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Interesting discussion about the relative merits of the DAX vs the EuroStoxx.
I trade the DAX and trade overnight positions. I don't find it any
different from any other market to understand.... As far as I can see it's
doing it's job of trying to take money from the 85% who will lose and
redistribute it into the hands of the other 15% of traders in the market....
That aside I did a bit of a comparison between the two markets....
The attached jpg shows the Dax (green line above) and the EuroStoxx (lower
green line) and the spread (in red). Movements in the two indices are
pretty similar...I would even go so far as to say highly correlated (only
don't ask for statistical backup).... Given that the DAX is the higher
priced... its percentage movements produce greater point swings hence the
action in the spread (which is scaled to screen) which mirrors the action
in the underlying..
So if the two indices move in line should you trade the DAX or the
EuroStoxx ? Well liquidity aside (and it isn't an issue for me).. Taking
the last ten days range as a proxy for volatility we see the total range in
the DAX was 816 points and in the Stoxx 596. Margin on the Dax is 10000
euros for its 25 euro tick size, in the stoxx its 2500 for its 10 euro tick
(margins correct last time I checked). Dividing the total variation in
contract value by the initial margin gives a ratio of 2.04 for the DAX and
2.384 for the Stoxx... hence you get more bang for your buck trading the
eurostoxx.....
At 10:25 4/19/01 +0200, Ed Kiers wrote:
>Kim,
>
>You are right about the stops. And yes, the DAX is not for the faint
>hearted. I would say the DAX is a very special index to trade intraday. It
>must be allright when you trade daily bars but intraday is a different
>story. Extremely volatile, empty orderbooks, big boys who are too big for
>that market squeeze it even more, electronic stops, basket/future spreads
>nobody understands except large banks etc.etc.
>I traded the DAX intraday but I do not understand it. I know guys who trade
>it and make money. With big, large, huge, breathtaking swings. If you like
>to travel with 200 mp/h and you love the feeling of loads of adrenaline in
>your blood, you are ready to trade the DAX.
>If you do not like that you should look at the Eurostoxx 50 index. This
>index contains 50 large European companies. Lighter contract, at least
>double the volume, an index that has growing interest (pensionfunds,
>insurance companies) orders in the book are real and really traded (not
>canceled when the market gets there), understandable moves etc.
>Whenever this world is ready to trade 25 hours a day (yes, 25....) and you
>want to trade European futures look at the Eurostoxx 50.
>
>Ed Kiers
>
>
>
>Ed >>
>
>Ed,
>
>You also have the added disadvantage that Eurex does not allow Stop w/Limit
>orders to reduce your risk.
>
>I've never traded it but The DAX is not for the faint-hearted is it?
>
>Rgds,
>
>Kim
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