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Learn to trade the DAX30 with the open range breakout strategy

February 26, 2020 10:00

After fears around the Coronavirus resulted in a short-term drop below 13,000 points, DAX30 bulls quickly regained control and the German index recovered not only most of its losses, but brought new all time highs. The mark around 13,800 points has the focus of market participants again.

And after the remarks from Fed chairman Powell at his semi-annual testimony couldn't negatively affect the current bullish bias , it comes hardly as a surprise that also breakout traders could profit from bullish stints on an Intraday basis.

DAX30 CFD Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD Daily chart (between November 8, 2018, to February 21, 2020). Accessed: February 21, 2020, at 10:00pm GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.

In fact, traders could profit from the resulting bearish price action on February 12, with a strategy taught in one of Admiral Markets' educational webinars, and can help you be ready for price action like this in the future! You can also learn about it under real market conditions – register now for our Trading Spotlight series!

In addition: 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!

But before you are given a deeper look into the trading setup and the trade of this specific day, 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)
    1. DAX30 CFD trades above > Long,
    2. 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 February 12, 2020:

1. The high and low between 08:00 and 09:05am (CET) can be found between 13,652 and 13,686 points, so the Open Range is 34 points wide.

DAX30 CFD 5min chart

Source: Admiral Markets MT5 with MT5SE Add-on DAX30 CFD 5min chart (between February 11, 2020, to February 13, 2020). Accessed: February 18, 2020, at 11:35 GMT - 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 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.

DAX30 CFD 5min chart

Source: Admiral Markets MT5 with MT5-SE Add-on DAX30 CFD 5min chart (between February 11, 2020, to February 13, 2020). Accessed: February 18, 2020, at 11:35 GMT - 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 on the upside and started to move strongly in the direction of the breakout on the downside.

The stop was placed at the bottom of the range at 13,652 resulting in a risk of 34 points.

Since the setup works with a Take Profit 2R away from the entry point of the trade, a Take Profit was placed at 13,754 points, 68 points away from the entry point.

The target was hit within the next hours, resulting in a profit of 68 points and a profit factor of 68 points : 34 points = 2 : 1.

In 2015, the value of the DAX30 CFD 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%, in 2019 it increased by 26.44% meaning that after five years, it was up by 34.2%.

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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. 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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