Whether you speculate on the stock market through your online bank or using an online trading platform using investment tools such as CFDs
, at some point you will probably consider trading in major European stock market indices such as the DAX 30.
General presentation of the DAX 30:
The DAX 30 is the major German stock exchange index, equivalent to the French CAC 40. This index is that of the Frankfurt Stock Exchange. But one of its major particularities concerns the volume of transactions that it generates which makes it the highest traded European index worldwide.
As indicated by its name, the DAX 30 uses the quotations of the best quoted 30 large German businesses, with the aim of providing a realistic overall view of the country’s economic health with all sectors of activity represented. The companies quoted are essentially selected according to their representation of the country’s economic health. Of course, this list changes regularly according to movements in the prices, profits and activities.
If we study its composition in detail we can logically find several large automobile sector groups, as well as several banking groups.
What is the Frankfurt Stock Exchange?
The Frankfurt stock exchange, as you have undoubtedly understood, is situated in Germany, at Frankfurt am Main (Frankfurt on the Main). Built in 1820 with the aim of developing this financial market, the Frankfurt stock market has gradually developed its place at the heart of the German economy. Nowadays it is the most important exchange market in the country as it alone unites 85% of national exchanges and boasts no less than 35% of European share trading. The Frankfurt stock exchange is also one of the largest financial markets in the world, third after New York and Tokyo.
The Frankfurt stock exchange building is decorated with two famous statues, a bear symbolising a fall in the rates, and a bull symbolising a rise in the rates. It is the company Deutsche Börse that is responsible for the listing of this stock market. Its major stock market index is the DAX.
Now directly connected to the DAX 30 index, the Frankfurt Stock Exchange has gained its reputation and position over time. Nowadays it represents the largest Stock Market in Germany as it processes nearly 85% of the national trades as well as 35% of European trades in shares.
A technological index:
Another peculiarity of the German Index DAX 30, is that it is a reference for German technological values in the sense that it represents these said values, including the sectors of automobilism and bank, the same way as the NASDAQ in the USA.
The other sectors represented by DAX30 are those of energy and computer science. This technological orientation implies therefore that certain companies that are part of this market are not based in Germany but abroad.
History and movements of the DAX 30:
The DAX30 is undoubtedly one of the European indices that has experienced the strongest and most regular rise, displaying a marked historical increase overall with a strong volatility. It achieved its highest historical rate in 2000 at 8,100 points, just before the financial crisis that caused a loss in points.
The volumes traded on the German technologies market have up to now been very high, the volatility of this index is therefore also extremely high and offers excellent opportunities for profits over the short and the long term.
Some advice for trading on the DAX 30 stock market index:
As is the case for all the major stock exchange indices, trading on the DAX30 should not be approached in a haphazard manner, and it is important to understand the different sectors of activities that are represented. Of course, it is not required to undertake advanced analyses of the results of the thirty largest businesses that are represented, simply have a general oversight of the economic health of the major sectors represented.
To direct your choice towards the rise or fall you will also need to monitor the economic calendar that often publishes highly influential data on the DAX 30. This is the case for all German economic statistics such as the GDP, Bond interest rates or the figures relating to industry and production that can indicate to traders which general direction to follow.
But it is also important to take into account the European data that can in certain cases favour or disfavour certain economic sectors. For example, a fall in the Euro interest rate will undoubtedly increase the competitiveness of European companies and consequently cause a rise in the DAX 30 rate.
Why follow the quote live from the Frankfurt Stock Exchange?
The Frankfurt Stock Exchange quotation is operated by the company Deutsche Börse. It is quite important to follow this rate, even more so if you trade on the DAX index.
In fact, with the quote from this stock market you will be able to trade more effectively on numerous European shares that are traded here each day. You will be able to identify the best opportunities and companies that could prove most beneficial for your stock market portfolio.
It is now possible to follow this quote live online.
How to follow the listing of the Frankfurt Stock Exchange?
There are different ways of following the movements of the Frankfurt Stock Exchange listing in real time. The first consists of following the movements in the rates of all the shares that are quoted which are retransmitted live and continuously from this financial market.
However the simplest way of following the listing of this stock market is undoubtedly to follow the rate of the main German index, the DAX30. This index is, as its name indicates, composed of the shares of the 30 German companies that have the highest share capital and therefore are representative of the country’s economic activity.
Composition of the DAX 30 stock market index with a breakdown and classification of the capital:
If you wish to invest in the DAX 30 it is best to trade on the rate of one of the 30 different company shares that are represented by this index. Here then is a list of these component companies classified according to their stock market capital:
- SAP with 120,478 million Euros of capital.
- Siemens with 84,493 million Euros of capital.
- Allianz with 76,920 million Euros of capital.
- Bayer with 70,967 million Euros of capital.
- Deutsche Telekom with 65,970 million Euros of capital.
- BASF SE with 63,393 million Euros of capital.
- Daimler with 56,583 million Euros of capital.
- BMW with 48,984 million Euros of capital.
- Adidas with 40,295 million Euros of capital.
- Fresenius SE with 36,747 million Euros of capital.
- Deutsche Post with 34,894 million Euros of capital.
- Volkswagen with 28,901 million Euros of capital.
- Munich RE with 28,300 million Euros of capital.
- Continental with 28,030 million Euros of capital.
- Fresenius Medical Care Company with 25,971 million Euros of capital.
- The Beiersdorf Company with 22,584 million Euros of capital.
- Deutsche Boerse with 21,210 million Euros of capital.
- Wirecard with 20,752 million Euros of capital.
- Infineon Technon with 20,595 million Euros of capital.
- Vonovia with 19,621 million Euros of capital.
- Deutsche Bank with 19,419 million Euros of capital.
- EON SE with 18,249 Euros of capital.
- Henkel with 16,850 million Euros of capital.
- Thyssenkrupp with 12,512 million Euros of capital.
- Covestro with 12,510 million Euros of capital.
- Heidelbergcement with 12,123 million Euros of capital.
- Merck KGAA with 11,148 Euros of share capital.
- RWE with 10,087 million Euros of share capital.
- Deutsche Lufthansa with 9,091 million Euros of share capital.
Of course, this classification is liable to change and takes into account the stock market capital of German companies in October 2018.
How is the DAX 30 index rate calculated?
Let us now examine the calculation method for the DAX 30 index. Here the weight of each company that comprises this index depends on its total stock market capital as well as its floating stock market capital; that is the number of company shares available on the stock market.
However, to ensure that the reliability of this index is not biased in any way and remains representative of the German economy, it is impossible for a company to have an index weight superior to 10% of the total value of the DAX 30.
On the other hand it is essential that the companies that are integrated into the DAX 30 represent at least 75% of the total capital traded on the German stock exchange.
However we can distinguish two categories of the DAX with different calculation methods. The DAX PR index is calculated in the same way as the CAC 40 and the dividends, or income from the shareholders is not taken into account in the total calculation. The DAX TR however does integrate the dividends paid to the shareholders of its different companies. Its name comes from an abbreviation of DAX Net Total Return. Its French equivalent is the CAC 40 NR which also takes dividends into account. In this case we consider that the dividends paid are immediately reinvested.
In any case, the DAX TR is considered as a reference for the state of the German markets. Let us now look at the formula used to calculate the rate. This is fairly simple and consists of dividing the total stock market capital of the related companies by the preceding value and dividing the result obtained by the preceding period.
Another major difference relating to the DAX 30 compared to other major worldwide indices is that this is updated daily with the futures rates for the following day, after the close of that day’s business.
Since 2006 it is the Xetra calculation platform that is responsible for the quotes of the DAX 30 index with a calculation completed every 15 seconds. This computerised and automatic financial products transaction system is situated in Frankfurt in Germany.
The quote for this index starts each day at 9 a.m. and ends at 5.30 p.m. This index is quoted in a continuous manner throughout this time, as is the case with the French CAC 40 index.
Using the information that we have revealed to you, you now know how the DAX 30 German stock market index operates and how to trade on it and on its shares.