The DAX, known in German language as Deutscher Aktienindex is a popular stock market index that is a trading instrument and a reflection of the German economy. Also known as the Germany 30 or DE30, this index contains 30 major German companies on the Frankfurt Stock Exchange. In the third quarter of 2021, the DAX constituents will be increased to forty companies.
Germany is Europe’s largest economy, and the DAX contains many international brands which play an essential role in the global economy. Notable constituents include BMW, Deutsche Bank, DHL and Siemens.
Constituents of the DAX index
Since the DAX index was established on the 1st of July 1998, many companies have come and gone. This index contains some of the best-known brands in finance, fashion, pharmaceuticals, technology and the automotive industry.
DAX CFD Specifications
The symbol for the DAX index varies between brokers and investment firms. At Trade Markets, we refer to the German stock market index as DAX. Other firms may call it DE30 or GER30. The DAX is quoted against the euro. When you trade DAX CFDs, the base asset is the underlying index, and the quote asset is euros. The standard contract size, often referred to as the Lot size is one index. An important characteristic of trading with Trade Markets is the smallest order size you can enter is 0.01 Lots, which allows you to trade this volatile instrument with lower exposure.
The Pip value of DAX is one euro. This means, if your order is for 2 Lots, if the price moves up or down by one Pip, the impact to your profit or loss would be €2. Similarly, if your order was for 0.5 Lots, and the price moves up or down by one Pip, the impact on your profit or loss would be €0.50.
One of the benefits of CFD trading is you can use leverage to reduce how much capital required to open positions. Trade Markets offers up to 1:20 leverage for trading major stock market indices, such as the DAX; therefore, you only need to provide a 5% margin to open a position.
How a CFD Transaction Works
When you go long on the DAX, which means you expect the price to rise, you’re theoretically buying DAX with euros. To close the position, another trade in the opposite direction is used to offset it. Your profit or loss will be determined by the difference in value between the opening and closing orders. If the value of DAX increases, you’d end up with more euros when the position is closed. However, if the value of DAX falls, you’d end up with fewer euros.
With leverage, you can open larger positions than your capital would otherwise permit. When you trade CFDs with Trade Markets , you can use leverage as high as 1:20; meaning you only need to provide margin to cover 5% of the position’s value.
When you trade CFDs, you don’t need to own either of the assets or currencies involved in the trade. For example, if your trading account balance is funded with pounds, you can still trade DAX. The purpose of a CFD is to allow traders to speculate on an asset’s price without having to purchase it or own it. When a CFD is closed, it will always be settled in cash either by increasing or decreasing your trading balance.
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* Risk Warning: Trading in forex and CFDs could lead to a loss of your invested capital.