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How to trade seasonal patterns in indices, today: DAX30 CFD

April 10, 2019 12:30

The DAX30 CFD not only saw a very positive first quarter for 2019, but also a very strong start into April with new yearly highs. Many traders may have wondered whether it was possible to profit from this sharp bullish rally, and here's a specific strategy how.

Thanks to a known bullish seasonal pattern in the DAX30 CFD in the time frame between March 7, until April 3, it would have been indeed possible.

Seasonal Pattern in the DAX30 CFD

The key parameter of this seasonal bullish pattern is as follows: between March 7, until April 3, for the past 16 years, the DAX30 CFD saw an average gain of 292 points for 12 of those years, and lost on average 109 points over the remaining, with a maximum loss of 271 points.

How to Trade The DAX30 CFD Seasonal Pattern

But now the interesting question: how do we prepare to trade this?

We want to use the following plan:

  1. After the identification of the profitable seasonal window, enter the market on the closing price of the starting date on March 7, (21:59 CET) at 11,492 points.
  1. Identify the maximum loss within the seasonal period. Then, have a look at the daily chart and the indicator ATR(14).

    If the maximum loss is above the ATR(14) reading, round it up to the next round number and use it as worst-case-stop.
    If the maximum loss is below the ATR(14) reading, use the ATR(14) as your stop-width (rounded up to the next round number).

    Since the ATR(14) in the DAX30 CFD, on a daily time frame, was trading around 126 points, we want to use the maximum loss of the window of 271 points as our worst-case stop which we placed at 11,220 points.
  1. Look at the average gain of the seasonal pattern. Place the take profit away this average gain from your entry point.

    The average gain of the seasonal pattern is 292 points within the defined period. So, after entering the trade on the opening price of March 7, at 11,492 points, we add those 292 points from it to get our take profit level at 11,784.
  1. If the trade is not stopped out in this way, it does not reach its take profit within the seasonal period - end the trade market on the closing price of the identified.

    The Take Profit was hit on March 19, around two weeks after the entry of the trade happened.

DAX30 CFD hourly chart

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Hourly chart (between February 26, 2019 to April 5, 2019). Accessed: April 5, 2019, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

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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  1. This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
  3. Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
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