The Main Benefits Of Trading Index CFDs On DAX30 – ValueWalk

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Investors and seasoned traders in Germany and around the world know that DAX3o is one of the most appealing indexes in the world. The Deutscher Aktienindex (DAX) is a benchmark index that provides a solid overview of the core economic performance of Germany, one of the largest economies in the world. Xetra, a subsidiary of Deutsche Boerse, runs DAX30. For the ones who do not know what 30 stands for, the number expresses the number of companies comprised under DAX. Today, we will discuss the main benefits of trading CDFs on DAX30.

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1. DAX30 Reflects Core European and Global Economic Performance

The blue-chip companies composing DAX (being global) have to meet a handful of strict criteria to get a listing under DAX. Powerful and compelling, the DAX index represents about 80% of the total German market capitalization.

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The DAX30 stood its ground since the crash in 2013, gained momentum, and significant peaks. The companies forming the DAX represent not only the backbone of the German economy but of the global one as well. The reputation and stability of DAX30 helped the companies reach global success, while the companies themselves strengthened the name and reliability of DAX.

Two growth vectors sustaining each other represent a solid basis for dealings for both beginner and seasoned investors.

If you wonder why you should trade CDFs on DAX30, there are two answers:

  • You will invest in the best of the best companies. Moreover, these companies represent around 80 countries.
  • When you build a portfolio around DAX30, you expose yourself to the global economy and work with top firms in the world, thus benefitting from the rises and the falls in domestic and global markets.

Most companies on DAX30 are also available for trade on the US Stock Exchanges. You can take advantage of the timing – as European markets open when American markets close. Timing your trades to a tee allows you to understand how the stock listed on the US markets will move on the European ones. Such timing is essential for making the right decision.

2. DAX30 Investing is Versatile on Many Levels

Traders prefer DAX30 for its long hours, tight spreads, and the versatility it offers. Here are some aspects you need to know about DAX30 trading:

  • The trading hours are Monday to Friday 6:01 – 19:59 (GMT); the DAX30 updates with futures prices for the next day, being a bit different than other indexes you may work with already; the DAX30 updates even after hours, after the main stock exchange closes.
  • Most providers offer pre/post-market indications;
  • DAX30 moves in increments of 0.50, with a margin requirement of 2%;
  • You can trade with a minimum size of 1 unit;
  • When it comes to leverage, there is a maximum of 30:1.

Specialists recommend you work with professional brokers and specialists, as DAX 30, while volatile, makes an excellent choice for investors, especially when the market is at its most liquid context.

3. DAX30 Allows Dynamic Portfolio Diversification

It is true that under DAX, you have only 30 top companies, but these companies cover a handful of industries that are compelling for those interested in diversification.

For instance, some of the biggest companies in DAX are active in the manufacturing industries, chemical or automotive sectors. If you think about names such as BMW, Daimler, and Volkswagen on the one hand, and Bayer or Adidas on the other, you know that an investment portfolio with DAX30 will open a world of possibilities.

  • Another advantage is that you have access to diversification from another point of view as well: the DAX30 list changes, adding or removing companies from the list. This way, you can always trade with stocks coming from companies which are on an ascending or descending path. You will know which is which as you learn the selection criteria for DAX30.
  • For many investors, buying a DAX 30 index fund and keeping it in the long term is one of the safest and most affordable strategies.

4. DAX30 Correlates with Forex, and You can Take Advantage of Both

Germany, as one of the world’s top economies and the chief economic heavyweight champion in the Eurozone, is more resilient to economic, political, or social disruptions that might occur. On the other hand, the DAX30 is a relatively small index in size. In other words, these companies which are both domestic and global influence and are influenced by the rise or fall of the Euro.

In its turn, Europe’s currency also depends on significant events, news, political factors, and so on. Smart investors read both Forex and DAX30 to make the best of trades.

There is a dangerous side to the correlation, of course. Those who have a base currency in USD, for instance, should know that DAX functions on EUR and they also should consider the coins fluctuations’ when trading on DAX.

For instance, a spike in the EUR price may have a negative impact on the DAX30 due to the rise of export costs. Since most companies in the DAX rely on exports inside and outside the European Union, the fluctuations in the import/export costs reflect on DAX as well.

  • When it comes to correlating DAX with Forex for trading, you should also rely on the thorough read of other indexes, such as CAC-40, IBEX and FTSE MIB. Through technical analysis, putting together the data provided by the indexes will help you get a clearer picture of the ups and downs characterizing the market.

Conclusion

When you plan to trade CDFs on DAX30, make sure you practice with a demo account – just as you would do with Forex. Before taking advantage of the market’s trends, you should always have a solid trading plan, a risk-management strategy, and a robust technical analysis. Otherwise, DAX30 is an excellent opportunity for investors of all types.