​Trading the DAX30 using the open range breakout strategy

December 05, 2019 14:00

After a great start into the fourth quarter, and a push back above 13,000 points, the DAX30 CFD consolidated at an elevated level and presented itself choppy.

But even under these market conditions, traders could profit from the bullish price action several times within the last few weeks, for example with a strategy taught in one of Admiral Markets' educational webinars to help traders advance their trading plan to the next level.

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between August 23, 2018, to November 29, 2019). Accessed: November 29, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

If you want to learn more about the strategy presented below – register now for our Trading Spotlight series and learn about it under real market conditions! Also, join our exclusive Trading Spotlight community and follow various strategies of our experts under real market conditions, see how they perform and what they draw out of their results for their trading!

Let's recall the 3 steps of the DAX30 CFD open range breakout strategy:

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

    DAX30 CFD trades above > Long
    DAX30 CFD trades below > Short
  3. 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 November 19, 2019:

  1. The high and low between 08:00 and 09:05am (CET) can be found between 13,225 and 13,254 points, so the Open Range is 29 points wide.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5min chart (between November 19, 2019, to November 19, 2019). Accessed: November 25, 2019, at 14:00 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 MT5SE Add-on DAX30 CFD 5min chart (between November 19, 2019, to November 19, 2019). Accessed: November 25, 2019, at 14:00 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 13,225.58 resulting in a risk of 29.66 points.

    Since the setup works with a Take Profit 2R away from the entry point of the trade, a Buy Limit was placed at 13,314.56 points, 59.32 points away from the entry point.

    The target was hit within the next hour, resulting in profit of 59325 points and a profit factor of 59.32 points : 29.66 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%.

Check out Admiral Markets' most competitive conditions on the DAX30 CFD and start trading on the DAX30 CFD with a low 0.8 point spread offering during the main Xetra trading hours! To test Admiral Markets DAX offering in combination with the described strategy above register for a free demo account today and experience the live market risk free!

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