No, the DAX is not a new trendy drink.  It is actually the name of the German stock exchange, which is nothing to shake your head at considering Germany is the 5th largest economy in the world with GDP nearing $3 Trillion.  The DAX, officially named “Deutscher Aktienindex” is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange.  Prices are taken from the electronic Xetra trading system.  According to Duetsche Borse, the operator of Xetra, DAX measures the performance of the Prime Standard’s 30 largest German companies in terms of order book volume and market capitalization.  It is roughly the European equivalent of the Dow Jones Industrial Average, and because of its small selection of components does not necessarily represent the vitality of the economy as a whole.

Here’s some of the things you need to know if looking to trade the Dax:

Angela Merkel

Angela_Merkel_2008-300x225Alan Greenspan…Ben Bernanke, Janet Yellen…perhaps all household names but those trading DAX should know the name Angela Merkel.  Who is Angela Merkel?

Angela Merkel is the practical, sensible, down to earth leader of Germany with the official title of German Chancellor who continues to reign as the most powerful woman on the planet 10 years running.  She clinched a third four-year term of Europe’s most vibrant economy in December 2014, making her the longest-serving elected EU head of state.

The Euro

EuroThe DAX is priced in Euros, seeing as how Germany is in Europe and part of the EU (the biggest part).

In Q1 the Euro lost just over 11% and then proceeded to rally better than 7%, but do you track the ups and down of the Euro currency other than when you are booking your next European vacation?  You may want to if trading an exchange that is priced in Euros.  Consider that if you made 10% ‘trading’ the Dax, but the Euro lost 10%, your P/L in US Dollar terms would be zero.

The Clock

Excuse us for pointing out the obvious, but there’s a bit of a time change between Germany and your US home base.  Now, this isn’t a big deal for European traders, but for those that reside in the US – the time difference between NY (EST) and Germany is 6 hours.  So the DAX gets a head start and starts trading when most US investors are catching some ZZZs.  If you were trading the DAX in New York, you’d have to be up for the opening bell at 3 AM until the close at 11:45 AM (now that’s a graveyard shift).

It’s so Important – there’s a Dax Futures

The German DAX is one of the most important markets in the world, but unless you’re running a billion dollar hedge fund, most US based investors do not look to trade the DAX.  Because Germany is the largest single economy in Europe what happens in their economy has far reaching implications.  The DAX is considered to be the most important index in Europe which in turn makes it influential on US markets.  In recent years a large portion of the companies on the DAX have become increasingly more important to the global economy.

For that reason and more, there are Dax futures enabling investors around the world to efficiently access and trade the Dax index, whether it be for speculation or portfolio hedging purposes.  May choose to trade DAX futures because it has a higher nominal value then the U.S. Stock Indices.  For example, 1 Dax Futures contract is 25 euro x the nominal value of the index.  Each full point move is worth 25 euros ($28.18).  With the front months DAX contract at 11401, we’re looking at $321,280.  At the same time it’s important to note that since there’s opportunity for profit, there’s also opportunity for larger nominal losses.

How do you trade it?

So how do you trade this thing?  That’s a great question over the past 3 months when the DAX has largely been range bound – trading between 12500 and 11200, a 1300 point trading range which represents a range nominally of $32,500 Euros.

DAX-market

(Disclaimer:  Past performance is not necessarily indicative of future results)

Even though the market has been choppy, volatility has heated up with average daily trading ranges between 200-250 points daily ($5,000-$6250 Euros).  One way investors look to make a profit in sideways markets is by looking to capture portions of that volatility in taking both sides of the market, buying and selling at different times and price levels in an attempt to capture the ups and downs.  But that begs the question, how do you know when to go long or short?  When do you exit?  How much do you risk?  Do you watch CNBC Europe or scan the wires at 3 AM looking for market moving comments by Angela Merkel?

We think there’s a better way:

Until the DAX finds a pronounced trend, we think trading both longs and shorts utilizing systems is a great way to take advantage of a directionless market.  But not just any sytematic model, we prefer one’s that were built for the DAX with a back tested history and the ability to see it’s real time performance.  We’re talking DAX systems on the iSystems platform.  Here’s an example of the top performing DAX systems:

Top-10-Systems-DAx

The market never sleeps, but you can.  Turning on some Dax systems for your account allows the iSystems platform to track the Dax while you’re asleep, placing orders, exiting trades, and managing risk.  It’s not quite making money while you sleep – you could lose while asleep too, but it sure beats staring at the screen all night.

Click here to schedule a live demo of the iSystems platform, or call us at 407-378-4775 to learn more about trading the DAX and other top performing systems.


IMPORTANT RISK DISCLOSURE
You should fully understand the risks associated with trading futures, options on futures, commodity trading systems and retail off-exchange foreign currency transactions (“Forex”) before making any trades.  Trading futures, options on futures, Forex and commodity trading systems involves substantial risk of loss and is not suitable for all investors.  The ability to withstand losses and to adhere to a particular trading program in spite of trading losses are material points which can adversely affect investor returns.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources.  You may lose all or more than your initial investment.  Opinions, market data, and recommendations are subject to change without notice.  Past performance is not necessarily indicative of future results.
The returns for trading systems listed throughout this website are hypothetical in that they represent returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real-time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on backadjusted data (backadjusted).
The hypothetical model account begins with the initial capital level listed, and is reset to that amount each month. The percentage returns reflect inclusion of commissions, fees, slippage, and the cost of the system. The monthly cost of the system is subtracted from the net profit/loss prior to calculating the percentage return.
If and when a trading system has an open trade, the returns are marked to market on a daily basis, using the backadjusted data available on the day the computer backtest was performed for backtested trades, and the closing price of the then front month contract for real time and client fill trades. For a trade which spans months, therefore, the gain or loss for the month ending with an open trade is the marked to market gain or loss (the month end price minus the entry price, and vice versa for short trades).
The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor’s participation (whether or not all signals are taken) in the specified system and money management techniques. Because of this, actual percentage gains/losses experienced by investors may be materially different than the percentage gains/losses as presented on this website.
Please read carefully the CFTC required disclaimer regarding hypothetical results below. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN; IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK OF ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL WHICH CAN ADVERSELY AFFECT TRADING RESULTS.
The information contained in the reports within this site is provided with the objective of “standarizing” trading systems account performance and is intended for informational purposes only. It should not be viewed as a solicitation for the referenced system or vendor. While the information and statistics within this website are believed to be complete and accurate, we cannot guarantee their completeness or accuracy. As past performance does not guarantee future results, these results may have no bearing on, and may not be indicative of, any individual returns realized through participation in this or any other investment.
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