What is the DAX? | AvaTrade Tutorial
Trade the DAX index
The DAX 30 is the benchmark Stock Market Index in Germany. Also known as the Deutscher Aktienindex, this important index provides an overview of the overall economic performance of the country. The DAX 30 is an important way for Australian traders to gauge 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 the 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. The DAX 30 represent 80% of total German market capitalisation.
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The DAX 30 index began with a base value of 1,000 on 30 December 1987. Since that time, it has been through many mergers, bankruptcies, takeovers and restructures, all of which led to an unstable outlook and negative investor sentiment.
This all changed between 2003 to 2007 when the DAX saw upward, record-breaking trends for a consecutive 1,587 days. The once struggling index enjoyed values which exceeded 8,105 peaks.
Subsequently, as per the cycle of most popular indices, the DAX saw a pitiful fall in the 2009 ‘credit crunch’ and ended its peak performance at 3,580. The index was not down for long, however. Since the crash of September 2013, the DAX has experienced a major peak and record high of 8,736, which was built on the back of a 1,000-point gain.
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 towards solid growth and successful globalization.
DAX 30 Index composition
The DAX 30 was formulated in 1987, with this index measuring 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) and fulfil certain criteria. A minimum of 10% of the listed company’s shares needs to be held in public hands, with a number of other criteria also considered before a company can become a constituent part of the index.
Constituents can only be altered after have been reviewed on a quarterly basis by the Board of the German Stock Exchange (Deutsche Börse). A company is excluded from the index when it’s rank is 45 or lower, with this criterion coming from a free float market capitalization or low order book volume.
On the other hand, if a company’s rank is 25 or more than a lower ranking company, the latter will be replaced with the fast entry of the better-ranked company.
|Company||Index weighting (%)|
Factors that influence the overall index price
As with most indices, cfd stocks, commodities, etc, the DAX reacts directly to global economic and political factors. Events such as breaking economic news, political unrest, or even natural disasters can affect the index. This is mainly due to import/export activities that will influence demand in each company’s industrial sector, which in turn affects the index as a whole.
Following DAX live trading charts during DAX index trading is necessary to understand the DAX CFD trading trends, especially when there are news announcements such as: 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 trading 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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