The Cowabunga Strategy – why should you not use it?

The Cowabunga Strategy – why should you not use it?

There are many controversies about The Cowabunga Strategy, which is not in fact a binary trading strategy. It was borrowed from Forex, and even if it was successfully used in this type of trading, it seems like it is not that great for binary options trading. Let’s see why.

What is The Cowabunga Strategy?

The strategy is only good for short term trading, as it is based on identifying short-term trends, based on statistical and mathematical concepts. In other words, this strategy is based on patterns, and the rumors of the market won’t affect it in any way. The strategy is based on identifying a predominant trend based on a four hour chart, and on applying certain Options strategies for the following hour.

If the general trend for a period of four hours is UP, and if the value of the respective pair has grown by more than 10%, it means that you have a growing trend in your hands, which should be speculated. For the next hour, the trader would have to buy the respective pair, and to get out of the transaction as soon as he is able to get at least 2% profits.

Why is The Cowabunga Strategy good for Forex, but not so great for binary trading?

While in the case of Forex and currencies, the trends are usually the same for the whole duration of the day, in the case of stocks; the trend might change at the end of the day, considering the fact that the respective companies are closing their operations for the day. This is why a four hours growing trend of a stock does not mean that the trend would be the same for the next hour. On the contrary, it was observed that the value of some stocks shrinks at the end of the day, and this is why The Cowabunga Strategy is not recommended for binary trading with stocks.

Another reason why The Cowabunga Strategy must not be used for stocks binary trading is the fact that the market of stocks is more rigid than the market of currencies. While the trend of currencies might be changed even by a simple announcement of the Federal Reserve, in the case of stocks, major changes within a day are rarely observed, and those are usually given by unforeseen events. As this is a short-term trading strategy, it is not recommended for stocks trading, which are usually long and medium term investments.
This strategy is mostly not recommended for beginners, as several charts and statistics must be followed at the same time, which is not so easy especially for a beginner trader. As any beginner in binary trading must focus on simple instruments and long-term investments, Cowabunga is not recommended in any case. Even if the trader is able to understand those charts, anticipating the evolution of stocks based only on those observations might not be so easy.

As a beginner in the binary options trading world, you should not use this strategy whatsoever. Even later, when you think that trading does not have so many secrets for you; you might discover that there are several other strategies that can be used effectively. Instead of trying exotic strategies that might ruin your budgets, it is important to focus on a single effective one, which is not Cowabunga, at least from the point of view of experts.

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