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​Trading DAX30 CFD with the Open Range Breakout

August 08, 2018 12:50


The DAX30 CFD could potentially make back some of the losses it saw over the month of June, gaining close to 5%. It started the month of August with losses again, finding a potential trigger in the continually rising fears concerning the escalation of the trade war between the US and China.

Source: Sunday 7 August 2018 1pm CEST - Admiral Markets MT5 with MT5SE Add-on - July 2017 - August 2018

Based on a recently presented strategy in one of Admiral Markets' educational webinars, which aim to help traders to reach the next level on their journey to profitability in trading (check Admiral Markets' webinar schedule for all events) it was again possible to capitalize on the so called "Open Range Breakout" strategy in the DAX30 CFD that day.

Before you are given a deeper look into the trading setup itself, and the trade that occurred on 1 August, let's recall the 3 steps of the DAX30 CFD Open Range Breakout strategy (for live coverage of the trade make sure to check out: Admiral Markets ESMA special webinar, which used this trading setup to illustrate the regulatory changes for retail clients):

  • Define 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 these three steps and see how the setup would have performed on the 1 August 2018:

1.The high and low between 08:00 and 09:05am (CET) can be found between 12,805 and 12,840 points, so the Open Range is 35 points wide.

Source: Sunday 5 August 2018 4pm CEST - Admiral Markets MT5 with MT5SE Add-on

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 will only occur if the DAX30 breaks out on the down-side of the Open Range.

Source: Sunday 5 August 2018 4pm CEST - Admiral Markets MT5 with MT5SE Add-on

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 12,840, resulting in a risk of 35 points. Since the setup works with a Take Profit 2R away from the entry point of the trade, a buy limit was placed at 12,735 points, which was hit after some time.

To test Admiral Markets' DAX30 CFD offering in combination with the described strategy above, register for a free demo account today and experience the live markets risk free! Or if you're ready to trade straight away, why not check out Admiral Markets' most competitive conditions on the DAX30 CFD and Dow Jones CFDs, and start trading on the DAX30 CFD with a low 0.8 point spread offering during the main Xetra trading hours!

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.

Risk Warning

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.