Nadex Trade of the Day - Smooth Sailing for the Germany 30 (DAX) Index

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 7am-9am 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 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
• 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.

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.

Click on Chart to Enlarge

• 6:45am 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.
• 7:00am: 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 (9AM) - 1 Contract  Risk $50, Reward $50
  2. BUY Germany 30 (Mar) >10708 (9AM) - 3 Contracts Risk $75, Reward $25
  
  Both 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 7am 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 8am hourly candlestick will close above the 7am opening price. And the rules of this strategy are to BUY below the opening price of the 7am 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 9:00am 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, click below

The Purpose of this Blog

The Inquisitive Trader will be used  to share my experiences as an investor getting back into trading the markets. In June 2014 I joined the staff at TradingPub, and I am responsible for helping to book speakers for free webinars. Each week, I am exposed to a wealth of information from leading industry experts who teach how to trade the financial markets. When I come across interesting trading strategies, I will summarize my thoughts and share a link to the archived webinar. As I develop my own trading plan, I will also share some of my personal successes and failures. Responsible comments are welcome, but to avoid flaming posts and spam, I will be moderating all comments. I hope you find this blog useful, and wish you the very best on your journey trading the markets.

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