Cowabunga System Daily Update: Thursday, 06/17/2010

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 was down the entire day.

Today I only looked for short trades.

News events to watch for today :

  • 4:30am EST- UK Retail Sales 
  • 8:30am EST- US CPI
  • 10:00am EST- US Philadelphia Fed Survey

Today’s Surf

12:15am 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 1.4694 with a stop at the most recent swing high at 1.4715. Since I was 44 pips away from the nearest 50 or 00 level, I decided to put my intial target at 1.4650.

Entry: Short at 1.4694 Stop: 1.4715 Target: 1.4650

2:00am EST- Unfortunately I got stopped out of my trade.

2:30am 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 1.4669 with a stop at the most recent swing high at 1.4718. Since I was 19 pips away from the nearest 50 or 00 level, I decided to put my intial target at 1.4650.

Entry: Short at 1.4669 Stop: 1.4718 Target: 1.4650

3:00am EST- My target was hit. Price didn’t make a clean break so I took my final profit right at 1.4650.

10:30am EST- There was a moving average crossover for a short trade. RSI was less than 50, stochastics were trending down but MACD was already negative from the previous candle. This cancelled out the signal and I did not enter.

entry2

Trade Result: -21 +19= -2 Pips (NOT INCLUDING SPREAD) R-Multiple: -1.00; 0.38

News events to watch for Friday:

  • None

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.

  • shortpipin

    CAUGHT THE SAME WAVESS 12;

  • shortpipin

    CAUGHT THE SAME WAVES 12:15 AND THE 02:30, CHECHED OUT EARLY ON THE 12:15 ( LOOSER ) RECOUPED PIPS ON THE 02:30 (WINNER) + 4 PIPS NICE SURFING WITH YOU DUDE. COWABONGA

  • pg2007

    Hi, Thanks for all your work.
    My question is: Will you open more than one trade at a time if there are multiple signals during trade time?
    Thanks

  • PIPhanger

    PipSurfer, I noticed on meetpips.com you have your Cowabunga System posted and your beta Swing System posted. It doesn’t look like you have done much with your Swing System. Have you dropped this setup all together or your still messing around with it. If you are still using this system i would like to ask some questions about it if you don’t mind.

    One question is, does the Parabolic SAR have to be below or above the signal candle as it appears, or can it already have a couple of dots on the previous candles. Also you said if it doesn’t appear until the next candle that is ok. So do you wait until the next candle when it puts the dot below or above the candle to enter.

    If you would like me to ask you these questions in a different section of this website please let me know.

    Thanks,

  • piptarts

    Hi Pipsurfer.
    Thanks for the update!

    You mentioned the system is winning about 70% of the time.
    I browsed through the available trading stats on BP and meetpips stats and here’s what I found.

    __________

    2007 (BP trade record)
    234 trades
    57% win
    avg win = 1.8 times more pips than loss

    2008 (BP trade record, only till may)
    84 trades
    56% win
    avg win = 1.59 times more pips than loss

    2009 (via meetpips)
    101 trades
    56%
    avg win = 1.13 times more pips than loss

    2010 (till june, via meetpips)
    74 trades
    58%
    avg win = 1.28 times more pips than loss

    One big remark on 2008:
    There’s no option on meetpips to display the stats of 2008, only a ‘view the last 2 years’ option. The win ratio is of those last 2 years is 66% while the first half of 2008 is 56% and 2009 is 56%. Either the 2nd half of 2008 were VERY succesfull, or these stats are not representative.
    ___________

    Since the average wins are much bigger than the average losses:
    did you mean that the average profitability per trade is around 70%?

    Regards!

  • shortpipin

    CAUGHT THE SAME WAVESS 12;

  • shortpipin

    CAUGHT THE SAME WAVES 12:15 AND THE 02:30, CHECHED OUT EARLY ON THE 12:15 ( LOOSER ) RECOUPED PIPS ON THE 02:30 (WINNER) + 4 PIPS NICE SURFING WITH YOU DUDE. COWABONGA

  • pg2007

    Hi, Thanks for all your work.
    My question is: Will you open more than one trade at a time if there are multiple signals during trade time?
    Thanks

  • PIPhanger

    PipSurfer, I noticed on meetpips.com you have your Cowabunga System posted and your beta Swing System posted. It doesn’t look like you have done much with your Swing System. Have you dropped this setup all together or your still messing around with it. If you are still using this system i would like to ask some questions about it if you don’t mind.

    One question is, does the Parabolic SAR have to be below or above the signal candle as it appears, or can it already have a couple of dots on the previous candles. Also you said if it doesn’t appear until the next candle that is ok. So do you wait until the next candle when it puts the dot below or above the candle to enter.

    If you would like me to ask you these questions in a different section of this website please let me know.

    Thanks,

  • piptarts

    Hi Pipsurfer.
    Thanks for the update!

    You mentioned the system is winning about 70% of the time.
    I browsed through the available trading stats on BP and meetpips stats and here’s what I found.

    __________

    2007 (BP trade record)
    234 trades
    57% win
    avg win = 1.8 times more pips than loss

    2008 (BP trade record, only till may)
    84 trades
    56% win
    avg win = 1.59 times more pips than loss

    2009 (via meetpips)
    101 trades
    56%
    avg win = 1.13 times more pips than loss

    2010 (till june, via meetpips)
    74 trades
    58%
    avg win = 1.28 times more pips than loss

    One big remark on 2008:
    There’s no option on meetpips to display the stats of 2008, only a ‘view the last 2 years’ option. The win ratio is of those last 2 years is 66% while the first half of 2008 is 56% and 2009 is 56%. Either the 2nd half of 2008 were VERY succesfull, or these stats are not representative.
    ___________

    Since the average wins are much bigger than the average losses:
    did you mean that the average profitability per trade is around 70%?

    Regards!

  • vedant

    Quick question on indicators…If i have a long entry (and main trend is long), if the red stochastic line is trending up and not in overbought, but the blue stochastic line is still trending down, does that mean it is not a valid long entry? In other words, do both stochastic lines have to be trending up? Thanks a lot for your help!

  • agapetos

    Hi.
    I have been demo testing this system and so far had no profitable trades (around 10 stop-outs). I know it is still a short time to determine if it is profitable or not, but I have been doing this without regard to the stochastics overbought/oversold condition on 4h chart.
    I was wondering – how much weight do you give to stochastics and RSI on the 4h chart?
    Thanks

  • vedant

    Quick question on indicators…If i have a long entry (and main trend is long), if the red stochastic line is trending up and not in overbought, but the blue stochastic line is still trending down, does that mean it is not a valid long entry? In other words, do both stochastic lines have to be trending up? Thanks a lot for your help!

  • agapetos

    Hi.
    I have been demo testing this system and so far had no profitable trades (around 10 stop-outs). I know it is still a short time to determine if it is profitable or not, but I have been doing this without regard to the stochastics overbought/oversold condition on 4h chart.
    I was wondering – how much weight do you give to stochastics and RSI on the 4h chart?
    Thanks

  • agapetos

    Ok, I’ve just saw that you answered my question in the last video. Thank you. The topic about main trend is now clearer to me :)

  • agapetos

    Ok, I’ve just saw that you answered my question in the last video. Thank you. The topic about main trend is now clearer to me :)

  • piptarts

    Just read thru the comment which I posted above…apologies, the last question doesn’t make any sense.

    I guess, the thing i’m trying to get a grip on is how one expresses the profitability of a sytem in general…
    Would much appreciate it if you can elaborate a bit about this stuff in regards to Cowabunga.

    Thanks for sticking with us noobs!

  • piptarts

    Just read thru the comment which I posted above…apologies, the last question doesn’t make any sense.

    I guess, the thing i’m trying to get a grip on is how one expresses the profitability of a sytem in general…
    Would much appreciate it if you can elaborate a bit about this stuff in regards to Cowabunga.

    Thanks for sticking with us noobs!

  • rajmaster

    Why do you trade only after midnight EST? I read the best time to trade was between 8am and 12pm EST…

  • rajmaster

    Why do you trade only after midnight EST? I read the best time to trade was between 8am and 12pm EST…

  • PipSurfer

    Thanks for all the comments! I’ll do my best to answer.

    pg2007- I will only have 1 trade at a time. I do not like to trade 2 cowabunga signals at once. Once I’m in a trade I ride it out until I get stopped out, my target is hit, or I manually exit due to news or low volatility past 12 noon EST.

    Piphanger- The swing system is something I’ve been toying around with for a few years. I just haven’t had enough time to thoroughly test it although preliminary testing looks good. It is ok if Parabolic SAR has appeared up to 2 dots prior to the possible entry candle. Any more than that and it is not a signal. Again, my rules are still being worked out but that is what I’ve been going by with SAR up to this point.

    piptarts- You have a very good question. There are 2 ways to tell if a system is profitable. If the R-multiple is less than 1 then your win % must be greater than 50% to be profitable. The lower it deviates from 1, the higher the win percentage must be. Vice versa, if your R-multiple is greater than 1 then your win percentage can be less than 50%. The higher your R-multiple the less your win percentage can be. So if you have an R-multiple of 3.00 then you only have to win at least 30% of your trades to be profitable. Obviously a higher R-multiple is desirable because it gives you much more room for error but even if your R-multiple isn’t so great, if you are able to pinpoint your trading accuracy to have a high win percentage then you will still be profitable. hope that helps!

    vedant- As long as the fast stochastic line has crossed above the slow stochastic line then that is considered “trending up”. It doesn’t matter which direction they are pointing.

    rajmaster- Midnight to noon EST captures the most volume over the span over the day because you catch 2 overlaps of trading sessions. In the early part of the day, you catch the market when both the Tokyo and EU session is open. In the later part of the day you are able to catch the market when both the EU and US session is open.

  • PipSurfer

    Thanks for all the comments! I’ll do my best to answer.

    pg2007- I will only have 1 trade at a time. I do not like to trade 2 cowabunga signals at once. Once I’m in a trade I ride it out until I get stopped out, my target is hit, or I manually exit due to news or low volatility past 12 noon EST.

    Piphanger- The swing system is something I’ve been toying around with for a few years. I just haven’t had enough time to thoroughly test it although preliminary testing looks good. It is ok if Parabolic SAR has appeared up to 2 dots prior to the possible entry candle. Any more than that and it is not a signal. Again, my rules are still being worked out but that is what I’ve been going by with SAR up to this point.

    piptarts- You have a very good question. There are 2 ways to tell if a system is profitable. If the R-multiple is less than 1 then your win % must be greater than 50% to be profitable. The lower it deviates from 1, the higher the win percentage must be. Vice versa, if your R-multiple is greater than 1 then your win percentage can be less than 50%. The higher your R-multiple the less your win percentage can be. So if you have an R-multiple of 3.00 then you only have to win at least 30% of your trades to be profitable. Obviously a higher R-multiple is desirable because it gives you much more room for error but even if your R-multiple isn’t so great, if you are able to pinpoint your trading accuracy to have a high win percentage then you will still be profitable. hope that helps!

    vedant- As long as the fast stochastic line has crossed above the slow stochastic line then that is considered “trending up”. It doesn’t matter which direction they are pointing.

    rajmaster- Midnight to noon EST captures the most volume over the span over the day because you catch 2 overlaps of trading sessions. In the early part of the day, you catch the market when both the Tokyo and EU session is open. In the later part of the day you are able to catch the market when both the EU and US session is open.

  • Nickemp

    Hi PipSurfer

    Thank you for posting these trades and also your kind and patient answers.

    If I could add any input to your answer above about win rate vs R return my personal experience is that low win rate systems can be very hard for the average Joe to trade despite them being profitable because of possible strings of losses.

    Mathmatically they go like this

    Win Rate Losses in row
    30% 30
    35% 25
    40% 21
    45% 18
    50% 16
    55% 14
    60% 12
    65% 10
    70% 9
    75% 8
    80% 7

    The theory is that if you trade often and long enough you will hit these once in a while. In my experience I didn’t even have to trade often or for a long time.

    I’m OK because my money management allows for this but I have started trading your system because I like a win rate higher than 50% for a change.

    Thanks again

    Nick

  • Nickemp

    Hi PipSurfer

    Thank you for posting these trades and also your kind and patient answers.

    If I could add any input to your answer above about win rate vs R return my personal experience is that low win rate systems can be very hard for the average Joe to trade despite them being profitable because of possible strings of losses.

    Mathmatically they go like this

    Win Rate Losses in row
    30% 30
    35% 25
    40% 21
    45% 18
    50% 16
    55% 14
    60% 12
    65% 10
    70% 9
    75% 8
    80% 7

    The theory is that if you trade often and long enough you will hit these once in a while. In my experience I didn’t even have to trade often or for a long time.

    I’m OK because my money management allows for this but I have started trading your system because I like a win rate higher than 50% for a change.

    Thanks again

    Nick