Cowabunga System Daily Update: 05/10/07

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

Main Trend

Current Trend= The trend remained up until 8am ET. From 4am – 8am ET, there was a new trend change candle which changed the trend from up to DOWN. After 8am ET, the trend remained down the rest of the day.

Today I looked for long trades until 8am ET. After 8am ET, I only looked for short trades.

Today’s Surf

8:00 am ET- 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 which was at 9871 with a stop at the most recent swing high which was at 9906. Since I was only 21 pips away from the nearest 50 level, I decided to go for the same amount of pips I was risking on the trade, which in this case was 35. This put my target at 9836.

8:45 am ET- My target is hit and the candle makes a clean break of my target. I decide to move my stop to 9836 and go for 9800 as my next target.

9:00 am ET- Unfortunately I was not able to capture any more pips as I was stopped out at 9836.

Trade Result: +35 pips ; R-Multiple= 1.00

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  • bruadair

    Hi Pip Surfer, just a couple of things I don’t completely understand, would be grateful if you had the time to clarify:

    1) What exactly defines the trend change on the 4 hour chart.

    – 5 EMA crosses over 10 EMA, this part I understand
    At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point

  • babyfx

    After some study on your system, I found out on Meta Trader system MACD configuration does not works well. I lost most of your trading track and contradict with each other. However, after using OsMa the indicator confirmed & agree with your posted trades. I suggest MT4 user avoid using MACD, but try using OsMa as an alternative for MACD.

  • bruadair

    Hi Pip Surfer, just a couple of things I don’t completely understand, would be grateful if you had the time to clarify:

    1) What exactly defines the trend change on the 4 hour chart.

    - 5 EMA crosses over 10 EMA, this part I understand
    At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point

    Do you always need a red candle to confirm the trend? Because my interpretation before reading your blog was that the trend had already changed down by 4 a.m.

    2) “My target is hit and the candle makes a clean break of my target. I decide to move my stop to 9836 and go for 9800 as my next target.”

    I’m trying to understand exactly what you did here. When your target was hit, you mean your take profit was hit? In which case your trade was closed, so how did you move your stop loss? I think there is something I’m missing here.

    Forgive me as I am relatively new to this..

    Thanks for the daily updates, it’s a great way to learn this system!!

  • babyfx

    After some study on your system, I found out on Meta Trader system MACD configuration does not works well. I lost most of your trading track and contradict with each other. However, after using OsMa the indicator confirmed & agree with your posted trades. I suggest MT4 user avoid using MACD, but try using OsMa as an alternative for MACD.

  • bruadair

    My post above was truncated :-(

    4 hr chart: At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point

  • bruadair

    now even more of my post was truncated :-(

  • bruadair

    Really sorry for cluttering this, my posts were truncated because I was using the “less than” character embedded in the post. Please ignore all my messages above.

    1) 4 hr chart: At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point is less than 50 and stochastics moving down. Does this not mean that at 4 a.m. we have a downtrend? Or we also must have a red candle to also confirm (at 8 a.m.)?

    2) “My target is hit and the candle makes a clean break of my target. I decide to move my stop to 9836 and go for 9800 as my next target.
    I don’t fully understand. Did you not have your trade set up to take profits when your target was hit?

    And thanks for keeping a daily log of your trades, it’s very useful for beginners like me!!

  • bruadair

    My post above was truncated :-(

    4 hr chart: At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point

  • bruadair

    now even more of my post was truncated :-(

  • bruadair

    Really sorry for cluttering this, my posts were truncated because I was using the “less than” character embedded in the post. Please ignore all my messages above.

    1) 4 hr chart: At about 3 a.m. the 5 EMA crosses below the 10EMA. RSI at this point is less than 50 and stochastics moving down. Does this not mean that at 4 a.m. we have a downtrend? Or we also must have a red candle to also confirm (at 8 a.m.)?

    2) “My target is hit and the candle makes a clean break of my target. I decide to move my stop to 9836 and go for 9800 as my next target.
    I don’t fully understand. Did you not have your trade set up to take profits when your target was hit?

    And thanks for keeping a daily log of your trades, it’s very useful for beginners like me!!

  • PipSurfer

    BabyFX- Thank you for your input. I recommend that you also post it in the Cowabunga Thread on our forums so that other users can see this.

    Bruadair- A trend change candle does not occur until after it closes. From 4am-8am ET, a trend change candle formed which meant that that particular candle produced a MA crossover and RSI was less than 50. The actual candle doesn’t close until 8am ET which means that the trend didn’t officially switch from up to down until after 8am ET. Regarding the 2nd point– It’s not in the hard set of rules to trail your stop, but I like to do it because I always try to maximize my wins. When I have an initial target and I see a clean break of that level, I simply trail my stop to that level (to lock in my profit) and set my sights on the next target to achieve maximum gains. It’s not mandatory to do this, but it certainly does help. Hope that helps you. Happy trading!

  • bruadair

    thanks PipSurfer – yes my misunderstanding was due to forgetting that MA’s are lagging indicators, and of course are not complete (for a period) until the candle closes. Your post and watching live movements of an MA helped me to see this

  • PipSurfer

    BabyFX- Thank you for your input. I recommend that you also post it in the Cowabunga Thread on our forums so that other users can see this.

    Bruadair- A trend change candle does not occur until after it closes. From 4am-8am ET, a trend change candle formed which meant that that particular candle produced a MA crossover and RSI was less than 50. The actual candle doesn’t close until 8am ET which means that the trend didn’t officially switch from up to down until after 8am ET. Regarding the 2nd point– It’s not in the hard set of rules to trail your stop, but I like to do it because I always try to maximize my wins. When I have an initial target and I see a clean break of that level, I simply trail my stop to that level (to lock in my profit) and set my sights on the next target to achieve maximum gains. It’s not mandatory to do this, but it certainly does help. Hope that helps you. Happy trading!

  • bruadair

    thanks PipSurfer – yes my misunderstanding was due to forgetting that MA’s are lagging indicators, and of course are not complete (for a period) until the candle closes. Your post and watching live movements of an MA helped me to see this