Cowabunga System Week 1 Results
This is the first week of testing the Cowabunga Forex System.
To briefly recap, I am testing it on a 2,500 USD demo account with 1 mini lot on each trade.
On the first day of February the GBPUSD entered a bullish phase as the main trend on the 4h chart indicated that I should start looking for long trades on the 15min time frame.
However, this only happened at 18:00 GMT and I am supposed to close all trades at 21:00 GMT so there was no trading opportunity on the 15min time frame.
A few hours after the London session started, I went long at 10:30 GMT at the close of the candle at 1.4393.
All conditions have been met for this trade. Firstly, the main trend was bullish:
Next, on the 15min chart the EMA’s crossed, RSI was above 50, Stochastic oscillator was rising and not in overbought territory, while MACD started was positive and rising.
The stop loss was set at the previous swing low (at 1.4326) which was 67 pips away from the entry price.
In order to stick to a 1:1 risk-reward ratio, the take profit in this situation was set at 1.4460.
But while the swing higher lifted price all the way to 1.4446, it was not high enough to reach the take profit level.
At 21:00 GMT, according to the rules, the position was closed at 1.4415 with +22 pips profit, or 22 USD. Not bad for a start!
Wednesday began on fast and furious mode as 15 minutes after 05:00 GMT a long trade was initiated at 1.4409 with a stop at the previous swing low (1.4390) and the take profit at the next round number (1.4450).
As it turned out, the take profit level was too far as market stopped advancing at 1.4437 and aggressively retraced into my stop loss, netting a -18.3 pip loss, which almost wiped out the gains from the previous trade.
Four hours later, the move lower turned was clearly a fakeout as the main trend was still bullish and the 15min chart gave another long signal at 1.4426 with a fairly decent stop at 1.4382 and the take profit at the next round number at 1.4450.
The target was reached less than 30 minutes later, providing +24 pips of profit, erasing the earlier loss and adding a few more pips on top of it.
At this point I started to get curious as to how the week might end as it was only Wednesday and the system brought in almost $50 in just two trading days (no signal was given on Monday).
Thursday was supposed to be a busy day for the pound as Bank of England was releasing the interest rate decision, the Inflation Letter report and a press conference following which Mr. Carney, BOE’s Governor would be answering questions about monetary policy.
In short, a lot of volatility was to be expected and according to the rules, I am not supposed to trade during such news releases.
As it turned out, there was a long signal before the news at 08:15 GMT at 1.4589, with a stop loss at 1.4562 and and a take profit at 1.4616.
And again, exactly like on the previous day, less than two candles later, the profit target was reached for +27 pips profit.
At this moment I was up on the week with a net +55 pips which represented a 2.75% capital gain.
Upon the news release, the GBPUSD was all over the place with violent price swings when Carney started the press conference and the next trade that came up required a wide stop of more than one hundred pips.
I decided to skip the trade because the stop loss allowance would be too large, and it turned out to be a good decision as the market eventually moved down to the stop area.
The all-important NFP (Non-Farm Payrolls) was released on Friday and until the actual number hit the wires no trades were taken.
With the trading week behind us, it is time to work out the results so far:
The Cowabunga System got me a +2.2% return, which is frankly more than expected but it is still too early to draw any conclusions.
The key question is whether this performance can be maintained.
We’ll find out the answer in the weeks to come.
Next: Week 2 Results