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