histogram on my charts is basically showing the difference between the 2 MACD lines. If you take that into account you can pretty much look at your MACD lines and see if there is a positive difference or a negative difference. If the long signal occurs and you have a negative difference then you can pretty much picture the histogram as being negative. If the difference between the 2 lines decreases then you know that the histogram is gaining value which makes the signal valid. You can reverse the scenario for short trades. Does that help at all?

  • PipSurfer

    I’m not sure which softwares can imitate the MACD that I have but I do know that the MACD histogram on my charts is basically showing the difference between the 2 MACD lines. If you take that into account you can pretty much look at your MACD lines and see if there is a positive difference or a negative difference. If the long signal occurs and you have a negative difference then you can pretty much picture the histogram as being negative. If the difference between the 2 lines decreases then you know that the histogram is gaining value which makes the signal valid. You can reverse the scenario for short trades. Does that help at all?

  • gailellis

    I use VT Trader supplied by cmsfx. It’s MACD gives the same results as Pip Surfer’s – at least for as long as I’ve been following the blog (a couple of months.) It’s not as pretty as xTick, but the demo is free for as long as you want.

    The formula it uses is
    FL:= Mov(spr,Sh,smat) – Mov(lpr,Lg,lmat);
    SL:= Mov(FL,sig,sigmat);
    OsMA:= FL-SL;

    where
    spr is short MA price
    Sh is short MA periods
    smat is short MA type

    lpr is long MA price
    lg is long MA periods
    lmat is long MA Type

    sig is signal MA periods
    sigmat is signal MA type

  • gailellis

    I also remember reading somewhere that the MACD for MT 4 was not right, and somebody posted a corrected version on another site. I also use MT4 to track this blog (because it’s prettier than VT Trader) and I have the corrected version that shows the same results as Pip Surfer’s MACD. If somebody can tell me how to post it I will. I don’t remember where I got the indicator but its name is MACD 1 and it was made by by “David W. Thomas”

  • gailellis

    I use VT Trader supplied by cmsfx. It’s MACD gives the same results as Pip Surfer’s – at least for as long as I’ve been following the blog (a couple of months.) It’s not as pretty as xTick, but the demo is free for as long as you want.

    The formula it uses is
    FL:= Mov(spr,Sh,smat) – Mov(lpr,Lg,lmat);
    SL:= Mov(FL,sig,sigmat);
    OsMA:= FL-SL;

    where
    spr is short MA price
    Sh is short MA periods
    smat is short MA type

    lpr is long MA price
    lg is long MA periods
    lmat is long MA Type

    sig is signal MA periods
    sigmat is signal MA type

  • gailellis

    I also remember reading somewhere that the MACD for MT 4 was not right, and somebody posted a corrected version on another site. I also use MT4 to track this blog (because it’s prettier than VT Trader) and I have the corrected version that shows the same results as Pip Surfer’s MACD. If somebody can tell me how to post it I will. I don’t remember where I got the indicator but its name is MACD 1 and it was made by by “David W. Thomas”

  • tekkk

    All right, here’s my two cents on this interesting problem:

    Following gailellis’s tip, I tried some google magic and came across the code for David Thomas’ MACD at http://xeatrade.com/trading/11/M/360.html. I created a new indicator in MT4 (“Tools/Metaquotes language editor” etc.) based on this code and it fits quite well with the MACD on the screenshots above. Not identical, but the general trends seem to correspond.

    Surfer dude, if you’d care to have a look at this and point out what might have been the issue with the original MACD, I’m sure that would be very beneficial for everybody. And regardless, thanks for providing us with a fun, working system!

    (PS – if anybody needs help with setting up indicators from code, do let me know. This was my first time, and I’m assuming I’m not the only one.)

  • tekkk

    All right, here’s my two cents on this interesting problem:

    Following gailellis’s tip, I tried some google magic and came across the code for David Thomas’ MACD at http://xeatrade.com/trading/11/M/360.html. I created a new indicator in MT4 (“Tools/Metaquotes language editor” etc.) based on this code and it fits quite well with the MACD on the screenshots above. Not identical, but the general trends seem to correspond.

    Surfer dude, if you’d care to have a look at this and point out what might have been the issue with the original MACD, I’m sure that would be very beneficial for everybody. And regardless, thanks for providing us with a fun, working system!

    (PS – if anybody needs help with setting up indicators from code, do let me know. This was my first time, and I’m assuming I’m not the only one.)

  • PipSurfer

    Hi Tekk and Gailellis- Thank you for your input! Could please post it in this forum and I will make it a sticky so people can fix their MACD problems. Thanks!

  • gailellis

    Ok, after a good night’s sleep my memory was jogged and I remembered where I got the MACD1 indicator – right here on this site.

    Here’s the link
    http://forums.babypips.com/free-forex-trading-systems/572-cowabunga-system-mt4-indicator-11.html

    In his post # 34 on this page Pipalot explained what was the problem with the original MACD indicator shipped with MT4 so maybe this will save PipSurfer some work.

    p.s Thanks for all your work Pip Surfer. I’m a newbie to Forex so it’s a big help to be able to use your blog as a benchmark

  • PipSurfer

    Hi Tekk and Gailellis- Thank you for your input! Could please post it in this forum and I will make it a sticky so people can fix their MACD problems. Thanks!

  • gailellis

    Ok, after a good night’s sleep my memory was jogged and I remembered where I got the MACD1 indicator – right here on this site.

    Here’s the link
    http://forums.babypips.com/free-forex-trading-systems/572-cowabunga-system-mt4-indicator-11.html

    In his post # 34 on this page Pipalot explained what was the problem with the original MACD indicator shipped with MT4 so maybe this will save PipSurfer some work.

    p.s Thanks for all your work Pip Surfer. I’m a newbie to Forex so it’s a big help to be able to use your blog as a benchmark

  • tekkk

    Beautiful. The templates that are posted there really make life easier.
    Pipsurfer, I think the Cowabunga template for MT4 is priceless, since so many of us do seem to be using this (free!:) software. How ’bout adding a link to that template on the FAQ, under “Cowabunga on MT4″ or something? (http://forums.babypips.com/attachments/free-forex-trading-systems/
    1940d1192788110-cowabunga-system-mt4-indicator-cowabunga_template.zip)

    And thanks again. You’re the Elvis of comprehensible, easy systems, and we’re your loyal fans:)

  • tekkk

    Beautiful. The templates that are posted there really make life easier.
    Pipsurfer, I think the Cowabunga template for MT4 is priceless, since so many of us do seem to be using this (free!:) software. How ’bout adding a link to that template on the FAQ, under “Cowabunga on MT4″ or something? (http://forums.babypips.com/attachments/free-forex-trading-systems/
    1940d1192788110-cowabunga-system-mt4-indicator-cowabunga_template.zip)

    And thanks again. You’re the Elvis of comprehensible, easy systems, and we’re your loyal fans:)