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Trading the DAX30 with the Open Range Breakout: December 5, 2018

December 05, 2018 10:30

On average, November is the second strongest month in terms of performance in the DAX30 CFD.

Source: Finanzen.net

And on Friday November 30, the DAX30 CFD traded at the open slightly below its monthly opening price of 11,424.7, giving the bulls a last chance to push the index into the green for the month.

Shortly after the opening bell rang, these chances diminished quickly, the DAX30 CFD instead fell below 11,300 points and made new weekly lows.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (between 07 November 2017 to 30 November 2018). Accessed: 01 December 2018 at 9:00 AM GMT

But even if bulls weren't capable of pushing the DAX30 CFD back into the green for the month and levelling the path to a small Christmas rally in the upcoming days, for traders it was possible to be positioned in this short stint on the downside with the open range breakout strategy.

But before we go into further details, let's recall the three steps of the DAX30 CFD open range Breakout strategy:

  1. Define Open Range between 8:00am and 9:05am (CET)
    • Identify the advantage: based on the 5-minute EMA (50)
  2. DAX30 CFD trades above → Long, DAX30 CFD trades below → Short
    • Trade the break of the Open Range in direction of the identified advantage,
    • Stop above/below the high/low of the range (= 1R)
  3. 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 30, 2018:

  1. The high and low between 08:00 and 09:05am (CET) can be found between 11,330.3 and 11,305 points, so the open range is 25.3 points wide.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between 30 November 2018 to 30 November 2018). Accessed: 30 November 2018 at 12:00 PM CET

  1. As you can see in the chart above, the DAX30 CFD traded below the EMA(50) on a 5-minute time frame (purple line). That means that only short trades will be taken and only if the DAX30 CFD breaks out on the down-side of the open range.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between 30 November 2018 to 30 November 2018). Accessed: 30 November 2018 at 12:00 PM CET

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

The stop was placed at the top of the range at 11,330.3, resulting in a risk of 25.3 points.

Since the setup works with a Take Profit 2R away from the entry point of the trade, a buy limit was placed at 11,254.4 points, 50.6 points away from the entry point.

The target was hit within minutes, resulting in profit of 50.6 points and a profit factor of 50.6 points : 25.3 points = 2 : 1.

Check out Admiral Markets' 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!

Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

  1. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation.
  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 (hereinafter "Author") based on the Author's personal estimations.
  4. To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
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