Best DAX Trading Platforms (Germany 40 Brokers) Compared & Reviewed

There are multiple financial products derived from the underlying DAX Index that you can trade with, including:

• Index Futures (EUREX)
• Index Options (EUREX)
• Exchange-Traded Funds (GMG Guide on ETFs)
• Investment Funds
• Spread trading
• CFDs

Read the GMG Guide on Index Trading.

To trade the DAX 40 profitably requires a good trading strategy. The following tips may help you to maximise your chances of trading the DAX 40 successfully over the long term.

1. Understand your requirements for trading the DAX 40. Are you an intra-day or positional trader? Do you invest for the long term? Are dividends important?
2. Research various technical (or fundamental) indicators to support the trading objective. There are many technical indicators that you can use, including
   • Trend indicators like moving average
   • Oscillators
   • Support & resistance levels (see GMG Guide on Support/Resistance)
   • Patterns like breakout and reversals
3. Backtest these indicators if they are profitable over time. Select a few that you can understand. Check their pitfalls and signal variations over time. Put these indicators into a trading software and backtest. Is it profitable? Can you withstand the drawdown?
4. Select the indicators that best suit the objectives. Once the initial backtest research is completed, setup a mock testing period of, say, six weeks. Assess the results. Are they good? Which type of indicators works better?
5. Include risk management factors in your assessment. Important factors like position sizing, leverage levels, stop loss levels and risk-reward ratios must be specified. Trading without risk management is like driving without brakes and safety belts.
6. Select trading platforms that support your operations. Capital requirements, platform fees, and trading capability are all important factors to look for. See the comparison table above.
7. Commit capital and go live. Make sure that you drip feed capital into new strategies because there may be many things to iron out before you’re comfortable with it.

The DAX effectively trades around the clock through a combination of index futures and prices that are derived from them and the moves in other significant indices. Many OTC brokers quote 24 hours prices in the DAX. However, spreads may widen and volumes traded be lower, the further we move away from German market hours, simply because there are fewer active participants in the market at these times.

The DAX is one of the most actively traded equity indices in the world, representing as it does both Germany and the broader export-led Eurozone economy. The front-month futures contract often trades in well in excess of 100,000 lots per day and has open interest in the tens of thousands of contracts.

Being actively traded, with only 40 constituents, the DAX index moves around and often does so more quickly than broader equity indices, which is why it is so popular with traders. However, the average level of volatility in the index since October 2017 is just 16.54 percent on a scale that runs between zero and one hundred. So while that’s a higher level of volatility than some peers, it’s still relatively low over the longer term.

The DAX Index is Euro-denominated. If you are trading in the UK with a GBP-denominated account make sure that you cover any currency deficit from trading losses.

The index is maintained by the Deutsche Börse Group.

The German DAX40 index (Deutscher Aktienindex) is an equity index launched in 1988 that tracks the performance of 40 of Germany’s leading stocks. Launched in 1988 with an initial base value of 1000, the index has risen substantially since then and touched an all-time high of 13,596 in 2018.

Current DAX constituents are:

• Adidas AG ADS
• Airbus SE AIR
• Allianz SE ALV
• Basf SE BAS
• Bayer AG BAYN
• Bayerische Motoren Werke AG BMW
• Beiersdorf AG BEI
• Brenntag SE BNR
• Continental AG CON
• Covestro AG 1COV
• Deutsche Bank AG DBK
• Deutsche Boerse AG DB1
• Deutsche Post AG DPW
• Deutsche Telekom AG DTE
• Deutsche Wohnen SE DWNI
• E. On SE EOAN
• Fresenius Medical Care AG & Co. KGaA FME
• Fresenius SE & Co. KGaA FRE
• HeidelbergCement AG HEI
• HelloFresh SE HFG
• Henkel AG & Co. KGAA HEN
• Infineon Technologies AG IFX
• Linde Plc LIN
• Mercedes-Benz Group AG MBG
• Merck KGAA MRK
• MTU Aero Engines AG MTX
• Muenchener Rueckversicherungs-Gesellschaft AG MUV2
• Porsche Automobil Holding SE – PRF PERPETUAL EUR 1 PAH3
• Puma SE PUM
• Qiagen NV QGEN

40. Remember that this index only contains 40 stocks, so it is not a wholly representative index of the entire German economy.

The top three stocks in the index, by market capitalisation, are SAP, Linde, and Siemens.

The biggest ETF based on the DAX Index is the DAX 40 ETF (ticker: DAXEX). This ETF is gaining popularity because of the ease of trading, unlike futures or options where there are rollover costs and expiry dates.

DAX index futures, they usually expire on March, June, September, and December.

To invest in the DAX, you can either buy an ETF or mutual fund that specifically tracks the DAX or a range of large-cap German equities. ETFs will try to replicate the performance of the Dax, both on the upside and downside.  Investing in this way should provide you with the index return. The mutual fund may try to do the same, but it could also try to outperform the benchmark, through active stock selection, though this is becoming harder to achieve as passive investments grow in popularity.

Alternatively, you could invest directly into a basket of German equities selecting from the constituents of the DAX, for example owning the five stocks highlighted in the graphic above, would expose you to approximately 42% of the DAX by market cap. However, it’s always best to seek professional advice to make sure that any investment is suitable and matches your particular requirements before you jump in.

The German DAX40 Index is closely watched. The index is attractive to investors and traders alike because:

• DAX stocks are highly international and these companies derived their earnings globally
• DAX 40 offers good liquidity – as some of these stocks are huge (e.g. SAP, Allianz, and Siemens)
• DAX 40 offers a good exposure of leading industrial companies such as BMW and Linde.

Moreover, Germany companies are export oriented and they are hugely beneficial from firm global economic growth.

Remember that, with only 40 constituents, the DAX Index may be more volatile than broader equity index. Hence its popularity with traders.

Stock markets are often driven by a wide variety of factors. For the German stock market, the number one factor global growth. This is because these companies are global in nature and derive their earnings from many markets.

Other important factors include:

• Monetary factors (e.g., Quantitative Easing, rates movements, yield curve etc)
• Technical factors (e.g., new highs or lows)
• Earning factors (e.g., profitability and earnings momentum)

Investing in the DAX implies the long term ownership of assets related to the index. Whereas trading in the DAX, or indeed any other financial instrument or commodity, suggests short term speculation. Perhaps through spread bets or CFDs, that don’t confer ownership of the underlying assets, just an interest in the rise and fall of the index value.

Yes, you can read about the major indices in our guide to the best indices for index trading.

• Dow Jones Industrials Average (US 40)
• Standard & Poor’s 500 (S&P 500)
• Nasdaq (Composite and Nasdaq 100)
• Dow Jones Industrials (DJIA)
• UK FTSE 100 (FTSE 100)
• CAC 40 (France 40)
• DAX (Germany 40)
• European Stocks to Buy Now
• Japan 225 (Nikkei 225)
• Hong Kong (Hang Seng Index)