Cowabunga Trading System For MT4

Cowabunga Trading System For MT4

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The Cowabunga Trading System For MT4 is a simple strategy that can be used in multiple time frames. But in the lower time frames, false spikes ( often known as noise) are more prominent. So, the inventor of this system suggests using this trading strategy in the M15 or higher time frame.

The system looks for the trade signals by using the EMA variations. The trade filtering process is done by the RSI, Stochastic, and MACD indicators. As a rookie trader, you may have some tough time in taking confirmation from these three unique indicators. So, using the system in the demo account might make you comfortable with this strategy in a risk-free environment.


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What is The Cowabunga Trading System For MT4?

 

This strategy is using the EMA and three unique sets of indicators to filter the trade signals. As a new user of this strategy, you should be looking for the trade signals in the major currency pairs only. As you become more skilled, you may test this strategy to trade the minor and exotic pairs via a paper trading account.

For our safety, we will use this system in a conservative way. Thus our preferred time frame will be H4.

Let’s have a loot at the indicators used in this strategy:

  1. Exponential Moving Average (EMA)- value 5
  2. Exponential Moving Average (EMA)- value 10
  3. Relative Strength Index (RSI)- value 14
  4. Stochastic Oscillator- Value (5,3,3)
  5. Moving Average Convergence and Divergence (MACD)- value (12,26,9)



After installing the indicators, the chart should look like this.

The function of the EMA in this system is to determine the direction of the trend. If the price is trading above the EMA 10 and 5, you should be expecting a bullish rally. On the contrary, if the price is trading below the EMA 10 and 5, you should be expecting a strong bearish rally.

Besides this, the RSI and Stochastic indicator will be used to identify the overbought and oversold zone in the market. If the signal lines in the oscillator cross the 80 marks, consider the market as overbought. Similarly, if the signal lines fall below the 20 marks, you should be expecting a bullish reversal.

Finally, we have the MACD indicator. This indicator will print the bullish bars on the top of the reference line. On the contrary, if the bars are formed below the reference line, you should be expecting a drop in the price.

 

Cowabunga Trading System For MT4 - Bullish Trade Setup

 

The Cowabunga Trading System For MT4 works can be used to trade all currency pairs. But we will be trading the major currency pairs till we get comfortable with this system.

 

 



Conditions to execute long trades

  • The price should be trending higher. EMA 5 should be trading above the EMA 10.
  • In the next 15 minutes, there should no significant major news release.
  • In the 15 minutes chart, EMA 5 should cross above EMA 10.
  • RSI reading should be above 20.
  • Stochastic should be in the oversold zone.
  • Bars in the MACD must be above the reference line.


Entry

After checking the required conditions, we can take our long trade at the opening price of the new candle.

 

 

Stop Loss

The EMA is very sensitive in nature and provides us a good reference point for the identification of support. After identifying the support level, we will place our stop loss below the support zone.

 

Take Profit

To set the take profit, we have to analyze the resistance level. While setting up the take profit level, we should be careful about the risk to reward ratio. The minimum risk to reward ratio for each trade should be better 1:3

 

Cowabunga Trading System For MT4 - Bearish Trade Setup

 Let's have a look at the bearish trade setup:


Conditions to take the short trade

  • The price should be trending lower. EMA 5 should be trading below the EMA 10.
  • In the next 15 minutes, there should no significant major news release.
  • In the 15 minutes chart, EMA 5 should cross below EMA 10.
  • RSI reading should be above 80.
  • Stochastic should be in the overbought zone.
  • Bars in the MACD must be below the reference line.



Entry

We need to check the conditions before taking the short trade. If the market fulfills all the stated conditions, we can take our short trade.

 

Stop Loss

The stop-loss price should be determined by analyzing the resistance zone. To make the process easier, we can use the EMA lines as reference resistance points. Once the resistance level is identified, we will set our stop right above the resistance.

 

Take Profit

The nearest support level should act as the resistance level for this trading system.  In case, you wish to trade the daily chart, you can use the swing low in the market as your reference exit point.

 

Cowabunga Trading System For MT4 - Conclusion

The Cowabunga Trading System For MT4 mostly uses the market momentum and oscillators. The execution of the trades is based on the EMA crossover and its slope. On the other hand, the functions of the RSI, stochastic, and MACD indicator is closely related to the quality assessment. If you fail to get confirmation from the oscillators, you should avoid taking the trades regardless of the EMA crossover.

Note that, every system has some pros and cons and it greatly depends on the trader's skill. Before you start using this system to trade with real money, we highly encourage you to trade in the demo account. By doing so, you can analyze whether the system is really suited for you or not.

 

Download the complete system description and the files here:

FREE Cowabunga Trading System

Download the FREE Cowabunga Trading System for MT4.

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