You can leverage the power of the DAX by trading Germany 40 ETFs, individual shares, or
directly trading the index's value.
Ways to Trade the DAX
There are several ways to gain exposure to the DAX with us. You can:
Trade the DAX Directly with a derivative product
Trade in DAX ETFs
Trade in DAX-listed Shares
With most borkers, you'' trade on the DAX using CFDs, which are financial derivatives. This means you won't own the underlying assets, such as stocks in a DAX-listed company. Instead, you'll speculate on the price movements of the underlying asset, either the DAX index itself or the prices of DAX companies' shares or ETFs.
Understanding Financial Derivatives
Financial derivatives are leveraged, meaning you don't pay the entire value of your position upfront. Instead, you pay an initial deposit, called margin, to open your trade. Because both profits and losses of leveraged trades are calculated based on the full position size, rather than your deposit amount, you can earn or lose far more than the initial margin.
Learn More About CFDs
Remember, all trading carries risk, so ensure you understand the risks involved and whether you can afford potential losses. Here are the ways you can take advantage of the German premiere index.
Trade the DAX Directly
Speculate on Germany’s Largest Companies: Some of the most popular in Europe from a single position.
Use CFDs: This derivative trading product allows you to trade the DAX directly.
High Liquidity: Gain exposure to the DAX in a market with high liquidity.
Flexible Positions: Go ‘long’ if you expect the price to rise or ‘short’ if you anticipate a fall.
Commission-Free: Trade commission-free with CFDs, excluding share CFDs, as charges are included in the spread.
Extended Trading Hours: Trade almost 24/7
Trade in DAX ETFs
Broad Exposure: Gain broad exposure to the DAX index with ETFs.
Speculative Trading: Use CFDs to speculate on DAX ETF price movements without owning the underlying asset.
Flexible Strategies: Go long or short but note that this offers lower liquidity and higher spreads than trading the index directly via CFDs.
ETF Price Movements: Trade on the price of the ETF, calculated using the fund’s net asset value (NAV).
Trade DAX Shares
Target Specific Stocks: Focus on specific stocks included in the DAX, like Volkswagen, Allianz, and Adidas, without trading the entire index.
Trading Methods Comparison
Trading Method | Direct DAX Trading | DAX ETF Trading | DAX Shares Trading |
Market Hours | Market hours for Direct DAX Trading vary, but are mostly 23/5. | If German-listed, when the Frankfurt Stock Exchange is open – 4 pm to 12:30 am, Monday to Thursday, and 4 pm on Friday to 12:30 am on Saturday (UTC+8). | When the Frankfurt Stock Exchange is open – 4 pm to 12:30 am, Monday to Thursday, and 4 pm on Friday to 12:30 am on Saturday (UTC+8). |
Timeframe | Short to medium term. | Short to medium term. | Short to medium term. |
Liquidity and Execution | Deep liquidity and fast execution | Lower liquidity compared to trading the index directly. | Lower liquidity compared to trading the index directly. |
Costs | Commission-free. Trading the DAX on the spot (cash) incurs overnight fees | CFD cash (spot) ETF trades incur overnight fees and often have a minimum commission | CFD cash (spot) trading incurs overnight fees and often have minimum commission |
Starting Your DAX Trading Journey
Join our community: You can begin trading the DAX by joining our community and going through the introduction to financial markets and trading.
Open an demo account with one of our verified brokers: having a trusted broker to trade the DAX with is of utmost importance. That's why we've handpicked two brokers which we have vetted and tested
Learn What Moves the DAX's Price: Key factors influencing the DAX's price include:
Earnings Reports: Changes in valuations and results of DAX constituents, as well as significant news releases in their latest earnings reports.
Economic Events: Such as the economic fallout during the Covid-19 pandemic.
News Releases: High-profile news releases can trigger volatility in the market.
Exchange Rates: Fluctuations in exchange rates can affect the DAX's price, especially for companies earning substantial income internationally.
Global Market moves
Hone Your DAX Trading Strategy:
Refine your trading strategy by:
Deciding on a Trading Style: Choose from scalping, day trading, swing trading, or position trading based on your preferred trading frequency and duration.
Studying Charts and Price Action: Use daily and weekly charts to gauge market sentiment and recognize patterns.
Utilizing Technical Analysis and Indicators: Identify signals and trends using technical analysis and trading indicators.
Looking for Trading Signals: Confirm trading signals with momentum indicators like the stochastic oscillator or relative strength index (RSI).
Staying Informed: Keep up with news and the economic calendar to make informed trading decisions.
Setting Trading Alerts: Use trading alerts to be notified of specific market conditions for the Germany 40 price.
You can learn do to all of this by joining our trading community
Additional Information on the DAX:
The DAX index is calculated by weighing its 40 listed stocks by market capitalization. Bigger companies like Bayer, Adidas, or Volkswagen, with higher market capitalizations, have a larger effect on the index’s overall price. Most of these companies' individual stock prices are automatically calculated by Xetra, an electronic trading system.
FAQs
What is the DAX?
The DAX is an index of Germany’s 40 largest companies by market capitalization, listed on the Frankfurt Stock Exchange. It is a popular way to gain exposure to the European stock market and track Germany’s economic health.
What are the ways you can trade the DAX?
Trading the DAX directly (called the Germany 40 index).
Trading in DAX ETFs.
Trading in DAX shares. When trading the DAX, you’ll use CFDs to speculate on price movements of the index, ETFs, or shares.
What should you know before trading the DAX?
Before trading the DAX, ensure you understand how the index works and conduct thorough research.
How do companies get onto the DAX?
To be listed on the DAX, a company must be one of the top 40 by market capitalization on the Frankfurt Stock Exchange. Significant drops in market capitalization can result in a company losing its DAX listing.
Conclusion
By understanding the various methods of trading the DAX and leveraging CFDs, you can effectively gain exposure to Germany’s top companies. Whether you choose to trade directly on the DAX, through ETFs, or individual shares, having a well-defined trading plan and risk management strategy is essential for success. Always stay informed about the factors influencing the DAX's price and continuously refine your trading strategy for the best results.