Created in 1988 and starting with a base index value of 1,000, the DAX is German’s stock index, tracking 30 of its largest most liquid companies by market capitalization listed on the Frankfurt Stock Exchange (FSE). Read on to find out more about the DAX 30, its history, relevance, and how to trade this volatile index like a pro.
The DAX 30 is also known as the Deutscher Aktien Index, and prices used for its calculation come through an electronic trading system called Xetra. The DAX 30 index is the equivalent of the Dow Jones in the US. In Europe, its counterparts include the FTSE 30 in the UK and the CAC 40 in France. The index represents the strength of the German economy and, along with its counterparts in the region, indicates the health of Europe’s economy as a whole.
What time does the DAX 30 stock market index open?
The DAX 30 opens from Monday to Friday between 8:00 am and 4:30 pm UK time. The Deutsche Borse (Frankfurt stock exchange) calculates the early DAX between 7:00 am and 8:00 am, while late DAX is calculated between 4:30 pm and 9:00 pm UK time. It should be noted that hours may change as the UK and Germany move to and from daylight savings.
The DAX 30 can be traded in different ways, such as using DAX 30 options like $DAX and futures such as $FDAX. Options are used to hedge against existing financial investments. At the same time, futures are used to capitalize on directional-based markets when trading up or down.
How is the GER 30 calculated?
The GER 30 is calculated every second based on Xetra prices; from 9:06 am to 5:30 pm, all selection indices are calculated as price indices, performance indices, and net return indices. Hence DAX is most often considered a performance index.
To be enlisted in the DAX 30, companies meet specific criteria. A certain amount of ownership must be held in public hands and has its headquarter operating in Germany.
Which companies are listed on the Germany index 30?
A list of companies that are a component of the DAX 30, as of 2020, is shown below.
|DEUTSCHE TELEKOM||DTE.DE||Communication services|
|FRESENIUS SE & CO||FRE.DE||Health care|
|DEUTSCHE BOERSE||DB1.DE||Financial services|
|DEUTSCHE BANK||DBK.DE||Financial services|
|HENKEL AG & CO||HEN3.DE||Consumer defensive|
|FRESENIUS MEDICAL CARE||FME.DE||Health care|
|DEUTSCHE WOHNEN||DWNI.DE||Real estate|
|München Rückversicherungs-Gesellschaft||MUV2.DE||Financial services|
|HEIDELBERG CEMENT||HEI.DE||Basic materials|
|MTU AERO ENGINES||MTX.DE||Industrials|
The list goes through periodic reviews. Some of the component’s members are not permanent and can be added or removed at intervals. The DAX 30 companies are listed on the Prime Standard (Frankfurt Stock Exchange), and as a criterion, a minimum of 10% of the listed company’s shares must be free-float.
How to trade or invest in the DAX 30 CFDs
DAX 30 mini index CFD are usually traded in the form of DAX scalping strategy, which is dependent significantly on the market conditions. Its volatile nature is most suitable for scalpers and short-term traders; however, traders can day-trade the index. To profit from DAX CFDs, traders can buy and hold the DAX CFDs, and when the price of DAX increases, they sell and make a profit. Further reading – 1 Minute Scalping Strategy Guide for Traders
Hedging is another way of profiting from DAX CFDs; in this case, the trader protects his/her portfolio by holding opposing positions. For example, the trader may sell DAX CFDs against a long trade on a basket of correlated stocks; by doing so, if the price of the DAX rises, the stock will fall and vice versa, this keeps the overall position in a neutral position.
DAX 30 trades very quickly, and it is suitable for a retracement; there is no point trying to trade the DAX differently; develop a trading strategy that meets your goals. The DAX is one of the most volatile markets, this makes it more popular, and some traders consider it more comfortable to trade than the FTSE 100.
The following factors can significantly impact on the DAX 30:
1. Global risk sentiment; generally, the DAX 30 would rise alongside the wall street, the FTSE 100, and CAC 40.
2. The value of the euro; a stronger euro makes German exports less competitive; when the euro goes up, DAX 30 goes down. This is, however, not precise.
3. Factors that impact global trade: a trade war, price of oil, the performance of the US economy, the Chinese economy, and other European economies.
German stock exchange index
DAX 30 includes the share prices of the 30 largest and best-performing companies on the Frankfurt stock exchange. It is regarded as the German equity market benchmark, with its primary function of providing investors with investments in the German equity market via index derivatives. It represents about 80% of the total market capital authorized in Germany.
It worthy to note that the German stock exchange publishes two DAX indices:
• The DAX TR is the DAX total returns and includes the dividends paid by companies in the index.
• The DAX PR, which represents the DAX price, dividends are not included in the index’s calculation.
The DAX 30 is a very volatile index (Germany’s most liquid European equity), and its relevance calls for huge recommendations from traders and investors across the globe. An efficient way to trade the index is by using CFDs, which provides extensive exposure to the market using small limited investments. Potential traders of DAX 30 should note that as it is with any other index or trading instrument, it is better to practice with a risk-free demo account before embarking on real trading.