Seasonal DAX EA

Are there typical patterns for the daily change in the (F)DAX depending on whether we are in a bear or bull market? The daily change should now be considered to be the percentage change between the stock market opening at 8 a.m. and the stock market closing at 10 p.m.

The result is astonishing:



Now we immediately recognize a striking and clear connection. In a bull market, prices rise on Monday, Thursday and Friday, while prices tend to fall on Tuesday and Wednesday. In a bear market, it is exactly the other way around.

So if you are looking for a buy signal in a bull market, you should get in at the end of the week and avoid Tuesday at all costs. The question of "why" is of course exciting, but for us it is pure speculation. One could certainly write great stories here, but more interesting is:

Can this probability advantage now be immediately converted into a profit advantage?

Here we can now do a simple calculation according to fixed rules and then carry out a profit calculation using the historical data. If the opening price on a day is above the EMA80 of the previous day (=> bull market) and we have a Monday, for example, a long position is opened and closed at the end of the day. On a Tuesday you would buy a short position at the opening (in a bull market) and also sell it again at the end of the day. If you apply this simple rule to the historical data, you get the following summation of the FDAX points.



In total, you would have collected almost 14,000 FDAX points in 14 years. So a probability advantage became a real profit advantage. On closer inspection, you would now take into account the real spread (difference between the buying and selling price) and certainly also define a stop loss for the individual trades. The basic system is impressively simple and offers numerous optimization options.
   

The trading idea

In a bull market, prices regularly rise on Monday, Thursday and Friday. While prices tend to fall on Tuesday and Wednesday. In a bear market, it is exactly the other way around.
 

Bull market

If the opening price on a trading day is above the exponential moving average, we assume that it is a bull market. We therefore always go long on Monday, Thursday and Friday, and short on Tuesday and Wednesday. On Monday morning we buy a position and close it shortly before the closing bell rings. On the following Tuesday we sell short in anticipation of falling prices. We continue to follow this plan for the rest of the week.

Bear market

If the DAX is below our trend filter at the opening of trading, we assume that there is a downward trend, i.e. a bear market. We apply the opposite behavior: on Monday, Thursday and Friday we short the market. Whereas on Tuesday and Wednesday we go long. If you apply this simple rule to the historical data, you should get a profitable and stable trading system.