Trade the DAX30 CFD with the Open Range Breakout
When looking at the average performance of the DAX30 over the last few years and decades, the month of August has presented itself as the second worst month.
Source: Monthly DAX 30 Performance / Data Range: 1958 - July 2018 - Finanzen
That being said, there were several opportunities to see strong intraday trends on the downside, and to develop and profit from them. Here we have used a recently presented strategy from one of Admiral Markets' educational webinars - which aim to help traders reach the next level on their journey to profitability in trading. Make sure to check out Admiral Markets' webinar schedule for all upcoming webinars.
One of these days was 10 August 2018. But before you are given a deeper look into the trading setup itself, let's recall the 3 steps of the DAX30 CFD Open Range Breakout strategy (for live coverage of the trade you can watch Admiral Markets' ESMA special webinar which used this trading setup to illustrate the regulatory changes for retail clients):
- Define the Open Range between 8:00am and 9:05am (CET)
- Identify the advantage: based on the 5-min-EMA (50)
- DAX30 CFD trades above → Long, DAX30 CFD trades below → Short
- Trade the break of the Open Range in the 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
Let's go through the aforementioned three steps and see how the setup would have performed on 10 August 2018:
- The high and low between 08:00 and 09:05am (CET) can be found between 12,568 and 12,630 points, so the Open Range is 62 points wide.
2. As you can see in the chart above, the DAX30 CFD traded below the EMA(50) on a 5-minute time frame (blue). That means that only short trades will be taken and this is only if the DAX30 CFD breaks out on the down-side of the Open Range.
3. As you can see in 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 12,630, resulting in a risk of 62 points. Since the setup works with a Take Profit 2R away from the entry point of the trade, a buy limit was placed at 12,444 points, which was hit after some time. Now that you've read through this setup, make sure to check out Admiral Markets' most competitive conditions on the DAX30 CFD, and start trading 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 markets risk free!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
