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DAX GER 40 Index

Written By

James Barra

Written By

James Barra

James is an investment writer with a background in financial services. He has worked as a management consultant, where he delivered large-scale operational transformational programmes at some of Europe's biggest banks. James authors, edits and fact-checks content for a series of investing websites.

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Edited By

Jemma Grist

Edited By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

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Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

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Updated

Jun 13, 2024

DAX 40 brokers offer access to the forty largest, blue-chip German trading companies found on the Frankfurt Stock Exchange. As Germany sits as the largest and most powerful economy in the Eurozone, the DAX (Deutscher Aktien index) is regarded amongst the most important indices for European investors.

This tutorial will break down how the DAX works, detailing its purpose and implications. It will also explain how to start day trading on the DAX, including how to compare brokers and platforms, plus information on signals, market opening hours, analysis, and strategy, as well as top tips. Use our list of the top brokers with access to the DAX 40 to start trading.

How To Compare DAX Brokers

DAX 40 brokers will be your gateway to the German stock market. They will facilitate trades and perhaps even finance some of your DAX trading activity via margin opportunities. But with so many options out there, how do you know what to look for when comparing brokers with access to the DAX 40? Below are some of the most important factors to consider:

• Costs – As a day trader, making a high volume of trades each day, high commission fees will quickly cut into your end-of-day market returns. So, check whether DAX brokers offer competitive commissions and spreads. Also, are DAX 40 prices laid out in a transparent format, free from hidden costs? As well as fees to open and close positions, consider other charges, such as deposit  withdrawal rates or costs to convert money into the Euro, for example. Commission-free deposit methods should be top of your list, with third-party charges often covered by the best DAX brokers.
• Platform – When comparing DAX brokers, look for an easy-to-use and reliable trading platform. Also check whether it will have the DAX graphs and tools you need for technical analysis, including any historical data. In addition, does the platform facilitate fast execution speeds? Among the most popular third-party platforms is MetaTrader 4 (MT4). Alternatively, some of the top DAX 40 brokers offer their own terminals via desktop downloads, web browsers, or mobile apps.
• Tools – Look out for DAX brokers that provide access to educational content and additional features such as copy trading. Integrated economic calendars and live news streams are also ideal for staying in the loop with German company publications and local economic health, which may influence your decisions when it comes to investing on the exchange.
• Customer service – You don’t want to be sat losing money for hours because of a glitch on your platform. The best DAX brokers offer 24/7 support, including Pepperstone. Language flexibility should also be a key consideration when comparing DAX brokers, especially if you are not of German nationality. In addition, look out for DAX 40 brokers with toll-free telephone numbers, email addresses and live chat functionality. Some brokers with access to the DAX also now offer alternative instant messaging solutions, such as Facebook Messenger or WhatsApp.

What Is The DAX 40?

Before you start day trading on the DAX with registered brokers, you must first understand its intricacies. You probably know the index for the infamous companies listed, including BMW, Eon, Siemens, and Deutsche Bank. However, it’s worth noting the DAX 40 is relatively young. Its predecessor, the DAX 30, was only created in 1988 with a base index value of 1,000. The DAX 40 itself only came about in September 2021.

But a quick look at a DAX live chart today and you get a feel for the sheer size of the companies now listed. The DAX 40 companies listed by market capitalization make up a staggering 75+% of the value on the Frankfurt Stock Exchange. For this reason, this market index is often compared to the FTSE index of the UK, and the Dow Jones Industrial Average of the US.

Frankfurt Stock Exchange

The DAX trading system works in conjunction with the Frankfurt Stock Exchange. It is considered to be one of the largest and most efficient trading facilities found anywhere on the globe. The Frankfurt Stock Exchange posts several indices, including the DAX, Vdax, plus the Eurostoxx 50.

The DAX opening hours in GMT are 07:00 to 21:00 on weekdays.

Xetra

The Frankfurt Stock Exchange commands a significant share of all turnover in Europe. However, the majority of profit can be attributed to its Xetra trading system. This system has enabled a high volume of foreign investors to enter the exchange.

The electronic trading venue was launched in 1997 and this is where the DAX 40 live prices are taken from. Approximately 95% of all stocks and shares are now traded through Xetra. Xetra has determined the index after every second since the 1st of January 2006.

The system was originally created for use on the Frankfurt Stock Exchange. However, it has since expanded to be used on numerous exchanges across the globe. This includes stock exchanges in Ireland, Shanghai, and Vienna. Today it facilitates the trade of stocks, bonds, funds, warrants, and commodities contracts.

How The DAX Is Measured

Deutsche Börse, the operator of Xetra, tells us the DAX 40 measures company performance in terms of order book volume and market capitalization. They calculate the index weightings, plus the average trading volume using a free-float methodology.

Versions

It’s important to note there are two versions of the DAX you need to understand. These are the:

• Performance Index – This measures the total return and is the most commonly quoted of the two.
• Price Index – The price index is similar to the frequently quoted indices found in other countries and financial systems.

What Is The DAX Used For?

Domestic Outlook

Whilst to some extent it is used to gauge the health of the German economy, it is not quite that straightforward. This is because its selection is far smaller than the Dow Jones, for example. Therefore, it is not as accurate a reflection of the economy overall. However, it does give some indication of investor sentiment toward German equities.

Global Outlook

It also remains a crucial index for international investors to keep an eye on and trade via registered brokers. This is evidenced by the fact that approximately 75% of sales generated by DAX 40 listed companies are earned abroad. Also, because many of the DAX constituents are huge multinational companies that have a significant impact on global markets, the index can also be used to gauge global trends.

For example, a substantial number of the companies on the DAX 40 also trade in the US. This means the index serves as a good indicator of trends in the US. Furthermore, because the European trading session finishes before the US sessions begin, they are used by some to determine in which direction US markets will go.

Trading

From real-time charts, the DAX 40 is also used by individuals to generate substantial earnings. Thousands head online each day in an attempt to profit from short-term price fluctuations. The best DAX 40 brokers make online trading easy to get started with, especially for beginners.

Live DAX Price Chart

What You Need To Know To Start Trading The DAX

Put DAX 40 daily forecasts, DAX brokers comparisons and online investing to the side for a minute. Below a key facts sheet has been collated, including points you should be aware of before you start investing on the exchange.

• The distinguishing characteristic of the DAX 40 is that it is calculated as a performance index.
• Unlike other indices, the DAX 40 includes dividends in its calculations, therefore the return reported is the total return.
• All the DAX 40 index companies are capped at a weight of 10%. This ensures the legal provisions of the index are met. Plus, it sees to it that mergers and acquisitions do not create index titans, that will disproportionately impact the value of the index.
• The companies found on the Frankfurt Stock Exchange come from over 80 countries. Therefore, the index can be seriously impacted by global market influences.
• News about wars, natural disasters, GDP stats, interest rates, employment rates, and other economic benchmarks are common influencers of the DAX.
• Of the DAX 40 listed companies, the top five (Bayer, BASF, Siemens, SAP, and Allianz), make up around 43% of the entire index. So, despite best efforts, the weighting of the constituents is still relatively unbalanced. This means it is important you check the performance of individual companies at DAX brokers as well as their corresponding sectors.
• DAX dividend yield is simply the dividend per share, divided by the price per share. It is used to calculate the earnings on investment (shares). Ascertaining who can offer the best dividend stocks is all part of the fun.

DAX 40 Changes

Unlike other indexes, the DAX is updated with the next day’s future prices, even after the main stock exchange has closed.

The DAX top 40 index list is changed quarterly after review dates. Index constituents can be removed if they are no longer in the top forty-five largest companies. Businesses can be added if they break the twenty-five threshold. New entrants and ranking changes are determined by the Board of the German Stock Exchange (Deutsche Börse).

Admission

To be included as one of the index components and available for day traders to invest via major DAX 40 brokers, a company must be listed on the prime standard, the Frankfurt Stock Exchange. In addition, at least 10% of company shares must be held by the public.

DAX Trading Performance

A DAX index forecast 20 years ago would have failed to predict many of the highs and lows the index has seen. The DAX was in a bull market for a staggering 1,587 days between 2003 and 2007. During this time the value rose to its peak of 8,105.69.

Despite opening with a base value of 1,000, it wasn’t until April 10th, 2015 the price index first closed above its closing high from 2000. It was March 16th of 2015 when the performance index first exceeded 12,000.

Unsurprisingly, it suffered a blow during the credit crunch as other markets crashed, and it fell to 2,580 in 2009. Since then, 2013 saw an impressive over 1,000 point gain, reaching an all-time high of 8,736 on the 19th of September.

Looking down the DAX 40 stocks list for daily volume, you can see many of the constituents have benefited from globalization, such as Volkswagen and Henkel. This has been a crucial catalyst for growth. Not to mention, the likes of Bayer and Adidas have successfully broken into US markets as well as emerging Asian markets.

Big Players

Below some of the most famous and far-reaching of the 40 members have been listed, including the big four of the DAX 40.

• Adidas AG (ETR: ADS) – A world-famous brand that offers athletic clothing, shoes, and products.
• Allianz SE (ETR: ALV) – They are a huge financial services company, specializing in insurance and asset management.
• BASF SE (ETR: BAS) – BASF remains one of the largest chemical companies on the planet.
• Bayer AG (ETR: BAYN) – Bayer has developed some of the most popular pain relief drugs. It stands as a heavyweight in the healthcare industry.
• BMW AG (ETR: BMW) – BMW is another automobile manufacturer, selling award-winning cars all over the world.
• Deutsche Bank AG (ETR: DBK) – One of the world’s largest banks, Deutsche offers products and services to both individuals and businesses.
• Man SE (ETR: MAN) – Man design and manufacture commercial vehicles and equipment for use in 150 countries.
• Siemens AG (ETR: SIE) – Siemens produce electronics and electrical engineering services for a number of sectors.
• SAP AG (ETR: SAP) – The company makes enterprise software to manage business operations and has offices in 180 countries.
• Volkswagen AG (ETR: VOW) – This automobile manufacturer now has vehicles driven on every continent.

As you can see from above, sector weights in the automotive industry tip the scale significantly. The top DAX brokers will also provide detailed insights into leading stocks, along with key financial metrics and the latest price projections.

DAX 100

Another one of the important indices that you may find on major international brokers is the DAX 100 (Deutscher Aktienindex 100). The composition is straightforward. It represents the top 100 traded German stocks. It combines the 40 DAX equities and the top 60 of the MDAX equities listed on the Frankfurt Stock Exchange.

It is worth pointing out that since March 24th, 2003, the MDAX has included 50 equities and the previous DAX has changed to the HDAX. The HDAX represents the price development of all shares found in the DAX 40.

So, the HDAX consists of a more diverse and broad blue-chip index than the DAX. It covers all sectors listed in the EU-regulated markets’ Prime Standard Segment.

The MDAX, DAX 40, and TecDax are all aggregated to form the HDAX. The simplest way to wrap your head around it all is by using the definitions below:

• DAX 40 – The biggest and most actively traded companies on the Frankfurt Stock Exchange.
• MDAX – Consists of 50 mid-cap from the more traditional sectors.
• TecDax – This tracks the 30 largest issues from the technology sectors with the highest liquidity.

DAX Futures

An increasing number of individuals are moving away from traditional stock investments via online brokers. Instead, they are looking to trade DAX bitcoin, forex, CFDs, plus futures and options. DAX futures are offered by the Eurex exchange. This is a specific exchange that specializes in European futures.

A quick look at a DAX live futures chart and you can see there is ample opportunity for profit. However, it is worth noting you can get various forms of DAX futures. Contract specifications vary from standard futures to mini-sized DAX futures with a multiplier of 5 EUR. Usually, DAX futures are priced in euro, which is then converted to US dollars.

However, be warned, as individuals continue to turn impressive profits from futures investing, the market will become increasingly competitive.

Why Trade The Dax?

If you’re unsure whether investing on the DAX is for you, below are a couple of good reasons.

• Volatility – Volatility promises attractive price movements. Quite simply, bigger moves and higher daily ranges offer the savvy day trader plenty of opportunity to yield substantial DAX 40 monthly profits. You will see more volatility on the DAX compared to the FTSE, and other markets. This means you have the option of more setups at the start of the trading day and throughout your session.
• Lifestyle – Day trading on the DAX is ideal for those short on time. With steep movement in the morning, you can trade early on and then go about your day, whether it’s collecting the kids or going to work. Plus, the fact you can trade it alongside the FTSE with many international DAX brokers, means you could potentially double your returns at the same time.

How To Start Day Trading The DAX

There are a number of ways for international investors to gain access to the DAX, such as exchange-traded funds (ETFs) on European exchanges via registered brokers. However, you can also purchase individual components found in the index.

Before a discussion about DAX strategy and signals, there are a couple of straightforward steps you will need to follow after you have compared DAX brokers.

1. Choose A Security

The DAX is a highly competitive marketplace. That means it is important you choose the right security. So, when you conduct your chart analysis, look for volume and volatility. A security with both will enable you to enter and exit positions swiftly, whilst promising the greatest profit potential.

Volume

Volume is concerned simply with the total number of shares traded within a specific time period. So, if 50 transactions are made today, the daily volume will be 50. Volume gives weight to market moves. If you are unsure about a price fluctuation, the reliability of the move can be supported by volume. Put simply, the larger the volume, the more significant the move.

Volatility

Another important factor to consider when you’re analyzing your DAX 40 stock chart is volatility. This is concerned with the amount of risk/unpredictability in the size of changes in a security’s value. High volatility is a strong indicator you can expect significant price movement within a short period.

The price of stocks with lower volatility are likely to remain more stable. For day traders looking to profit in the short-term, this means reduced profit potential.

Beta

Fortunately, there is a straightforward way to measure the volatility of a potential security. You need to use ‘beta’. This predicts the volatility of a stock’s return against the returns of a comparative benchmark.

For example, if Volkswagen has a beta value of 1.2, it has moved around 120% for every 100% in the corresponding benchmark. If BMW has a beta of just .8, it has moved just 80% for every 100% in the benchmark index.

Consider both factors when you load up your DAX 40 price charts and potential securities for the day. Your bottom line will thank you for it.

DAX Day Trading Strategies

Even with the best DAX brokers and a thorough understanding of the markets, you need an effective strategy to generate high earnings.

Before we explore a couple of examples, you need to get to grips with technical analysis. To do that, you must get familiar with charts and patterns. You will need these to read historical index data. You will also use them to execute your strategy, from plotting your support and resistance levels to validating trends.

Once comfortable, you will find reading quickcharts, year charts, symbols, and live tickers will come easily, allowing you to focus on the business of trading.

Two-Hour Range Breakout

This is a simple DAX strategy to get your head around. Whilst many people like trading the DAX first hour, combining the first two hours of data and statistics can give you a better measurement of market sentiment.

For this example, we will use DAX futures, which open at 09:00 Central European Time, or 07:00 GMT. At this time you will often find a high number of economic releases. A lot of this information is full of noise and can be misleading. Being patient for a couple of hours will afford you greater opportunities, once the range or trend is set.

The only indicator you will need is volume data. Then you simply draw horizontal lines on the highs and lows of the first two-hour trading session. Now watch the volume whilst the price remains within these levels.

Application

Buy or sell on a breakout of this range. Use increased volume to validate the move on the breakout of the candle.

Place stops at the high or low of the breakout candle. Profits can be taken for 10-15 points. You will find that some traders can still have open positions until the last hour of trading.

This two-hour range and volume breakout is ideal for profiting from short-term trends. The volume validation also allows you to trade with confidence. It is worth bearing in mind though that setups aren’t constant. So, there may be some days when there are zero trades to make.

High/Low – Buy/Sell Trend Strategy

On the whole, the DAX tends to follow strong trends. However, there are periods of consolidation where flat price action can whipsaw your position. Price action is more stable once the trend is established.

So, you can use a 30-minute DAX intraday trading strategy. Quite simply, you buy if the price closes above the previous day’s high. Alternatively, you sell if the price closes below the previous day’s low. Then place your stops at the high or low of the 30-minute breakout candle.

This is a relatively transparent system where you can identify a fixed take profit level. However, if you are entering trends on a short-term basis, you must be aware of strong pullbacks, which could jeopardize your open winning position.

You can further validate moves by looking for support from volume data. Volume on the breakout of yesterday’s high or low will support your move. You can also use moving averages to trade with the trend.

However, the downside of that is that you will need to be tuned in closely to your 30-minute charts. This method requires patience. Some days you will have to wait until later in the trading session for a breakout.

There are a vast number of techniques out there, including scalping strategies. Your task is to find a strategy that compliments your trading style.

DAX Tips

News

The DAX is a complex marketplace, where prices rise and fall in response to news events. Therefore, keeping up to date with the news is vital. Put simply, the latest news will help you make better price predictions.

You can find German DAX 40 live index news today, from a variety of sources. For example, you can get the index and news from Yahoo Finance. Bloomberg is another popular location to go to for DAX 40 forecasts and discussions. You can also find official DAX websites that will keep you up to date with opening and closing prices, plus economic events that may impact their indices. The best DAX brokers will also integrate this information within their platform interfaces.

Staying tuned into the news will allow you to maintain an edge over the market. You can react rapidly to terrorist incidents, political announcements, and any other events that will cause a shift in price.

Education

Peter Lynch pointed out, “All the math you need in the stock market you get in the fourth grade.” However, school is not over. Understanding the complexities of the DAX requires utilizing the range of resources around you.

To name just a few that you can use to supplement your DAX knowledge and enhance your trading performance:

• Books & ebooks – You can find books on every aspect of DAX trading, no matter how niche.
• PDFs – These can help you read DAX values, live quotes, and updates. You can learn how to tell which holdings are doing well and worth day trading.
• Charts & graphs – These will help you make predictions for today, tomorrow, and the future. Plus, learning to read charts in real time will aide with your technical and fundamental analysis.
• Forums & chatrooms – You can question experienced traders on everything from levels to watch to trading after hours. They can help you get to grips with pivots and quotations. Seeking a range of opinions can also help you achieve trading diversity.
• Online courses & video tutorials – Learn how to set up charts, screen stocks, and execute trades, from some of the most successful traders out there.

All of the above will help bolster your end of day profits. Traders that believe they already know it all, often find they get swallowed up by the markets and spat out broke. So, check your DAX 40 calendar and use the market opening hours and holidays to get market smart. Many leading DAX brokers offer integrated educational content, suitable for new and experienced investors.

DAX Automated Trading

Once you’ve ironed out any creases in your DAX strategy, why not consider brokers offering automated trading systems to increase your profits? These algorithms act like robots. Once you’ve programmed in your criteria, they will enter and execute trades on your behalf. This enables you to make far more trades than you ever would manually, increasing your overall potential profit.

Journals

It may seem time-consuming, but a DAX investment journal is an excellent way to monitor and improve your performance. You can even use a straightforward excel spreadsheet or make notes within your broker’s terminal, you just need to include the following information:

• Entry & exit position
• Purchase & sale date & time
• Price
• Reason for making the trade

With this data in front of you, you will find it far easier to identify flaws in your strategy. Those without an investing journal often go on far longer making expensive mistakes, before ascertaining where they went wrong.

Final Word On DAX Brokers

Germany’s DAX is one of the most influential stock market indexes in the world, and arguably the most important in Europe. It is used as a thermometer to measure both the German and global economies. It is also used by investors to gauge market sentiment. To succeed at day trading the DAX you will need an effective strategy, plus you need to utilize the range of resources and tips outlined above. Head to our list of the best brokers with access to the DAX 40 to start trading.

FAQs

How Can I Make The Most Profit When Trading The DAX?

There is unfortunately, no straightforward answer to secure profits when investing on the DAX. Look out for DAX brokers with a competitive fee structure as commissions can quickly erode profit margins. Also make use of educational content, demo profiles, investment journals and tools to strengthen your overall strategy.

When Is The Best Time To Trade The DAX With Major Brokers?

Regular trading of the DAX begins early at 7 AM. You may find the earlier the better when it comes to investing on the exchange at the top DAX brokers. This is when the biggest changes occur in the shortest amount of time. Many professional day traders will prioritize this period to make the most of the high volatility in prices.

How Can I Choose The Best DAX Brokers?

There are many factors to consider when choosing between DAX brokers. We recommend comparing fees, platforms, tradeable instruments, customer service and tools.

How Many Companies Are Listed On The DAX 100 Index?

100 companies make up to DAX 100 index. It represents the top 100 traded German stocks. It combines the 40 DAX equities and the top 60 of the MDAX equities listed on the Frankfurt Stock Exchange.

What Are The Biggest Players On The DAX?

Some of the biggest companies included on the DAX include Adidas, Volkswagen, Deutsche Bank, BMW and Allianz. Look out for DAX brokers that offer key financial metrics on these firms, including the latest publications and upcoming announcements.