Trading Systems on Dax: Two Reversal Strategies with Real Performance.. Watch the Results!

by Andrea Unger | The Trading Show

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The DAX (Deutsche Aktienindex) is the benchmark index for the German stock market and is one of the most heavily traded European markets.

It is an instrument that responds very well to different types of logic, be it trend following, reversal or bias.

This video presents two reversal strategies that have been performing well for quite some time.

In fact, they were both created in 2017, and since then, they’ve proven to perform well in different market phases.

By watching the video, you’ll learn:

  1. The rules of the multiday reversal strategy with an average trade of more than 1,000 euros

  2. The rules of the hybrid multiday/intraday reversal strategy

  3. The real performance of the two strategies in recent years

Enjoy! 😎

Transcription

Hello everyone, and welcome back to this brand-new video! Here we are, back to our usual chat about the strategies in our portfolio that have performed the best over the last period.

Okay, so this week we're going to be talking about the DAX market, the European equity index for German stocks.

Now, the DAX futures are certainly well suited for both reversal and trend-following logics, but they also work well with bias strategies, that is strategies based on seasonal behaviors or recurring behaviors that take place in specific time windows during the day. An example is the bullish time window that starts at 5 pm and ends at 9 am the following day.

But in this video we're not going to be talking about bias strategies… Because we’ll be talking about reversal strategies that have worked well over the years.

So we're going to be seeing two types of strategies. One, a multiday strategy that keeps its positions open beyond the end of the session, and another strategy that is a little bit more mixed because it includes both intraday exits, so until the end of the session, and multiday exits.

So let's go and start with the first one, the multiday strategy. It closes its positions at the latest after six days or, of course, when a stop loss or a profit target are reached.

This strategy is based on the false breakouts that form in the 15-minute time frame of the DAX.

Let's take a look and see. Here, we go, this example. This seems a pretty blatant example.

You can see that the market initially broke out to the upside from the previous day's high, which we set up at this level here and which coincides with this point.

And you can see that the market reversed after a rise. So here you can see the mean-reverting characteristics of the market that emerged.

And at the next bar, at the close, again below the previous day's high, the strategy opened a short position.

And then the next day, we see that it immediately reversed the position.

As you can see, the low was immediately crossed on the first bar. Then there was a return above the previous day’s low, creating a bullish position.

This strategy was developed in 2017 and has been working very well out-of-sample, especially in the last period.

The equity line long has done very well, and the equity line short also performed very well in the out-of-sample period, especially if we consider that this is an equity index, so a market that tends to generally go up - except for the last couple of months of course.

And that’s the overall equity line of the strategy.

The average trade is also definitely excellent. You can even reach up to €1,000, which on the DAX corresponds to more or less 40 points.

The average trade has even improved in out-of-sample, so guys, go and give it a try too! This really is an easy strategy to code and an idea that has proven to work pretty well and continues to work over time.

Let’s now turn to the next strategy. As for the entry triggers, this strategy is based on the same logic as the previous one.

And in fact, it enters when the false breakouts occur. More in particular, we'll sell on the false breakouts to the upside, while on the false breakouts to the downside, which are the breakouts of the previous day's low, we'll go long.

As for the exits, all the short trades will always be closed at the end of the day.

On the long side, on the other hand, if we buy when this strategy buys one contract at market, at the end of the day it will check whether the open profit of the active position is positive or negative at that point.

If negative, the strategy will hold open positions overnight and perform the same check the next day.

For example, here we can see a trade that was closed at the end of the day, but obviously, it had already yielded a good profit, so it wasn't negative.

Here's an opposite example. The strategy had entered. At the end of the session, the position was at a loss, so the system decided not to close the position, stay in the market, and then close it the next day when a profit was made.

This strategy has also proven to be very successful over the years.

It too was also developed in 2017, and although it’s less powerful than the multiday strategy, it has performed quite well both in market declines and market rises.

And here, we can see the equity line short.

So, guys, go and give these a try too! These strategies are easy to code. They’re similar to each other, albeit with some slight differences between one strategy and another.

If there is anyone among you who’s interested in the world of systematic trading, go and click on the link in the description. From there, you can access a video by Andrea Unger, get our best-selling book by just covering the shipping costs, or even book a free call with a member of our team.

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And with that, this video is over! Thank you so much for watching and I will see you again very soon! 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

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.