What's DAX 30? A Trader's Guide to the DAX

The DAX 30 is really a major stock market index tracking the greatest German companies trading on the Frankfurt Stock Exchange and is really a strong measure of German and European economic health. Keep reading to understand what the DAX 30 represents, its history, how it's calculated, and why it's a popular asset to trade.

WHAT IS THE DAX 30 INDEX?

The DAX 30 is an index comprising the 30 biggest companies, by market capitalization and liquidity, trading on the Frankfurt Stock Exchange (FSE). Previously known as the Deutscher Aktien Index 30 and today operating whilst the Deutscher Aktien Xchange 30, the DAX index began with a foundation value of 1,000 in 1988. Since 2006, the all-electronic Xetra system has calculated the Dax price every single second.

The DAX 30 is usually reported as a performance-based index. What this means is companies'dividends, capital gains and cash disbursements are put into the internet stock price, in place of an amount index where in fact the corporate distributions remain disregarded (this is visible, as an example, in Euro Stoxx 50). The counterparts of the Dax30 in Europe will be the CAC 40 in France and the FTSE 100 in the UK.

HOW IS THE DAX INDEX CALCULATED?

The Dax index is calculated using ‘free-float methodology ', meaning it takes merely into consideration the amount of readily-available shares and disregards the shares that cannot be bought and sold, such as for example those held by governments.

Just like other major stock indices, the Dax 30 is weighted by market capitalization, meaning the businesses higher up in the index will have a greater influence on its overall price. However, the most weight a listed company may be assigned is 10%.

WHAT AFFECTS THE PRICE OF THE DAX 30?

The Dax price may be affected by a number of factors, including trade wars, currency wars, the Euro exchange rate, socio-political circumstances such as for example Brexit and knock-on effects from other markets. Company weightings in the index can also have a profound impact on the worthiness of the Dax index.

ADVANTAGES OF TRADING THE DAX 30

The DAX 30 provides a higher level of liquidity, long trading hours (the Frankfurt Stock Exchange trades from 9am to 5:45pm) and tight trading spreads. Many traders get the DAX to be a market with trends that are easy to identify, which explains its popularity. Also, it gives clean technical patterns across a selection of timeframes, providing a great opportunity to achieve or hedge exposure to equities.

HOW TO TRADE DAX 30

The DAX 30 may be traded through DAX futures and options, and exchange-traded funds (ETFs). DailyFX also offers more technical advice on how to trade DAX 30, considering strategies, expert tips and trading hours.