Learn to use the DAX Index in trading

This article is about the DAX 40 stock index. It continues the topic of stock indices which we touched on earlier in the articles:

What is the DAX index?

The DAX (Deutscher AktienIndex) is a German stock index. Its calculation is based on the value of shares of the largest companies in Germany (“blue chips”) which are traded on the Frankfurt Stock Exchange. Let’s trace the key dates in the history of the DAX index. December 31, 1987. The start of the DAX index. Initial value = 1000, it was based on the value of 30 shares of the largest companies in Germany. January 1, 2006. The DAX index is calculated every second thanks to Xetra technology 2021. The base for calculating the index was increased from 30 to 40 companies. November 15, 2021. The historical (at the time of writing this article) maximum has been set. The record value of the index is = 16,290.

What companies are included in the DAX index?

The DAX index is calculated by Qontigo which is part of the Deutsche Börse Group. The selection of index components is based on the market capitalization of the publicly traded shares. The index composition is reviewed quarterly. On the special index page https://qontigo.com/products/dax-en/ you can find out:

• about the calculation methodology;
• companies of which sectors form the index;
• what shares have the most weight.

The current list of the index components, history and other background information can be found on Wikipedia at wikipedia.org/wiki/DAX. The value of the shares included in the DAX index and the current value of the index can be found on specialized financial websites, for example, Investing.com.

How to profit from DAX fluctuations

Download the ATAS platform for free, install and run it. Then open the Chart, in the Instrument Manager window select the EU Stocks section on the All Instruments tab. You will definitely find here all the stocks that are included in the DAX index.

To profit from DAX fluctuations, it is wise to pay attention to DAX futures. You can open a futures chart by selecting the appropriate contract in the instrument manager:

Please note that you can choose between regular DAX contracts and mini or micro versions for small cap traders. All these contracts are traded on the EUREX exchange. The specification can be viewed on the corresponding page of the official website eurex.com. Let’s open a Continuous contract chart of the DAX index:

The TPO and Profile and the Delta Indicator have been added to the chart. The profile shows the maximum volume level (1) for the period when the market was balanced for several days. Then sellers became more active, as can be seen from the Delta indicator (2), and the price of the contract decreased. After a while, the price rose to a high volume level (3) again. This is a perfect moment to assess the situation and try to find a short entry point with a low risk in the expectation that the market will turn down after it tests the high volume level. This is what we see at the opening of the European session. You can find similar setups on a regular basis using the ATAS platform.

How to start trading DAX index

Here is a step-by-step guide to help you take advantage of price changes for DAX index futures.

1. Download ATAS. The platform offers many benefits for futures traders. Learn how to apply easy-to-use cluster charts and useful indicators of the ATAS platform.
2. Open a demo account built into the ATAS program and connect quotes. Try trading without risking real capital at first.
3. If your demo account is growing, learn the terms and conditions of the stockbroker that provides access to trading DAX index futures. Please read the specifications of the contracts carefully. Make a trading plan. Treat trading like a business, not a game of chance.

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