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What Is the DAX?
Date Modified: 31/01/2024
The DAX (short for the Deutscher Aktien Index), is an index that currently includes the largest 40 blue-chip companies trading on the Frankfurt Stock Exchange (the FWB) and is sponsored by the Deutsche Börse Group. The FWB is the largest of Germany’s seven stock exchanges, and the 12th largest stock exchange in the world. On active trading days, the market is open from 09:00 to 17:30 CET. As of the third quarter of 2021, the DAX was expanded to include 40 companies.
The DAX was founded in 1988, and the base value of the index at that time was 1,163. The performance of the DAX is a representative reflection of the Frankfurt Stock Exchange’s overall status in real-time. Until the introduction of the DAX, there was no standard index of German stocks. Instead, there were several independent listings run by banks or media outlets.
The index has since gained popularity and is now one of the most traded indices in the world, alongside the FTSE (UK 100), the Dow Jones Industrial Average- DJIA (USA30-Wall Street), and other similar indices.
Illustrative prices.
How is the DAX calculated?
The DAX is calculated by free-floating market capitalisation. This means that only shares that are available for trading are counted towards each company’s market cap. The Deutsche Börse Group has operated the low-latency, fully electronic Xetra trading venue to determine DAX pricing since 2006. Xetra has used the T7 trading architecture since 2017 to provide the stability and availability required to run Germany’s largest cash market. Xetra is operated by the Frankfurt Stock Exchange and includes 200 trading participants from 16 European countries, as well as Hong Kong, and the United Arab Emirates.
The Xetra system calculates the DAX price every second, making the index extremely accurate. The calculation is weighted by using only the free-floating, or liquid, shares of the companies that are included in the index. This methodology means that any shares that are not available for purchase or sale in the market, such as those held by the company itself, are not counted.
Several of the member corporations are large and multinational and their performance is affected by Germany and the global economy. The index constituents now make up 80% of the market capitalisation of all publicly-traded German companies.
The Frankfurt Stock Exchange has created two versions of the DAX, a performance index and a price index. The performance index is most commonly quoted. However, the price index is the index that resembles commonly quoted indexes in other countries, such as the S&P 500 and the FTSE 100 (UK 100). In the DAX performance index, corporate distributions such as dividends, capital gains, and cash payments are calculated as part of the share price. In the DAX price index, these disbursements are not taken into account.
Can I trade the DAX as an instrument?
While you cannot trade the DAX directly on the Plus500 platform, you can trade CFD futures contracts that are based on the DAX index. You can open a buy position if you believe the DAX is heading up, or open a sell position if you feel the index will take a downturn. Another way to trade the DAX is through options trading. Traders can also place Buy/Sell orders on Options CFD (Call and Put).* Opening a position on the DAX also exposes you to potential losses if the trade goes against you.
Who is responsible for the DAX?
The DAX is operated by the Deutsche Börse Group, which organizes marketplaces for the trading of shares and securities, and also runs the Frankfurt Stock Exchange. The Deutsche Börse Group also runs an index for medium-sized German companies called the MDAX, as well as an index for smaller German companies called the SDAX.
*Instruments availability subject to regulation.
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Germany 40 FAQ
Germany 40 index futures CFD, which is based on the DAX index futures, tracks the 40 largest companies with the highest trading volume on the Frankfurt Stock Exchange. It is considered a highly popular financial instrument among day traders.
Germany 40 is a capitalisation-weighted index, meaning its value is determined by summing up the components of the index based on the market capitalisation of their freely tradable shares, and then dividing that figure by the total number of companies. As a result, large-size companies in the index have a higher impact on the price then small-size companies.
The price of the Germany 40 futures contract can be influenced by numerous factors relating to Germany’s economic stability - ranging from its GDP growth rate and government revenues, to changes in interest, inflation and unemployment rates. Furthermore, macroeconomic events and changes in trade agreements, at both regional and global levels, tend to move the Germany 40 index, which represents one of Europe’s biggest and most influential economies.
You can find live updates on the instrument’s Details screen regarding economic events and reports that may affect Germany 40.
Europe’s leading stock market indices are open for trading from Monday to Friday. Below are their usual opening and closing times in UTC:
- Germany 40, Europe 50, France 40, Italy 40, Spain 35, Swiss 20 – Open at 07:00; Close at 21:001.
- UK 100 – Opens at 01:00; Closes at 21:001.
1 These hours may change from time to time depending on the underlying stock exchanges.
Here are 7 steps to start trading Germany 40 CFDs with Plus500:
- If you don’t already have a Plus500 account, open a Trading Account Here.
- Complete your account registration, documents verification and deposit funds.
- Search for Germany 40 under the ‘Indices’ category or in the search bar.
* You can add Germany 40 to your Watchlists, by clicking the Watchlists star on the instrument’s info screen. - Check for live and historic prices of Germany 40 with Plus500's advanced charting tools.
- Check the Economic Calendar for events that may cause price movements in Germany 40.
- Consider placing stop orders: you can define in advance the profit you would be happy with and/or the level at which you would like to close out the position should the trend turn against you.
- Open a trade on Germany 40 according to the direction you think it will move: ‘Buy’ if you believe it will rise in the future; ‘Sell’ if you believe it will fall.