Return To Open ... a Birger Schäfermeier strategy

Description

The Return To Open strategy is one of two strategies in Birger Schäfermeier’s Morning Strategies package. The package was designed and programmed by Birger for the NanoTrader Full platform. The strategy is based on the principle that the market price, after a first move, will often return to the open price. Birger Schäfermeier uses the strategy to trade the Dax and the Eurostoxx in the morning and to trade the S&P 500 in the afternoon. The strategy can be used for futures and CFDs.

Click here to buy Birger Schäfermeier’s Morning Strategies package in the store

The strategy in detail

Birger Schäfermeier places his orders at 8h00 (or at 15h30 for the S&P 500). Before placing his orders he determines the market trend. To determine the market trend Birger Schäfermeier uses the SuperTrend indicator. The SuperTrend indicator is included in the strategy. If the trend is positive, the indicator colours the chart background green. If the trend is negative, the indicator colours the chart background red. Birger uses 30 calendar days of data for the SuperTrend.

In order to calculate the price levels at which to place his limit order Birger Schäfermeier uses the relationships between the high, the low and the open prices of the previous 5 days. The strategy shows the price levels at which Birger Schäfermeier places his orders in the chart. The price levels are represented by a green and a red line.

 

This example shows (1) the open price and (2) the high and low price levels on which Birger Schäfermeier may place an order at 8h00.

The Dax index is in a positive trend (green chart background). In this case Birger is likely to place a buy limit order on the green line.

When to open a position?

Birger Schäfermeier will place a buy limit order on the green line when the market is in a positive trend. If the market is in a negative trend he will place a short sell limit order on the red line.

 

This example shows the Dax in a negative trend (red chart background). Birger Schäfermeier placed a short sell limit order on the red line at 8h00. At 8h25 his postion was opened. As Birger expected, the market price subsequently returned to the open price.


If the market price does not reach Birger Schäfermeier's order by 9h00, he will cancel the order. In case he trades the S&P 500 he will cancel his order at 16h15. The strategy includes a pop-up message which will appear on your screen when it is time to cancel the order.

When to close a position?

The Return To Open strategy uses both a target and a stop. Birger Schäfermeier assumes that the market price returns to the open price. Hence the open price is the target. Birger places his stop at exactly the same distance. This results in a return/risk ratio of 1. If the position is opened and you activated the TradeGuard, the strategy will automatically place the stop and target orders where Birger would place them.

Birger Schäfermeier does not keep positions overnight. Therefore he included a time filter in his strategy. The time filter, if ticked and if the TradeGuard is activated, will automatically close the open position at the market price at 21h59.

Click here to buy Birger Schäfermeier’s Morning Strategies package in the store

Practical implementation

If you are not yet familiar with the NanoTrader Full platform, please visit the quick start page.

Setting up

Step 1: activate Birger’s strategy. Right-click on the instrument you wish to trade and activate the relevant strategy. The strategy's chart is set to a 1-minute timeframe. It is advisable not to change the timeframe.

Step 2: if you want to trade the S&P 500 you need to change the values of these two parameters:

  S&P 500
(future ou CFD)
Market open time 1530
EndTime 1615

You can change these values in the DesignerBar:


Or you can change the values directly in the chart (click the relevant number and use the mouse wheel or your keyboard):



Step 3: activate the TradeGuard. The TradeGuard will automatically place the stop and target orders after the position is opened. If one of these orders is executed, the others are cancelled automatically. The TradeGuard will also close any position which is still open at 21h59 if you ticked the time filter.



Birger also included a lay-out which simultaneously opens charts (Dax, Eurostox and S&P 500) for both the strategies in his Morning Strategies package. You can open this lay-out via the PageManager:

Trading

At 8h00 (or 15h30) …

If the market is in a positive trend (green chart background) place a buy limit order on the green line. If the market is in a negative trend (red chart background) place a sell limit order on the red line.

The easiest way to place the order is to click in the chart. Select limit order in the ticket. Drag the order line to the relevant price level. You do this by clicking the triangle in front of the order and dragging it to Birger’s price level.


If your order is not executed by the time the cancel message appears on your screen, you need to cancel the order.

If your order is executed and you activated the TradeGuard the platform will automatically place a stop order and a target order just like Birger Schäfermeier’s.

If your position is not closed by 21h59 and you activated the TradeGuard, the position will be closed at the market price at that time.

It is worth noting that Birger Schäfermeier likes to use discretion when trading. He will not necessarily implement his strategy to the letter every day. Sometimes Birger will make changes based on his experience.

Click here to buy Birger Schäfermeier’s Morning Strategies package in the store