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Nadex Trade of the Day- Smooth Sailing in The DAX

TradingPub Admin | January 26, 2015

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Every once in a while, it's nice to have a day where the markets behave beautifully. Today was like a nice day sailing on calm waters for the 7 am-9 am  Germany 30 (DAX) strategy using Nadex binary options. 

All indicators were bullish, and there was no economic news lying ahead like a storm on the horizon. Just smooth sailing for the 2-hour duration of the trade with a nice tailwind.

A veteran trader once observed that the 7 am EST hourly candlestick of the Germany 30 (DAX) Index is a pivot point that determines the direction of that market for the next hour or so.

The rules for this are extremely simple:

  • Select the 7 am-9 am EST Nadex time period
  • If the 7 am EST hourly candlestick is BULLISH, then BUY at the first Nadex strike price available BELOW the opening price of hourly candlestick.
  • If the 7 am EST hourly candlestick is BEARISH, then SELL at the first Nadex strike price available ABOVE the opening price of hourly candlestick.
While this sounds really easy, sometimes it can be a little bit difficult to execute. Since the beginning of the year, there's been a flurry economic news reports that have roiled the markets. But today was fair weather and smooth sailing.
Smooth Sailing in the DAX Trading Chart
Smooth Sailing in the DAX Market
  • 6:45 am EST: Time to pull up the charts and check the economic calendar. No economic news of any importance. The candlesticks were riding smoothly above the T-Line (8 EMA) and the 50 MA on the 15 minute charts.  The candlesticks were above the 5-minute Ichimoku cloud and the next 2 hours were pointing strongly bullish. All indicators were in agreement, and no economic news to muddy the waters.
  • 7:00 am: The Germany 30 (DAX) Index opened at 10731. On the 5-minute chart (shown above), the first candlestick was bullish, gapping above the T-Line. The next two candlesticks retraced back to the T-Line. With all indicators still confirming bullish, the following orders were placed:1. BUY Germany 30 (Mar) >10728 (9 AM) - 1 Contract  Risk $50, Reward $50
    2. BUY Germany 30 (Mar) >10708 (9 AM) - 3 Contracts Risk $75, Reward $25Both of these orders were placed as pending/working orders and they both filled before 7:30. The 10708 order was deeper into the money, therefore commanding a higher risk to reward. It acted as an insurance policy against the 10728 order which was placed at the money. If both orders expire in the money, the gross profit would be $125.00 less $7.20 in exchange fees. If the 10728 order got knocked out completely, then there is still a $25 profit from the backup order.
  • 8:00 am: The 7 am hourly candlestick closed bullish at 10750. From months of trading, testing and back-testing this strategy, I know there is a very a strong probability (about 80%) that the 8 am hourly candlestick will close above the 7 am opening price. And the rules of this strategy are to BUY below the opening price of the 7 am hourly candlestick once that candlestick is confirmed bullish. The market retraced slightly before finishing with a strong upward move, ultimately settling in the money at 10758.833.

Both orders expired in the money at the 9:00 am expiration for a net  profit of $117.80 after exchange fees were deducted. After a couple of weeks of sometimes challenging trades, it was nice to have a day to relax and watch a trade ride to expiration without fearing the need to bail out. Smooth sailing.

For more about the 7am-9am EST Germany 30 (DAX) Strategy, see full video below:

If you would like to learn more about Nadex, or how to trade  Binary Options, please check out the free video library and learn why this may be an interesting new way for you to diversify your trading portfolio.

CLICK HERE  to test drive Nadex with a free demo!

Cheers, 

The Trading Pub Team