Trading Systems

Why Trade the DAX?

The DAX30 is one of the biggest markets in Europe, and measures the performance of the Prime Standards top 30 largest German companies in terms of order book value and market capitalization.

Volatility of the DAX

You will consistently see more volatility on the DAX compared to the FTSE, so there is a potential for more setups at the start of the trading session and during the session.

With bigger moves and higher daily ranges I personally think there is more money to be made if you play your cards right and have the right mentor behind you.

Brexit and the DAX

Has the ‘Brexit’ decision had any effect on how we trade the DAX? Not for us, our trades are normally complete within the first hour of the session; we are not buy and hold investors. We make our money then go and enjoy the rest of the day.

The DAX closed at 10257 points on Thursday 23rd June 2016 trading session, and reopened at 9257 after the ‘Brexit’ vote had been determined the following day.  Which is one massive drop, nearly 4 weeks on the market is only just trading above these levels.

The DAX currently is in a bearish pattern, which will not change until the DAX is trading above the MA200, which is the average price for the index over the last 200 days, which sits at 10056.

The stock standard trade for the DAX is the 5min bar break, which simply is a break either long ( buying ) or short ( selling ) of the opening 5min bar. This is just one of many setups you can expect trading the DAX.

There are a few factors we need to line up before we can go blindly taking every 5min long or short that presents itself, there are just too many of them, we want the good ones!  These setups are explained and taken in the live trading room.  We can expect at least 3 setups per week.

A stop loss is put in place every time we trade, this is our insurance, this is also when we know we are wrong and it’s time to walk away from the screen.

If taking a short of the opening 5min bar our stop loss is placed above the high of the opening 5min bar, normally 3-5 points, and taking a long our stop is placed 3-5 points below the low the opposite of the short position.

Our profit target is normally bar length on these setups, so if the opening 5min bar was say 35 points, we are looking for 35 points of profit.  This is also the trade I have explained in the picture below.

DAX 5 Minute Bar

The setups are much the same as the FTSE, Gaps, Extreme Gaps, Double Extreme Gaps, Breakaway long or short, 5 min bars and the new edition setup the Bollinger Band Trade. Most of these setups are related to market inefficiencies, and consistently appear multiple times during the week and consistently deliver nice profits.


Timing of the DAX and Lifestyle Trading

The DAX is perfect for someone who is time poor and would like to make some extra cash at the start of the day, and then continue a day job, or spend time with the kids, grab a coffee or lunch with friends. (Tweet this)

Given the fact you can trade it alongside the FTSE at the open the same time you, could effectively double your returns in the markets without double the screen time. This is an ideal situation for a lifestyle trader.

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