Day Trading in Germany

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Written By
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Written By
Christian Harris
Christian is a seasoned journalist with decades of experience. He transitioned from tech journalism to finance to follow his interest in investing. He has been trading stocks, futures, forex, and cryptocurrencies for more than 5 years, becoming an eToro Popular Investor. With hands-on expertise across various assets, he offers valuable trading insights.
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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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Michael MacKenzie
Michael is a writer and editor with over a decade in journalism and publishing. His niche lies in editing and fact-checking content in the financial services sector, with a focus on online brokers and trading platforms. Michael previously reported on politics and economics in the Middle East and edits books for established publishers.
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As the fourth-largest economy in the world, Germany’s reliable financial markets are a prominent hub for day traders, offering a sense of security. Furthermore, the Frankfurt Stock Exchange (FSE) is one of the world’s largest trading venues, handling millions of daily transactions.

This guide will equip you with the fundamentals of day trading in Germany, from tax and regulatory considerations to an example trade on a prominent German security.

Quick Introduction

  • Day trading in Germany is regulated by the Federal Financial Supervisory Authority (BaFin), a ‘green-tier’ financial body that provides excellent safeguards for German traders.
  • The FSE is one of the world’s largest and most important trading centers for stocks, making it an attractive venue for day traders seeking quick execution and minimal price slippage.
  • German law applies capital gains tax to day trading profits. This tax features a flat rate of 25%, with an additional solidarity surcharge of 5.5% levied on the total tax amount.

Top 4 Brokers in Germany

Our latest tests show these 4 trading platforms are a cut above the rest for active traders in Germany:

Click a broker for details
  1. 1
    Eightcap

    Ratings
    4.3 / 5
    4 / 5
    3.6 / 5
    3.8 / 5
    4.3 / 5
    4 / 5
    3.5 / 5
    3 / 5
    4.8 / 5
    4.4 / 5

    $100
    0.01 Lots
    1:30
    ASIC, FCA, CySEC, SCB, CNMV
    CFDs, Forex, Stocks, Indices, Commodities, Crypto
    MT4, MT5, TradingView
    Neteller, Skrill, Visa, UnionPay, Credit Card, Debit Card, Bitcoin Payments, Wire Transfer, FasaPay, BPAY, PayPal, Dragonpay, PIX Payment
    USD, EUR, GBP, CAD, AUD, NZD, SGD
  2. 2
    AvaTrade
    79% of retail accounts lose money with this provider.

    Ratings
    4.8 / 5
    4.3 / 5
    4.5 / 5
    3.8 / 5
    4.3 / 5
    4.3 / 5
    4.3 / 5
    4.5 / 5
    4.3 / 5
    4 / 5

    $100
    0.01 Lots
    1:30 (Retail) 1:400 (Pro)
    ASIC, CySEC, FSCA, ISA, CBI, FSA, FSRA, BVI, ADGM
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Bonds, Crypto, Spread Betting, Futures
    WebTrader, AvaTradeGO, AvaOptions, AvaFutures, MT4, MT5, AlgoTrader, TradingCentral, DupliTrade
    Skrill, Wire Transfer, FasaPay, Mastercard, Perfect Money, Swift, MoneyGram, Credit Card, WebMoney, JCB Card, Debit Card, Neteller, Boleto
    USD, EUR, GBP, CAD, AUD
  3. 3
    Deriv.com

    Ratings
    3.5 / 5
    4.5 / 5
    4.5 / 5
    4 / 5
    4 / 5
    4.1 / 5
    2.5 / 5
    3 / 5
    4.2 / 5
    4.5 / 5

    $5
    0.01 Lots
    1:1000
    MFSA, LFSA, VFSC, BFSC
    CFDs, Multipliers, Forex, Stocks, Indices, Commodities
    Deriv Trader, MT5
    Neteller, Visa, Skrill, WebMoney, FasaPay, Perfect Money, Diners Club, Banxa, Paytrust, Wire Transfer, Mastercard, Credit Card, JCB Card, Sticpay, Trustly, Volet, Paysafecard, AstroPay, Maestro, Airtm, Boleto, JetonCash
    USD, EUR, GBP, AUD
  4. 4
    Pepperstone
    CFDs and FX are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs.

    Ratings
    4.6 / 5
    4 / 5
    3.8 / 5
    4.4 / 5
    4.4 / 5
    4.6 / 5
    4.3 / 5
    4 / 5
    4.4 / 5
    4.1 / 5

    $0
    0.01 Lots
    1:30 (Retail), 1:500 (Pro)
    FCA, ASIC, CySEC, DFSA, CMA, BaFin, SCB
    CFDs, Forex, Currency Indices, Stocks, Indices, Commodities, ETFs, Crypto, Spread Betting
    MT4, MT5, cTrader, TradingView, AutoChartist, DupliTrade
    Visa, Mastercard, Credit Card, Debit Card, PayPal, Wire Transfer, POLi, UnionPay, BPAY, Neteller, Skrill
    USD, EUR, GBP, CAD, AUD, NZD, JPY, CHF, HKD, SGD

All Day Trading Platforms in Germany

What Is Day Trading In Germany?

In Germany, day trading involves actively buying and selling various financial instruments throughout the trading day to profit from short-term price fluctuations.

These instruments can include CFDs (contracts for difference) on stocks like those listed on the FSE (e.g., SAP), forex (e.g., EUR/USD), and commodities (e.g., copper), reflecting Germany’s role as a dominant manufacturer in cars, boats, and electronic products.

The DAX 40 index, with its composition of prominent German companies, also presents a fertile ground for day traders seeking short-term opportunities with companies including Siemens, Deutsche Telekom, and Allianz.

As a barometer for the German stock market and to some degree, the wider German economy, the DAX and its constituent stocks may be an attractive starting point for aspiring German traders.
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Christian Harris
Author

Germany allows day trading, regulated by the financial authority BaFin.

The body, in line with ESMA, mandates numerous rules, with those of particular note for day traders including setting leverage limits to protect against massive losses. Leverage allows you to control large positions with less capital, but it amplifies both profits and losses.

To safeguard retail traders, BaFin restricts leverage on major currency pairs (e.g., EUR/JPY) to 1:30, 1:5 for stocks (e.g., Mercedes-Benz), and 1:20 for indices (e.g., DAX 40) and commodities (e.g., copper).

Additionally, the implementation of negative balance protection in Germany ensures that your losses do not exceed your initial investment, providing a sense of safety.

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Germany does not have a pattern day trader rule, reducing the entry barrier, while the US requires a minimum equity of $25,000 in your account to engage in day trading. However, you are subject to general regulations and the European Markets in Financial Instruments Directive II (MiFID II).

How To Start Day Trading In Germany

Day trading in Germany involves several steps:

  1. Your first step in German day trading is choosing a suitable broker. We recommend looking for a BaFin-regulated broker or one authorized under the EU’s passporting regime, ensuring compliance with German financial regulations.
  2. After selecting a top day trading broker in Germany, the next step is opening an account. The usually involves verifying your identity with documents like a German National ID Card and proof of address. You’ll also likely need to submit financial information. Once approved, you can fund your account using methods your broker accepts, such as wire transfer, credit card, or digital solutions like German-based Sofort.
  3. Select your trading instruments. Popular options in Germany include stocks listed on major exchanges like the FSE (e.g., Deutsche Bank, Porsche, BASF) and currency pairs like EUR/GBP and EUR/USD, given that Germany is the Eurozone’s largest economy whose activities can heavily influence the value of the Euro.

A Day Trade in Action

To help you understand how day trading in Germany works in practice, here is a scenario demonstrating a short-term trading strategy for the German software company SAP.

Event Background

Earnings reports are crucial to day traders, including those trading SAP stock, because they provide immediate insights into the financial health and performance of the company.

SAP was ready to release its Q1 financial results. I decided to look for an opportunity to trade this earnings report because SAP is one of the world’s most valuable companies by market cap, and earnings reports often lead to significant price movements based on whether the results meet, exceed, or fall short of market expectations.

Data Analysis

SAP announced its earnings report after the markets closed, unveiling a robust performance driven by significant growth in its cloud services segment.

The report exceeded market expectations with a 24% increase in cloud revenue, showcasing strong resilience amidst economic challenges. This positive news triggered a bullish sentiment in SAP’s stock during pre-market trading the following day.

Day trading analysis on German stock SAP
TradingView – SAP Charting Analysis

Trade Entry

SAP’s pre-market price climbed from the previous day’s close of €167.33 to €170.39 (1.83% increase). Based on the favorable financial results, I decided to enter a long (buy) position at the market open and hold the trade open until the end of the day’s trading session.

I entered a long position at €170.42, anticipating further upward movement as market participants reacted positively to the earnings report. I also placed a stop-loss at the previous day’s close (€166.85) to lock in downside risk (-2.09%).

Trade Exit

SAP’s price was choppy throughout the trading session but continued its upward trajectory, peaking at €173.80 by midday. I continued to monitor trading volume and price action to confirm sustained buying interest.

Profit-taking activities became apparent in the afternoon, stabilizing the SAP stock price. However, to capitalize on potential volatility towards the end of the day, I closed the position at €175.41, resulting in a return on investment of 2.93%.

How Is Day Trading Taxed In Germany?

In Germany, day trading profits are taxed under the capital gains tax system, known as Abgeltungsteuer. This flat tax applies a rate of 25%, with an additional solidarity surcharge of 5.5% on the tax itself.

Losses incurred from online trading can offset these capital gains taxes. Any remaining net losses can be carried forward to future tax years to reduce your tax burden.

German regulations require you to report and pay taxes on your trading profits to the Federal Central Tax Office.

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Maintaining meticulous records of your day trading activity is crucial to ensuring smooth tax filing, with the tax year in Germany running from 1 January to 31 December and returns by self-filers due on 31 July.

Bottom Line

Germany’s well-regulated and dynamic markets offer an exciting environment for day traders, with the potential for profit from short-term opportunities, instilling a sense of optimism.

By equipping yourself with a thorough understanding of market regulations and sector-specific trends, you can navigate the German trading landscape.

Additionally, leveraging the capabilities of the best day trading platforms in Germany can empower you to capitalize on these fleeting price movements and achieve your financial objectives.

Article Sources

The writing and editorial team at DayTrading.com use credible sources to support their work. These include government agencies, white papers, research institutes, and engagement with industry professionals. Content is written free from bias and is fact-checked where appropriate. Learn more about why you can trust DayTrading.com