The DAX is the "German share index" and measures the performance of the 30 largest and highest-turnover companies. The index value is determined on the basis of the Xetra-Kurse quoted on the Frankfurt Stock Exchange.
Originally, the DAX was thought of as just another German index, but it grew so popular that it became the established benchmark index for the German stock market, similar to the S&P 500 in the USA.
The "Arbeitsgemeinschaft der deutschen Wertpapierbörsen", the "Frankfurter Wertpapierbörse", and the "Börsen-Zeitung" introduced the DAX in 1988.
Historically, it is the successor to the Index of the Börsen-Zeitung, which was founded in 1959. The DAX was first standardised to 1,000 index points on 31 December 1987.
The well-known DAX is the performance index in which dividends of companies are also taken into account. The EURO STOXX 50 Index refers only to the price index, excluding dividends.
The total market capitalization of the DAX was 1,192 billion euros (as of October 2017).
For the calculation of the index, the prices and market capitalization of the DAX 30 companies are used, which are in free float (i.e. freely accessible). The Laspeyres formula is used for the calculation.
The index is based on the prices of the electronic trading system Xetra. Every trading day, starting at 9:00 am CET and going until 9:06 am CET at the latest, the first prices are fixed. The trading day ends with the Xetra closing auction at 17:30 CET. Since January 2006, the price is recalculated every second.
The DAX is calculated as a Late/Early DAX (L/E DAX) before and after trading. This fee is charged beforehand from 8:00 am to 9:00 am CET and after trading between 5:45 pm and 8:00 pm CET.
In addition, there is the X-DAX, which is calculated every trading day from 8:00 am to 9:00 am CET and from 5:45 pm to 10:00 pm CET. The basis for this is the price of the DAX future with the shortest remaining maturity traded on the EUREX futures exchange and the official Euribor interest rates of the ECB. The X-DAX is therefore a very safe tracker of the development of the DAX when the market is closed. Importantly, the US markets are fully covered.
In order for a company to be included in the DAX, it must have a free float of at least 10 percent. It may have its registered offices in Germany, or the main part of its trading turnover takes place in Frankfurt, with a registered office elsewhere in the European Union.
The weighting of the shares is solely based on the value of the free-floating stock. This is constantly changing as a result of price changes and new weightings in the free float. Price changes are taken into account every second, while changes in the free float are recorded only once per quarter.
Distortions such as the sudden appreciation of the VW shares to more than EUR 1,000, driven by the Porsche takeover attempt and the corresponding forced purchases of a scarce supply of VW shares, are to be avoided. If a DAX participant holds more than 10 percent of the DAX and the 30-day volatility of the share exceeds 250 percent, this company can be temporarily excluded from trading.
What Moves the DAX?
Due to the different weighting of companies in the DAX, not all of them have the same influence on the index. Companies with the highest DAX weighting are, for example, Siemens, SAP, Bayer, and Allianz (>35 percent). When the quarterly or annual figures of these companies are due, these price changes have a far greater impact on the price changes of the DAX than when companies have only a smaller share in the capitalization of the DAX. However, the index weighting of a company is limited to 10 percent.
Otherwise, the DAX reacts strongly to macroeconomic changes in key figures such as unemployment in the largest economies or any significant economic data, as well as changes in interest rate policies in Europe and the USA. The DAX is an excellent risk barometer on the capital market.
What Is a DAX Future, and What Is a CFD Contract?
The FDAX future is a futures contract; the CFD is a difference contract. The future is a standardised, exchange-traded futures contract. The CFD is an individual speculation with the broker virtually without a time limit.
The future and the CFD contract are a bet on the so-called "underlying" (in this case, the DAX). For both products, they do not acquire the DAX but only speculate on price changes.
DAX CFDs reflect the price of the underlying almost 1:1. CFDs are tradable at significantly lower entry prices and can be split into much smaller trading blocks than the DAX future. The DAX market of a CFD, in contrast to the future, is replicated at contract level. Transaction costs include margin, spread (difference between purchase and sale price), and swaps (overnight financing costs).
The minimum trade size is one lot at EUR 0.95 per point. The overall maximum size is 100 lots and can be split into any number of positions.
The ECN account, which is directly linked to the liquidity providers, charges a total of USD 0.60 per traded lot round trip (USD 0.30 each side). The margin requirement is 1 percent with a maximum available leverage of 1:100.
The costs to hold a position overnight are being recalculated every day and published on the Valutrades website. The DAX CFD can be traded continuously from 9 am to 11 pm CET every working day.
See all DAX Companies below.
DAX Unternehmen (2017)
The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.