The DAX 30 (Deutscher Aktien indeX) is formed of the thirty 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 is regarded amongst the most important indices for European investors. This page will break down how the DAX works, detailing its purpose and implications. It will then walk you through how to start day trading on the DAX, including, signals, trading hours, analysis, and strategy, as well as offering invaluable top tips.
- What Is The DAX 30?
- What Is The DAX Used For?
- Live DAX Price Chart
- What You Need To Know
- DAX 30 Changes
- DAX Performance
- Big Players
- DAX 100
- DAX Futures
- Why Trade The Dax?
- How To Start Day Trading The DAX
- DAX Day Trading Strategies
- DAX Tips
- Final Word
What Is The DAX 30?
Before you start day trading on the DAX, 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 30 is relatively young. It was created in 1988 with a base index value of 1,000.
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 30 companies listed by market capitalisation 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 weekdays.
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 30 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 30 measures company performance in terms of order book volume and market capitalisation. They calculate the index weightings, plus the average trading volume using a free-float methodology.
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?
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 towards German equities.
It also remains a crucial index for international investors to keep an eye on. This is evidenced by the fact that approximately 75% of sales generated by DAX 30 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 30 also trade in the US. This means the index serves as a good indicator for 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.
From real-time charts, the DAX 30 is also used by individuals to generate substantial earnings. Thousands head online each day in an attempt to profit from short-term price fluctuations.
Live DAX Price Chart
What You Need To Know
- The distinguishing characteristic of the DAX 30 is that it is calculated as a performance index.
- Unlike other indices, the DAX 30 includes dividends in its calculations, therefore the return reported is the total return.
- All the DAX 30 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 30 listed companies, the top five (Bayer, BASF, Siemens, SAP, and Allianz), make up around 43% of the entire index. So, despite best efforts, the constituents weighting is still relatively unbalanced. This means it is vital you check the performance of individual companies 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 30 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 30 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).
To be included as one of the DAX 30 index components, 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.
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 September.
Looking down the DAX 30 stocks list for daily volume, you can see many of the constituents have benefited from globalisation, 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.
Below some of the most famous and far-reaching of the 30 members have been listed, including the big 4 of the DAX 30.
- 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, specialising 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 vechicles driven on every continent.
As you can see from above, sector weights in the automotive industry tip the scale significantly.
Another one of the important DAX indices is the DAX 100 (Deutscher Aktienindex 100). The composition is straightforward. It represents the top 100 traded German stocks. It combines the 30 DAX equities and the 70 MDAX equities listed on the Frankfurt Stock Exchange.
It’s 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 30.
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 30, 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 30 – 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 thirty largest issues from the technology sectors with the highest liquidity.
An increasing number of people are moving away from traditional stocks. Instead, they want to trade DAX bitcoin, forex, CFDs, plus futures and options. DAX futures are offered by the Eurex exchange. This is a specific exchange that specialises 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 dollar.
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 Day Trading with the DAX is for you, below are a couple of very good reasons.
- Volatility – Volatility promises attractive price movements. Quite simply, bigger moves and higher daily ranges offers the savvy day trader plenty of opportunity to yield substantial DAX 30 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, means you could potentially double your returns in 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. However, you can also purchase individual components found in the index.
Before a discussion about day trading DAX strategy and signals, there are a couple of straightforward steps you will need to follow first.
1. Choose A Broker
Your broker will be your gateway to the DAX market. They will facilitate your trades and perhaps even finance some of your DAX 30 activity via margin. You will spend numerous hours on their platform a day, so doing your homework to make the right investment is essential for your bottom line.
However, with so many options out there, how do you know what to look for? Below some of the most important factors have been outlined.
- Cost – 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, do they offer competitive prices that will enable you to hold onto your hard-earned cash? Are their DAX 30 prices laid out in a transparent format, free from hidden costs?
- Platform – You want a straightforward to navigate and reliable trading platform. Will it have the DAX graphs and tools you need for technical analysis? Do they offer a reliable platform like Metatrader 4 (MT4)? Do they have all the historical data and price charts your strategy requires? Can they guarantee fast execution speeds? In day trading, every second count.
- Customer service – You don’t want to be sat losing money for hours because of a glitch on your platform. Check reviews to ensure if you have any problems, they will be remedied swiftly. Some brokers offer 24/7 support, in numerous languages.
2. Choose A Security
The DAX is a highly competitive marketplace. That means it is imperative you choose the right security. So, when you conduct your chart analysis, you must 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 is concerned simply with the total number of shares traded within a specific time period. So, if fifty transactions are made today, the daily volume will be fifty. 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.
Another important factor to consider when you’re analysing your DAX 30 stock chart is Volatiality. 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.
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 30 price charts and potential securities for the day. Your bottom line will thank you for it.
DAX Day Trading Strategies
Even with the best broker 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 price remains within these levels.
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 where there are zero trades to make.
High/Low – Buy/Sell Trend Strategy
One 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 jeopardise 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.
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 30 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 30 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.
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.
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 utilising 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 aid with your 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 30 calendar and use the trading holidays to get market smart.
DAX Automated Trading
Once you’ve ironed out any creases in your DAX day trading strategy, why not consider using automated trading systems to increase your profits? These algorithms act like day trading 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.
It may seem time-consuming, but a DAX trading journal is an excellent way to monitor and improve your trading performance. You can use a straightforward excel spreadsheet, you just need to note the following information:
- Entry & exit position
- Purchase & sale date & time
- 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 a trading journal often go on far longer making expensive mistakes, before ascertaining where they went wrong.
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.
Vincent Nyagaka is a Professional Trader, Analyst &. He has been actively engaged in market analysis for the past 7 years. He has a monthly readership of 100,000+ traders and has taught over 1,000 students since 2014. Vincent is also an experienced instructor and public speaker. Checkout Vincent’s Professional Trading Course here.