11 Ways Trading from Home Can Improve Your Life

trading from home

Looking for a good work from home opportunity has many pitfalls… but in all honesty, the most common and certainly what were considered the easiest means of working from home are just not so easy anymore.

 

eBay, Amazon, Google AdSense have long been the staple for many that wish to leave the rat race.

But that’s changing.

 

It’s Way More Difficult Today

 

The problem nowadays is that these forms of income are becoming increasingly complicated options to start from home single handedly.

 

Amazon for example, are seemingly bringing in so much red tape to clear before you get started selling on their platform, that I can only imagine they are scaring off more new businesses than gaining.

 

If you are not a tech type of person, and can’t create original content, write adverts, run social media marketing campaigns, import goods from China, handle the shipping in the UK, do your accounts, deal with customers, take product photos, create a listing, learn how to get your products ranked and selling… then Amazon probably wont be for you.

 

eBay, even though somewhat easier to get started on, still has many areas of complexity to digest and tackle before you start making any kind of regular profits.

 

Google

 

Only a few years ago, Google AdSense was considered a mainstream income… but that too has become way harder to make income from.

 

Consumers are battered online with advertising from every possible angle… so much so that we have become immune to the adverts. This means that the adverts that you use to get commissions are less effective.

 

Blogging, which is mine and many entrepreneur’s best advice on how to start a new business online has also become harder to profit from. With 2.7 Million blog posts published every day in 2017… how does a new blogger stand out?  It’s difficult. Not undoable… just harder than it used to be.

 

Why Trading from Home Could be a Good Bet

Trading for a living

 

When you consider the amount of logistics that need to be addressed before you are even making a sale online, you can see why trading is becoming a far easier option for the modern entrepreneur.

 

After comparing the pro’s and cons that trading for a living can offer, compared to what other online businesses offer, then I can only see the trend [no pun intended] of new traders continuing to rise.

 

Here are some of the biggest benefits that trading can offer you if you are thinking about or looking for a way to generate an income online.

 

It’s easy to start

You don’t need any special equipment to get started. Once you have chosen a broker or spread betting company you are good to go. All the reputable services provide you with the necessary charts that you’ll need.

 

You Don’t Need Much Capital

Contrary to popular belief, you really don’t need mountains of money to start trading. In fact, you can risk far less start up funds deciding if trading is going to be your thing than you can buying stock from China to resell.

 

A few hundred quid is enough to test the waters out. If you decide that it is not for you, you can just close your account after you have withdrawn your funds.

 

You Only Need to Rely on Yourself

Unlike the other opportunities I mentioned earlier, with trading you are in control of your own destiny.

 

I have heard many unfortunate stories of entrepreneurs that have had there selling privileges removed by Amazon and eBay for what can only be considered unfair reasons… basically putting the person out of business quicker than you could say crash!

 

This never happened to me, but I’ve had my fair share of grievances with these selling channels and it regularly reminded me that you could be out on your ear for the slightest and leanest of issues.

 

When you think about it, it’s the same as being made redundant without pay or any clear explanation on any random morning that you arrive for work.

 

Spread betting or trading binary options carry no such hazard.

 

It Really can be Done from Home

You wont need to go to the post office, petrol station, market, cash and carry, library or any other shop or establishment to trade the markets successfully. Trading from home can genuinely be done on a laptop, in your pyjamas at the kitchen table if you wish.

 

Weekends are Always Free

With the financial markets and banks being closed from Friday evening until Monday morning, you have all weekend to do as you please. No overtime to do, ever!

 

No Staff 

Obviously, if you do decide to give trading from home a go, you are never going to need any staff.

 

This removes the entrapment of asking friends or family for favours.

 

Freedom

make money trading

Learning to trade the markets can really free up your time.

 

Vince Stanzione says that you need no more than 15 minutes a day to make money trading… you know what… he’s totally right.

 

Of course though, you’ll need a little more time if you’re day trading.

 

Creates other opportunity’s

The fact that you will have more free time available to you once you do become a successful trader can open the doors to all sorts of other opportunities.

 

Time to learn new skills and take up hobbies, indulge in subjects that have always interested you, travel, self-improvement, fitness, cooking classes, improving your social life… whatever takes your fancy becomes a realistic possibility.

 

Discovering the Law of Attraction

It isn’t luck that falls into the laps of successful and happy people; it is more a case of belief creates the world that they live in.

 

If you start with good foundations and a solid trading strategy, you’ll gain belief in what you are doing and trying to achieve when trading from home; then, the more life will unfold for you. This means getting more of what you want… in our case, trading success.

 

The angry trader that curses his stupidity and berates his own monitor or iPhone on every loss is mentally attracting more of the same into his life… trading failure.

 

Start as you mean to go on… Learn well, trade easily.

 

Satisfaction

 

Winning at anything is obviously more satisfying than losing [for most of us anyway] but winning at trading seems to carry a greater feeling of satisfaction than other successes.

 

The sheer emotional and psychological fact that you are winning trades and money on a regular basis, that is then compounding from month on month is truly exciting.

 

The result is true self-satisfaction.

 

Wealth

As most of us are striving towards creating more money, then last but certainly not least, the most obvious attraction of trading from home is the financial wealth that it can generate and offer.

 

The bookshelves and internet are littered with stories and successes of rags to riches investors. It can most certainly be done.

 

Although I must point out, as I have developed as an individual over the years, I believe that happiness is a far deeper and more soulful state than just being financially rich.

 

However, I do totally understand where this ideal of financial salvation comes from… after all, I used to think the same.

 

There is a certain level of financial gain that will undoubtedly lead many to a happier existence. But it is not infinite; more money does not equal more happiness.

 

Vince Stanzione has declared on numerous occasions that the first couple of million that he made, did most certainly make his life sweeter… after that, he said that nothing else really changed.

 

In Conclusion

 

I hope I haven’t gone to spiritual on you and that whatever you want to get from trading for a living you find.

 

It is worth remembering though that although trading from home can offer many benefits and can enhance your life in many ways… it’s too shallow to assume that money will make your life complete. It might help, and help a lot… but it’s not everything.

Triple moving average system

Triple Moving Average System

Using a triple moving average system to determine price direction is a great way to choose entry points into a market. Not only that, you can also use the moving averages as a trigger to exit the market too.

I’ll show you how later on.

The triple moving average can be used to trade longer term trends as well as short term day trading.

Triple moving average system

So let’s look at what a triple moving average system can do for us over the short to medium term first. Then we can look at using triple moving averages to day trade.

The triple moving average can offer the trader a good indication as to what direction a market is likely to go in. As always this is never going to be 100% accurate… but it is pretty dam accurate… and certainly enough so to help you profit from the markets.

This type of trading is also what can be classed as mechanical, meaning that the entry and exit points are clear and that no guess work is involved.

Don’t get Confused

A Triple Moving Average System is not the same as the triple moving average indicator or TEMA.

I am adding 3 separate EMA’s to my chart to create a crossover signal that I can enter the market on but also exit the market when other criteria are met using the same three EMA’s.

The TEMA is a single line standalone indicator that is configured by smoothing the price of a single equity [stock, ETF, indices] value 3 times using an EMA [exponential moving average] which is then used to calculate the result in the combined EMA’s from the previous results [prices]

What? Well that is the technical explanation of a TEMA.

Basically, all you need to know is the TEMA is something completely different to what we are using here.

If you want to read more about the TEMA indicator you can do here.

We are NOT using the TEMA indicator or system.

 

Triple Moving Average System Settings

First off, we are going to set our moving averages. We are going to use 10-20-50 exponential moving average [EMA]

These settings are going to be added to a 4hour chart and will enable us to look at trading from days-weeks at a time.

Whatever charts you use, this setting is one of the most common and easiest to add to any chart.

 [This triple moving average crossover system can be used for trading binary options or spread betting and is compatible with most chart durations up to a day.]

 

In our first example we are using the EUR/USD 4 hour charts.

 

triple moving average crossover

You can see that we have added our moving averages to our chart. You can also see that there is a clear Triple Moving average [TMA] crossover on the 15th May.

Our TMA has formed a crossover, the price [candles] are moving above the moving averages. This is indicating a buy signal. We are expecting the price to move up from here.

If we now look and compare the first signals that we can see on the chart, we can see what not to do when trading using this strategy.

If we go back another week we can see that the price has started to move down from around the 8th May. There was a crossover of the 10/20 EMA.

This was not a triple moving average sell signal to enter the market, as the 10 and 20 day EMA are both above the 50 EMA.

A valid entry signal can only be considered such if the price [candles] are above or below all 3 moving averages 10,20,50.

There is however a time and place to use this particular signal [10,20 crossovers above and below the 50 EMA] within our TMA system, but just not for entry. I’ll explain in a moment.

Explaining the Triple Moving Average System and Signals

EMA crossover

If we follow our trend up until around the 26th May, you will see that the price continues to climb until we get another crossover.

This is our exit signal. You can clearly see that the purple 10 EMA crosses the Yellow 20 EMA on the 26th. And that the candles move below this crossover.

You can also see that the 50 EMA is still beneath the crossovers and price.

The reason that we trade out when we get a crossover signal of the 10/20 EMA is that we obviously want to take a greater share of profits when ever possible. If we wait for another triple moving average to signal our exit position, then we eat into our gains far to much.

So, if we open our position after a triple moving average crossover signal, then we are buying on a stronger signal than just using a double moving average. We are waiting for 3 crossovers with the longest period being 50. This means we are looking for further clarification to enter our trade instead of using just the double [2 moving averages] crossover signal.

However, on exiting a trade, we are looking for a weaker signal to get us out of the position and take our profits… hence using the 10/20 EMA. We then wait for the next TMA signal to enter the action again.

So in short, we are entering the market on strength [the triple moving average signal] and exiting on weakness [the double moving average signal] .

All markets can be Traded

The great thing about using a triple moving average system is that it can be applied to practically all other markets and all other candle time frames.

Shares, Indices, FX, ETF’s can all be traded using a triple moving average system.

Look at this chart of the German 30 DAX from the 26th June using 1 hour candles.

You can see in this period that we have had (3) clear TMA triple moving average system crossovers… there are another 2 crossovers that were not so clear [1 and 3] that resulted in break evens or very small losses.

So in all, this chart shows over 400 points profit in just over a couple of weeks trading.

German 30 Trading System

In Depth Details and Avoiding Pitfalls

It’s a bit hard to see[I’ll zoom in a moment], but if you look very closely at our DAX chart you will see that there have been occasions when the price has spiked in one direction or another.

It is these spikes that can cause the biggest challenge to traders… especially newbies.

If you were watching your position during these periods it is then that the panic button normally gets activated or if you are using stop that they will get triggered.

But in hindsight, looking at the chart, it seems obvious that there was actually no point in being alarmed.

In each of the cases where we have had a big spike in price, the price has come back to a level where it has then stabilised and continued on its trend.

The reasons that these spikes occur is this… WE ARE TRADING.

I couldn’t tell you why these sharp price swings happen… reaction to news, a terrible drought in some part of the world, unemployment figures, better than expected harvest… the lists of reasons go on and on.

All I know is that it is rare that you will get caught out in a storm in your bikini if you are trend trading and using moving average crossovers.

Because a candle moves 50 points in the wrong direction when you are in a trade, it doesn’t signal the next stock market crash.

Understand that this is not science… mistakes, losses and corrections happen when you are trading.

A major stock market crash or capitulation has not occurred in any 1-hour candle to my knowledge. These events take weeks and months to materialise. Try and take a back seat and chill out when you are trading… whatever you are thinking is probably not going to happen.

The 50 Period EMA… Your Emergency Stop Loss

Keeping your emotions in check when trading is as big [if not bigger] than any component of trading. Fortunately, this is where the triple moving average system can really help you out.

Golden Rule: You do need need to close your trade unless the price [candle] closes above or beneath the 50 EMA… even if the price goes shooting of in one direction or another during the formation of a candle… hold tight and see it out. If you’re not watching your screen then you’ll be none the wiser anyway.

As explained previously, instead of using stop losses on your account and seeing them being constantly hit and then seeing the price coming back to happily move on in the right direction [as if it has done it on purpose to tease you and only you personally]… just use the 50 EMA as your emergency stop loss guide if need be. Use the 10/20 EMA crossovers to close out and take profits on a winning trade.

A Quick Example of Trading Psychology

beginner trading system

The money is in the waiting… I’ve told you that many times before.

Opening your trade and then walking away is a great strategy to increase profits in most cases.

It’s far easier said than done for most though. But once you do manage to do it, and you are confident enough to leave your PC or device, you really can be cooking with gas.

What’s in Your Head?

Let’s zoom right in and have a look at what goes on during trading one of our triple moving average system crossovers. We are going to analyse what a new trader might think if they were looking at the chart as the price unfolds. We can then compare it to how a more seasoned trader enters and then trades the market.

 

Dax Triple Moving Average

  • After entering our trade at some stage after the crossovers the price moves steadily up.
  • All of a sudden at around 9am the price starts moving down for no apparent reason when the trend is clearly up. OMG.
  • At 2pm it is clear that this is a crash, the trader takes a loss, closes out their position and is left shaking with relief. The price then moves back up and the trend continues.
  • The trader is then left scratching their… um, head or probably something else in wonder and enters the market again. At 4pm, the price falls back slightly again but the trader has already just seen this. They stay in the market overnight… although they don’t sleep well.
  • At 8am the following morning the price shoots out and up into the stratosphere… I knew I was right! But in the blink of an eye the prices crashes back down along with the traders’ confidence.
  • The next hour the price moves down even more… there’s going to be a crossover… I’m out of this… relief sets in again and the feeling of loss that the trader should have taken profits at the peak of the 8am candle… what’s more, in shock, the trader watches the price climb up again.
  • The trader enters the market again. The market goes sideways.

Sound familiar to any of you?

The Experienced Trader

Now let’s see what a more experienced trader does.

They enter the market knowingly at a convenient time after the triple moving averages system gives the signal.

They set an alert that is emailed to them and also arrives on their mobile if the price closes beneath the 50 EMA if they are long or above the 50 EMA if they are short.

They then walk away in confidence.

If there is no alert, then all is good. They go to the gym, have coffee and walk their dog… all whilst as calm as a Hindu cow. Life’s good.

You Don’t Need to Watch the Screen all Day

Can you see how trading can be as easy or as hard as you make it?

You don’t need to be watching your positions all day. Doing so is just stressful and pointless. It also makes you do unnecessary things that are not part of your strategy.

Even if you’re not using stops like I explained earlier, you can still leave your trades to do their thing. In fact, Vince Stanzione believes that spread betting companies offer stops to their customers to maximize losing trades. He’s got a really good point if you think about it.

Trading stocks with the Triple Moving Average System

Here are some more examples of the system trading individual stocks.

Triple moving average TMA

In the above Mastercard chart you can see that there were a couple of false signals 1 and 2 and then a better move on the third 3. Another breakeven or small loss on the 4th 4 and then a good move on the 5th 5 signal.

trading starbucks

The chart above is from Starbucks. This 30 minute charts TMA gave us a stress free 350+ points profit in around 10 days. You will be hard pushed to find an easier trading strategy than the triple moving average system.

Triple EMA

In the above Microsoft 1-hour chart you can see that there was a couple of false signals from the 15th May. After this we get a nice signal on the 22nd that takes us right up to the 11th June. The result… over 250 points profit.

 

Using Daily Charts

You can also trade the daily charts using the triple moving average system.

Depending on your bank size of course and the actual stock in question.

The 50 period EMA is about the shortest of periods you can use when you get onto the daily charts though.

 

TMA trading system

Day Trading Using a Triple Moving Average System

You can easily convert a triple moving average to a day trading system by simply reducing the time frame of the candles [price]

If you look at this chart of the German 30 DAX you can see that I have set the candles to 5 minutes. I am still using the same triple moving average values though.

Day trading triple moving average

As with any form of day trading, you are going to get far more signals and false signals at that, each day when using 5 minute charts. However, you can use some of the other indictors that are available on the chart to clarify taking a position.

Here you can see that I have added what is called an awesome oscillator. You could use this to validate your triple moving average crossovers. Although it isn’t going to keep you out of a sideways moving market it can be useful.

 

The TMA Crossover Setup Visually Explained

The actual crossover setup of the triple moving average system can sometimes cause a little confusion. Although it needn’t do.

The first TMA on the chart beneath is what you can consider a perfectly formed triple moving average crossover.

Different triple moving average crossovers

And yes, you most certainly could have made profits trading that signal.

But the following triple moving average also made profits, even though the moving averages haven’t crossed over in such unison.

They [the moving averages] do not need to look like they have been drawn on by an artist and fan out like a peacocks’ tail. They just need to cross in and around the same time.

The important point to remember is that as long as the smallest moving average has crossed both the other moving averages and that the longest moving average [in our case 50] is clearly above or beneath the both the other 2 moving averages [ours being 10/20] then you are good to go.

Trading needn’t be more complicated than it has to be.

Many systems will have you believe that you need to be doing this that and the other so that you gain some sort of edge. This is rarely the correct approach.

Get use to riding the ups and downs of your triple moving average system or strategy and eventually the penny will drop.

By that I mean that you will gain faith in what you are doing and from there you can develop your skills as a trader.

More importantly you will start to develop a sound mental game too.

Also think carefully about the use of stops. 9 out of 10 times you will be better of just trading to the moving average crossovers signals.

In conclusion

  • Set a triple EMA using the periods 10,20,50
  • Open the trade when all moving averages cross and make sure that the longest moving average is clearly above or below the 10 and 20 EMA.
  • Close trade and take profits if the 10,20 crossover again or if the candle/price closes above the 50 EMA.
  • Trade to the crossover signals rather than using stops if possible.
  • Accept that you can’t and won’t ever win them all.
  • Don’t panic. The price may move like what seems drastically at times… this isn’t a stock market crash. Keep calm, it’s unlikely you’ll lose more than 50 points or so as long as you are trading within your means.
  • Remember that your winners will more than cover losses over time.

DAX Trading System

trade the dax 30

The German 30 or DAX if you prefer, is one of the most heavily traded markets. This is certainly true for day traders as it can be one of the easiest markets to predict spread betting price movement on from a day to day basis.

 

It also moves more than most currency markets from a daily point perspective. This adds to it as ideal market to spread bet.

 

There are many strategies and systems floating around online that can show you various ways on how you can make money from trading the German 30 DAX… I hope though, that none are going to be as simple and quick as this one.

 

Although this strategy is for financial spread betting [so you will need an account with one of the financial spread betting firms]. You could easily convert it to a binary trading system… I’ll show you how later.

 

Ok, with that said, lets get down to business and look at how we can trade the DAX.

 

DAX Trading System

 

I’m currently working on a day trading system for the DAX. It is looking very promising and I am now testing with real funds.

 

However, it has been whilst testing this new system that I spotted this little niche and I thought that I must share it with you now.

 

There are no technical indicators other than support and resistance lines to use.

 

All you need are some live charts.

 

NOTE: If it [this strategy] or something similar has already been published somewhere, then hey ho… I’m not claiming any rights to it.

 

The Rules of the DAX Trading System

 

Firstly, you need to open up your charting package and select the German 30 index.

 

Once selected you need to set the candles on the chart to 10 minutes.

 

I’m using the IG charts in these examples. They are good charts and are free even if you’re not trading on IG platform.

 

Now that I have selected the correct candles, I now need to look at the range of price movement from 7am – 9am

 

It is the price breakout from this range that we are going to be trading.

 

Whilst developing my new DAX trading strategy, I noticed that the first 2 hours of the DAX from 7.00am gave some major swings back and forth. Although you could try and trade this volatility alone, I thought it safer to trade the price breakouts from this range.

 

What is important to remember here is that we are not trying to get in on the start of any major movement and get out just as it finishes. Although a nice ideal it’s unlikely to happen with any regular occurrence.

 

Look at this chart image of the DAX German 30

 

DAX trading System

 

Dax Trading Zones

This image is of the first 2 hours of price movement. You can see that from 7 am until 9 am that the price has consistently swung back and forth from 12418 to 12382. I have highlighted this with the blue support and resistance lines.

 

This price zone gives us a 36-point range. That is actually quite a small range for the DAX and we can realistically expect a price breakout at some stage over the course of the day.

 

NOTE: Sometimes when trading this system, you can easily [and regularly do] get a price range of 100 + points. When the range is this large it’s better to leave this strategy and trade moving average crossovers.

 

So, from here we are looking for the price [our 10 minute candles] to close over or under one of our blue support or resistance lines. To simplify this we can set a price notification.

 

So the next thing you need to do is set the price alerts. Doing this saves having to be at your pc all day or checking your phone every 10 minutes.

 

Here how you create the alerts.

 

  • On the right hand side of the ig screen you’ll see the alert tab. Click that and then click the price level tab.

 

  • Enter the price levels of where you have drawn your support and resistance lines.

 

  • Click the set alert button.

 

German 30 trading system

 

Now when the price reaches one of these levels you can check to see if the candle will then close over or below the level, and if so we can then consider opening a trade on the following candle.

 

Opening a trade

 

To open a trade, we need to be clear and sure that the price has truly broken out of its trading range. It is important the price hasn’t just tested the levels and is going to reverse.

 

To do this and be confident that the price is breaking out from range, we are looking for a big bull or bear candle to break the S&R lines.

 

As you can see from our chart… the price continues to move sideways until we get a good bull candle that clearly breaks the resistance line.

 

Once you are ready to enter the trade, you just hit the buy or sell buttons in the top right hand corner of the IG screen.

 

Trade the DAX

 

With our breakout candle you can see that there is a small wick that formed at the top of the candle. Ideally you should enter the trade once the next candle has broken this level.

 

This can help ensure that the price will continue to move in our direction with minimal drawdown.

dax trading

 

Using Binary.com to Trade

 

If you don’t fancy trading on IG by spread betting this DAX trading system, then you can still trade it on binary.com

 

To do so just trade the German 30 will be higher or lower in 2 hours’ time.

This 2 hour time frame seems to suit this strategy really well.

You can’t start the trade now on binary.com so you will need to set the time of the trade to start a minimum of 5 minutes into the future.

 

Using Resistance Levels Versus Moving Averages

 

Resistance levels are one of the key indicators for day traders, but as you know, moving averages are probably the most used indicator in any form of financial trading.

 

Moving averages are awesome… but if you look at our chart with one of the most popular short term moving averages set ups added, you can see the issues with this type of indicator in sideways markets.

 

Using moving averages that are this small has cut us to smithereens. In and out of the markets all day and paying the spread each time as well as having our banks battered.

 

As you can see we have had a 7 crossover signals [blue dotted vertical lines] in the morning session alone. Most of which didn’t materialise into anything noticeable.

DAX System

 

 

A better moving average for the DAX Trading System.

 

However, if you use a longer moving average you can manage to stay out of most the noise and still get a clear entry point that can help clarify a breakout.

 

I have been looking at how effective the 10/50 EMA is on the DAX and currencies for a few months now and I can say that I have been impressed with the results.

 

The combination keeps you out of much of the sideways movement and noise but give a good buy or sell signal to boot.

 

DAX day trading system

 

Only 1 false signal out of 2 using the 10/50 EMA crossover and the 2nd signal [crossover] signified the start of the breakout.

 

Using a good reliable moving average can help anticipate the price movement as well as keeping you out of choppy unpredictable movements.

 

So the 10/50 EMA can be very useful, but you really do not need it for signalling an entry point when trading this strategy.

You can use it however [or another moving average] to exit the trade as I’ll explain shortly.

 

Closing the position.

 

How long will the trend last? I have absolutely no idea… but I do know that once you are in on it then long may it continue. But that doesn’t help you get out of the trade.

 

The best way to exit a trade using this strategy is following the moving average crossovers. So basically you are in the trade until the moving averages crossover. This is the easiest solution.

 

You can easily use a 10/50 Exponential moving average as an exit signal. This will keep you in the trend longer but can cost you more as the trend finishes.

 

If you want to keep your profits a little tighter then a 5/10 Exponential Moving average may work better for you.

 

You can also close the trade if the price moves back under/over S&R levels or if you are using trailing stops [I don’t use them very often] when and if your stop is hit.

 

You can also just manually close your trade when the market closes at 16.30pm.

 

Using stop losses

Stop losses can be great… but also a great pain in the rear.

 

I occasionally use them and have done when testing day trading strategies.

 

The question always is and always has been, where do you put a stop loss? Stating how much you want to risk on any trade is not a great idea even though popular. If you say you are happy to risk 2% of your bank on any 1 trade then why let the stop get hit in the first place? If the price seems to be bolting in the opposite direction, why let the stop get triggered?

 

In my opinion every trade is different… even if you are trading the same market. So therefore stop losses and where you are placing them are too.

 

This means that they need to be adapted as such. Plus, if you’re day trading, you need to be around to trade anyway. So you can hit the stop [close position] button as and when.

Longer term Trading

Long term trend trading is a far slower moving game. Price rarely go boom or bust in a day. So stop losses are not needed as much.

 

Long term trading is easier if your stop loss is whatever you are risking on that trade. Let me explain briefly.

 

So [an example of this] I may buy SOSO stock at £2 a point but I may be willing to risk £500 on that trade… however, instead of using a stop that keeps getting triggered every minor retracement and costing me £100 each time it does, I have a set risk in my mind. And I use moving averages to exit positions so I rarely if ever lose my amount risked.

 

The times I have seen my trade get stopped out, only to then see the price continue in the right direction was so irritating. And maybe even more annoying is paying extra spread for the privilege to see it happen.

 

Personally, with this strategy I’d be using moving averages to signal my moves, all I need to do is admit I’m wrong if need be and go the other way if I choose.

 

Anyway I digress, if you want to use a stop with this strategy then you are probably best putting it just beneath or above the breakout S&R lines… since you are expecting the price to move from there anyhow it is obviously far better to cut your losses sooner rather than later.

 

How Profitable Can Trading the DAX Breakouts be?

 

These breakouts on this DAX trading system can be very profitable. In fact, I’d say that even if this was your only trading system that you ever used then you’d be realistically able to grab 300 + points each month as a complete beginner.

 

Let’s look at what happened to our trade.

 

Dax strategy

 

Our breakout resulted in just over 50 points profit if we closed our trade as the market closes at 16.30.

 

Considering that this trade never had any losing periods or drawdown since opening the trade, it is a nice stress free result.

 

The awesome thing with this type of trading is that your downside is limited but the upside is unrestricted.

 

Another Example

german 30 day trading system

If you look at this next example of a breakout you can see that many more points can be made.

 

This trade resulted in 75 points profit if we had traded out when the 5/10 moving averages crossed over just before market close.

 

Often the breakouts can last a day and longer, and if the breakouts occur earlier in the day the you can ride the trend for longer if it is profitable.

 

In this next example you can see that the entry crossover candle was quite small but not once did the price move back over the morning support level.

 

This trade gave a very generous and easy 106 points profit if you had closed out at 16.30 or just over 110 points profit if you had waited and traded out at at the crossover.

 

how to trade the dax

 

Leaving Trades Overnight

 

If you are thinking about leaving a trade over night because you have been in a good winning move and you think that it is likely to continue, this is a one of the times it can actually be a good idea to add a stop loss.

 

You could add a 20 point trailing stop so that you can stay in the move should it continue over night, but you also get the safety and peace of mind that if it goes against you that you can lock in most of your profits from earlier in the day.

 

In conclusion

 

  • Open 10 Minute chart of the German 30
  • Draw support and resistance lines of highs and lows from 7am – 9am
  • Wait for a strong 10-minute bull or bear candle to close past the S&R levels.
  • Open trade on the start of the next candle if price movement continues.
  • Exit trade when moving averages have crossed over or at close of day.
  • Let profits run.
  • If using a stop, place it just beneath or above the S&R levels.

 

This really is a great stand alone DAX trading system that can be used on a regular daily basis if the morning support and resistance levels are broken.

 

You might not get to trade every day, but when you do, the minor risk compared to the rewards will easily see you in profit over the months.