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Best DAX (Germany 40) Index Trading Brokers

DAX or GER40 as it is also known is one of the most actively traded European indices. It tracks the performance of the 40 biggest blue-chip companies listed on the Frankfurt Stock Exchange (FSE). As the index takes into account market cap and liquidity, it is considered a reliable gauge of the German economy’s current state. Unlike pure price-weighted indices, the DAX embraces information about dividends, cash outflow, and capital income and does not disregard corporate distributions.

What is specific about the DAX index is that a free-float methodology is used for its calculation. The market capitalization of the constituent companies is equal to the equity price multiplied by the number of readily available shares. That is to say, untradable shares such as those held by governments, are excluded.

How DAX Trading Works for Traders and Brokers

DAX TradingGiven the constituents of the DAX and the specific way it is computed, it is not surprising that the index enjoys great interest both by retail and professional traders as well as by major trading brokers that operate all over the world. It is in the interest of the latter to provide their customers with as many different options as possible in terms of account types and trading platforms.

It is a brokerage’s common approach to feature a standard account and at least one that is more specific. The first type usually comes with zero commissions as all trading costs are incorporated in the respective spreads. Due to their simplicity and convenience, these are the accounts used by the largest number of traders. On the other hand, those users who are professionally oriented and operate on a daily basis, prefer tighter spreads in return to which they are ready to pay certain fees and commissions.

How to Trade the DAX Index?

How to Trade the DAX IndexIn this respect, DAX40 does not differ much from the other popular stock indices. Theoretically, there is the possibility of investing in or trading the individual components of the index. However, such a practice bears more difficulties and inconveniences than benefits. It is for this reason that over time some derivative trading products have been formed that allow for operating with a basket of stocks simultaneously rather than executing separate trades on the stocks of individual companies. DAX trading brokers offer three main ways to operate with the index:

  • DAX Futures – futures contracts obligate the buyer and the seller to transact the subject of the deal at a predetermined price on a particular date. The preset price is not amendable, i.e. even if the current market value is more profitable, you have to buy or sell at the price stated in the contract.
  • DAX CFDs – here subject to trading is the difference between the settlement prices of the open and closing trades. When traders expect a certain price to move up, they will buy the CFD. Conversely, if a downward price movement is expected, traders will try to sell.
  • DAX ETFs – in their essence, exchange-traded funds represent a pooled investment security that tracks the index performance. The name comes from the fact that ETFs can be traded on exchanges the same way as stocks. In most cases, exchange-traded funds come with lower average fees than mutual funds.

Top DAX Trading Brokers

choosing a brokerProfitable DAX trading requires you to find a reliable brokerage company that aligns with your expert level, trade goals, and operating manner. Of course, no broker is capable of providing you with sure-fire fund returns but the closer it is to your needs and preferences, the better chance of performing fruitful DAX deals. To facilitate your choice, tradingpedia made a selection of ten trustworthy trading brokers giving you useful info about the platforms and the applicable spreads, fees, and commissions.

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DAX (Germany 40) FAQ

1. What does DAX index family mean?

In addition to the popular DAX (Ger40) index, the DAX index family comprises MDAX® (the 50 largest companies after DAX), the SDAX® index (the 70 next biggest companies), and TecDAX® (emphasis on technological companies).

2. What happened with the GER30 index?

On September 3rd, 2021, it was announced that the German benchmark index is expanding with 10 more companies coming from MDAX - Airbus SE, Zalando SE, Siemens Healthineers AG, Symrise AG, HelloFresh SE, Sartorius AG, Vz Porsche Automobil Holding, Brenntag SE, Puma SE, and Qiagen N.V.

3. When can I trade the DAX (Germany 40)?

The main DAX trading hours are between 9:00 a.m. and 5:30 p.m. CET. Keep in mind that the opening auction is conducted from 8:50 a.m. and the closing action from 5:30 p.m.

4. How do I start trading the DAX index?

You must first create an account with a trustworthy brokerage company. The above list of Top DAX Trading Brokers is the perfect place to make your selection. Our recommendation is to choose a platform that provides a demo account and extensive educational content. Among the things that are worth checking in advance is the set of available financial instruments.

5. Which are the Top 5 DAX companies?

At the time of writing this article, the five companies with the greatest market caps are:
  1. Linde
  2. SAP
  3. Deutsche Telekom
  4. Siemens
  5. Volkswagen