What is the DAX? | AvaTrade Tutorial
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 of listings. 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.
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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 the cycle of most indices trading 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 global popularity of German companies that form the DAX 30, have 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 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 for the index when it’s rank is 45 or lower, this is from criteria that is driven 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.
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Factors that influence the overall DAX 30 index price
As with most indices, CFD’s, Stocks trading, commodities trading, etc. 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 trading 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
- The margin requirement is 2%
- Maximal available leverage is
- The minimum trade size is 0.1 unit
- The DAX is priced in Euro
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DAX 30 Trading Main FAQs
- What is the DAX 30?
The DAX 30 is the German benchmark equity index, representing the 30 largest and most liquid German companies whose shares trade on the Frankfurt Stock Exchange. Some of the most easily recognized companies on the DAX include Volkswagen, Bayer, BMW, and Adidas. The 30 companies represented in the index encompass roughly 75% of the Frankfurt Stock Exchange market capitalization, and the index is considered to be an excellent gauge of the German economy.
- 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 are highest. 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 analyzing potential entry and exit points.
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