Trading the DAX Index

The DAX (Deutscher Aktien Index) is composed of the 30 largest German companies that are traded on the Frankfurt Stock Exchange. Germany is the largest individual economy in Europe, making the DAX an influential European index to watch. Some of the companies listed on the DAX 30 are BMW, Siemens, Adidas and Deutsche Bank.

The 30 companies on the index make up 75% of the value on the Frankfurt Stock Exchange. The DAX is the most quoted index representing the German economy, and it is often compared to the Dow Jones Industrial Average of the U.S.

The DAX 30: What You Need to Know

  • The companies traded on the Frankfurt Stock Exchange represent over 80 different countries, and many of the market participants are companies based outside of Germany, making the index more responsive to global market influences.
  • The DAX is a capitalization-weighted index, meaning that the stocks are weighted according to the market value of all the outstanding shares. The companies are selected based on market capitalization and order book volume, and the components are reviewed every quarter.
  • Most of the companies on the German Stock index also trade in the U.S., and therefore serve as a good indicator of the trends in the U.S. markets. The European market session, because it precedes the North American openings, can often provide a good indication as to which way the U.S. markets will go.
  • The DAX, like any other market index, reacts to world events such as natural disasters, wars, political unrest, and economic news. Part of being a smart trader is keeping an eye on current events and predicting how the market will respond. It is important to follow economic data from Germany and the European Union, including unemployment rates, job creation, interest rates, GDP figures, and other economic benchmarks.

Anyone who wants to trade the DAX 30 Index should perform a careful analysis of market conditions before trading.

Trade DAX 30