Cowabunga System Daily Update: Tuesday, 01/26/2010

The CFTC may be changing the rules for retail traders in the US. This affects many of us in a negative way and we need your help getting our voices heard.

Read more of the details

I can not find better words to describe my position on all this than those from Andrei Pehar, Chief Currency Strategist at fxKnight.com.  

Andrei says: "I am not opposed to regulation nor regulatory agencies. But that regulation needs to be fair, transparent, and open to public input. Otherwise it becomes corrupt and self-serving. Sure high leverage can get you into trouble if used thoughtlessly. Sure hedging when not done properly turns one loss into two. But I believe the cure is EDUCATION, not restricting what people can and cannot do with their investment decisions. Guide, don’t dominate – government was invented to protect people and their property, not to limit their potential.

We at BabyPips.com disagree with the CFTC proposal.

If you disagree as well, you may submit your comments to secretary@cftc.gov.  

Include “Regulation of Retail Forex” in the subject line of the message and the identification number RIN 3038-AC61 in the body of the message. Please, help us to spread the word!

I think this is a very important matter that affects us all, and we should try our hardest to ensure that things will be done for the best of the trading community.

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

Main Trend

Current Trend

The trend stayed up until 7am EST. From 3am – 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 Gross Domestic Product
  • 9:00am EST- US S&P/Case-Shiller Home Price Index
  • 10:00am EST- US Consumer Confidence

Today’s Surf

1:45am EST- There was a moving average crossover for a long trade. RSI was greater than 50, stochastics were trending up and MACD went from negative to positive. This was a valid entry.

The entry was at the close of the candle at 1.6233 with a stop at the most recent swing low at 1.6191. Since I was 17 pips away from the nearest 50 or 00 level, I decided to put my initial target at 1.6250.

Entry: Long at 1.6233 Stop: 1.6191 Target: 1.6250

3:30am EST- My target was hit. Price made a clean break so I trailed my stop to 1.6250 and set my next target for 1.6300.

3:45am EST- Unfortunately I got stopped out at my initial target at 1.6250.

entry2

Trade Result: +17 pips (NOT INCLUDING SPREAD) R-Multiple: 0.40

News events to watch for tomorrow:

  • 6:00am EST- UK CBI Realized Sales
  • 10:00am EST- US New Home Sales
  • 2:15pm EST- US FOMC Statement

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.

  • Bondtrader

    Hi PipSurfer,

    Thanks for sharing the Cowabunga System with us. This system is based on sound trade entry principles. There are alot of different variations of this system on the internet. One I purchased about 12-13 years for a small fee which uses different MA’s and lengths enters trades using price action and no oscillators. So , we know the basic strategy works. One thing I have a hard time with is the size of alot of S/L you use on these trades. I went back and saw a trade from a year or so ago that used a 96 PIP S/L and was a losing trade . Thats insane for a 15-minute chart. I understand very well the logic of using the most recent swing highs/lows for your S/L but some of the trades look to have Risk/Reward backwards. Instead of say 1:3 RR its 3:1 RR . Unless the system wins 100% of the time which we know it doesnt, theres no way to make money over time. One losing trade cancels out 3-4 winning trades.Have you comsidered using a ” Hard S/L of say 15-20 Pips ” which is reasonable for a 15-minute chart to see how profitable the system would be ? If the trend reverses enough to take a 96 PIP S/L out , I would much rather have had a Hard 20 Pip S/L in place and saved myself the additional 76 Pips to trade another day with.

    Best in Life ,
    EZTrades

  • Brachson

    Hi Bondtrader,

    The general strategy is that we aim at the nearest 00 or 50 level, OR the same amount of pips that we are risking, whichever is larger. If we stick to that, the risk/reward ratio will be rarely more than 1.

    In a situation where the nearest swing low is 96 pips away and we get a valid entry signal, we should decide if the risk is within our money management tolerance range – and it it is not, then it’s better to stay away from the trade. There will be another good entry soon enough.

    When trading any system, we should not forget about the common sense (the so called soft side of trading). If we know that the average daily trading range of GBP/USD is around ~95 pips, and the price have just surged 96 pips up, even though the Cowabunga shows “enter long” it may be better to stay away.

    Pipsurfer mentioned a couple of times how the “big picture” is important, but for the educational reasons here on the blog, he usually follows the system’s instructions to the letter to prove that the system is profitable in the long term.

    Happy trading!

    Brachson

  • supermalv85

    hey pip surver, I’m just wondering how do you do your money management in detail.. I read the part about your stop loss for this system, but it’s still doesn’t give me a clear picture regarding what your lot size is etc.

    I have no idea how to stay risking 2% of my money management with cowabunga system…

    if you can clarify that, i’d most appreciate it.. thankss

  • Bondtrader

    Hi PipSurfer,

    Thanks for sharing the Cowabunga System with us. This system is based on sound trade entry principles. There are alot of different variations of this system on the internet. One I purchased about 12-13 years for a small fee which uses different MA’s and lengths enters trades using price action and no oscillators. So , we know the basic strategy works. One thing I have a hard time with is the size of alot of S/L you use on these trades. I went back and saw a trade from a year or so ago that used a 96 PIP S/L and was a losing trade . Thats insane for a 15-minute chart. I understand very well the logic of using the most recent swing highs/lows for your S/L but some of the trades look to have Risk/Reward backwards. Instead of say 1:3 RR its 3:1 RR . Unless the system wins 100% of the time which we know it doesnt, theres no way to make money over time. One losing trade cancels out 3-4 winning trades.Have you comsidered using a ” Hard S/L of say 15-20 Pips ” which is reasonable for a 15-minute chart to see how profitable the system would be ? If the trend reverses enough to take a 96 PIP S/L out , I would much rather have had a Hard 20 Pip S/L in place and saved myself the additional 76 Pips to trade another day with.

    Best in Life ,
    EZTrades

  • Brachson

    Hi Bondtrader,

    The general strategy is that we aim at the nearest 00 or 50 level, OR the same amount of pips that we are risking, whichever is larger. If we stick to that, the risk/reward ratio will be rarely more than 1.

    In a situation where the nearest swing low is 96 pips away and we get a valid entry signal, we should decide if the risk is within our money management tolerance range – and it it is not, then it’s better to stay away from the trade. There will be another good entry soon enough.

    When trading any system, we should not forget about the common sense (the so called soft side of trading). If we know that the average daily trading range of GBP/USD is around ~95 pips, and the price have just surged 96 pips up, even though the Cowabunga shows “enter long” it may be better to stay away.

    Pipsurfer mentioned a couple of times how the “big picture” is important, but for the educational reasons here on the blog, he usually follows the system’s instructions to the letter to prove that the system is profitable in the long term.

    Happy trading!

    Brachson

  • supermalv85

    hey pip surver, I’m just wondering how do you do your money management in detail.. I read the part about your stop loss for this system, but it’s still doesn’t give me a clear picture regarding what your lot size is etc.

    I have no idea how to stay risking 2% of my money management with cowabunga system…

    if you can clarify that, i’d most appreciate it.. thankss