Trading Dow Jones EURO STOXX 50® Index Futures with Fibonacci

Trading Dow Jones EURO STOXX 50®Index Futures with Fibonacci

Retracement Techniques

1

Prepared and Presented by Daniel Gramza

Materials in this presentation are covered under current United States and

international copyright laws.

NO PORTION OF THIS PRESENTATION MAY BE REPRODUCED WITHOUT THE

WRITTEN PERMISSION OF THE AUTHOR.

Daniel Gramza is currently completing two books:

TRADING IN THE EYE OF THE STORM

THE HANDBOOK OF JAPANESE CANDLE TRADING STRATEGIES

2

THE HANDBOOK OF JAPANESE CANDLE TRADING STRATEGIES

You can be notified when these books are available by contacting Daniel Gramza.

Daniel M. Gramza

President

Gramza Capital Management, Inc.

[email protected]

Eurex Overview

Fibonacci Retracements

Concepts

Strengths

Weaknesses

Trading Applications

Q&A

AGENDA

3Gramza Capital Management, Inc.

Eurex Overview


Concepts

Strengths

Weaknesses


Q&A

AGENDA


Are the Eurex Equity Index Futures

Are you making the most effective use of your trading capital?

Have you diversified your investments beyond US corporate stocks?

Have you diversified your investments beyond the US?

Are you taking direct advantage of the European market movement?

Do you hedge or protect your portfolio from adverse price movement?

right for YOU?


Strong Growth in Contract Volume

1,0151,066

1,250

1,526

1,900

1,200

1,400

1,600

1,800

2,000Eurex – The European Derivatives Exchange | Products

+ 25 %comparedto Jan-Dec2006

6

26 50 70 87 100 117 145

248

381454

674

801

0

200

400

600

800

1,000

19911992 1993 19941995 1996 19971998 1999 20002001 2002 20032004 2005 20062007

Traded contracts (in millions)

• Benchmark equity index

• Tracks the development of the European economy

• Focus on the Euro zone countries that have adopted the Euro astheir currency

Austria, Belgium, Finland, France, Germany, Greece,

Ireland, Italy, Luxembourg, the Netherlands,

Dow Jones Euro STOXX 50® - Underlying Index

7

Ireland, Italy, Luxembourg, the Netherlands,

Portugal and Spain

• Captures approximately 95% of the free float marketcapitalization of the represented countries

• Index of 50 European Blue-chips firms

Companies that are included in the index:

Banco Santander, Carrefour, L’Oreal, Nokia, Renault, etc.

Calculated by STOXX Ltd., created in 1998

Dow Jones Euro STOXX 50® - Underlying Index

8

Futures Cash Settlement

Dow Jones EURO STOXX 50® Index

Trading hours:

7:50AM – 10:00PM CET 12:50AM – 3:00PM CST

Minimum tick size:

1 index point = €10 / $14.50*

Multiplier:

10

9

10

Contract size:

at 4,400 index level = €44,000 / $63,800*

Contract months:

The 3 nearest quarterly months of Mar, Jun, Sep, Dec

Expiration:

The 3rd Friday of the maturity month at 12:00PM CET / 5:00AM CST

*EUR/USD = 1.4500

Reasons to trade on Eurex

Trade different time zones

Trading hours are from 12:50 AM CST - 3:00 PM CST.

Many moves that begin in Asia and Europe carry over intosimilar domestic USA products.

Diversification

New opportunities and product offerings in foreign markets

Decrease market exposure to US Corporate stock market

10

Decrease market exposure to US Corporate stock market

Large volume

Large open interest

Depth of market

Good movement / volatility

Gramza Capital Management, Inc.

Access to the European equity and debt markets

Benefit from the leverage effect of futures contracts

Lower transaction costs in futures

Hedge

Take foreign exchange risk

Euro-denominated contract

Reasons to trade on Eurex


Eurex Overview


Concepts

Strengths

Weaknesses


Q&A

AGENDA


Market Retracement is the return of a market to previously traded prices during anupward or downward trend.

Markets rarely trend straight up or straight down.

Typically, they retrace part of the direction of the trend before continuing.

Market Retracement


These retracement measurements are common to the Dow, Gann andFibonacci theories.

Leonardo Fibonacci, was an Italian mathematician in the 1200’s.

He created a numerical sequence of numbers.

Each number is determined by the sum of the previous two numbers.

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,...

The ratio of any number to the next higher number approaches a

Market Retracement


The ratio of any number to the next higher number approaches aconstant value of .618 (8/13 = .612, 55/89 = .612)

The ratio of any number to the number occurring two places higherapproach a constant .382 (8/21 = .382, 55/144 = .382).

.382 is the inverse of .618 (1- .618 = .382).

38.2

50.0

BCAB

B

Market Retracement


50.0

61.8

C

A

100%

Market Retracement

Buy


0%

38.2%

50%

61.8%

Buy

Sell38.2%

0%

61.8%

50%

Market Retracement


100%

Eurex Overview


Concepts

Strengths

Weaknesses


Q&A

AGENDA


Trading Dow Jones EURO STOXX 50®Index Futures with Fibonacci

Retracement Techniques

32

Prepared and Presented by Daniel Gramza

Trading Dow Jones EURO STOXX 50® Index Futures with Fibonacci

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