How to trade the DAX 40

Learn how to trade Germany’s flagship index, the DAX 40, here. Discover how the DAX works, what moves its price and more about the companies it represents.

Want to trade the DAX today? Open your City Index account:

What is the DAX 40 index?

The DAX 40, or Deutscher Aktien Index, is a stock index that tracks 40 of the largest German companies trading on the Frankfurt Stock Exchange. It is one of the most widely followed stock indices in the world, offering a glimpse into the health of the largest economy within the European Union (EU).

On the City Index platform, the DAX is called the Germany 40.

In 2020, marketplace organiser Deutsche Boerse announced that the then DAX 30 would become the DAX 40 as of Q4 2021. This means a broader range of industries and a change to certain regulatory practices.

Created in 1988 with a value of 1,000, the DAX 40 index had surpassed 13,000 by November 2020. While it is only comprised of 40 stocks, those stocks make up around 75% of the Frankfurt Stock Exchange (FSE).

Did you know?

You can practise trading the DAX without paying anything. With our index trading demo, you get $20,000 virtual funds to trade on the live prices of thousands of markets.

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DAX 40 companies

The DAX 40's companies are spread around a wide set of industries, with no single sector truly dominating the index. It’s home to many globally renowned blue chips, including:

  • Volkswagen
  • SAP
  • Linde
  • Adidas
  • E.ON

SAP is the largest company on the index by market cap. Over its history, the index has seen remarkably little volatility in its constituents.

Here's how the DAX 40’s sectors looked at the close of 2020:

Pie chart showing the DAX 40 components by sector

Source: Siblish Research

Take a look at every company listed on the DAX in 2021.

How do companies list on the DAX 40?

The DAX has strict criteria when it comes to deciding which companies can join. Constituents must have:

  • A minimum free float of 10%. This means that 10% of the company’s shares must be freely available to trade
  • A legal or operating base in Germany
  • A listing in the Prime Standard segment of the FSE. This segment has stringent transparency rules

Constituents are reviewed each quarter. Ongoing requirements for companies listed on the DAX are the submission of regular financial reports, audited earning reports, and minimum capital requirements.

How to trade the DAX

You can’t trade the DAX directly – like any stock index, you’ll need to use derivatives or ETFs that track the index’s price. Why? Because the DAX is only a calculation of the values of a group of stocks. There’s no market to buy or sell.

However, there are a number of ways to trade the DAX: including CFDs, ETFs or as a Knockout Option.

DAX CFDs

DAX CFDs are contracts that track the price of the DAX 40. You can buy CFDs to take a long position on the index, or sell them to take a short position.

Learn more about trading indices with CFDs

DAX Knockout Option

Knockout Options are options trades with a unique feature whereby the price moves one-for-one with the underlying City Index price, and we offer the DAX as one of our carefully selected Knockout Option markets.

Discover more about Knockout Options and how to trade them.

DAX stocks and ETFs

Remember that the DAX is only a number representing a group of stocks? An ETF is a fund that contains all those stocks, using them to track the price of the index itself. Alternatively, you can trade the individual DAX companies themselves.

Find out more about trading shares as CFDs.

DAX trading hours

The DAX 40’s trading hours are between 9am – 5.30pm in Central European (CET) time. However, out of hours prices are also calculated through the late DAX (5.30pm – 10pm CET time) and early DAX (8am to 9am CET time).

In Singapore, the DAX is available to trade from 8:15am on Monday to 5am on Saturday. 

All you need to get started is a live City Index account.

How is the DAX calculated?

The DAX is calculated using a free-float methodology, weighted by market cap. This means that it only takes readily available shares into account, disregarding any that can’t be traded. And that companies with larger market capitalisations will have a greater impact on its price.

Changes in the biggest companies on the DAX 40 – such as SAP, Volkswagen or Linde – will have a larger impact on the overall index than smaller cap firms like Fresenius, Continental or RWE.

An electronic trading system called Xetra calculates and publishes the DAX’s price each second. It is worth noting that the DAX 40 price factors in reinvested dividend payments, unlike other major indices.

Learn more about how indices work.

What moves the DAX's price?

The DAX’s price movements reflect the volatility seen by its constituents. If Germany’s biggest businesses are booming, the DAX should rise. If they struggle, the DAX should fall.

Lots of factors might affect German stocks, and there is no guarantee that any event will have the expected impact on the index itself. That said, here are a few of the key factors that are worth considering when trading the DAX 40.

Exchange rates

The DAX often shows a negative correlation to the euro. As the euro weakens against USD, the DAX 40 will often rise – if EUR/USD strengthens, it often falls.

This happens because German exports to the US, paid for in USD, are worth more in euros when EUR/USD is weak. This should buoy the profit margins of German multinationals, which make up most of the index.

Conversely, a stronger euro may dampen the DAX as international sales are worth less.

Key companies

As we’ve already covered, the DAX is capitalisation-weighted. Companies with higher market caps are more capable of moving the index than smaller constituents.

SAP, for example, was the largest company in the DAX by market cap in October 2020, when the stock suffered a 20% dip – which was a major contributor to the overall index falling 2.6%.

Socio-political events

Events such as Brexit, the 2008 recession and the coronavirus pandemic are all capable of hitting market demand in one way or another. For instance, the pandemic in 2020 had a particularly outsized impact on key sectors such as aviation and banking, with Lufthansa and Deutsche Bank’s share prices plummeting in March 2020.

The DAX soon followed, writing off years of gains in just a few weeks.

DAX price history

Take a look at the history of the DAX 40, previously known as the DAX 30, since 2011, documenting some of the fundamental drivers that impacted the index’s price movements.

History of DAX 40 II

Source for DAX pricing: City Index

Average returns of the DAX 40

Between 2011 and 2020, the DAX produced an average annual return of 8.2%. Essentially, that means you would have earned an annual average return of 8.2% if you’d invested in the DAX from 2011.

You can see the yearly returns from 2011-2020 below. Remember, past returns are no guarantee of future performance.

year-on-year-dax-returns-since-2011 

DAX companies by market cap

Here is a list of the companies on the DAX 40 by market capitalisation as of October 2021.

Rank

Ticker

Company name

1 SAP SAP
2 LIN Linde
3 VOW3.DE Volkswagen
4 SIEGY Siemens
5 DAI.DE Daimler
6 AIR Airbus
7 MRK.DE Merck
8 ALIZF Allianz
9 DTE.DE Deutsche Telekom
10 DPW.DE Deutsche Post
11 SHL Siemens Healthineers
12 ADDDF adidas
13 BFFAF BASF
14 IFX.DE Infineon
15 BMW.DE BMW
16 BAYF Bayer
17 SRT Satorius
18 MUV.VI Münchener Rückversicherungs-Gesellschaft
19 HELKF Henkel vz.
20 VNA.DE Vonovia
21 EOAN.DE E.ON
22 DBOEF Deutsche Börse
23 PAH3 Porsche
24 DHER.F Delivery Hero
25 DB Deutsche Bank
26 RWE.DE RWE
27 FRE.DE Fresnius
28 BEI Beiersdorf
29 CON.DE Continental
30 ZAL Zalando
31 FMS Fresenius Medical Care
32 SY1 Symrise
33 PUM Puma
34 SMEGF Siemens Energy
35 HFG HelloFresh
36 HEI.DE HeidelbergCement
37 BNR Brenntag
38 MTX.DE MTU Aero Engines
39 QGEN QIAGEN
40 1COV.F Covestro

DAX FAQs

What does DAX stand for?

DAX stands for Deutscher Aktien Index. In English, that simply means ‘German Share Index’. It is often referred to as the DAX 40, as there are 40 companies on the index. The index changed from the DAX 30 in 2021.

What is the Germany 40?

The Germany 40 is the name for City Index’s market on the DAX. When you trade DAX CFDs in the City Index platform, you’ll buy or sell our market called the ‘Germany 40’.

See live pricing for the Germany 40.

What’s the best way to trade the DAX?

Choosing the best way to trade the DAX depends entirely on your goals, aims and experience. If you’re a long-term investor looking to hold your position for weeks or months at a time, for example, you might find that DAX ETFs suit you best.

On the other hand, if you’re looking to day trade the DAX then CFDs could be a better option.

Learn more about how to trade indices.

What does the DAX 40 price mean?

The price of the DAX 40 indicates whether the value of the companies on the index are rising or falling. If the price of the DAX 40 is increasing, it means that a specific company or group of companies are experiencing gains, which is reflected in the price of the overall index. Likewise, if the DAX 40 price is falling, it means that companies on the index are experiencing a decline in price.

See the DAX 40’s current price.