Dax Dow Puzzlement

[ZigZag]

Ideas Please. After following the DAX dropping all morning I entered long after a turn up off the low. My reasoning was the following; Yesterdays DOW ended flat. The low of the DAX was at 2773 a 2.3% drop. Measuring the DOW/ DAX ratio yesterday it was consistent at 2.988. Using this ratio I converted the DAX of 2773 to arrive at a DOW equivalent of 8285. AS the DOWS low of yesterday was 8394 and the close was 8491 I thought it unlikely that such a a 200point drop was likely. ...You guessed it the idea didnt work. AS I was going against the 5 Day trend (silly me)
my bet size was small so no harm done. I hope the above makes sense. Another idea hits the dust.

 

[warm_machine]

dax is weakest of the majors...you would be better off pairing it up with the cac40 if that is your system.

 

[ZigZag]

Thanks warm machine. No its not a pairing system. As the DAX has a good correlation with the U.S. majors I monitor the DOW to trade the DAX.

 

[FatCanary]

I don't know if it makes a difference to your system but the DOW's low yesterday was 8416. :|

FC

 

[ZigZag]

FAT CANARY: Thanks for that Ive just learned something I need to watch. Yahoo historical data is showing a low of 8394 however on their own graph as well as quote. com the low is shown as 8416. As it turns out I would have still done the same as the close data shown a big drop. I was using the lows as a support area. As I said before more analysis is required. As a point of interest the ratio has jumped to 3.02 today. Thanks again as someone said you learn something new everyday in trading.

 

[mmillar]

ZigZag,

There is more information on why Yahoo numbers are different and how to get the correct ones here...

http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=5391

 

[oatman]

Your ratio theory might work over a different time span. These things can go out of sync for long periods.

Good luck,

 

[ZigZag]

mmillar
Thanks for the info . Will follow it through.

 

[mercury7]

zigzag,
Have also just started to monitor trends of dow to trade Dax, just to start off with am not entering position for 1st hour of Dow trading and then wait for major (or minor) trend. Dax is more relaxed for my type of trade, may not pick up so many points, but then hopefully not lose so many either!
In the mornings I find more difficult, as there is nothing to compare with, as like Dow after 2.30pm, unless you follow FTSE?

 

[ZigZag]

Hello Mercury. We seem to be on same wave length. A few more
ideas. Re the morning I watch S&P, CAC, STOXX 50 & FTSE. THese must confirm the action on the DAX after the first 30 MINS. I also watch the highs of the day and if they appear at approx 1200 hrs and begin to fade I enter a short position. My reasoning is this time frame begins to enter the U.S. Markets gravity pull.
The fade tells me the European markets are unsure of the direction hence the profit taking. The same idea but in reverse applies. i.e. Going long when the trend begins an upward move. Today and at the moment the DAX is on an uptrend . Apart from looking at yesterdays high and close Im also looking at a fulcrum zone of 2930-2940. Good Luck