A Deep Dive into the DAX 30 Index

What is the DAX 30 index, how exactly does it work, and how can you apply it to forex?

After Covering the Nasdaq and the S&P 500, we move on to European markets.

History of DAX 30

The DAX 30 was established at the beginning of the 1980’s but it was officially published on July 1, 1988, with a value of 1,163.52 points.

The purpose was to have a stock market index for the financial center of Germany.

A few interesting points:

• 17 companies are still in the index since it was established until today.
• October 1989 – The DAX 30 lost 13% after the fall of the Berlin Wall.
• 7 March 2000 – The DAX 30 reached its highest level – 8,136 points.

 

What is DAX 30

Founded in 1988, the DAX (Deutscher Aktienindex) consists of the 30 largest German companies trading on the frankfurt stock exchange.

The market is traded on the Frankfurt Stock Exchange with prices derived from the Xetra trading place.

There are currently two versions of the DAX:

The performance index and the price index.

The performance index is more commonly quoted because it is a measure of total return, whereas the price index is closer in comparison to regularly quoted indexes from around the world. 

The performance of the 30 companies listed on the DAX is computed by order book volume and market capitalization. In this way, it is essentially the German equivalent of the Dow Jones Industrial Average.

This is also why it is not considered an accurate barometer for the economy in its entirety. 

Today the DAX 30 index has a market cap of 971.8 billion EUROS, large for the European market but dwarfed by its American predecessors. 

 

How is The DAX Index Calculated?

In order to be part of the DAX 30 index, a company must trade at least 15% of its market cap publicly and be listed for at least three years.

The DAX index is capitalization-weighted, that’s means that firms with bigger market caps will have a higher influence on the DAX’s share price.

Companies on the German DAX 30 are examined quarterly – they are removed or added based on the size of their order book and their market cap.

Principles for DAX 30 Calculation:

▪ The indices try to best represent the performance of the target market.
▪ The components of the german stock index are tradable relative to the size of the firms and the target market.
▪ The performance of indices can be tracked by an actual portfolio.
▪ A high degree of continuity of the index.
▪ Index calculation and changes must follow transparent rules.

 

How Does the DAX 30 Works

Unlike many other indices, the DAX germany 30 Index keeps updating futures prices even once the exchange has been closed.

Regular review dates are still maintained to capture changes in the market and if a company underperforms and falls below a ranking of 45, they can be removed from the index.

A well-performing company can likewise be added if they break through the top 25 companies. 

 

 

 

The Companies

Currently, the top 30 countries indexed on the exchange are:

Covestro AG (1COV: GR)

adidas AG (ADS: GR)

Allianz SE (ALV: GR)

BASF SE (BAS: GR)

Bayer AG (BAYN: GR)

Beiersdorf AG (BEI: GR)

Bayerische Motoren Werke AG (BMW: GR)

Continental AG (CON: GR)

Daimler AG (DAI: GR)

Deutsche Boerse AG (DB1: GR)

Deutsche Bank AG (DBK: GR)

Deutsche Post AG (DPW: GR)

Deutsche Telekom AG (DTE: GR)

E.ON SE (EOAN: GR)

Fresenius Medical Care AG & Co KGaA (FME: GR)

Fresenius SE & Co KGaA (FRE: GR)

HeidelbergCement AG (HEI: GR)

Henkel AG & Co KGaA (HEN3: GR)

Infineon Technologies AG(IFX: GR)

Deutsche Lufthansa AG (LHA: GR)

Linde PLC (LIN: GR)

Merck KGaA (MRK: GR)

MTU Aero Engines AG (MTX: GR)

Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen(MUV2: GR)

RWE AG (RWE: GR)

SAP SE (SAP: GR)

Siemens AG (SIE: GR)

Vonovia SE (VNA: GR)

Volkswagen AG (VOW3: GR)

Wirecard AG (WDI: GR)

 

Advantages of Trading The DAX Index

Dax 30 has quite a few advantages when it comes to trading:

• The DAX is a favorable place to trade because it offers traders a very high level of liquidity, tight spreads, and long hours with which to access the market. The market is open from 9 am GMT to 5:45 pm GMT. Even after the closing bell, most providers will offer pre and post-market indications. This is very handy when trying to gauge where the market might open. 
• Another great reason to trade the DAX is that it is notorious for having easily spottable trends. Traders around the world generally find these patterns to be clean regardless of timeframes. This makes the DAX a great market to follow in order to gain or hedge exposure to equities.
• DAX30 has a high reputation and stability. Therefore, many traders and investors trade in it and are not afraid to lose their money because of the credibility of the companies that are in it.
• Most companies on DAX30 are also registered on the US Stock Exchanges. you can determine the behavior of the stock on the Dax markets.
• With DAX30 you’ll have a Diversification Portfolio.
  DAX 30 companies cover a variety of industries, so it will lower your portfolio risk, from BMW, Adidas to Bayer.
• For investors, buying and holding the DAX index for the long term is a safer and affordable strategy.
• Germany is one of the top world economies and the main economic heavyweight in the Eurozone, Germany is more resilient to political, economic or social disruptions that might happen.
• Investors like to follow both Forex and DAX30 to make the best of trades decisions.

 

 

Incorporating the DAX into Your Trading Routine

Like all other indices or indicators, the DAX makes up only a portion of the available information. The index, combined with other resources can give you a holistic view of the markets and the directions they’re heading in. Take all of these resources into consideration together in order to have the best view of where your money is and might be headed to.

Here’s How The DAX30 Index Is Looking:

Dax 30 Index Summary

After analyzing the Dax in-depth you realize that there are quite a few advantages to trading the Dax and it is very important to follow it. The Dax is basically suitable for all types of traders, whether it is long-term, short-term or forex traders.

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