​Trading quarterly economic announcements on the DAX30

  • master
  • 14.11.2019
  • Comments Off on ​Trading quarterly economic announcements on the DAX30

The fourth quarter of 2019 began by moving in the opposite direction to the fourth quarter of 2018. There were rising hopes of the US and China finding a partial deal in terms of trade, while central banks started to aggressively ease their monetary policy in anticipation of a global economic downturn pushed equities higher.

Following US equities, the DAX30 CFD pushed back above 13,000 points and, if no external bearish trigger is found, there is a serious possibility that the German index will close 2019 close to, if not at, new all-time highs. The index is currently sitting at 13,600 points.

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between August 2, 2018, to November 8, 2019). Accessed: November 8, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

There were several opportunities for traders to profit from bullish price action in the last few weeks. One example is with a strategy
presented in Admiral Markets’ Trading Spotlight webinar.

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The strategy is the DAX30 CFD open range breakout, which has three key steps:

  1. Define Open Range between 8:00am and 9:05am (CET)
  1. Identify the advantage: based on the 5-min-EMA (50)

    DAX30 CFD trades above > Long

    DAX30 CFD trades below > Short

  1. Trade the break of the Open Range in direction of the identified advantage

    Stop above/below the high/low of the range (= 1R)

Take Profit: 2R away from the entry point of the trade

In the following, let’s go through these three steps and see how the setup would have performed on October 23, 2019:

  1. The high and low between 08:00 and 09:05am (CET) can be found between 12,679.92 and 12,716.67 points, so the Open Range is 36.75 points wide.

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD 5min chart (between October 22, 2019, to October 24, 2019). Accessed: November 8, 2019, at 11:30am GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As you can see in the chart above, the DAX30 CFD traded above the EMA(50) on a 5-minute time frame (blue line). That means that only long trades will be taken and only if the DAX30 CFD breaks out on the up-side of the Open Range.

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD 5min chart (between October 22, 2019, to October 24, 2019). Accessed: November 8, 2019, at 11:30am GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

  1. As shown on the chart above, the DAX30 CFD broke out of its open range on the upside and started to move strongly in the direction of the breakout on the upside.

    The stop was placed at the bottom of the range at 12,679.92 resulting in a risk of 36.75 points.

    Since the setup works with a Take Profit 2R away from the entry point of the trade, a Buy Limit was placed at 12,785.97 points, 73.5 points away from the entry point.

    The target was hit within the next hour, resulting in profit of 73.5 points and a profit factor of 73.5 points : 36.75 points = 2 : 1.

In 2014, the value of the DAX30 CFD increased by 2.65%, in 2015, it increased by 9.56%, in 2016 it increased by 6.87%, in 2017 it increased by 12.51%, in 2018 it fell by 18.26%, meaning that after five years, it was up by 10.5%.

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