DAX - easy ??

[Van88Guy]

To DAX or not to Dax, That is the question.

Jiggy,

I'm trading Estoxx50 and Bobls, however, I'm tempted by the DAX because the potential payoff looks bigger.

In that regard I just did a 3 month backtest on the DAX using: i) a 13 day EMA; ii) 13 hour EMA, and then iii) I looked at the slope of the hourly MACD (9/19/9.) I only traded when all three indicators pointed in the same direction, and I set a protective stop at 15 points (that's about 1/3 of the 13-hour channel.) I covered my position whenever the MACD (9/19/9) fast line crossed the slow line. (If I was long I sold when the fast cut south across the signal line, and vice versa for covering short positions.)

The system generated 30 trades, including 19 winners. Most of the losses were cases where I got stopped out. Assuming Euro 9400 in capital, and assuming Euro 10/side, the system generated an annual return of 448%. Wow!

This said, I'm suspicious of the overall return, because this assumes that I am glued to the screen during the entire session, which is impossible for me because I have a day job. Besides, 3 months is too short a time frame, especially since the DAX was trending for most of that time. So there might be some sampling error.

Putting these limitations aside, for the moment, I found the weakest part of the system was the entry point. I think I can refine the system by using oscillators to finesse the initial buy/sell decision. That's my next project.

Anyway, I'm curious to know if you have any tried-and-true DAX system, or any other words of wisdom. At this stage I'm interested in harvesting as much input as possible before I plunge into the DAX. :?:

Regards,


Van88Guy

the dax along with any index or instrument is not 'easy' to trade

what makes them 'easier' is your ability to read the market and feel comfortable with the contract and the price action.

it is your confidence and belief which may lead you to beleive it is easier, it is just psychology at work.

nothing is easy, it just becomes easier with a winning mind set and a proven approach over many months of hard work and screen time.

good luck and kind regards

 

[jiggly]

Jiggy,

I'm trading Estoxx50 and Bobls, however, I'm tempted by the DAX because the potential payoff looks bigger.

In that regard I just did a 3 month backtest on the DAX using: i) a 13 day EMA; ii) 13 hour EMA, and then iii) I looked at the slope of the hourly MACD (9/19/9.) I only traded when all three indicators pointed in the same direction, and I set a protective stop at 15 points (that's about 1/3 of the 13-hour channel.) I covered my position whenever the MACD (9/19/9) fast line crossed the slow line. (If I was long I sold when the fast cut south across the signal line, and vice versa for covering short positions.)

The system generated 30 trades, including 19 winners. Most of the losses were cases where I got stopped out. Assuming Euro 9400 in capital, and assuming Euro 10/side, the system generated an annual return of 448%. Wow!

This said, I'm suspicious of the overall return, because this assumes that I am glued to the screen during the entire session, which is impossible for me because I have a day job. Besides, 3 months is too short a time frame, especially since the DAX was trending for most of that time. So there might be some sampling error.

Putting these limitations aside, for the moment, I found the weakest part of the system was the entry point. I think I can refine the system by using oscillators to finesse the initial buy/sell decision. That's my next project.

Anyway, I'm curious to know if you have any tried-and-true DAX system, or any other words of wisdom. At this stage I'm interested in harvesting as much input as possible before I plunge into the DAX. :?:

Regards,


Van88Guy

if your statements are correct then you could be onto a winner, if it works for you run with it, thats what i say.

but as you mentioned, it would be a wiser idea to continue forward testing your method/strategy until it yields the outcome you desire before quiting the day job,. continue to tweek and optimize, take an indicator off here add something elsewhere always looking to improve and refine both strategy, money management and indicator settings.

in my opinion backtesting is nowhere near the same as forward testing in real-time, after you have done 1000 trades you will come to your conclusions and realise that you have gone round in circles, if you do, which you probably will do, what i have mention ( you also) in the paragraph above.

this may take you best part of 7 months, but the journey would be worth it if you are serious about trading, only then would you have sufficiently established what really works for you and what doesnt. ( i am assuming you are a new trader, i know nothing about your current trading situation)

words of wisdom, - the dax is a wild animal, indicators are useless learn to trade with as little of them as possible ( if you must) !! the market is too dynamic for anything but a dynamic system and thats the human brain, (the final paragraph is just my opinion)

good luck and kind regards

 

[Baruch]

if your statements are correct then you could be onto a winner, if it works for you run with it, thats what i say.

but as you mentioned, it would be a wiser idea to continue forward testing your method/strategy until it yields the outcome you desire before quiting the day job,. continue to tweek and optimize, take an indicator off here add something elsewhere always looking to improve and refine both strategy, money management and indicator settings.

in my opinion backtesting is nowhere near the same as forward testing in real-time, after you have done 1000 trades you will come to your conclusions and realise that you have gone round in circles, if you do, which you probably will do, what i have mention ( you also) in the paragraph above.

this may take you best part of 7 months, but the journey would be worth it if you are serious about trading, only then would you have sufficiently established what really works for you and what doesnt. ( i am assuming you are a new trader, i know nothing about your current trading situation)

words of wisdom, - the dax is a wild animal, indicators are useless learn to trade with as little of them as possible ( if you must) !! the market is too dynamic for anything but a dynamic system and thats the human brain, (the final paragraph is just my opinion)

good luck and kind regards

jiggly,

Do you have a strategy for trading this "wild animal"?

 

[jiggly]

jiggly,

Do you have a strategy for trading this "wild animal"?

hey livermoore

buy on strength, sell on weakness

put your bid/offer behind the market, take advantage of of the springy price action.

support, resistance, trendlines, look for buying or selling pressure around these key areas.

 

[Baruch]

hey livermoore



put your bid/offer behind the market

Could you explain a little bit more?

 

[Van88Guy]

Dax

Jiggly,

Thanks for the insight on the DAX. I think I will forward-trade the system for a bit, perhaps adding an oscillator to fine tune the entry points.

Regards,


Van88Guy

if your statements are correct then you could be onto a winner, if it works for you run with it, thats what i say.

but as you mentioned, it would be a wiser idea to continue forward testing your method/strategy until it yields the outcome you desire before quiting the day job,. continue to tweek and optimize, take an indicator off here add something elsewhere always looking to improve and refine both strategy, money management and indicator settings.

in my opinion backtesting is nowhere near the same as forward testing in real-time, after you have done 1000 trades you will come to your conclusions and realise that you have gone round in circles, if you do, which you probably will do, what i have mention ( you also) in the paragraph above.

this may take you best part of 7 months, but the journey would be worth it if you are serious about trading, only then would you have sufficiently established what really works for you and what doesnt. ( i am assuming you are a new trader, i know nothing about your current trading situation)

words of wisdom, - the dax is a wild animal, indicators are useless learn to trade with as little of them as possible ( if you must) !! the market is too dynamic for anything but a dynamic system and thats the human brain, (the final paragraph is just my opinion)

good luck and kind regards

 

[TommyT]

Could you explain a little bit more?

I would presume he's saying to put you bid/offer in a couple of ticks outside of traded price as you can quite often get some great cheeky fills this way.

Also, with the way the dax trades you're often taking a bad price (if scalping) if you're missing the first part of the move and just hitting and lifting madly.

 

[Van88Guy]

TommyT,

Speaking of cheeky fills, I notice that Dax usually moves a fair amount in the first 30 minutes of trading. This is the movement generated by all the geniuses that read the papers, and want to profit from the trend, established by yesterday's moves. Of course, it is tougher to figure which way Dax will go after the open.

I am tempted to put Buy Stop Limit orders above the opening price and and Sell Stop Orders below the open, wait for the fill, and then put in a protective stop-limit to limit the downside risk of a whipsaw. That way the trade should go into profit, provided the market doesn't turn on its heels and go the opposite way.

Have you seen this strategy work, or do the profits merely get chewed up by adverse swings, slippage, and commissions?

Regards,

 

[TommyT]

Personally, I would never do that.

1. It's too 50:50 for my liking
2. The 1st hr is extremely hard to trade
3. I don't trade with stops and my commisions are reasonably low as I do reasonable amount of round trips.

It all comes down to personal taste and your own risk/reward pain barrier.

Also, think of "adverse swings" as "market action" because that's all it is. It may not be going the way you want it to, but squeezes and the filtering of large orders in the market can be distracting.

If you learn to read the squeeze in the dax, you'll do brilliantly. It takes time, money and discipline though...

 

[Worems1]

Stoxx is a waste of time?? Ha, Tell that to the guys in my office scimming 50 bags a day in the stoxx!!!