Cowabunga System Daily Update: Tuesday, 01/05/2010

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Main Trend

Current Trend

The trend stayed up until 7am EST. From 11pm – 7am EST, a new trend change candle formed and changed the trend from up to DOWN. After 7am EST, the trend remained down the rest of the day.

Today I only looked for long trades until 7am EST. After 7am EST, I only looked for short trades.

News events to watch for today :

  • 4:30am EST- UK Purchasing Manager Index Construction
  • 10:00am EST- US Pending Home Sales

Today’s Surf

8:30am EST- 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 1.6008 with a stop at the most recent high at 1.6052. Since I was only 8 pips away from the nearest 50 or 00 level (1.6000), I decided to go for the same amount of pips I was risking on the trade, which in this case was 44. This put my initial target at 1.5964.

Entry: Short at 1.6008 Stop: 1.6052 Target: 1.5964

9:45am EST- My target was not hit by this point and I knew that news was coming out at 10:00am EST. I manually exited at 1.6043.

11:15am EST- 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 1.6013 with a stop at the most recent high at 1.6066. Since I was only 13 pips away from the nearest 50 or 00 level (1.6000), I decided to go for the same amount of pips I was risking on the trade, which in this case was 53. This put my initial target at 1.5960.

Entry: Short at 1.6013 Stop: 1.6066 Target: 1.5960

1:00pm EST- My target was almost hit here. Since it was already late in the day, I decided to go ahead and take my final profit. I exited at 1.5968.

entry2

Trade Result: -35 +45= +10 pips (NOT INCLUDING SPREAD) R-Multiple: -0.79; 0.84

News events to watch for tomorrow:

  • 4:30am EST- UK Services PMI
  • 8:15am EST- US ADP Non-Farm Employment Change
  • 10:00am EST- US ISM Non-Manufacutring Composite
  • 10:30am EST- US Crude Oil Inventories
  • 2:00pm EST- FOMC Minutes

For a complete list of news events check out our Forex Economic Calendar.
Questions? Read the Cowabunga FAQ.

Want to discuss the Cowabunga System? Visit our Forex Forums.

  • cds4686

    Hi there,

    Thanks for your posts; I’ve been learning so much from them.
    Two quick questions:

    1) You wait until the close of the candle once there’s been a signal. What if the signal comes 1 minute before the close of the candle? Will you wait a whole nother candle? What is the ‘significance’ of waiting a candle – wouldn’t it make more sense to wait a certain amount of minutes?

    2) Is there a reason that you close 2 candles before a news event and not – say – 5 minutes before a news event?

    Thank you!

  • mabidashraf

    @cds4686: 1) This system determines at the close of candle whether there is a valid signal or not. You don’t have to wait another candle if there is a signal at the close of candle i.e. if there is a valid signal at the close of candle you enter the trade. 2) There is no hard rule as to when you should close the trade before the news event i.e. you can prefer to close 5 minutes before the news event. Regards.

  • cds4686

    Hi there,

    Thanks for your posts; I’ve been learning so much from them.
    Two quick questions:

    1) You wait until the close of the candle once there’s been a signal. What if the signal comes 1 minute before the close of the candle? Will you wait a whole nother candle? What is the ‘significance’ of waiting a candle – wouldn’t it make more sense to wait a certain amount of minutes?

    2) Is there a reason that you close 2 candles before a news event and not – say – 5 minutes before a news event?

    Thank you!

  • cds4686

    Hi mabidashraf and thanks for your reply.

    I’m still not clear on the significance of waiting until the close of that candle. There could be a signal when the candle is 14 minutes old or 1 minute old and you are still waiting until the close of the candle – but a candle is just a measurement of 15 minutes of time. If the purpose of waiting until the close is to see if the signal is real, then wouldn’t it make more sense to wait 15 minutes or a certain amount of time? (And if the signal comes right before the candle closed, you haven’t really given it any time to prove itself..?)

    Regarding my second question: You say that I can close 5 minutes before the news event if I want. But at what point before a news event does the news event start affecting the price (i.e. people exiting positions or waiting to see what the news will be)?

    Thank you!

  • PipMonger

    Great job with the blog. I’m becoming a big fan. I would like to know which trading platform you are using? Mine does not have the zoom feature on the indicators that yours does.

    Thanks

  • mabidashraf

    @cds4686: 1) This system determines at the close of candle whether there is a valid signal or not. You don’t have to wait another candle if there is a signal at the close of candle i.e. if there is a valid signal at the close of candle you enter the trade. 2) There is no hard rule as to when you should close the trade before the news event i.e. you can prefer to close 5 minutes before the news event. Regards.

  • cds4686

    Hi mabidashraf and thanks for your reply.

    I’m still not clear on the significance of waiting until the close of that candle. There could be a signal when the candle is 14 minutes old or 1 minute old and you are still waiting until the close of the candle – but a candle is just a measurement of 15 minutes of time. If the purpose of waiting until the close is to see if the signal is real, then wouldn’t it make more sense to wait 15 minutes or a certain amount of time? (And if the signal comes right before the candle closed, you haven’t really given it any time to prove itself..?)

    Regarding my second question: You say that I can close 5 minutes before the news event if I want. But at what point before a news event does the news event start affecting the price (i.e. people exiting positions or waiting to see what the news will be)?

    Thank you!

  • PipMonger

    Great job with the blog. I’m becoming a big fan. I would like to know which trading platform you are using? Mine does not have the zoom feature on the indicators that yours does.

    Thanks

  • PipSurfer

    @mabidashraf- Thanks for helping. You rock!

    @cds4686- The reason you wait for the candle to close is because you have to get the whole picture before making a decision. Think of trying to guess a picture on a puzzle without having all the pieces. Sure you may think you know what it is with most of the pieces, but you won’t know for sure until every piece is complete. If you enter during a candle you aren’t waiting for all the pieces to be complete, and you’re still trying to guess the final picture. True, you might have a pretty good guess, but in this system, we don’t like guessing :)

    @pipmonger- I am using Xtick. I have no affiliation with them but that is the charting platform I am using :)

  • PipSurfer

    @mabidashraf- Thanks for helping. You rock!

    @cds4686- The reason you wait for the candle to close is because you have to get the whole picture before making a decision. Think of trying to guess a picture on a puzzle without having all the pieces. Sure you may think you know what it is with most of the pieces, but you won’t know for sure until every piece is complete. If you enter during a candle you aren’t waiting for all the pieces to be complete, and you’re still trying to guess the final picture. True, you might have a pretty good guess, but in this system, we don’t like guessing :)

    @pipmonger- I am using Xtick. I have no affiliation with them but that is the charting platform I am using :)

  • foxahmed

    keep this going, great stuff!

  • foxahmed

    keep this going, great stuff!

  • Phantom14

    How do you set charts to show trend change candles? I’m also using the fxcm platform.

  • Phantom14

    How do you set charts to show trend change candles? I’m also using the fxcm platform.