DAX automatic trading
Het Beurslab DAX30 automatic trading system
Major Markets Trading offers access to a couple of automated trading systems through this website. The DAX30 trading system was developed by Het Beurslab in Amsterdam, near the oldest stock market in the world. The aim of Het Beurslab is to provide a profitable automatic trading system in the form of an algorithm on the German DAX30. The trading system is very suitable for investors who have little time to trade, do not have programming knowledge and want to remove emotions from trading.
The trading system of Het Beurslab has been live since January 2017 and the results so far have been very positive. Het Beurslab does not trade for or on behalf of customers. Interested investors can copy the transactions generated by the algorithm to their own account via their own MetaTrader 4 trading platform.
The DAX auto-trading long & short algorithm is a fully automated trading system that buys and sells positions on a derivative of DAX futures, in the form of CFDs (contracts for difference). The traded market is referred to as DAX30, where 1 euro per index point is traded. The system is based on a backtest of the period 2013-2016 and is live since January 2017.
A trading system is used for trading that follows a defined set of instructions to place trades. These instructions form the so-called algorithm. The trading algorithm is based on timing, price, quantity and a set of indicators. The algorithm monitors the market based on the defined set of instructions and will automatically place buy and sell orders when certain conditions are met.
The automatic trading system allows you to be active on the market without having to sit in front of the computer. Trade and risk management are predefined. More information about the advantages of algorithmic trading can be found here.
The trading system of Het Beurslab is performance based. This means that a monthly performance fee of 20 percent of the net result is charged based on so-called high watermark. This means that the system is free of start-up costs and based entirely on a win-win relationship between Het Beurslab and the followers of the trading algorithm.
The results of Het Beurslab DAX30 trading system can be found here.
The DAX30 trading system uses a so-called break-out strategy.
This strategy speculates on the continuation of an already initiated upward or downward movement. The system tries to identify new trends at an early stage by searching for a break in the trend. The aim of the system is to achieve relatively large movements on the DAX index of approximately 0.8% to 2.5% with relatively few positions. These movements can be upwards (long) or downwards (short).
The trading system focuses on the profit ratio and not on the profit percentage. The profit ratio is the ratio between winning and losing positions compared to their size. The percentage of winning positions is therefore subordinate to their size. On average, the system wants to win more per transaction than it can lose.
The duration of a position can vary from a few hours to 3-4 days. The trading frequency is between four and ten times a month.
The money management of the DAX30 trading system is based on so-called lots. A lot represents an amount of € 1750.00. Each lot is traded on the DAX30 with € 1.00 per DAX point. All results of the trading system are calculated on the basis of a lot of € 1750.00. Maintaining a minimum balance of € 1750.00 on your trading account is recommended. However, this is not a requirement.
For example, if you want to follow the DAX30 trading system with 5 lots, you will need to deposit a minimum balance of € 8750.00 into your trading account. In this example, you are trading at € 5.00 per DAX point. In the event of any losses, an additional deposit will not be required immediately, unless the balance on your account falls below approximately €850.00 per lot. No such drawdown has occurred since 2013.
The number of lots with which you follow the DAX30 trading system is up to you. You can set the number of lots yourself in the software tool provided by Het Beurslab. After registration you will receive a clear instruction, in which you can read which steps you have to take yourself to be able to follow the trading system. You can change the number of lots with which you follow the trading system yourself at any time.
Trade and risk management
The DAX30 trading algorithm works with a fixed stop loss of 79 points (€79.00 per lot) and a fixed take-profit of 270 points (€270.00 per lot). The risk-reward ratio is 3.4. If there is sufficient unrealized profit, the trading system will tighten the stop loss by using a so-called trailing stop. As soon as the profit comes closer to the take-profit, the system will trail more tightly.
All positions are opened with a guaranteed stop loss. The use of a guaranteed stop loss avoids the risk of large overnight gaps and extreme slippage. Thus, no more than € 79.00 per lot can be lost per trade, excluding trading fees charged by the broker.
The DAX30 trading system of Het Beurslab is not comparable to any form of asset management. It is a ‘pur sang’ trading system with a high risk of temporary and significant losses. The system has been designed in such a way that it is possible to achieve good returns with a relatively small investment. The profitable months are sometimes significant in percentage terms, but so are the loss-making months. The maximum drawdown during the backtest was almost 50% of the initial invested capital. Since the launch, this was 40%. These drawdowns are often recovered relatively quickly, but certainly not always.
Following the DAX30 trading system is done on your own initiative and at your own risk. The increased risks of this product are assumed to be known and have been described in detail by Het Beurslab. It is not wise to use a large part of your capital for this product.
Costs & high watermark
As indicated, the trading system of Het Beurslab is performance-based. This means that a monthly performance fee of 20 percent of the net result is charged based on the so-called high watermark. This means that the system is free of start-up costs and based entirely on a win-win relationship between Het Beurslab and the followers of the trading algorithm. For the VPS connection and the technical application made available by Het Beurslab, a cost-covering amount of € 20.00 excluding VAT is charged monthly.
The performance fee is charged monthly to the net result. The net result consists of the gross result minus the trading costs charged by the broker. These trading costs consist of:
- Financing costs of approximately € 0.80 per lot if a position is transferred to a subsequent trading day (overnight).
- Premium for the use of a guaranteed stop loss of € 1.50 per lot. This premium is only charged when the entered stop level is actually hit.
The performance fee is charged on the basis of the so-called high watermark. This means that the fee is only calculated on additional profits. The fee is then calculated over the part after losses from the past have been recovered. This prevents a fee from being calculated from a volatile performance.
For example, if the loss was €200.00 per lot in a certain month and the profit in the following month was €350.00 per lot, then a commission is calculated on the additional profit. In this example this is €150.00, which sets the commission at €30.00 per lot.
Costs VPS connection and technical application.
To ensure that transactions are executed even when you are not online, you normally need a VPS connection. Het Beurslab provides an easy-to-use software application that allows you to track the trading system and set the number of lots to trade. This eliminates the need for a proprietary VPS connection.
The VPS connection and the technical application made available by Het Beurslab are subject to a monthly cost-covering charge of € 20.00 excluding VAT. These costs are charged on a quarterly basis.
Participation and customer relationship
Following the automatic trading system of Het Beurslab is straightforward and easy. You do not have to set up your own trading system or carry out complex actions. Below you will find an overview of the requirements.
To be able to follow the trading system, you need a MetaTrader 4 account. Het Beurslab provides all buy and sell transactions through a technical link via the MT4 (MetaTrader) trading platform. The software of MT4 makes it possible for the positions to be copied to your trading account. MetaTrader 4 is a downloadable trading platform. MetaTrader 4 is available at many brokers. A MT4 account can be requested online.
VPS stands for virtual private server. VPS is a form of hosting where you have your own virtual machine on a physical server. By using a VPS connection it is not necessary to be online at home to be able to perform transactions on the MetaTrader 4 platform. The MT4 account is therefore always online.
The Beurslab provides you with a technical application, so that you do not need a VPS connection yourself. The advantage of this is that you are not dependent on any external factors and your transactions are always carried out. Furthermore, there is no need to purchase an expensive VPS connection yourself and install it at home.
In the software application provided by Het Beurslab you can also set and adjust the number of desired lots.
Het Beurslab acts as a signal provider, providing buy and sell signals that can be automatically copied to the participant’s trading account through a technical application. Het Beurslab does not trade for or on behalf of customers.
Het Beurslab does not have access to your account. Participants can stop the service at any time. You have and retain full control of your own trading account.
To follow the DAX30 trading system you need an active MT4 trading account, which is funded with a balance. Once your trading account is active you can send an email to firstname.lastname@example.org to register. You will then receive a document with instructions on how to link your account to the trading system of Het Beurslab.
For further questions you can always contact us.