We recently started our Nadex Trade of the Day rubric presented by Cam White. He is an expert on trading on the exchange and shares his trading education and other observations on his DAX strategy below. If you are not yet trading on Nadex, see this free library we put together and learn more about the wonderful opportunities the exchange has to offer. Simply Click Here
Sometimes when you have a strategy that has a high probability of success, you just have to trust that your trading plan will work most of the time. You also have to trust that the strategy won't work the minority of the time. Today was a day to trust the rules and let the trade ride.
A veteran trader once observed that the 7am 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 7am-9am EST Nadex time period for the Germany 30 (DAX) Index.
- If the 7am EST hourly candlestick is BULLISH, then BUY at the first Nadex strike price available BELOW the opening price of hourly candlestick.
- If the 7am EST hourly candlestick is BEARISH, then SELL at the first Nadex strike price available ABOVE the opening price of hourly candlestick.
8:30am: The four US economic reports came in mixed/bearish. Not enough to shock the markets, but just enough to drop and fill the pending orders that were placed at 7:50 The 10728 order filled, and just one of my 3 contracts at 10708 filled. The market did not stay down long enough to fill the other 2 contracts. The DAX spiked upward sharply at 8:45, making both contracts good. It would have been a wise move to exit both positions early and take profit, but today the decision was made to let both contracts ride to expiration. Then the market dove at 8:50, before settling in the money for a full profit at expiration.
BUY at >10728: $50 profit, less $1.80 in exchange fees
BUY at >10708: $20 profit, less $1.80 in exchange fees
Today's trade was actually a beautiful day for the 7am-9am DAX Strategy. The 7am hourly candlestick opened at 10731, and the trade closed at 10732 at the 9am expiration. If you were patient and followed the ruled of this strategy to the letter, then you would have bought at 10728 and expired in the money for a full profit. If you sold the market at 10748, your trade would have also expired in the money.