About the system

So you want to know how this all works, and you need to understand how decisions are made. Good! Here is the Cowabunga Strategy taken directly from Mr. Pips Surfer.

The Main Trend Is Your Friend
The main concept of the theory is to catch small trends during the day while avoiding fakeouts. Simple right? Wrong! It's easier said than done. I will be making my trades off of a 15 minute chart, but I will be using a 4hr. chart to give me my main trend. If my 4hr. chart is trending up, then I will only be looking to go long on the 15 minute chart. On the other hand, if my 4hr. chart is trending down, then I will only be looking to go short on the 15 minute chart. By looking at the main trend first, I will have a better chance for a winning trade by moving along with the current market direction.

4hr. Chart Settings:
5 EMA applied to the close
10 EMA applied to the close
Stochastics (10,3,3)
RSI (9)
The 15 Minute Chart
After establishing the main trend , it's time to look for trade entries on the 15 minute chart. The 15 minute chart looks similar to the 4hr. chart, except for the fact that I have added a MACD histogram. The trade entry rules are simple:
Long trades:
5 EMA must cross above the 10 EMA (Indicated on my chart by a black candle)
RSI must be greater than 50
Stochastics must be headed up and not in overbought territory
MACD histogram must go from negative to positive OR be negative and start to increase value. (We want to catch trends early so the MACD histogram must be negative)

Short trades:
5 EMA must cross below the 10 EMA (Indicated on my chart by a purple candle)
RSI must be less than 50
Stochastics must be headed down and not in oversold territory
MACD histogram must go from positive to negative OR be positive and start to decrease in value. (We want to catch trends early so the MACD histogram must be positive)

15 Minute Chart Setup:
5 EMA applied to the close
10 EMA applied to the close
RSI (9)
Stochastics (10,3,3)
MACD Histogram (12,26,9)
Stop Losses
There is not a hard number that I use for a stop loss. Instead I use either the most recent swing low (for long trades) or the most recent swing high (for short trades) as my stop loss. Using the examples above, this is where I would place my stops:

In these examples, the stop losses were not that wide. However, there will be times when the most recent swing high or low is several pips away from your entry. This is where you must be careful. If the stop is too wide for you to keep within your money management rules, simply stay out of the market! Trust me, there will always be another trade later. Even if that trade happens to win a gazillion pips, you should never compromise or doubt your decision to follow strict money management.
Exits
Here's where things get a little hairy. You'll have to use your brain for this one. What's that? A trading system that actually requires you to think?! But don't worry; it's really not that hard. Generally 50 and 00 levels will be your targets. What is a 50 or 00 level? It's simply any price that ends in 50 or 00. For example, 2550 and 2600 are examples of a 50 and 00 level respectively.
However, if you are too close to a 50 or 00 level you can also choose to set your target for the same amount of pips you are risking. For example, if your going long and your entry is at 2445 and your stop loss is at 2425 you would be risking 20 pips. You could then set your target for 20 pips away from your entry. So in this example your target would be 2445 + 20= 2465.

Conclusion
If you're sharp, you may have noticed that I use RSI and Stochastics which both measure overbought and oversold extremities. Referred to as multicollinearity, it's often frowned upon to use 2 indicators that pretty much tell you the same thing. However, in this case I am using RSI as more of a trend confirmation tool rather than an overbought/oversold tool.
I also must mention that I will only be trading the GBP/USD. If you're starting out in the Forex, it's best that you stick to one pair so that you can focus all of your concentration on it. After a while, you'll start to get a feel for its movements, and it will help build your "intuition" on future moves. This is something that will come in handy as you become a more experienced trader.
I will never trade a news candle or the candle before it. If I am in a trade and a major news event is coming up, I will exit my trade before the report is released. I will however trade a candle after the news provided all my criteria are met.
Signals that occur before 12 midnight ET should be taken with caution. While you can still take them, you should be cautious because market volume is very quiet before the Euro session.
I will close my trade whether I'm in the money or not at 4pm ET because market volume is very low at this time. Trade signals that you see before 12 am ET (midnight) should be taken with discretion because market volume is also low at this time. Optimal signals usually come after 1am ET.

Corbanfx Week End Review

Well the first week of posting was really only two days since it started on Wednesday and Friday was a holiday. But in any case these are the numbers for March 17-21:


Wednesday- No trades
Thursday - One trade for -35 Pips (3 lots -105 pips)
Friday - Holiday

Total - One Trade for -35 pips (-105 pips)

Starting with a drawdown!!

Well, the first trade I post in this and it's a loss of 35 pips! I hope it doesn't mark a trend! Anyway, today I got around to my computer at 4:30 am. What this means is that I missed a trade that was to be done in the 3:30am candle. By the way, all trades are on the GBP/USD unless other wise specified. More bad news- That trade would have been profitable! The bad news continues, the trade I did take, at 10:15 am was a loser. Now this is another reason it is important to get into as many valid trades as possible. If you miss out the good ones and jump in the bad ones, then it doesn't matter what strategy you use..results won't be good.

The system called for two trades today for a total of -16 pips. I lost 35 pips. So lets compare two traders executing the same strategy:

In his blog, Pip Surfer entered the trade short at 1.9807. I got in at 1.9805. For whatever the reason. When calculating the stop I put 1.9840. Pip Surfer had 1.9837. Maybe I look at charts on the ask price and he is looking at the bid price when he sets his stops...who knows, the fact is that we both followed the same rules, entered for the same reason and in the end I lost 5 pips more. Once again proving my point that no 2 traders will end up with the same result even if they follow the same rules. (Not to mention that he was up and got the trade I missed to make his day less of a loser than mine).



So here are the charts for the day. The main trend chart shows that we were in a downtrend all day and the 15 min chart shows what should have been the entries, stops and exits.



I will not be trading tomorrow or monday since it is easter and volume will be low, and thus erratic..so I will talk to you on tuesday!

Have a good Weekend!

Lotta looking-nothing cooking

Well, As far as the day went, lets just say I could have slept all day and the result would have been the same. But I will take the time to note that as far as the strategy goes, I should have been in a trade @ around 1:15am. As you can see in the charts, The main trend was down (240 min chart) and all signals were go on the 15 min chart. That trade actually would have been stopped out and we would have lost about 34 pips per lot. Honestly, I missed the trade, I don't have a crystal ball..had I seen the signals I would have been in. It's in my best interest to get in on as many valid trades as possible to really get a feel for how profitable it is in my case.
But this brings up a valid point also. I had mentioned that hypothetical results of a strategy vary from actual results. Today is a perfect example of why that is. Today I was lucky to miss the trade and not lose 34 pips, but monday I missed a 71 pip gain (hadn't started this blog yet)
Anyway there was another valid signal at around 5:00 am and this one I did notice, but I did not enter because I don't trade (this strategy) when a major announcement is about to come out and we had the GBP MPC minutes meeting coming out @ 5:30 am. Soooo, nothing there today with the cowabunga system.
Tomorrow is another day. Talk to you then.

Here's how it all went down...(or should have!!)

And so it begins!!

First and foremost, I want to make it clear that I did not develop this strategy. I am simply making a detailed accounting (more for personal reasons and discipline purposes than anything) of my own experience using this strategy. The idea, as far as I know, come from alias PIP SURFER on babypips.com. In his blog, he gives detailed info on how the system works and when he places trades. SOOOOOO...why then am I doing this? ahhhhh...because I have noticed that even though I follow the strategy exactly as per what it calls for, and try to execute exactly when it shows that entries should be made, my results vary. WHY? Sometimes I miss a trade because I am sleeping at 3 am! (i have not set up automatic alerts (YET!) Sometimes my entries are different because of 2 second difference in pressing a button! My exits and profit taking is different. In truth, I believe that if two traders sit next to each other, following the same strategy, in the end their results will not be exactly the same. Errors happen, timing, slippage, computer crashes and so on and so forth.
So, with that in mind, I am posting my own experience in this the "COWABUNGA" strategy.
Talk to you soon!