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Trade the DAX index
The DAX 30 is the benchmark Stock Market Index (known as the Deutscher Aktienindex), in German Stock Indices and overall economic performance of the country, which lends itself to investor sentiment towards German equities. The DAX-30 trades on the Frankfurt Stock Exchange of the Deutsche Börse Group, which is the 10th largest in the world, and third largest in Europe in terms of total market capitalisation. The DAX is capitalisation weighted like France’s CAC 40, and measures the performance of the 30 largest and most publicly traded on companies in Germany, which represent 80% of the total German market capitalisation.
There are also DAX sub-indices that offer investors exposure to other niche industries in the Frankfurt Stock Exchange. Like the DAX, these sub-indices are composed of companies admitted into the Prime Standard segment of the Frankfurt Stock Exchange.
Furthermore, all the sub-indices are based on free-float market capitalisation (at least 10% outstanding shares should be held by the public), and they have a 10% cap factor on individual constituents.
The 3 sub-indices are:
MDAX is an index that tracks the performance of the 60 largest and most liquid stocks of companies that rank immediately below the DAX30 stocks. The companies are essentially classified as mid-caps and are drawn from various industries.
SDAX is an index that tracks the performance of 70 stocks of companies (drawn from various industries) that rank below MDAX stocks (in terms of size and liquidity).
TecDAX is an index that tracks the performance of 30 of the largest and most liquid stocks of technology companies listed in the Prime Standard segment of the Frankfurt Stock Exchange.
The index began with a base value of 1,000 on 30 December 1987, and over the years the DAX has been through many mergers, bankruptcies, takeovers and restructures which brought about an unstable outlook and negative investor sentiment. This was changed, as during 2003 to 2007 the DAX saw upward trends that were record-breaking for a consecutive 1,587 days, and enjoyed values exceeding of 8,105 peaks. Subsequently, as was the case with most indices, the DAX saw a pitiful fall in the 2009 ‘credit crunch’ and ended its peak performance at 3,580. However, the index was not down for long, as since the crash in September 2013, the DAX experienced a major peak and a record high of 8,736, following a 1,000-point gain.
The DAX then embarked on a gradual, steady rally that saw it cross above the 10,000-price barrier in 2014. The drift higher continued past 12,000 in 2015 before a retracement occurred that saw it dip to lows of 9,000 in 2016. It, however, resumed its uptrend and managed to cross above 13,000 in 2017. 2018 saw the DAX pullback again, closing the year at circa 10,500. In 2019, the index drifted upwards to reclaim the 13,000 level, but at the start of 2020, it succumbed to the pressures and tensions of the global COVID-19 pandemic. After printing a then all-time high at above 13,700 in February 2020, the DAX tanked sharply to lows of circa 9,000 by March 2020. The uncertainty around the coronavirus pandemic, coupled with strict lockdown and curfew restrictions, inspired this massive dip.
Germany was one of the countries around the world that handled the pandemic admirably, and this inspired investor confidence in the DAX. The country quickly flattened its curve and benefitted from rapid and decisive measures to contain the spread of the deadly virus. The DAX quickly reclaimed the 10,000 mark by April 2020, and by July 2020, it had managed to hit the psychological 13,000 handle. Concerns about a second wave of the pandemic inspired a temporary dip to just above 10,500 in October 2020, but the DAX proved resilient. As vaccines rolled out, investor confidence supported the DAX as it rallied to its all-time high of circa 15,200 in April 2021.
The global popularity of German companies that form the DAX 30 has been the backbone of the German economy. The DAX name and reputation has been responsible for carrying these companies in their solid growth and globalisation.
DAX 30 Index composition
The DAX 30 was formulated in 1987 and as mentioned measures the performance of 30 of the most profitable companies in Germany. For companies to be included in the DAX 30, they need to be listed on the Prime Standard (Frankfurt Stock Exchange), where a minimum of 10% of the listed company’s shares are to be held in public hands as well as a number of other criteria to be considered to become a constituent part of the index. Reviewed on a quarterly basis by the Board of the German Stock Exchange (Deutsche Börse) and according to basic criteria, these constituents can be altered. A company is excluded from the index when its rank is 45 or lower, based on criteria derived from a free-float market capitalisation, or a low order book volume. On the other hand, if a company’s rank is 25 or better than the lower ranking company, the latter will be replaced with the fast entry of the better ranked company.
Index weighting (%)
Factors that influence the overall index price
As with most indices, CFD’s, commodities and Stocks trading, the DAX, like any other instrument, reacts directly to factors that occur globally. Events such as economic breaking news, political unrest, even natural disasters. These are mainly due to import/export activities that will influence the demand in each company’s industrial sector, that in turn affects the index as a whole. Keeping abreast of economic data from Germany as well as most of Europe is a smart trading move when you are trading DAX index. Following the DAX live charts during DAX index trading is another method to understand the DAX CFD trends, especially when there are announcements that include: Job creation, unemployment rate, GDP figures and other economic benchmarks.
DAX 30 Trading information
- The DAX trading hours are Monday to Friday 6:01 – 19:59 (GMT)
- The DAX moves in increments of 0.50
- Leveraged trading with maximum available leverage of up to
- The minimum trade size is 0.1 unit
- The DAX is priced in Euro
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DAX 30 Trading Main FAQs
Should I trade the DAX 30?
If you have any interest at all in the German economy, or in the multi-national corporations that make up the DAX 30, then the answer is yes. With the German economy the largest in the European Union, and often called the engine of growth for Europe, trading the DAX 30 is like making a bet on the strength or weakness of not only Germany but of the broader European Union. The DAX provides traders with the perfect opportunity to speculate on the broader economy rather than focusing on a single company or sector.
What’s the best strategy to trade the DAX 30?
First of all, traders should look to trade the DAX 30 when its liquidity is higher. This tends to be at the start and end of the day, so planning trades to enter and exit the market during the first and final hours of the trading day is a good start. Any of the standard technical trading strategies can be used when trading the DAX 30, including moving averages, Bollinger Bands, RSI, MACD, and more. Support and resistance levels are also important when analysing potential entry and exit points.
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