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Trading the DAX30 CFD with the Open Range Breakout Strategy

August 01, 2018 10:39


After the DAX found stronger resistance in the region around 13,200 points on 15 June 2018, there have been rising fears concerning an escalation of the trade war between the US, China, and the EU. The DAX has taken on some serious momentum on the downside. At the beginning of the month of July there were clear signs of a potential bottom forming around 12,100/130 points. Such a bottoming out could be considered successful after a break back above 12,400 points, a region that becomes successful and reconquered could be seen as a trigger for stronger bullish momentum, especially intraday.

With this in mind, and by utilising a presented strategy from one of Admiral Markets' recent educational webinars to help traders progress in their trading journey (check out Admiral Markets' webinar schedule for all current and upcoming events), it was possible to capitalize on this strong intraday trend on the DAX on that particular day. Before we delve deeper into the trading setup itself, and the particular trade from 5 July 2018, let's recall the 3 steps of the DAX Open Range Breakout strategy (for the recording of the entire webinar please visit Admiral Markets' YouTube channel)

  • Define Open Range between 8:00am and 9:05am (CET)
  • Identify the advantage: based on the 5-min-EMA (50)
  • DAX trades above → Long, DAX 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

If you're impressed with the potential of DAX so far, why not check out Admiral Markets' most competitive conditions on the DAX30 CFD and Dow Jones CFDs? You can start trading on the DAX30 CFD with a low 0.8 point spread offering during the main Xetra trading hours! But before you do that, let's go through these three steps together, and see how the setup would have performed on 5 July 2018:

  • The high and low between 08:00 and 09:05 AM (CET) can be found between 12,309 and 12,371 points, so the Open Range is 62 points wide.

Source: Sunday 29 July 2018 1 PM CEST - Admiral Markets MT5 with MT5SE Add-on

  • As you can see in the chart above, the DAX traded above the EMA (50) on a 5-minute time frame (blue). That means that only long trades will be taken, and this will only occur if the DAX breaks out on the upside of the Open Range.

Source: Sunday 29 July 2018 1 PM CEST - Admiral Markets MT5 with MT5SE Add-on

  • As you can see in the chart above, the DAX broke out of its Open Range and started to move strongly in the direction of the breakout.

The stop was placed at the bottom of the range at 12,309, 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 sell limit was placed at 12,495 points and hit. To test out the strategy presented today with Admiral Markets' DAX30 CFD offering, why not register for a free demo account 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.

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.