DAX 30 - A Report Brought to You by Q8 Trade
The DAX is an index that measures the strength of the 30 largest German companies listed on the Frankfurt Stock Exchange (Börse Frankfurt). The DAX was initially known as the Aktienindex.
Trading started on it on the 30th of December of 2007 with a total value of about 1,000 points and the 30 companies reflect the strength and activity of the German economy through the main index in the German stock markets as they reflect an estimated value of about 75% of the trading performance on the German stock exchange.
Now get this:
In Frankfurt, this is a high percentage that reflects the importance of this indicator for the German market in particular as well as for European stock markets in general.
And you know what?
This index is considered as one of the most important European indicators after the main FTSE index.
This indicator is also considered as one of the most vital indicators in European stock markets as it contributes to the movement, strength and activity of European companies shares in general in addition to German companies in particular.
Here’s a trivia:
The DAX 30 is the abbreviation of the DeutscherAktien Index, the German stock index.
It is a leading indicator in the German stock market and closely resembles the Dow Jones Industrial Average in the United States of America.
It is worth noting that:
The DAX is one of the most important indicators closely monitored and followed by traders due to the fact that Germany is one of the largest economies in the Euro area and therefore, the index reflects the general state of the region during a specific time period.
The most prominent companies listed on the DAX index
All companies included in this indicator represent the largest companies in terms of market capitalization in addition to their activity through trading in stock markets as these companies do not specialize in a specific sector but the arrangement includes the largest 30 companies in all different sectors including the major industrial companies.
The auto industry which is represented by BMW and Mercedes-Benz, are classified among the global companies and Germany is one of the most important countries in the auto industry.
The DAX index includes some companies such as Siemens International which often score the highest percentage through this indicator in addition to Adidas and other famous companies and major banks such as Commerzbank and Deutsche Bank.
To top it off…
The companies listed in the DAX index are of great importance in the global economy as the statistics indicated that a high percentage of sales that are traded through companies listed in this index are acquired abroad.
So what’s the point?
The DAX is one of the most viewed indicators by international investors!
What are the main features of the DAX?
The DAX index is distinguished by the fact that it reflects the activity of the largest German companies.
What it means is this:
The difference is an important advantage added to the activity of this indicator as it is unlike other indicators that are limited to a specific sector.
The DAX 30 index is a general indicator that reflects activity in more than 4 sectors.
The value of the DAX 30 index is calculated like any other indicator where the average indicators for the 30 companies are taken and relatively calculated based on the size of the company and the value of its capital.
What is the price-earnings ratio through the DAX?
The price-earnings ratio is essentially the number of years that are required from profit until payment is made.
Here’s an example:
A company with a price-earnings ratio of 14 means that it will take 14 years of profits to repay it.
It should be remembered that:
Profits are equal to the amount the company earns in a year.
So, the higher the PE price, the higher the stock price and as for recessions, PE can drop to less than 10.
Why trade the DAX 30 index?
Because the primary asset in the index is the stock price of the listed companies’ shares. Shares are just the value of any other security that represents an ownership interest in the company, regardless of whether the company is public or private.
It should also be borne in mind that the Forex market is significantly and strongly related to stocks, and that both stocks and Forex can be linked in a number of different ways.
First, economies with a strong manufacturing and export sector, for example (Japan and Germany), can face the strength or weakness of the currency. Investment preferences are largely related to trading in long-term deals, which are usually held for at least one year, which in turn in most countries leads to a decrease in the value of capital gains tax fees, according to the “acquisition and retention strategy”.
Second: Regarding short-term trading, whether trading it during the day or during the week, the most traded indices are the Nikkei, FTSE, Dow Jones, DAX, NASDAQ and S&P 500 indexes. This is largely due to the good volatility and volumes Strong trading, low spreads as well as extensive media coverage in these markets that allow them to make informed trading decisions.
The DAX 30 is definitely one of the most popular among them, as traders tend to use “scalping” strategies in DAX trading. It should be borne in mind that not all DAX brokers are the same, so whoever wants to trade should always check the conditions first.
The DAX 30 is trading representative of the largest economy on the European continent
When we talk about trading and investing, it should be mentioned that one of the best ways to trade for potential long-term success is to buy an index fund or stocks. Traders also refer to indices as “Indices”, because the underlying asset for the index is Stocks.
How to trade the DAX 30 index?
DAX CFDs are usually traded in the form of an instantaneous speculation strategy (scalping).
However, it’s important to remember:
The DAX30’s instantaneous speculation method also depends on market conditions.
Sometimes traders can trade through it on a daily basis but due to its fluctuations, it is actually very suitable for active speculators and short-term traders who are looking for an active market.
But here’s something really interesting:
The DAX 30 trading strategy is a good solution between scalping and daily trading as it is used within a timeframe of about 30 minutes. This is very suitable as a strategy for novice traders.
A word of caution:
The DAX 30 is a volatile indicator but trading can be very rewarding due to its nature and its linkage between the markets as you will often find the best DAX30 movements during New York sessions.
But there’s one small catch:
There is a problem of “follow the leader” as the Dow usually tracks the DAX, which in turn tracks the FTSE until the US markets open correctly.
In the event that you are enthusiastic about trading the DAX 30, it is highly recommended that you first train through a demo trading account without risk if you’re a beginner.
The importance of the DAX
The stock market index reflects the state of the national economy in general and the economic performance of companies listed on the market in particular.
Look at it this way:
If the demand for corporate production increases due to economic boom, it is expected to increase the sales and profits of these companies as well as an increase in the distribution of these companies from the profits to shareholders which contributes to the increase in the prices of their shares and the market index as a whole.
There are two types of indicators in the global financial markets:
- Overall indicators that measure the market situation in general.
- Sectoral indicators that measure the state of the market in relation to a specific sector such as:
- Banking sector
- Industrial sector
- Agricultural sector
- Telecommunications sector
- Other sectors
How important is the DAX 30 index to traders?
- The DAX tracks the market value of the 30 largest and most liquid companies that trade on the Frankfurt Stock Exchange which is the largest exchange in Germany and the 10th largest in the whole world.
- Germany is the largest economy in the European Union in addition to being the fifth largest global economy.
- Its listed companies contribute significantly to this position and the 30 companies that make up the index represent about 75% of the total market capitalization of the Frankfurt Stock Exchange.
How to trade the DAX index via derivatives?
Here’s the thing:
Just like any stock index, the DAX index cannot be bought or sold as a stock but instead, those who want to trade in this index should trade it using derivatives such as futures or CFD (contract for difference).
Eurex is the main stock exchange for the DAX futures contract. It also allows trading CFDs by buying or selling the DAX without having to deal with one of the exchanges.
How is a company listed on the DAX index?
In order for a company to be able to appear in the DAX index, it must fulfill the following requirements:
- It must be listed for public subscription for at least 3 years.
- At least 15% of its market capitalization is publicly traded.
- Be a part of the “basic standard” segment on the Frankfurt Stock Exchange.
- Representing the German economy (through achieving sufficient returns or the company’s headquarters in Germany). The companies are added or written off quarterly based on their market capitalization and the size of the application record.
The DAX is a “weighted value index” which means that companies with higher market capitalization have more influence on its price and it is calculated using the free-float methodology so it only takes into account the number of shares available.
No single company can obtain a weighting of more than about 10%. Prices are drawn from Xetra which handle 90% of trading on the Frankfurt Stock Exchange and are calculated every second.
Historic prices of the DAX index
Here’s a quick look:
The DAX index recorded strong growth during the first few years as it exceeded 2000 points in 1993 as well as about 5,000 points in 1998.
With the start of the new millennium, the DAX index rose by about 7500 points at one level at the beginning of 2000.
The emergence of the Internet bubble at the beginning of the new millennium had a dire effect on the DAX as it transformed it into a bearish market over the next three years.
At the beginning of 2003, the index fell back below 2,500 points again. And with the economic meltdown during 2008, the DAX crossed the 7500 point barrier which was hit by a sharp drop again. This time, it fell below 4000 points but it managed to recover again.
In the decade following this economic meltdown, many world records were broken, including a 12,000 barrier on March 16, 2015.
Since that time, the DAX has been experiencing more moderate price fluctuations than its counterparts in the United Kingdom and the United States.
This makes the DAX the focus of attention for many traders but it also carries many risks.
Why trade the DAX index via Q8Trade’s platform?
The Q8Trade platform is distinguished by its long experience in the world of financial services and through a long period of more than 25 years in the Kuwaiti and Gulf market.
Below are just some of its most notable advantages:
- 3 platforms to suit your trading needs
- A growing list of tradable financial assets including region-specific markets
- Client interview services with an account manager
- Hawks trading academy (NEW)
Q8Trade is a recipient of several notable awards including:
- Best foreign exchange currency brand in the MENA region for the year 2019
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Q8 Trade, through its 3 platforms (WebTrader, MetaTrader 5 and mobile app), provides the the opportunity to trade CFDs of over 170 shares including Google, Amazon, Facebook, Apple, Netflix and even Saudi Aramco.
The platform gives you the opportunity to trade global and local stock indices and the German DAX 30 is among the most prominent and important, in addition to other indices such as the Tadawul Saudi TASI, Japanese Nikkei N225, French CAC 40, FTSE, Dow Jones Industrial (DJI) and others.
Q8Trade provides contracts for all these indices to traders through its platforms in a modern style supported by leverage.
There are also additional benefits that you’d be able to enjoy as a member including the following:
- Trading Central – a private portal for high-quality recommendations
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