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The Daily DAX strategy

Description

The Daily DAX strategy was designed to show trading can be simple and accessible to all. Two common sense trading concepts are combined with the impressive back-testing and optimization functionalities of the NanoTrader Full platform to develop a solid strategy.

These are advantages of the Daily DAX strategy:

  1. Trades a popular market index.
  2. Simple and to the point.
  3. Uses only key technical analysis concepts.
  4. Good back-test results.
Suitable for : DAX market index
Instruments : Futures and CFDs
Trading type : Daytrading and swing trading
Trading tempo : Maximum 1 trade per day
Using NanoTrader : Manual or (semi-)automated
 

The strategy in detail

The Daily DAX strategy is proof trading can be simple. Only two basic trading concepts are used:

  1. Determine the direction of the trend.
  2. Determine the strength of the trend.

A simple moving average is used to determine the direction of the trend. A close above the 10-period moving average indicates a bullish trend. A close below the average, indicates a bearish trend.  Another stalwart, the ADX indicator, is used to measure the strength of the trend. An ADX of 25 or more equals a strong trend.

The trader can determine the historically ‘perfect’ point in time to open a position using the NanoTrader. Every time, at precisely this point time, the trader opens a position if the trend criteria are met. The NanoTrader calculated the historically optimal time to open a position for this combination of indicators as being 13h20.

When to open a position?

A long position is bought at 13h20 if the trend is bullish and strong. A short sell position is sold at 13h20 if the trend is bearish and strong. If the trend is not strong, the trader does not open a position.

This example shows a buy signal at 13h20. The trend was positive (price above the moving average – purple line) and strong (ADX at 50 i.e. above the dotted line indicating 25).

DAX trading signal

This example shows a day without a signal. The trend was too weak (ADX below 25).

DAX no short sell signal

For added flexibility, this free trading strategy includes a signal filter. The filter allows traders to select the days on which they want a signal. In this example the trader excludes Monday and Friday.

NanoTrader
 

When to close a position?

The position is automatically closed at 21h20 by the flat filter if the TradeGuard is activated. The Daily DAX strategy has no stop loss or take profit. If wanted, the trader can add these manually or via the TradeGuard.

This is the 10-year back-test on the DAX Future.

DAX strategy backtest

This is the back test on the DAX Future during the Corona pandemic (Jan 2020 – June 2020):

DAX strategy results

 

Practical implementation

Using the NanoTrader follow these steps:

  • Select the instrument you wish to trade and open the chart.
  • Select the strategy "WHS Daily Dax” in the "WHS Strategies" folder.
  • If required, adapt any parameters as described above.
  • For semi-automated trading, activate TradeGuard+AutoOrder in the chart. For automated trading, activate AutoOrder in the chart.