The Cowabunga System is a type of Mechanical Trading System that filters trades based on the trend of the 4 hour chart with EMAs and some other familiar indicators ( , Stochastics and ) while entering trades base on 15 minute chart.
I have coded (quite amateurishly) the basic system onto a 15 minute chart (the 4 hour settings are coded as well). The author says the system is to be traded off the 15 minute chart with the 4 hour chart only as a reference for trend direction.
4 Hour Chart Settings
Then we move onto the 15 minute chart, where he gives us the trade entry rules.
15 Minute Chart Settings
- Stochastics (10,3,3)
Entry Rules - long entry rules used, obviously reverse these for shorting.
1. must cross above the 10 .
2. must be greater than 50 and not overbought.
3. must be headed up and not be in overbought territory.
4. histogram must go from negative to positive OR be negative and start to increase in value.
What I did.
1. Set the and levels to avoid entries when they indicate overbought conditions for long and oversold conditions for short (80 and 20 levels).
2. Users can input specific times they want to backtest.
3. User's can configure profit targets, trailing stops and stops. Default is set it to was 100 pips profit target with a 40 pip trailing stop. (Note, when you are changing these values, please note that each pip is worth 10, so 100 pips is entered as 1000.)
The Cowabunga System from babypips.com is another popular and active system. The author, Pip Surfer, continues to post wins and losses with this system. It shows there is a lot of honesty and integrity with this system if the author keeps up to date even 10 years later and is not afraid of sharing the times the system causes losses.
As an example of this, here is post he shared just last week. It's almost like a journal, he gives specific times and reasons why he entered, lets the readers know when he was stopped out, etc. I think that what he does is equally important as his system.
To read more about this system, visit the thread on babypips.com, click here.