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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Trade DAX index

The DAX 30 is the benchmark Stock Market Index (known as the Deutscher Aktienindex) for German Stock Indices and an indicator of overall economic performance for 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 10^th largest in the world and the 3^rd 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 companies in Germany, which represent 80% of total German market capitalisation.

DAX 30 Trading information

The DAX trading hours are Monday to Friday 00:10 – 19:59 (GMT)
The DAX moves in increments of 0.50
The margin requirement is 10%
Leveraged trading available
The minimum trade size is 0.1 unit
The DAX is priced in Euro

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DAX History

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 changed when, between 2003 and 2007, the DAX saw upward trends that were record breaking for a consecutive 1,587 days, and enjoyed values exceeding 8,105 peaks.

Subsequently, like the cycle of most indices, the DAX saw a pitiful fall during the 2009 ‘credit crunch’ and ended its peak performance at 3,580. However, the index was not down for long as, hitting a record high of 7628 by May. 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 companies’ shares are held in public hands, and fulfil several other criteria to be considered for the index.

Reviewed every quarter 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 based on criteria that is driven by a free float market capitalisation or 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.

Top 5 companies represented by DAX 30 and their index weighting (%)

Bayer	10.03%
Daimler	9.06%
Siemens	7.93%
Allianz	7.82%
BASF	7.77%

Factors that influence the overall index price

As with most indices, CFDs, Stocks, commodities, etc. the DAX, like any other instrument, reacts directly to factors that occur globally. Events such as breaking economic news, political unrest, and even natural disasters. These are mainly due to import/export activities that will influence the demand in each company’s industrial sector, which 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 CFDs. Following DAX live charts during DAX index trading is another method to understand DAX CFD trends, especially when there are announcements that include job creation, unemployment rate, GDP figures and other economic benchmarks.

Trade the DAX 30 with Friedberg Direct

Covering the global markets, Friedberg Direct gives you accurate daily analysis, trading tools, as well as a personal portfolio manager who will assist you in making informed DAX trading decisions.