Cowabunga System Daily Update: Tuesday, 05/18/2010

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

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

GBPUSD 240 min chart

Current Trend

The trend stayed down the entire day.

Today I only looked for short trades.

News events to watch for today :

  • 4:30am EST- UK Consumer Price Index
  • 8:30am EST- US Producer Price Index

Today’s Surf

4:45am EST- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down and MACD went from positive to negative. This was a valid entry.

The entry was at the close of the candle at 1.4441 with a stop at the most recent swing high at 1.4517. Since I was 41 pips away from the nearest 50 or 00 level I decided to put my initial target at 1.4400.

Entry: Short at 1.4441 Stop: 1.4517 Target: 1.4400

8:15am EST- My target was not hit by this time. Since news was coming out at 8:30am EST, I decided to manually exit my trade at 1.4453.

10:15am EST- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down and MACD went from positive to negative. This was a valid entry.

The entry was at the close of the candle at 1.4458 with a stop at the most recent swing high at 1.4496. Since I was only 8 pips away from the nearest 50 or 00 level (1.4450) I decided to go for the same amount of pips I was risking on the trade, which in this case was 38. This put my initial target at 1.4420.

Entry: Short at 1.4458 Stop: 1.4496 Target: 1.4420

11:00am EST- My target was hit. Price didn’t make a clean break so I took my final profit. I exited at 1.4420.

entry2

Trade Result: -12 +38= +26 pips (NOT INCLUDING SPREAD) R-Multiple: -0.15; 1.00

News events to watch for Wednesday:

  • 4:30am EST- UK Bank of England Meeting Minutes
  • 8:30am EST- US Consumer Price Index
  • 2:00pm EST- US FOMC Meeting Minutes

For a complete list of news events check out our Forex Economic Calendar. If you have any questions, check out the Cowabunga FAQs or discuss the Cowabunga System in our Forex Forums.

  • Jabba1

    Hey pipsurfer,

    I read through the school and took the quiz’s but I’m still a bit confused on the purple trend change candles. Would you talk to me about them please. Like do you only enter trades during these candle’s, how to they form, do they always show up purple or how would one know when they occur?

    Also, would all of the trading companies advertised on this site have a platform that looks the same as the one you are using? Would they all have trend change candles? Thanks, blessings!

  • Jabba1

    Hey pipsurfer,

    I read through the school and took the quiz’s but I’m still a bit confused on the purple trend change candles. Would you talk to me about them please. Like do you only enter trades during these candle’s, how to they form, do they always show up purple or how would one know when they occur?

    Also, would all of the trading companies advertised on this site have a platform that looks the same as the one you are using? Would they all have trend change candles? Thanks, blessings!

  • rbevis

    @Jabba1 – - -The coloring is only something he setup as an indicator in his xtick software. The color isn’t important, what it indicates is. It indicates a trend change which is triggered by the crossing of the EMA’s (5&10 in this case). You are suppose to enter the trade as close to the close or at the close “of the candle following the trend change candle” if I understand correctly. There are several custom trend change indicators out there for MT4 if that’s what you are using.

  • rbevis

    Pipsurfer,
    I like to set my stop a couple of pips over/under the swing hi/lo because I find that if it bounces off the level agian it will likely trigger the stop. With the stop placed a couple more away I stand less of a chance of getting stopped out early and only risk a couple pips in the process.

    I’d like your thoughts on this approach.
    THanks,
    Russ

  • rbevis

    @Jabba1 – - -The coloring is only something he setup as an indicator in his xtick software. The color isn’t important, what it indicates is. It indicates a trend change which is triggered by the crossing of the EMA’s (5&10 in this case). You are suppose to enter the trade as close to the close or at the close “of the candle following the trend change candle” if I understand correctly. There are several custom trend change indicators out there for MT4 if that’s what you are using.

  • rbevis

    Pipsurfer,
    I like to set my stop a couple of pips over/under the swing hi/lo because I find that if it bounces off the level agian it will likely trigger the stop. With the stop placed a couple more away I stand less of a chance of getting stopped out early and only risk a couple pips in the process.

    I’d like your thoughts on this approach.
    THanks,
    Russ

  • travel9boy

    Hi Pipsurfer,

    Thanks for clarifying the MACD. I’ve come to realise that my server time is different from yours hence the trigger candle looks rather different from yours..In this case, do we have to look for platform where the server time is identical to EST?

  • travel9boy

    Hi Pipsurfer,

    Thanks for clarifying the MACD. I’ve come to realise that my server time is different from yours hence the trigger candle looks rather different from yours..In this case, do we have to look for platform where the server time is identical to EST?

  • PipSurfer

    rbevis- That’s good that you do that. Always remember to count for the spread though especially when you go short. My only comment would be not to place it too many pips above or below the swing high where it could dramatically affect your overall Profits/Loss

    travel- It doesn’t have to be identical to EST but just make sure you know what candle(s) corresponds to the EST time. So if you’re looking from 12am – 12pm EST, make sure you know which candles correspond to that time on whatever charting program you are using. Hope that helps!

    Happy trading everyone!

  • PipSurfer

    rbevis- That’s good that you do that. Always remember to count for the spread though especially when you go short. My only comment would be not to place it too many pips above or below the swing high where it could dramatically affect your overall Profits/Loss

    travel- It doesn’t have to be identical to EST but just make sure you know what candle(s) corresponds to the EST time. So if you’re looking from 12am – 12pm EST, make sure you know which candles correspond to that time on whatever charting program you are using. Hope that helps!

    Happy trading everyone!