We’ve decided to put the Cowabunga trading system to the test by coding an EA. You can download your own copy with user manual below!

Free Expert Advisor

We are offering the Cowabunga Expert Advisor for free! Click below to download:

The Cowabunga Expert Advisor is free, but we appreciate any donations to keep us up and running. The more support you give us, the more support you will get back with new free expert advisors and additional features. Any amount is appreciated. Happy Trading!

Download CowabungaEA-by-TheTradeMachine-1.1  (see update)

Download CowabungaEA-by-TheTradeMachine-1.0

Download CowabungaEA-by-TheTradeMachine-1.0 User Manual

Stay tuned for future updates as we will be backtesting and forward testing this system to see how it does long term.

View our live forward test as the trades happen every day: Cowabunga Live Results

If you are new to Expert Advisors, you will want to download Metatrader 4 Trading Terminal for free and read our article on How To Set Up Expert Advisors.

Cowabunga EA Indicators

The following is a list of the indicators used in creating the CowabungaEA. You do not have to do anything with these. All of these indicators come with Metatrader 4.

4 Hour Chart Settings
1. 5 EMA applied to the close
2. 10 EMA applied to the close
3. Stochastic (10,3,3) (Use slow and simple settings)
4. RSI (9) (Simple)

15 Min Chart Settings
1. 5 EMA applied to the close
2. 10 EMA applied to the close
3. Stochastic (10,3,3) (Use slow and simple settings)
4. RSI (9) (Simple)
5. MACD (12,26,9) (Exponential histogram)- Make sure the histogram displays the difference between the 2 lines (NOTE: MT4 Indicator OsMA is used here)

Cowabunga EA Features

4 Hour Trend: CowabungaEA-by-TheTradeMachine uses the 4 hour chart to determine the underlying trend. The current trend is automatically found when you load the EA and is power failure safe (meaning it can recalculate the current trend if there happens to be an internet or power failure). Trades are only placed in the direction of the 4 hour trend based on the original system rules:

Main Trend Is Long
1. 5 EMA must cross above the 10 EMA
2. RSI must be greater than 50
3. Stochastic must be headed up and not in overbought territory

Main Trend Is Short
1. 5 EMA must cross below the 10 EMA
2. RSI must be less than 50
3. Stochastic must be headed down and not in oversold territory

15 Minute Chart Entry: Entries are based on the original system rules.

15 Min Chart – Enter Long Trades When
1. 5 EMA must cross above the 10 EMA
2. RSI must be greater than 50
3. Stochastic must be headed up and not in overbought territory
4. MACD histogram must go from negative to positive OR be negative and start to increase value. (We want to catch trends early so the MACD histogram must be negative)

15 Min Chart – Enter Short Trades When
1. 5 EMA must cross below the 10 EMA
2. RSI must be less than 50
3. Stochastic must be headed down and not in oversold territory
4. MACD histogram must go from positive to negative OR be positive and start to decrease in value. (We want to catch trends early so the MACD histogram must be positive)

Stop Losses: Stop losses are calculated based on the most recent swing high or swing low.

Exits & Take Profits: The closest 50 and 00 levels are used for take profits. If the closest 50 or 00 level is too close, you can choose a setting that will automatically set your take profit equal to the amount of pips you are risking for your stop loss. You can also choose a minimum take profit value in pips.

News: You can choose to not trade specific news events by entering the time period of the event that you wish to avoid trading. There are three sets of time inputs so that you can avoid up to 3 news events per day.

Trading Hours: Enter the time you want to start and end trading (based on your server’s GMT time).

Auto Close Orders at Trading Session End: Enter true/false based on whether you want the EA to automatically close any open orders at the end of your trading session. If you select true, it will close orders regardless of your trade being positive or negative at the time.

Magic Number: MagicNumber lets you select a unique integer identifier to distinguish orders apart from other Expert Advisors or multiple instances of the CowabungaEA.

Choose Not To Trade If Stop Is Too Big: Enter true/false based on whether you want to enter trades when the swing high/low is larger than your MaxStop value.

This setting lets you opt out of trading if the swing high/low is beyond your maximum stop loss. You may not want to enter the trade if the stop loss can’t be placed behind the most recent swing high/low while still remaining within your MaxStop limits.

If you select False, you will not take these trades with stop losses in excess of your MaxStop.

If you select True, your stop loss will equal your MaxStop in situations when the swing high/low is too far away.

Changeable EMA Periods: Let’s you change any of the exponential moving average periods to a different one.

Much More Inside! Download the user manual and EA above and give it a try. If you have any questions, shoot us an email or leave a comment below. And stay tuned for future updates!

Custom Expert Advisors

Do you have a trading system that you would like to make into an expert advisor, but don’t have the time to learn how to program it? The Trade Machine can build a full-featured trading system just for you, starting as low as $179!

For more information, visit our Custom Expert Advisor Section

Terms and Conditions

Please read before using the CowabungaEA-by-TheTradeMachine or any of our products or services. By requesting our services and using our software you agree to be bound by these terms and conditions.

Risks and Disclaimers
Forex trading (Currency Trading) carries substantial risk of loss. Please consider your risk tolerance, bankroll and trading abilities before trading real money on the Forex market. Please understand that you can lose some or all of your investment.

While The Trade Machine goes to great lengths to code auto trading programs that are accurate and profitable, we cannot guarantee the profitability or accuracy of any expert advisor.

It is recommended that you thoroughly backtest any expert advisor, as well as forward trade it on a demo account for several weeks before using it on a live account. Please note that actual trading results may not correspond to optimized or backtested results.

All software is to be used at your own risk. TheTradeMachine.com cannot be held liable for any financial losses incurred through the use of our software. You are solely responsible for your trading activities!

Expert Advisor Copyright
Unless otherwise specified all software and source code is for personal use only and may not be resold or publically redistributed without prior agreement.

Many of the popular oscillators do give what appear to be obvious looking trade signals. The funny thing is that these signals typically come after the price has already made it’s move. This is because of the lagging nature of indicators. In the same way that price was at 1.5566 and now its at 1.5890, you can also observe that the price was below the moving average and then it crossed through and is now above the MA. It seems obvious that you should buy when price crosses through this MA. Hindsight, however, is always 20 20. Once you are looking at live price data it is very hard to know if it is going to move up or down – no matter what a fancy oscillator says.

FXCM has released over 20 Expert Advisors as part of an incentive to encourage traders to open up FOREX accounts. They have coded these simple EAs to follow some of the most popular indicators in technical trading. We decided to put these systems to the test. Backtests that is. Check out our results to see how these free EAs stood up to 8 years of backtesting on several of the major currency pairs.

We will backtest each one of these systems on high quality M1 history data just like we do for The Fade Machine and The Trend Machine.

Check out our reviews of FXCM’s free expert advisors:

1. Linear Weighted Moving Average Crossover EA Backtest Review

2. Awesome Indicator Oscillator Backtest Review

3. Bollinger Band Trading System

4. Bollinger Band Trading System with ADX Confirmation

Conclusions

While FXCM has done a good job providing a big array of simple expert advisors for free, they are just too limited to be used as stand-alone trading systems. Relying solely on one or two oscillators will not hold up long term as a viable trading robot. Therefore, we do not believe any of the EA’s are suitable for live trading. Yet, they do provide a good framework and can help educate traders on the function and reliability of the indicators themselves. This knowledge could be well applied in manual trading or used to come up with new automated trading robots.

The ADX is simple way to measure trend strength in the market. The ADX is non directional and simple to read. It does not state the direction of the market but rather if the market is in a trend. Many traders can simply spot a trend by looking at charts, but when comprising automated systems it is critical to have an objective indicator to determine if there is a presence of a trend.

FXCM has an EA that can be downloaded here that trades using Bollinger Bands and the ADX. This system is similar to the other Bollinger Band system from FXCM, but this system does not used fixed stops and take profits. Rather it enters the trade much the same way by going long when price moves above the upper bollinger band and selling below the lower line. However, once the trade is in place it stays in it until the price moves all the way to the other band. This is a huge improvement as it allow profits to run much further. In any trading system it is much more likely to work when there is a potential for one or two very large trades to play out.

Findings: The EA performed vastly different on various timeframes. On the EUR/USD from 2001-2008 it generally broke even on most timeframes, but absolutely tanked on the five minute chart. This is understandable, because typically oscillators are more accurate the further out the timeframe is. EUR/USD and USD/JPY were tried on multiple timeframes without success.

Final Thoughts: It was exciting to test this EA as the combination of two oscillators showed potential for profitability. However, when applied to multiple timeframes and other currencies the system was very unreliable. It is important to note that any good trading system should work under different timeframes and for all of the major currencies. Therefore, it is not recommended to trade this EA live, but it is significantly worth exploring possible tweaks to the EA for improvement. The addition of the ADX significantly improved results from the original Bollinger Band EA

The Bollinger Band EA from FXCM can be downloaded here. The EA is set to trigger long positions when the price moves above the upper Bollinger Band standard deviation line and sell short when the price drops below the lower line. User adjustable stops and take profit levels are used to manage trades.

Findings: The EA was tested on the EUR/USD on multiple timeframes and generally broke even fro the timeframe between 2001-2008. This is an unacceptable return for the time period and therefore the EA is not worthwhile to run. However, it is a very simple system and it is exciting to see that the simple Bollinger Band indicator by itself was able to breakeven. This would be a good indicator to try and add to an existing system or build a system around. In a future review we will examine the Bollinger Band EA from FXCM that has an ADX filer.

The EA can be downloaded from FXCM Here

Expert Advisor Settings

The EA does not use stops or limit orders. Its objective is to always be in the market either long or short depending on the Awesome Oscillator signal. If the signal is increasing then it trades long, if it is decreasing then it trades short.

Initial thoughts: The EA is meant to be used in conjunction with other trading strategies. The fact that it is always in a trade means the system is well over trading. Further since it is only long or short as soon as the indicator increases or decreases means it is likely that it will not hold up long term. It would be better to have it trade long or short based on specific values of the indicator or a divergence with price.

Results

The EA was tested on 3 different timeframes from 2001-2008. It was found to be unsuccessful on all three. However, the account held up much better than I expected it would over this significant time frame.

Conclusion

The Awesome EA is not ready to be traded live, but it is interesting that simply following the indicator held up pretty well. If this indicator is used with other trading rules it is possible it could lead to some profits. The strategy tester reports are as follows below: 15m, 1hr, Daily

Linear Weighted Moving Average Crossover EA

Today’s EA is called the Linear Weighted Moving Average Crossover EA. You can download this free expert advisor here provided by FXCM.

Trade System Setup:

The Linear Weighted Moving Average Crossover EA trades long and short based upon 2 linear weighted moving averages crossing over each other. When the fast linear weighted moving average moves above the slow linear weighted moving average the strategy buys. When the fast linear weighted moving average moves below the slow linear weighted moving average it sells.

The strategy is only in the market based upon 1 signal at a time. The strategy is designed to trigger and only be in the market part of the time. There are adjustable stops and limits that you may set to control your exits.

Expert Advisor Backtest Results:

Backtest 1
The first backtest was performed on the EUR/USD 15 minute time frame from 2002 to 2009 with the default settings. As you can see, the results produced a steadily down-sloping equity curve with a negative net profit of -$5753.22 and a profit factor of 0.87. The complete Strategy Tester Report can be seen here.

(EUR/USD 15 minute time frame from 2002 to 2009 – default settings)

Backtest 2
Because the results were so bad on the 15M time frame, we decided it was not worth while trying to optimize on that time frame. Instead, we decided to try a larger time frame, H1, to see if we could increase the percentage of profitable trades. Unfortunately, the results were not much better. Net profit was negative again at -$3086.67 with a profit factor of 0.87. The complete Strategy Tester Report can be seen here.

(EUR/USD 1 Hour time frame from 2002 to 2009 – default settings)

Backtest 3
For this backtest we moved up to a longer time frame again, the 4 Hour. The results were a little better, but still negative. Net profit was -$544.31 with a profit factor of 0.93. Because the results are more horizontal here, we decided to optimize at this 4H time frame. The complete Strategy Tester Report can be seen here.

(EUR/USD 4 Hour time frame from 2002 to 2009 – default settings)

Optimization
We decided to optimize on the 4H time frame. Here are the ranges we chose to optimize for, with a Start value, Step through increment, and Stop value.

StopLoss: 30, 30, 90
TakeProfit: 50, 100, 250

Optimization Results
Okay, Here are the top optimization results.

1. StopLoss 60, TakeProfit 250
Profit: $1547
Total Trades: 234
Profit Factor: 1.14
Drawdown: $1558
Drawdown %: 1.55

2. StopLoss 30, TakeProfit 250
Profit: $508
Total Trades: 280
Profit Factor: 1.07
Drawdown: $1192
Drawdown %: 1.18

3. StopLoss 30, TakeProfit 150
Profit: $188
Total Trades: 311
Profit Factor: 1.02
Drawdown: $1078
Drawdown %: 1.08

Conclusion

 

From these initial backtesting results, this expert advisor does not look to be a worthwhile system to trade. The longterm results are mostly flat or negative. Further test cases may be needed to completely rule this system out.

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