Cowabunga System Daily Update: 01/23/07

Main Trend

Current Trend= Up

Today I only looked for long trades.

Today’s Surf

6:30 pm ET-Cowabunga signal generated. RSI > 50, Stochastics trending up, and MACD went from negative to positive. Entry was at 9764 with a stop at the most recent swing low which was 9750. Normally, I would target 9800 in this case since the entry was a good distance away from a 00 or 50 level. However, since the signal happened before midnight I watched this trade very closely and set my initial target to the same amount of pips I was risking. In this case, the risk was 14 pips (9764-9750), so my target was 9778 (9764+14). Notice that this target is not big at all and once you factor in the spread, it becomes a very small trade.

7:00 pm ET- My target was hit, but instead of closing my trade for a measly gain, I moved my stop to breakeven just to see if I could catch any more pips. I set my new target for 9800.

2:30 am ET- Price shoots through 9800 with a nice clean break so instead of taking profit, I adjusted my stop and set it at 9800 to lock in some profit. My next target was for 9850.

5:00 am ET- The Cable hits 9850 and I held my trade to see if it would close above it. But unfortunately the price retraced down and I closed my trade out at 9850.

Trade Result: +86 Pips; R Multiple= 6.14

  • Topgun_68

    Nice Trade Big Pippin. Question: Do you ever find yourself not trailing your stop and just leaving the trade run until the moving averages cross the other way or RSI, Stoch, MACD change directions? I seem to be taking smaller profits by using an exact TP and missing some big trends. Just like your trade above kept going North.

  • bigpippin

    On longer timeframes I am more prone to hold the trade until I see a reversal in the indicators. The reason is that there is less noise on longer timeframes which make the indicators more reliable.

    On short time frames I like to watch the price action. I will almost always let the price either hit my stop or my initial target, but once my first target is hit, I like to feel the market and see if there is any room for more profit. This isn’t being greedy…it’s called trying to maximize your profit. You won’t always get the entire move. Today I still missed out on an extra 50 pips but at least I was able to get as much as possible. The beauty of it was that I only risked 14 pips and I ended up with 86! Indicators are a little funky on short time frames so I don’t really use them as exit signals. Hope that helps.

  • pinetree

    Are you able to inform us prior to when a signal may be possibly be generated. That would be a big help.

  • bigpippin

    I could, but then that would defeat the purpose of this blog. The blog is not meant to give out trades, but rather help traders learn how to trade for themselves. Then they can hopefully add on and make the system better or adjust it to fit their trading style.

    What I’ve hopefully done is established a starting point for new traders on which they can start building upon.

  • foricks

    Nice ride on the longboard Big Pippin. What parameters do you use to “let it ride” when deciding to move the stop?

  • bigpippin

    foricks- I use price action. There is no set rule. In today’s trade, my initial target was so small that I simply put my stop at breakeven to see if I could get to the 50 level. Not only was the 00 level reached, but the Cable soared passed it which gave me reason to believe the pair could go higher. So instead of taking profit, I just moved my stop to that level and targeted the 50 level. The 50 level was breached and the pair moved past it for a little bit, but because it retraced, I decided to take my profits at that level. If you look at the chart above and look at about 6 candles past my exit point…if I had seen that candle, I would’ve moved my stop to 9850 and let it ride instead of taking my profits because that candle made a nice break and managed to close above the 50 level.

  • Topgun_68

    Nice Trade Big Pippin. Question: Do you ever find yourself not trailing your stop and just leaving the trade run until the moving averages cross the other way or RSI, Stoch, MACD change directions? I seem to be taking smaller profits by using an exact TP and missing some big trends. Just like your trade above kept going North.

  • bigpippin

    On longer timeframes I am more prone to hold the trade until I see a reversal in the indicators. The reason is that there is less noise on longer timeframes which make the indicators more reliable.

    On short time frames I like to watch the price action. I will almost always let the price either hit my stop or my initial target, but once my first target is hit, I like to feel the market and see if there is any room for more profit. This isn’t being greedy…it’s called trying to maximize your profit. You won’t always get the entire move. Today I still missed out on an extra 50 pips but at least I was able to get as much as possible. The beauty of it was that I only risked 14 pips and I ended up with 86! Indicators are a little funky on short time frames so I don’t really use them as exit signals. Hope that helps.

  • pacifier

    Nice trade bigpippin !

    What time do you start looking at the 15min chart ?
    Also, do you hold position beyond UK or US close ?

    (Tried looking for this info on your blog to no avail)

    More questions (lol)

    Have you backtested this system ?
    What’s its stats ? WinLoss, Expectancy, R-Multiples, Max Drawdown ?
    At the same time, since your exits have some disgresionary element to it, it may not be possible to backtest.

    Cheers,

    Pacifier

  • pinetree

    Are you able to inform us prior to when a signal may be possibly be generated. That would be a big help.

  • bigpippin

    I could, but then that would defeat the purpose of this blog. The blog is not meant to give out trades, but rather help traders learn how to trade for themselves. Then they can hopefully add on and make the system better or adjust it to fit their trading style.

    What I’ve hopefully done is established a starting point for new traders on which they can start building upon.

  • bigpippin

    Pacifier-

    I look at the 15 minute chart starting around 6 pm ET. Like I said though, the best signals usually come after midnight. When a signal occurs before midnight I am very cautious with the trade and watch it constantly. The good thing about it is that if there is a signal before midnight, the risk is usually small, but at the same time that also means your targets will probably also be small.

    The system has about a 65-70% win ratio. The average win is about 50 pips while the average loss is about 11 pips. Average R-Multiple is 2.02. Max drawdown is 45 pips. Like you said, the exits are dynamic so I’m not so sure how effective the backtesting is. I think you’ll start to see a pattern on how I set my targets after you see me post for a while. Usually I go for a 50 or 00 level, but if either of those levels make it too small of a target, I usually go for the same amount of pips I am risking. I also keep my eye out for any important support or resistance levels. Hope that helps!

  • foricks

    Nice ride on the longboard Big Pippin. What parameters do you use to “let it ride” when deciding to move the stop?

  • bigpippin

    foricks- I use price action. There is no set rule. In today’s trade, my initial target was so small that I simply put my stop at breakeven to see if I could get to the 50 level. Not only was the 00 level reached, but the Cable soared passed it which gave me reason to believe the pair could go higher. So instead of taking profit, I just moved my stop to that level and targeted the 50 level. The 50 level was breached and the pair moved past it for a little bit, but because it retraced, I decided to take my profits at that level. If you look at the chart above and look at about 6 candles past my exit point…if I had seen that candle, I would’ve moved my stop to 9850 and let it ride instead of taking my profits because that candle made a nice break and managed to close above the 50 level.

  • pacifier

    Nice trade bigpippin !

    What time do you start looking at the 15min chart ?
    Also, do you hold position beyond UK or US close ?

    (Tried looking for this info on your blog to no avail)

    More questions (lol)

    Have you backtested this system ?
    What’s its stats ? WinLoss, Expectancy, R-Multiples, Max Drawdown ?
    At the same time, since your exits have some disgresionary element to it, it may not be possible to backtest.

    Cheers,

    Pacifier

  • bigpippin

    Pacifier-

    I look at the 15 minute chart starting around 6 pm ET. Like I said though, the best signals usually come after midnight. When a signal occurs before midnight I am very cautious with the trade and watch it constantly. The good thing about it is that if there is a signal before midnight, the risk is usually small, but at the same time that also means your targets will probably also be small.

    The system has about a 65-70% win ratio. The average win is about 50 pips while the average loss is about 11 pips. Average R-Multiple is 2.02. Max drawdown is 45 pips. Like you said, the exits are dynamic so I’m not so sure how effective the backtesting is. I think you’ll start to see a pattern on how I set my targets after you see me post for a while. Usually I go for a 50 or 00 level, but if either of those levels make it too small of a target, I usually go for the same amount of pips I am risking. I also keep my eye out for any important support or resistance levels. Hope that helps!

  • pacifier

    Hi again bigpippin,

    I don’t live in the states. I was trying to ascertain your routine with this system. What time do you start and finish (GMT time) and how many hours spent checking the 15 minutes charts (i guess sometimes could be every 4 hours hehehe). Do you have a time stop ? eg. exit all positions at London close.

    I would also like to commend you on a job well done with this blog. Not many ppl walk the talk these days.

    Thanks again ! Happy trading !

    Pacifier

  • pinetree

    Did anyone catch the sell setup last night – about 1:00am.
    Rsi

  • pacifier

    Hi again bigpippin,

    I don’t live in the states. I was trying to ascertain your routine with this system. What time do you start and finish (GMT time) and how many hours spent checking the 15 minutes charts (i guess sometimes could be every 4 hours hehehe). Do you have a time stop ? eg. exit all positions at London close.

    I would also like to commend you on a job well done with this blog. Not many ppl walk the talk these days.

    Thanks again ! Happy trading !

    Pacifier

  • pinetree

    Did anyone catch the sell setup last night – about 1:00am.
    Rsi

    Unfortunatley I was alseep by then.

  • bigpippin

    Pacifier- I close my trades at the end of the US session whether or not my target is hit. I also set up alerts so that I don’t have to sit in front of the charts all day. When I get an alert I check my chart and see if its a viable entry and move on from there.

  • bigpippin

    Pacifier- I close my trades at the end of the US session whether or not my target is hit. I also set up alerts so that I don’t have to sit in front of the charts all day. When I get an alert I check my chart and see if its a viable entry and move on from there.

  • Sambhunath Majumder

    When you change the S.L. how much margin do you leave so that the stops are not hit instantaneously?

  • bigpippin

    I kind of just watch the charts before moving my s/l. I like to wait and see if the candle can close higher or lower than my target but if I see that the price has been struggling trying to get there I just exit right on the target. If the candle does surpass my target, I move my stop my target. If I’m short then I add the spread because my charts show the Bid price.

  • Sambhunath Majumder

    When you change the S.L. how much margin do you leave so that the stops are not hit instantaneously?

  • bigpippin

    I kind of just watch the charts before moving my s/l. I like to wait and see if the candle can close higher or lower than my target but if I see that the price has been struggling trying to get there I just exit right on the target. If the candle does surpass my target, I move my stop my target. If I’m short then I add the spread because my charts show the Bid price.