DAX trading guide: How to trade the DAX 40 index

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 referred to as 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 well before its 40th birthday. While it is only comprised of 40 stocks, those stocks make up around 75% of the Frankfurt Stock Exchange (FSE)

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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:

SAP is the largest company on the index by market cap. Over its history, the index has seen remarkably little volatility in its constituents – on its 40th birthday, 15 companies had been present on the index since its inception. 

dax-40-components-by-sector-pie-chart

Source: Siblish Research

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

How do companies list on the DAX 40?

To list on the DAX a company must meet its strict criteria, including:

  • 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 40

To trade the DAX, you'll need to use derivatives or ETFs that track the index's price - you can't trade it directly. Why? Because like any stock index, 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, spread betting, futures, options and ETFs.

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 spread betting

Here, you’re making a bet on where the DAX’s price is headed. Buy the DAX, and your profits will increase as it rises – but you’ll make a loss when it falls. Sell the DAX, and the opposite happens.

Start spread betting on indices.

DAX futures and options

When you trade a DAX future, you’re agreeing to buy or sell the index at a set price on a set date. With DAX options, you get the right to trade the DAX at a set price before a set date – but you don’t have to.

Learn more about options trading with City Index.

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.

DAX trading hours

The DAX 40’s trading hours are between 09:00 – 17:40 in Central European (CET) time. However, out of hours prices are also calculated through the late DAX (17:40 – 22:00 CET time) and early DAX (08:00 to 09:00 CET time).

In the UK, that means the DAX is available to trade from 07:00 to 21:00 (UTC). With City Index, though, you can buy or sell the index from 23.00 Sunday until 21.15 Friday *with breaks.

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 40 by market cap when it suffered a 20% dip in October 2020 – which was a major contributor to the wider 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

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 2011-2021 below. Remember, past returns are no guarantee of future performance.

Year on year DAX returns 2011-2021

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 Post
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 FAQ

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.

Learn more about the DAX 40 and its constituents.

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What is the Germany 40?

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

The only difference between the Germany 40 and the DAX is the name. The prices of both markets should be identical.

See live pricing for the Germany 40.

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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 and spread betting could be a better option.

Learn more about how to trade indices.

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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.

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