Germany 30 Futures CFD, based on the DAX index futures, a total return index of 30 selected blue-chip German shares.
Technical Analysis DAX Futures
What is a stock market index?A stock index is a performance indicator or measure of a country's economy or of an industry sector. For example, Nasdaq 100 represents the largest 100 companies traded on the Nasdaq Stock Exchange. If, on average, the share price of these companies goes up, then the index will rise. Conversely, if they fall, the index will drop.
Most main indices are based on a basket of shares and are thus considered good measures of the current market sentiment. When you take a position on an index, you are effectively investing in the performance of these shares and thus avoid factors that influence the performance of individual companies (such as a lack of market volume). For a full list of index futures CFD offered on the Plus500 platform, click here.
How does leverage work in Index CFDs?By trading index futures contracts with leverage, you can multiply the value of a trade through the use of borrowed capital, and as such, you can increase the potential profit or loss to be realised from the trade. The available leverage for index CFDs on the Plus500 platform is up to 1:300.
How do you start day trading on the stock market index?Follow these steps to start trading stock CFDs with Plus500:
- If you don’t already have a Plus500 account, open a Trading Account Here.
- Complete your account registration and documents verification, then deposit funds.
- To search for a specific index, click into the search bar and type the name or symbol.
- Consider placing stop orders in advance: you can define the level of profit you would be happy with and/or the level at which you would like to close out the position should the trend turn against you.
- Open a trade.
What Is the DAX Stock Index?The DAX—also known as the Deutscher Aktien Index—is a stock index that represents 30 of the largest and most liquid German companies that trade on the Frankfurt Exchange. The prices used to calculate the DAX Index come through Xetra, an electronic trading system. A free-float methodology is used to calculate the index weightings along with a measure of the average trading volume.
The DAX was created in 1988 with a base index value of 1,000. DAX member companies represent roughly 75% of the aggregate market capitalization that trades on the Frankfurt Exchange.
Understanding the DAX Stock IndexThe DAX index, which tracks 30 large and actively traded German companies, is considered by many analysts to be a gauge for the health of the German economy. The companies listed in the DAX are multinational companies that influence the domestic German economy and the global economy as well. The success of these companies has greatly contributed to what is known as the "German economic miracle" or Wirtschaftswunder, a term that describes Germany's rebirth after World War II.
The companies in the DAX index span a wide range of industries. For example, Bayer AG is a pharmaceutical and consumer health company founded in 1863 and is well-known for its pain and allergy-relief products. Allianz SE is a global financial services company that focuses on providing customers with insurance and asset management products. Adidas AG develops, manufactures, and markets popular athletic footwear, apparel, and equipment.
Special ConsiderationsIn a different twist from most indices, the DAX is updated with futures prices for the next day, even after the main stock exchange has closed. Changes are made on regular review dates, but index members can be removed if they no longer rank in the top 45 largest companies, or added if they break the top 25.
The vast majority of all shares on the Frankfurt Exchange now trade on the all-electronic Xetra system, with a near-95% adoption rate for the stocks of the 30 DAX members.
Requirements for the DAXAs with the DAX, all exchanges have specific listing requirements for those who wish to offer their securities for trading. In general, these include regular financial reports, audited earning reports, and minimum capital requirements.
For example, the NYSE has a key listing requirement that stipulates a company must be profitable, have at least 400 shareholders who own more than 100 shares of stock at a minimum share price of $4, and a minimum of 1.1 million publicly traded shares. For worldwide market trading, the requirements companies must meet are stricter.
To be listed on the DAX, a company must pass strict selection criteria and continue to meet those requirements each quarter when the composition of the index is re-evaluated. Some of the requirements include that shares must have a minimum free float of 10%, the listing company must have its legal or operating headquarters in Germany, and the company must be listed in the Prime Standard segment, which is reserved for only those companies that meet stringent transparency rules.