Cowabunga System Daily Update: 02/19/07

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

Main Trend

Current Trend= Trend remained down for the entire day.

Today I only looked for short trades.

Today’s Surf

7:30 pm ET- There was a moving average crossover for a short trade. RSI<50 (barely..mine was at like 49.5), Stochastics were trending down, and MACD was positive and losing value. This was a valid entry. Entry was at the close of the candle which was at 9525 and my stop was at the most recent swing high which was at 9560. The signal occurred before midnight which means there was a risk of lack of movement. So I could either go for the nearest 00 (9500) for a target of 25 pips or go for the same amount of pips I was risking, which in this case was 35. Since I was worried about lack of movement I decided to take the smaller target and go for 9500.

*After midnight- My initial target was at 9500. Now since it is after midnight and I am still in my trade I decide to go for a larger target since movement should be ok now. I now set my initial target for the same amount of pips I was risking, which in this case was 35 pips. This put my target at 2490.

5:15 am ET- Wow! The market not only slices through my target at 2490, but it moves all the way down to 9450. The price makes a slight break of this level and actually ends up closing slightly below it so I move my stop to 9450 which is where I was eventually stopped out on the next candle.

Trade Result: +75 pips; R-Multiple= 2.14

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  • dfstone32

    It was pretty tough watching price head for the S/L level twice but caught this one too. Thanks

  • escort

    missed this one as usual
    but you risked 30 pips to gain 25??
    what about risk:reward ratio 1:3?
    luckily it paid off
    i have just finished pip school and see you recommend moving to London
    My advise DONT its expensive and rains!!!!!
    you would need to make twice as many pips to break-even

  • IvanStipac

    Hello Big Pippin, I am trading with Oanda, and using 3 hour instead of 4 hour chart. At the time you entered the trade I’ve had clear Up trend 18th at 7:30pm – 01:30 my time. Is it possible that the differencies are so big?

  • bigpippin

    escort- the initial risk was 35 to get 25 pips. Sometimes this happens. However, since the system has over a 50% win ratio, having smaller reward/risk ratios aren’t really a problem. And with days like today (and most of the winning days) the reward ended up being much higher than the initial risk.

    ivan- I’m not sure what to tell you. I can only go by what my charts tell me. Perhaps you could post a picture of what your chart looked like at that time on the forums (The Cowabunga thread) to give me a clearer picture.

  • dfstone32

    It was pretty tough watching price head for the S/L level twice but caught this one too. Thanks

  • escort

    missed this one as usual
    but you risked 30 pips to gain 25??
    what about risk:reward ratio 1:3?
    luckily it paid off
    i have just finished pip school and see you recommend moving to London
    My advise DONT its expensive and rains!!!!!
    you would need to make twice as many pips to break-even

  • IvanStipac

    Hello Big Pippin, I am trading with Oanda, and using 3 hour instead of 4 hour chart. At the time you entered the trade I’ve had clear Up trend 18th at 7:30pm – 01:30 my time. Is it possible that the differencies are so big?

  • bigpippin

    escort- the initial risk was 35 to get 25 pips. Sometimes this happens. However, since the system has over a 50% win ratio, having smaller reward/risk ratios aren’t really a problem. And with days like today (and most of the winning days) the reward ended up being much higher than the initial risk.

    ivan- I’m not sure what to tell you. I can only go by what my charts tell me. Perhaps you could post a picture of what your chart looked like at that time on the forums (The Cowabunga thread) to give me a clearer picture.

  • pinetree

    BP, according to my VT trader chart,at about 10:00pm on Sun Feb 18 — there was a spike that hit 1.9563. This would have hit your stop position at 1.9560 –and your trade should have been closed with a 35 pip loss. Why is it my VT trader chart hit 1.9563 and your chart did not? Thanks.

  • bigpippin

    pinetree- One reason may be the fact that we are using different brokers. As you know different brokers have different quotes. Also, in short trades make sure you are adding the spread to your targets and stops because when you enter a short position the spread is not until you exit your trade. In long trades, the spread is automatically taken at your entry.

  • bigpippin

    let me clarify on the “adding the spread” part. If you are short at 9500 and on your chart your stop loss is 9525, you would need to add your spread to 9525 as your true stop loss. So if the spread is 5 pips your actual stop loss would be 9530 (9525+5). This is assuming that your chart is showing you the “bid” price which is the case with my charts.

  • pinetree

    BP, according to my VT trader chart,at about 10:00pm on Sun Feb 18 — there was a spike that hit 1.9563. This would have hit your stop position at 1.9560 –and your trade should have been closed with a 35 pip loss. Why is it my VT trader chart hit 1.9563 and your chart did not? Thanks.

  • bigpippin

    pinetree- One reason may be the fact that we are using different brokers. As you know different brokers have different quotes. Also, in short trades make sure you are adding the spread to your targets and stops because when you enter a short position the spread is not until you exit your trade. In long trades, the spread is automatically taken at your entry.

  • bigpippin

    let me clarify on the “adding the spread” part. If you are short at 9500 and on your chart your stop loss is 9525, you would need to add your spread to 9525 as your true stop loss. So if the spread is 5 pips your actual stop loss would be 9530 (9525+5). This is assuming that your chart is showing you the “bid” price which is the case with my charts.