THE LITTLE E-BOOK OF DAX FOLLOW YOUR TRADING INSTINCT
BY
Colibri Trader
The Beginning The Base date for the DAX is 30 December 1987 and it was started from a base value of 1,000. The Xetra system calculates the index after every 1 second since 1 January 2006..
PRICING Prices are taken from the electronic Xetra trading system.
DAX
COMPANIES
DAX is Deutsche Borse’s blue chip index for the German stock market- one of the most efficient stock markets in Europe.
It comprises the 30 largest and most actively traded German companies
EUREX The Eurex, a European electronic futures and options exchange based in Zurich, Switzerland with a subsidiary in Frankfurt, Germany, offers options (ODAX) and Futures (FDAX) on the DAX from
DAX INFO 30 GERMAN COMPANIES
PURPOSE DAX Futures are highly liquid instruments that are perfectly suited to meet your needs in directional trading and for arbitrage, as well as for hedging and performance
EXCHANGE
•
WHAT IS AN EXCHANGE
An exchange is a marketplace where buyers and sellers come together to trade. But it is not the usual type of marketplace. Take a look around on any cash or derivatives market: you will not find a trace of the goods that are being so busily traded.
2015
DAX closes above 12,000
1997
XETRA established the beginning of
a new era of exchanges
1585
Organized Securities Market
DEUTSCHE BÖRSE
DAX VERSIONS
COMPARISON OF THE TWO VERSIONS
PERFORMANCE INDEX
VS Commonly Quoted Perfomance Dividends Counted
PRICE INDEX
MILESTONES The beginning…the birth of DAX
1992 1988 1958 1820 1585
Birth of the Frankfurt Stock Exchange
First share in FrankfurtAustrian Central Bank
Listing of first foreign share
Introduction of DAX
Renaming of Frankfurter Wertpapierbörse AG to Deutsche Börse
MILESTONES This century
2014 2011 2009 2007 2001
IPO of Deutsche Börse AG
Acquisition of ISE
Increase of the interest in the STOXX Ltd. to 50% plus one share
Migration of the floor trading to Xetra technology
Starting the “7 Market Technology Family” including trading architecture T7
DAX
Trading Secrets
TIPS The tips presented in this e-book are not to be taken for granted. They represent assumptions based on past data and therefore cannot guarantee future results. Statistics is not the most consistent of all sciences…
TRADING DAYS Consistent success doesn’t mean overtrading
Mondays
Bank Holiday
After a bank holiday, the afternoon period is much more reliable than the morning period
Mondays- especially Monday mornings are not the best days to trade DAX. This is because it is absorbing the news from the weekend and “establishing” direction
Fridays
Friday afternoon is a bad day to trade DAX since volumes are low as many traders have left their desks already
Times to trade Certain times are better to trade DAX than others- the first two hours of the European session; then the first two hours of the US session bring the most market participants
Rollover
Contract rollover days for options and futures, which happen every three months are bad days to trade DAX
TRADING TIMES Trading is a game of patience
7:00 and 16:30
According to the DTI, 7:00 and 16:30 European time are strategic times for the DAX30. The 7 o’clock price of the DAX is a key pivot point to evaluate the sentiments of the other market participants.
15 MINUTES
Be extra careful in the first 15 minutes of trading- preferably don’t trade
05 04
Avoid trading between 12:00-14:00 as traders at the exchanges take lunch and the volumes fall, while volatility takes a grip
03 02
TUE, WED, THU
Tuesday, Wednesday and Thursday are decent days to trade, unless there is a statement from the FED or a major earnings data from an important company. Wait for at least 15 minutes after the release to trade
12:00-14:00
01
BEST TIME TO TRADE
The best times for trading DAX are 8 to 10 GMT and 14:30-16:00 GMT.
CFDs VS FUTURES Pros
CFDs
FUTURES
Pros !Easy
Pros
to trade
!Smaller
initial deposit
VS
!Some
index CFDs are quoted 24h
!Better
protection against overnight moves
!24/7
Support
!Cheaper
to trade
!Transparency !Accurate
Technical
Analysis !Use
of Order Flow
Weaknesses of Futures for Daytrading and Scalping
•
BID/ASK •
LIQUIDITY •
ORDER BOOKS
The bid and the ask no longer touch each other as before, and if you want to “enter” 20 lots for example, you will have 4 lots at 11,101.5, 9 lots at 11,102 and 7 lots at 11,102.5 on the Dax futures which is the most liquid in Europe! With 20 lots on the Cac 40 FCE, you currently “knock off” the order book, which was unthinkable 10 years ago.
People who say that FCE futures are liquid, as I sometimes read, have not seen an FCE futures order book for the past 10 years … This example is similar to the Dow Jones 30 (YM) futures which constantly has 2 to 3 points gaps which is still very low. This has immediate consequences on our trading results: a portion of the sale or purchase orders are not (no longer) executed or partially executed on futures even if the price is affected. On American futures, with the algorithmic game and priority orders with CME licenses, professionals pass before us in the futures order book, the “game” is distorted, we are served only at the end of the order books … even when we anticipate well in advance … Do not mince words on American futures, the odds are stacked against us…
More weaknesses of Futures for Daytrading and Scalping
Since the futures lot sizes cannot be “adjusted”, we can only enter or exit lots in sizes of 1, it is rigid; we cannot for example enter a profit or a loss partially on a lot by clearing 0.25 of the position and leaving 0.75 there as it is.
•
Lot Sizes
The costs are now often higher than on CFDs : by entering the order book or preparing limit orders, commissions + gaps to fill which are often higher than the CDFs spreads + the tick size which is higher on futures … For example, by entering the order books on the Dow Jones futures, I will pay between 2 to 3 points gaps + lead/return commissions + the tick size of 1 point. On CFDs, all inclusive, I have a fixed spread of 1.8 on the Dow Jones with a tick size of 0.1 … almost twice cheaper. On the Dax, I pay a 1 point spread on fixed lead/return commissions on CFDs with a tick size of 0.1 while on futures I have a 1 point spread on average + lead/return commissions + a tick size of 0.5 …
•
Costs
Order Books
•
Order books are empty on futures a few minutes before an announcement. Spreads are not fixed and they can soar. It is not possible to enter or exit, you just have to wait (and sometimes pray) … here again we are confronted with the problem of liquidity … After 6:00 pm … one wonders whether there is still a futures trader alive…
•
Absolute Liquidity
CFDs STRENGTHS For scalping and daytrading
Compared to futures, CFDs offer ABSOLUTE liquidity; the price just needs to be affected for you to be executed, irrespective of the number of lots. It is absolutely revolutionary for scalpers or day traders. We no longer have partially executed orders, no more problems of orders piling in an order book. affected for you to be executed, irrespective of the number of lots. It is absolutely revolutionary for scalpers or day traders. We no longer have partially executed orders, no more problems of orders piling in an order book. affected for you to be executed, irrespective of the number of lots. It is absolutely revolutionary for scalpers or day traders. We no longer have partially executed orders, no more problems of orders piling in an order book.
Liquidity Guarantee CFDs have phased out order-books, the CFDs broker guarantees liquidity and this is his problem and no longer ours. In the past, 5 to 20% of my futures scalping trades were not being traded or were partially executed whereas the prices were affected, but now 100% of my orders are perfectly executed…
ABOUT CHART CFD Strengths
What makes CFDs better than Futures
Spreads The consequence is that I no longer hesitate in taking a trade depending on the time. I know that I can exit when I want with a spread that will not soar before an announcement…In fact, some CFDs brokers guarantee the spread; and here we talk of guaranteed spread. This means that even before or after an announcement, the spread remains at 1 while on futures it moves from 1 to 5
CFD Trading Example
Tick Size
Emphasising more strengths
01
Partial Fill If Dax 30 has a fixed spread of 1 on CFDs which means that your 20 lots, your XX lots will all be executed at 8378.5. No more worries about orderbooks, position in order-books, partially executed orders, slippage or orders
Lot Size
The lot sizes can be adjusted on CFDs; you can buy 1.17 lot, partially resell 0.45 lot if you wish. We can adjust the size as we wish, to about 0.01….
02 03 04
The tick size, which is a disguised spread, is 0.5 on Dax 30 and Cac 40 for example on futures. On CFDs, it is 0.1 for certain brokers. You can buy or sell in the “futures spreads”. On futures, to enter or exit, it will either be at 9000 or 9000.50. On CFDs you can enter or exit at 9000 9000.1 9000.2 9000.3 9000.4 9000.5… It always takes less fees. To earn money or exit flat, the price should not shift by 0.5 like on futures, 0.1 is enou h.
Other There are other benefits, like larger time slots compared to those on futures, the possibility to be more aggressive… but this would take a long time to develop.
Why do Scalpers and Futures Day Traders not Trade CFDs General Known Information
Old Habits
Old habits and the lack of desire to change to a new tradable product are two of the major reasons for that.
The General Perception
The general perception is that CFD brokers are scammers. There have been a lot of cases that have affirmed that statement.
Safe Brokers
The danger of doing business with an untrustworthy broker is too high for some of the futures traders. The last example came after the Bank of Switzerland surprised the markets and found a lot of CFD brokers unprepared for the losses.
Order Flow
A lot of day traders and scalpers prefer using futures, because of the ability to use order flow- one of the most sophisticated and accurate ways to trade the market profitably.
“
How else are you going to become a profitable trader, if you don’t learn by a profitable trader.
”
COLIBRI TRADER
www.colibritrader.com/trading-course
USE THIS VOUCHER AND GET 10% DISCOUNT OF THE TRADING COURSE
“10 TRADERS”
The Price Action Method The Way Hedge Funds and Prop Trading Houses Trade
Real Life Examples 79%
The Best Way To Learn Trading Is To Trade Like The Professionals
67% 47%
53%
28%
30%
15%
2008
2009
2010
2011
2012
2013
2014
In the slides to come, I am going to show a few intraday charts (15 Minutes) of DAX. All of the encircled areas represent bullish/bearish rejections- or good entry/exit points*.
*FOR MORE ON FINDING GOOD ENTRY/EXIT MARKET POINTS REFER TO COLIBRI TRADER’S TRADING COURSE
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
WEB DEVELOPMENT Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC. Contrary to popular belief It has roots in a piece of literature from 45 BC. Contrary to popular belief, Lorem Ipsum is not simply random text.
“We Made the best for you, feel the difference”
Retina Display Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Responsive Good looking for your Contraryeyes to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
www.colibritrader.com/trading-course
HTML5 A powerfull website Contrary to popular belief, Lorem Ipsum is not simply random text. It has roots in a piece of classical Latin literature from 45 BC. Contrary to It has roots in a piece of classical Latin literature from 45 BC.
Why do Scalpers and Daytraders Not Massively Transition to CFDs The Trader’s Edge
Changing Environment
CFD Brokers There are about 3 CFD brokers who call the shots in the market. They are powerful and are often listed on the stock exchange, monitored, audited, and checked. Some are even worth billions and they are regulated by FCA with their accounts guaranteed, segregated etc. One of these CFD brokers is more powerful than the Paris Stock Exchange as it makes transactions of 4 to 5 billion Euros a day whereas the Paris Stock Exchange finds it difficult to go above 3 billion per day…There are also non regulated CFDs brokers, in tax havens who are more dangerous than brokers. Serious CFDs brokers suffer
Due to lack of information and curiosity, and as a result of comfort and habits… the idea that Futures are superior to everything is now old fashioned…. Meanwhile, CFDs have entered the market and have started changing it and its habits. In the beginning CFD brokers got bad reviews in the UK, which explains the delay in perception. UK brokers tried to preserve their margin by casting doubts on the quality of newcomers but the CFD brokers’ world is actually very large.
CFD Brokers One Step Ahead Fixed Spread
Choice of Broker
The choice of a CFDs broker is crucial; all of them do not offer the same range of services and protection. You should be careful and wellinformed. You should thus choose a broker with the FCA label. We are already sure we have a seri ous broker, regulated by competent people. Avoid Cypriot brokers regulated by the Cysec.
Daytraders
Whatever the case, there is a market change that many futures or shares traders hardly see. You just need to look at the volumes exchanged on the DAX future (FDAX) for the last 10 years to understand that things have changed dramatically…and observe that the share exchanges of alternative platforms are soaring…
C
F
D
S
Not all CFD brokers provide the same types of services; for example my CFD broker offers fixed and guaranteed spreads with a spread of 0.9 on Dax 30, which I mostly trade… This means that if the market panics, the spread remains at 1. Some other very serious CFD brokers also propose a spread of 1 on Dax or Dow but it is not guaranteed, so in case a situation arises, it can move to 2.5, 10… this is what makes the whole difference between a spread of 1 and a guaranteed spread of 1.
Scalpers
For scalpers that are looking for a suitable market to trade, DAX offers some of the tightest spreads along with the EUR/USD.
What does a futures or CFDs trader want ? Last Words
Trader’s Status
Less Fees
I discussed this with my colleagues at the Prop Desk on futures. They are sometimes skeptical of the “futures trader status” which is more valorised in the collective psyche, but those who try it often shift very quickly from futures to CFDs.
A trader wants to pay less fees, have absolute liquidity, have no slippage, have the guarantee that the prices will remain tradable, be sure of entering or exiting the market when he wants with as many lots as he want, be able to choose the lot sizes, have guarantees on his accounts in case of bankruptcy… FCA regulated CFDs brokers do
INSTEAD OF CONCLUSION The Little E-book of DAX
To conclude, I believe it would be better if scalpers and day traders transition from futures to CFDs, to at least have the curiosity to try it. The certainty to be served and to exit when one wants, to no longer have partially executed orders, to no longer be overtaken in order books by algorithms, to have a guaranteed and fixed spread which enables rapid entry and exit irrespective of the announcement of the period or the day, have full and guaranteed liquidity… and in addition, after a practical analysis, pay less for their entries and exits than on futures… would revolutionise your trading, earnings and material life… Be curious, choose a good CFD broker and give it a try…Trading DAX CFDs could be a great solution for you if only you have the courage to try…
“
How else are you going to become a profitable trader, if you don’t learn by a profitable trader.
”
COLIBRI TRADER
USE THIS VOUCHER AND GET 10% DISCOUNT OF THE TRADING COURSE
“10 TRADERS”
The Price Action Method The Way Hedge Funds and Prop Trading Houses Trade
ABOUT THE AUTHOR COLIBRI TRADER Colibri Trader is a professional trader. Among his accomplishments are winning the KBC Stock Market challenge- where he ranked first among over 800 professional traders. Currently, he is working in one of the leading London Prop Trading Houses trading mainly DAX*.
TRADING VISION Trading is not a precise science- it is a form of art The trading style of Colibri Trader is defined as a form of Price Action that uses a special scaling-in technique. Some of the most important factors in this system are showing how to cut losses fast and let winners run for as long as possible. Colibri Trader proudly shows how risk:reward rations as 1:30 and above are possible. Ask for the Price Action Method for more information. Visit www.colibritrader.com for more information
MISSION My mission is to help traders become consistent with my experience The Price Action Method is Colibri Trader’s trading course in which he shows his trading strategy step-by-step. He honestly shows how he trades on a daily basis without hiding anything- even his LIVE ACCOUNT trading performance. The only mission Colibri Trader has is to help traders achieve their goals as he is doing day after day.
