Why do Traders say that DAX 40 (Germany) is the hardest market to trade, when it is the easiest?

[TraderJeff]

Why do Traders say that DAX 40 (Germany) Daily is the hardest market to trade, when it is the easiest?

[TraderJeff]

For example, look at today's 15/04/24,  DAX (Germany) 40 chart action.

I predicted that the market would take off up from the very start and have a positive morning.

[TraderJeff]

Yesterday, the market was divided, so I stayed out.

Today, I predicted that there would be a relief rally on DAX (Germany) 40 in the morning.

Therefore, I went long at the cash open and made 170 points.

Did anyone else have a similar experience?

[TheGuru12]

Two days? That's what you are basing your predictions on?

[TraderJeff]

Yes I agree Guru, giving current examples is a good way of doing it!

I have been trading for over 20 years and in the last 11 years I found myself mainly trading DAX (Germany) 40, because it is the easiest and most profitable.

Which market do you find easiest to trade, Guru?

Does anybody else find DAX easier to trade than other markets? 

I am interested in hearing other traders' experiences.

[TraderJeff]

I have been asked to provide annotations for my charts for 15/4/24 and 17/4/24. 

In my opinion this helps to show that DAX is easier to trade than other markets.

I would be interested to hear other peoples views.

[goldenbrown]

I am a little puzzled about the claim of the DAX being an easy market to trade. Moreover, thank you for the charts examples, but I am skeptical about that too. I am too old in this game to believe any claim made on an historical piece of data.

But please do give me some more pieces of hard tangible evidence that the DAX may be an easier market than let's say the Dow or the S&P. I can allow for my mind to be changed.

In the mean-time I believe that trading is a minefield, and I am never careful enough. The DAX is no exception as far as I am concerned. All the best

[TraderJeff]

Hello Goldenbrown,

Thank you for your interesting comments. I will answer them tomorrow, when I have some spare time.

Best regards.

[TraderJeff]

Yes Goldenbrown, I think you make a good point about being careful when trading. 

In my opinion, only trades which are calculated to have a high probability of being correct should be placed.

DAX is a market that can look daunting at first, but after a lot of study and experience with it, I have found it to be easier than the others.

If you would like to see the answers to your other points, please see my IG Community Profile.

Best regards.

[TraderJeff]

Another reason I think that DAX is easier to trade than other markets is that the ECB is generally clearer about forward guidance. 

For example, I had two really good trades this week, which were helped by  Bundesbank President Joachim Nagel's remarks that the ECB's expected June rate cut, will not necessarily be followed by others. 

Here are the two trades:

[TraderJeff]

I think another aspect is that DAX has a tendency to make decisive and clean moves - more so than other markets.

For example, I had a really good trade last week, that shows this very clearly (see chart below)

[TraderJeff]

Last week was short on trading days: Monday: UK Bank Holiday,      Wednesday: French Holiday, Thursday: German Holiday. But on Friday I went long on DAX (Germany) 40 at 08:28, Entry: 18,774, Stop: 18,754 and closed out my position at 18,848 winning 74 points (see chart below).

[TraderJeff]

In a week when reports were few, DAX was affected if perhaps less so, on 14th May, following USA PPI reports.

DAX went down to 18,621 and almost straight back 83 points in one minute. It is very important to have stops and limits in place. My Stop was at 18,741 (my Entry price + 20 points) and Limit at my Third Take Profit Target of 18,650.

The trade on 17th May was more straightforward (see charts below)

[MongiIG]

DAX 40 showing first signs of possibly soon losing upside momentum

Last week’s lows are line in sand for short-term uptrend.

Source: Getty Images

 

Indices Shares Market trend DAX Stock market Candlestick

Written by: Axel Rudolph FSTA | Senior Financial Analyst, London

 

Publication date: Monday 20 May 2024 15:51

In the medium- to long-term it pays to invest in stock indices when they hit record highs

Last week the DAX 40, among several other international stock markets, hit a record high close to the minor psychological 19,000 mark before consolidating. But is now the right time to buy into the rally?

Even though many investors are getting increasingly nervous, after all US stocks hit a new record high 23-times so far this year, historical analysis shows that investing when the stock market is at an all-time high is a medium- to long-term profitable strategy.

According to an article written by IG Chief Market Analyst Chris Beauchamp “the US stock market hits new all-time highs more frequently than one might expect, with new records being set in 30% of months since 1926. On average, 12-month returns following an all-time high have been 10.3% above inflation, better than the 8.6% for periods not at new highs.”

He also states that “the impact of avoiding the market after new highs can be severely detrimental to long-term wealth creation.” Data from Schroders shows that an investment in the US stock market in January 1926 would have created a 7.1% annualised return by the end of 2023.

But is now the right time to buy into the Dax 40 rally?

Last week’s new all-time high in the DAX 40 has been followed by a bearish ‘Dark Cloud Cover’ on the Japanese daily candlestick chart which promptly took it down to last week’s low at 18,628. On the front month June DAX 40 futures contract an even more bearish “Engulfing” pattern was formed.

This in itself is not an issue but if a daily chart close below the 18,628 low (18,708 for the June DAX 40 futures contract) were to be made this week, at least a short-term corrective move lower is likely to be seen which could then be used to jump on the DAX 40 medium- to long-term bullish bandwagon at lower levels.

Daily DAX 40 Candlestick Chart

Source: TradingView

The fundamental reason for such a possible retracement lower rearing its head could be triggered by Federal Reserve (Fed) commentary over the course of this week with perhaps some members re-iterating the “rates higher for longer” scenario and pushing back rate cut expectations.

DAX 40 technical outlook

From a technical analysis perspective, the fact that on the weekly, daily and hourly candlestick charts negative divergence can be spotted, does increase the odds of a minor top being formed in the current strong DAX 40 bull market.

Negative divergence occurs when a new high on the underlying asset, in this case the DAX 40 hitting a record high last week, is not being accompanied by a higher reading of an indicator, such as the Relative Strength Index (RSI). When this happens, in more cases than not, at least a short-term correction against the trend usually takes place.

In the current DAX 40 example such a bearish scenario would only become confirmed if at least a daily chart close below last week’s low at 18,628 were to be seen (18,708 on the DAX 40 June futures contract).

Weekly DAX 40 Candlestick Chart

Source: TradingView

If this were to happen, the late-April high slightly above the 18,200 mark, the 55-day simple moving average (SMA) and October-to-May uptrend line at 18,140 may present a better medium- to long-term buying opportunity for investors than current levels.

All bets would be off if a new record high were to be made, though.

 

 

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[TraderJeff]

Another reason I prefer DAX to other markets is that I am able to use my own profitable method on it, which I call "Reverse Trades."

In it's simplest form it is a good Entry Point, which is used repeatedly for trades, for as many times as the market price returns to this Entry Point. 

This is illustrated in the chart below for 22nd May.

The best Reverse Trades occur when the market beats the Entry Price and then re-crosses the Entry Price.

If this is not clear, feel free to write to me and I will explain in greater detail.