​Trading the DAX30 with the Open Range Breakout: December 19, 2018

This year in the lead-up to Christmas, the DAX bulls were put on the naughty list with the DAX30 CFD losing more than 300 points, which is nearly 3%.

This drop also marks a new yearly low. This is the first drop below 11,000 points since December 2016 and, until the week before Christmas, the DAX30 CFD couldn't reconquer the mark of 11,000 points.

Even though December is historically one of the strongest months of the year in terms of performance, this year's year-end rally failed with the DAX30 CFD being currently down more than 3% on the month.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD Daily chart (between 23 November 2017 to 14 November 2018). Accessed: 01 December 2018 at 9:00 AM GMT. Please note: Past performance is not a reliable indicator of future results or future performance.

But even if there was no year-end rally, for traders it was still possible to be positioned in this short stint on the downside and find some sweets in their stockings 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 8:00 am and 9:05 am (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 paragraphs, we will go through these three steps to see how the setup would have performed on December 6, 2018.

1. The high and low between 08:00 am and 09:05 am (CET) can be found between 11,029 and 11,092 points, so the Open Range is 63 points wide.

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5 minute chart (between 05 December 2018 to 07 December 2018). Accessed: 14 December 2018 at 11:00 PM CET. Please note: Past performance is not a reliable indicator of future results or future performance.

2. As you can see in the chart above, the DAX30 CFD traded below the EMA(50) on a 5-minute time frame (blue 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 05 December 2018 to 07 December 2018). Accessed: 14 December 2018 at 11:00 PM CET. Please note: Past performance is not a reliable indicator of future results or future performance.

3. 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 11,092 resulting in a risk of 63 points.

Since the setup works with a take profit 2R away from the entry point of the trade, a buy limit was placed at 10,903 points, 126 points away from the entry point.

The target was hit within minutes, resulting in a profit of 126 points and a profit factor of 126 points: 63 points = 2 : 1.

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