DAX Trading: Reversal, Trend Following or Both?

by Andrea Unger

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Want some fresh ideas for your strategies for the DAX?

The DAX is a very liquid market that responds well to different approaches. 

In this video, we'll show you two strategies that managed to work pretty well in the last few weeks, earning over €20,000.

These strategies are based on opposite approaches: one is reversal whereas the other one is trend-following…

But if you want to learn more about the rules they are based on and their real performance over the last few weeks, you need to watch the video!

Enjoy! 😎

Transcription

Hey everyone and welcome to this brand new video about the strategies in our portfolio that have performed the best over the last few weeks.

I'm one of the coaches of Unger Academy, and today we're going to be talking about two strategies for the Dax market that have performed particularly well recently.

Okay, so let's start with our video. Here we have two strategies. The first one is based on a reversal approach, while the second one is based on a trend-following approach. Both approaches can work pretty well on this market and have proved to be quite solid over the years.

So let's start from the reversal strategy, which is called "out of the bands". In this strategy, we use the Bollinger Bands to set the entries and we calculate them using 20 periods and two standard deviations. The short positions are opened when the low of the previous bar is outside the upper Bollinger Band whereas long positions are opened when the high of the previous candlestick is lower than the lower Bollinger Band. In other words, this strategy opens long or short positions in counter trend only when there is a candlestick that is completely out of the Bollinger Bands.

As you can see, in the last few weeks this strategy has had some really incredible profits. We have already shown you this long trade some time ago. Then, after that there was also an extremely profitable short trade - you can see it here, it made around €20,000.

Then the strategy hit a huge stop loss of a very high value, €7,500. As you know, the Dax is a very heavy market that doesn't lend itself too well to scalability because it's very heavy and a single point of this market equals €25. Today, however, mini and micro contracts have been introduced. Mini contracts equal one-fifth of the Dax and micro contracts equal one-tenth of the full contract of Dax, so these markets are certainly more suitable for smaller capitals.

Now let's check out the report of this strategy, which, as I've already told you, performed very well. Here is the extremely good short trade made in the week from November 19th and 26th. Then there is the €7,500 stop loss that I was telling you about, and then there's another trade in breakeven that produced neither benefits nor losses.

This is the equity line of the system. As you can see, it has accelerated a lot over the last period.

There can be some good stuff here, so, you know, give it a try because it's not so obvious as a trading idea.

Now let's take a look at the next strategy, which is opposite to the previous one because while the previous one is multiday and keeps positions open beyond the end of the session, this is an intraday strategy that closes the positions within the same session. In this case, for example, the strategy entered the market and before the end of the session, it closed the trades.

The strategy uses the signals generated by the ADX indicator and opens the positions only when the levels of this indicator are low. This is because the ADX indicates how strong the directionality of a trend is. So, when the values are low, it means that, at the moment, the market is not very directional and so, it could become more directional in the following days. So with this strategy, which is based on a trend-following approach, we try to take advantage of these movements.

In the last week, it made a short trade that earned €1,500. This profit is clearly smaller than the one made by the short trade of the other strategy, and this is related both to the fact that this is an intraday strategy and to the fact that the market has moved back a little bit. Here, too, we have a breakeven. The reason why it's marked in red is that these charts already consider slippage and commissions.

Let's also take a look at the strategy report. As you can see, this strategy works very well too, even though it's opposite to the previous one. Actually, they worked together, at the same time, and performed well. 

So, guys, you can definitely go and try to develop your own automated strategies for the Dax market.

And if you want to learn more about how to build trading systems, we're going to leave you a link in the description of this video that will take you to a webinar by Andrea Unger, the only four-time world trading champion, who will explain to you how to approach the financial markets and to become an independent trader.

As always, I remind you to please leave us a Like and write us a comment to share with us your opinion and of course tell us if you have any ideas for our next videos.

That's all for today, and we'll see you next time! Until then stay safe. Bye-bye!

 

Need More Help? Book Your FREE Strategy Session With Our Team Today!

We’ll help you map out a plan to fix the problems in your trading and get you to the next level. Answer a few questions on our application and then choose a time that works for you.

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Andrea Unger

Andrea Unger here and I help retail traders to improve their trading, scientifically. I went from being a cog in the machine in a multinational company to the only 4-Time World Trading Champion in a little more than 10 years.

I've been a professional trader since 2001 and in 2008 I became World Champion using just 4 automated trading systems. 

In 2015 I founded Unger Academy, where I teach my method of developing effecting trading strategies: a scientific, replicable and universal method, based on numbers and statistics, not hunches, which led me and my students to become Champions again and again.

Now I'm here to help you learn how to develop your own strategies, autonomously. This channel will help you improve your trading, know the markets better, and apply the scientific method to financial markets.

Becoming a trader is harder than you think, but if you have passion, will, and sufficient capital, you'll learn how to code and develop effective strategies, manage risk, and diversify a portfolio of trading systems to greatly improve your chances of becoming successful.