Cowabunga System Week 7 Results
After last week's extremely dovish announcements by the European Central Bank (ECB), this week we'll see the response of United States Federal Reserve on Wednesday.
This FOMC (Federal Open Market Committee) meeting will be accompanied by a press conference, so we can certainly expect increased volatility levels in the middle of the week.
Before then, few markets will be expected to move as everyone awaits the Fed's interest rate decision.
So far, the Cowabunga System has produced 6 consecutive weeks of profit, with a percentage gain just shy of 20%.
Will this week be yet another winning week? Or will we finally see a losing one?
Read on to find out!
The first trading day of the week began with a bullish bias:
At 09:15 GMT, the first buy signal was generated and I went long at 1.4377. The stop loss and target profit were set at 1.4336 and 1.4400 respectively.
At first, this trade looked like it was going to be a winning one, but the stop loss was triggered pretty quickly, resulting in a -42 pip loss.
This one trade wiped out last week's net profit, and I didn't feel too good about that, especially with the FOMC statement and press release coming up in a couple days time.
There were no further trade signals that day.
The GBP/USD turned bearish in the Asian session, so I was now looking for sell signals on the 15m chart:
At 13:45 GMT the first trade signal came. I went short at 1.4162 with a stop loss at 1.4197 and target at 1.4150.
While the risk-reward ratio was terrible, this trade was closed for a profit of +12 pips.
A win is better than a loss, but I was still deep in the red for the week.
Then, before the trading cut-off time, another signal was generated at 20:30 GMT.
I went short at 1.4151 with the stop loss and target at 1.4159 and 1.4143 respectively.
The allowable trading time expired, and I had to close this trade at 1.4149 for +2 pips of profit.
I was still far away from getting to break even on the week.
Today was FOMC day, and the 4h trend remained bearish:
A sell signal was issued at 10:00 GMT, and I went short at 1.4104 with a stop loss at 1.4073.
Since the entry for this trade was near a round number, I decided to set the target profit according to a 1:1 risk-reward ratio, at 1.4073.
I had expected today's market to range due to the FOMC statement, so I was skeptical of this trade.
But rules and rules and I went along with it...
And boy, I'm glad I did! The trade turned out to be a big winner, netting +31 pips and bringing me back into positive territory for the week. Cowabungaaa dudes!!
In the end, the Fed chose not to raise rates and the interest rate outlook was slashed from four cuts in 2016 just two. This translated to a dramatic weakening of the USD which caused the GBP/USD to rally aggressively.
Needless to say, the 4h trend today was clearly bullish:
The first trade signal came quickly at 07:00 GMT, and I went long at 1.4254 with a stop loss at 1.4221 and the target at the 1.4300 round number.
The target was hit for +46 pips.
This was one of the biggest winning trades in the past 7 weeks, and I was feeling pretty satisfied at this point.
The week looks to be ending in a healthy profit, and I was looking forward to Friday to see if I can get more pips before the weekend came around.
On Friday, the 4h trend remained bullish:
At 06:15 GMT, I went long at 1.4468 with a stop loss at at 1.4454 and the target at the 1.4500 round number.
In a classic case of "don't count your chickens before they hatch", the stop loss was triggered for a -13 pip loss on the trade.
I didn't feel so thrilled any more.
At this time, I could just have stopped trading for the week and walked away with my profits, but another signal was generated at 11:00 GMT and according to the rules, I went for it.
I entered at 1.4449 with a stop loss at 1.4410. Since the entry was close to a round number, I set the profit target based on a 1:1 risk-reward ratio, at 1.4488.
This trade resulted in a +39 pip profit, another big winner!
Cowabunga System Week 7 Performance
This system brought in more than 70 pips of profit this week, or a 2.49% gain on capital.
Even though the market was a fundamentally driven this week, my account has officially broken above the $3,000 mark, which means that the Cowabunga System has generated just slightly over a 20% return in the past 7 weeks.
I must say that I'm more than a little surprised at the profitability of the system, but so far I don't see any reason to be doubtful of its continued performance.
Thus, from next week onwards I will be trading with 1.5 mini lots per trade instead of the 1 mini lot that I've been using up till this point.
Next: Week 8 results