Binary Option Cowabunga Trading System is a easy to use super strategy if you can adopt it. It uses multiple time frames for identifying trading opportunities and entry points. The effectiveness of this trading strategy lies in the fact that it follows the market trend and is analyzed from the view point of 2 different time frames.
Binary Option Cowabunga Trading System
The system attempts to identify the main trend using a four hour chart and then trade accordingly on the 15 minute time frame. When I first made contact with this strategy, it was love at first sight because trend following and multiple time frame systems are my favorites. This one uses both techniques, resulting in a high win rate, but you should never forget that it’s not the infamous “Holy Grail” of trading and it won’t make you rich overnight.
- 5 Period Exponential Moving Average (EMA)
- 10 Period EMA
- Stochastic Indicator (Setting: 10, 3, and 3)
- Relative Strength Index (Setting: 9)
if 5 EMA above 10 EMA, trend is up,
if % EMA is below 10 EMA Trend is down.
Best Expiry time:
15 min chart
Trading rules of Binary Option Cowabunga Trading System
- 5 EMA must cross above the 10;
- RSI must be greater than50;
- Stochastic must be headed up and not in overbought terrritory;
- MACD Histogram must go from negative to positive or MACD Histogram must be negative and start to increase value.
- 5 EMA must cross below the 10;
- RSI must be <50;
- Stochastic must be headed down and not in oversold territory;
- MACD Histogram must go from positive to negative or MACD Histogram must be positive and start to decrease value.
How Binary Option Cowabunga Trading System works
After identifying the primary trend, your next task would be to try and see when the best time to enter the market is. To do this, you need to set up your 15 minute frame with the following:
On the 15 minute chart, to identify a trading signal for a downtrend, ensure that the 5 EMA is below the 10 EMA. The stochastic indicator must also be heading downwards but not in the oversold territory. Also the RSI level must be below the 50 level. Finally, the MACD must be moving from a positive territory into a negative territory. Or if the MACD histogram remains in the positive territory, its value must be decreasing. The following 15 minutes chart below shows how the described scenario will look like:
The Cowabunga trading strategy was originally a trading strategy frequently adopted by spot forex traders. Nevertheless, it is equally as effective when applied to binary options trading as the basic principles remain the same. The only thing that changes is the instrument that is being traded. For example instead of going short when you trade a downtrend in the spot forex market, you purchase a “Put” binary option.
A new trader would be overwhelmed by the multiple time frame condition that must be fulfilled and all the indicators used so I really don’t think that an inexperienced trader should venture in the trading jungle using this strategy as his/her only weapon. The fact that it’s too complicated can be Cowabunga’s greatest disadvantage, while a more experienced trader can find it very appealing. After all, everybody must find the trading style that suits him/her because if something works great for someone, it will not necessarily work the same for everybody.
It is likely that going in the direction of the main trend is always better and has a higher chance of success than totally disregarding the trend. The lower time frames like 1, 5 and 15 minutes are sometimes full of “noise” and a trend is harder to identify than on a four hour or daily chart so by making use of the higher time frame, the Cowabunga system makes sure that we only trade in the direction of the main trend and I think this is what prevents it from sucking.
The bottom line:
Remember! The Cowabunga trading strategy is not suited for beginner traders as the multiple time frames analysis can prove rather confusing and overwhelming. However, more experienced traders will like this trading strategy as it takes into account the situation from the perspective of 2 different time frames. In addition, it is a trend following strategy.
Binary Option Collage
All Lessons in Part 4: Common and Popular Option Trading Strategies
Lesson 1: Moving averages crossover strategy
Lesson 2: Binary Option martingale strategy
Lesson 3: Simple Stochastic Divergence Binary Options Strategy
Lesson 4: Simple MACD Binary Options Strategy
Lesson 5: Simple Stochastic Divergence Binary Options Strategy
Lesson 6: Binary Option Simple Balanced System
Lesson 7: Elliot Wave Binary Options Strategy
Lesson 8: Binary Option Cowabunga Trading System
Lesson 9: MACD Divergence Binary option Strategy
Lesson 10: Simple Trend Line Binary Option Strategy
Lesson 11: 5×5 Simple Binary Options Trading Strategy
Lesson 12: 123 Binary option Strategy