DAX 40
The DAX 40 is Germany’s most significant stock index and acts as an indicator of wider economic performance across Europe and the rest of the world. The DE 40 is a popular index to trade as it includes many large blue-chip stocks and provides investors with impressive diversification across central and western Europe. This 2024 review will explore how to compare DAX 40 brokers, how the index works and what strategies traders can adopt to profit from it. Moreover, check out our list of the best brokers for DAX 40 speculation below.
Top DAX 40 Brokers In The UK
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Established in Australia in 2010, Pepperstone is a top-rated forex and CFD broker with over 400,000 clients worldwide. It offers access to 1,300+ instruments on leading platforms MT4, MT5, cTrader and TradingView, maintaining low, transparent fees. Pepperstone is also regulated by trusted authorities like the FCA, ASIC, and CySEC, ensuring a secure environment for traders at all levels.
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Founded in 2002 in Poland, XTB now serves more than 1 million clients. The forex and CFD broker combines a heavily regulated trading environment with an extensive selection of 6400+ assets and a commitment to trader satisfaction, featuring an intuitive in-house platform with superb tools to support aspiring traders.
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Established in 1989, CMC Markets is a respected broker listed on the London Stock Exchange and authorized by several tier-one regulators, including the FCA, ASIC and CIRO. More than 1 million traders from around the world have signed up with the multi-award winning brokerage.
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FXCC is an established broker that’s been offering low-cost online trading since 2010. Registered in Nevis and regulated by the CySEC, it stands out for its ECN trading conditions, no minimum deposit and smooth account opening that takes less than 5 minutes.
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IC Markets is a globally recognized forex and CFD broker known for its excellent pricing, comprehensive range of trading instruments, and premium trading technology. Founded in 2007 and headquartered in Australia, the brokerage is regulated by the ASIC, CySEC and FSA, and has attracted more than 180,000 clients from over 200 countries.
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Eightcap is an award-winning, FCA-regulated broker offering industry-low trading fees. They are also the highest-rated brand by TradingView’s 50 million-strong users, who can trade directly on the platform. UK traders can sign up for a live account with an accessible £100 minimum deposit.
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RoboForex is an online broker, established in 2009 and registered with the IFSC in Belize. Traders can choose from five accounts (Prime, ECN, R StocksTrader, ProCent, Pro) catering to different needs with trades from 0.01 lots and spreads from 0 pips. RoboForex has also enhanced its offering over the years, adding CFD instruments and launching its stock trading platform, plus the CopyFX system.
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eToro is a top-rated multi-asset platform which offers trading services in thousands of CFDs, stocks and cryptoassets. Launched in 2007, the brand has millions of active traders globally and is authorized by tier one regulators, including the FCA and CySEC. The brand is particularly popular for its comprehensive social trading platform. Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply. 51% of retail CFD accounts lose money.
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Founded in 1999, FOREX.com is now part of StoneX, a financial services organization serving over one million customers worldwide. Regulated in the US, UK, EU, Australia and beyond, the broker offers thousands of markets, not just forex, and provides excellent pricing on cutting-edge platforms.
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InstaForex is a forex and CFD broker founded in 2007. The broker offers diverse market coverage to millions of clients, spanning traditional assets like currencies and shares, as well as other interesting opportunities such as IPOs.
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OANDA is an award-winning global broker, established in 1996. The hugely respected brand offers competitive trading accounts and serves clients from 196 countries. It remains a popular option with both beginners and experienced traders thanks to its user-friendly and sophisticated web platform, no minimum deposit and premium currency products and services. The company is also overseen by reputable regulators, including the FCA, ASIC and CIRO.
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Trade Nation is a top FX and CFD broker regulated in multiple jurisdictions including the UK and Australia. The firm offers low-cost fixed and variable spreads on 1000+ assets with robust trading platforms and training materials. The Signal Centre can also be used for trade ideas.
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Established in 2001, easyMarkets has made for a name for itself as a trusted, fixed spread broker. Improvements to its tools over the years, from adding the MetaTrader suite and TradingView to enhancing its exclusive risk management tools like dealCancellation, mark it out from the competition.
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BlackBull is a New Zealand-based CFD broker providing diverse trading opportunities on over 26,000 instruments. After undergoing a rebrand in 2023, it now sports a modern look and feel complete with professional-grade trading tools and ultra-fast execution speeds averaging 20ms.
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Founded in 2009, Vantage offers trading on 1000+ short-term CFD products to over 900,000 clients. You can trade Forex CFDs from 0.0 pips on the RAW account through TradingView, MT4 or MT5. Vantage is ASIC-regulated and client funds are segregated. Copy traders will also appreciate the range of social trading tools.
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Established in 2006, FxPro has emerged as a trusted non-dealing desk (NDD) broker offering trading on over 2,100 markets to more than 2 million clients worldwide. It has scooped over 100 industry awards and counting for its competitive conditions for active traders.
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Established in 2008 and headquartered in Israel, Plus500 is a prominent brokerage that boasts over 25 million registered traders in over 50 countries. Specializing in CFD trading, the company offers an intuitive, proprietary platform and mobile app. It maintains competitive spreads and does not charge commissions or deposit or withdrawal fees. Plus500 also continues to shine as one of the most trusted brokers with licenses from reputable regulators, including the FCA, ASIC and CySEC.
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Fusion Markets is an online broker established in 2017 and regulated by the ASIC, VFSC and FSA. It is best known for its low-cost forex and CFD trading, although its multiple account types and copy trading solutions cater to a range of traders. New clients can sign up and start trading in 3 easy steps.
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Established in 2017, Pocket Option is a binary options broker offering high/low contracts on forex, stocks, indices, commodities and cryptocurrencies. With over 100,000 active users and a global reach, the platform continues to prove popular with budding traders.
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GO Markets is an established forex and CFD broker with multiple industry awards and accolades. The ECN/STP broker is popular with budding traders, offering competitive accounts in multiple base currencies and a range of flexible payment methods. With top-tier regulation from CySEC and ASIC, GO Markets is a trusted broker.
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Established in 2007, Axi is a multi-regulated forex and CFD broker that has made strides to improve its trading experience over the years, from expanding its suite of stocks and upgrading the Axi Academy to launching its own copy trading app.
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EagleFX is a forex and CFD broker, established in 2019. The broker uses STP execution on the MT4 platform, offering tight spreads and low commissions. With leverage up to 1:500 and no restrictions on hedging or scalping, EagleFX is an attractive option for short-term traders.
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Founded in 2015, VT Markets maintains its position as a top Australian multi-asset CFD broker. With 1000+ tradeable instruments and support for the MetaTrader 4 and MetaTrader 5 platforms, this broker delivers a wide range of trading opportunities to over 200,000 clients worldwide. VT Markets is regulated by the ASIC, FSCA, and FSC.
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PrimeXBT is a multi-asset platform offering highly leveraged trading in forex, indices, commodities and cryptocurrencies. The company launched in 2018 and now has over 1 million users from more than 150 countries. With no minimum deposit, copy trading features and low commissions, the broker remains a popular option among crypto trading novices.
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FXTrading.com is global broker offering highly leveraged CFDs on 10,000+ assets, including forex, stocks, indices, commodities and cryptocurrencies. Competitive prices with raw spreads and low to zero commissions are available. Traders can use the popular MetaTrader 4 platform and will have access to a suite of additional analytical tools and other resources. The multi-regulated brokerage is authorized by the ASIC and VFSC.
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M4Markets is an award-winning broker regulated by the CySEC, FSA and DFSA. Although relatively new, the broker continues to improve its offering with a range of innovative tools, platforms and accounts. Beginners can start with just $5, whilst experienced investors can access leverage up to 1:5000.
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Founded in 2010, ThinkMarkets is a reputable CFD and forex broker with regulation from several top-tier bodies including the FCA and ASIC. The broker provides services to over 450,000 accounts from 11 global offices. Traders can use a bespoke platform, MT4 or MT5 to access a wide variety of assets including 3500+ stocks and ETFs, 46 forex pairs and over 20 cryptocurrencies.
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Trade.com is a trustworthy online broker with a global presence. The broker offers 2,100+ CFDs in major markets, as well as futures, options and more. The broker offers best-in-class platforms and superior analysis tools for experienced traders. The broker is also regulated by top-tier authorities including the FCA and CySEC.
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IronFX is a multi-regulated forex and CFD broker founded in 2010. This award-winning firm offers 500+ markets to over 1.5 million clients across 180 countries. Traders can access various account types with competitive pricing on the MT4 platform, as well as 24/5 customer support in 30 languages.
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Ingot Brokers is a multi-regulated brokerage established in 2006. The broker offers CFD trading opportunities on 1000+ instruments including forex, stocks, indices, commodities and cryptocurrencies. The broker supports the MetaTrader 4 and MetaTrader 5 platforms and offers both raw spreads and commission-free account options.
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FinPros is an offshore broker that provides CFD trading on 400+ instruments with high leverage up to 1:500. This is a reliable bet for traders seeking offshore options, with strong security measures, negative balance protection and segregated client funds. The extra features including trading tools and commission-free stocks make this a good choice for beginners, and experienced traders will appreciate tight spreads.
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Scope Markets offers trading and investing in multiple spot and CFD instruments. The group of brokers is regulated in several locations, including Belize, Kenya and South Africa. Users get competitive trading conditions, a range of payment methods, strong support and can get started in a few straightforward steps.
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Dukascopy is an online broker operated by a Swiss-regulated banking group. It offers a good selection of 500+ markets, with forex, stocks, gold, ETFs, indices, bonds and cryptocurrencies available. It also offers flexible trading opportunities through the choice of CFDs or binary options. Traders will use MetaTrader 4 or a proprietary platform that is well-suited to automated trading.
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xChief is a foreign exchange and CFD broker, established in 2014. The company is based offshore and registered with the VFSC and FMA. Users can choose between a wide selection of accounts and base currencies, making ForexChief accessible to global traders. The brand also stands out for its no deposit bonus and fee rebates for high-volume traders.
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GoFX is an unregulated CFD and forex broker that covers instruments from currency, stock, index, commodity and crypto markets. Traders can sign up to a variety of account types with deposits as low as $1 and will trade using the popular MetaTrader 4 platform. Exceptionally high leverage up to 1:3000 is offered on the standard account, while traders with the low-spread account can access leverage up to 1:1000.
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Focus Option is an offshore broker that specializes in binary options as well as CFDs. Binary options trading on forex, cryptos and three commodities is done through the broker's simple web-based platform with average payouts between 70% and 95%. The broker also offers a mobile app for trading CFDs, with 300+ tradeable instruments.
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OspreyFX is an ECN broker headquartered in St. Vincent and the Grenadines. Established in 2019, the firm offers 120+ forex and CFD assets with high leverage up to 1:500, tight spreads from 0.1 pips and round-the-clock customer support. OspreyFX also stands out for its funded trading accounts where traders can keep up to 70% of profits.
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Errante is a Cyprus-based and regulated forex and CFD broker with leveraged trading on multiple assets, tiered accounts including a zero-spread option, and copy trading support. The broker offers leveraged trading up to 1:30 under its CySEC-regulated branch and 1:500 from an offshore branch, and supports the MetaTrader 4 and MetaTrader 5 platforms. Errante's asset list is relatively limited but it does offer fast execution and low latency, and it is a trustworthy brand.
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Coinexx is an unregulated broker that provides leverage up to 1:500 on forex, commodities, indices and cryptocurrencies with deep liquidity, pure ECN spreads and negative balance protection. The broker uses crypto as base currencies and has low minimum deposit requirements of 0.001 BTC.
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LonghornFX is a forex and CFD broker offering over 150 instruments with leverage up to 1:500. The firm is registered in Saint Vincent and the Grenadines and was launched in 2020. Clients can access a strong selection of cryptos, alongside forex, indices, commodities and stocks. With ECN/STP processing, this offshore broker promises tight spreads and fast execution.
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Baxia Markets is an offshore CFD broker that offers trading on forex, commodities and indices with tight spreads on a straight-through processing model with ultra-low latency. Trade on MetaTrader 4 or MetaTrader 5 with leverage up to 1:500 and no restrictions to scalping or hedging strategies. Users also benefit from third-party copy trading services.
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TMGM is an ASIC-regulated forex and CFD broker with a vast range of tradeable assets covering forex, stock, index, crypto and commodity markets. The account types on offer provide a flexible choice between no commission or zero spreads, with competitive pricing all-round.
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Anzo Capital is an offshore broker that offers leveraged CFDs on 100+ instruments including forex, stocks, indices and metals. The MetaTrader 4 and MetaTrader 5 platforms are supported, and traders can choose between an STP account with spreads starting from 1.4 pips and zero commission, or an ECN account with a $4 round-turn commission and spreads from zero. A decent range of payment methods are accepted, including crypto deposits.
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AdroFx is an offshore ECN/STP broker that has offered CFD trading since 2018. The firm supports 100+ tradable assets on the popular MetaTrader 4 platform as well as a web trader, Allpips. Eight live accounts are available with no restrictions on trading strategies.
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Global Prime is a multi-regulated trading broker offering 150+ markets. Traders can get started with a $200 minimum deposit and trade with leverage up to 1:100. The firm also has a high trust score and a good reputation with a license from the ASIC.
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ActivTrades is a UK-headquartered CFD and forex broker established in 2001. The award-winning brokerage has secured licenses from trusted bodies, notably the UK’s FCA, and facilitates trading on over 1000 instruments spanning 7 asset classes, with over 93.60% of orders are executed at the requested price.
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Swissquote is a Switzerland-based bank and broker that offers online trading and investing. The company has a high safety score and is listed on the Swiss stock exchange. The firm offers a huge range of products, from stocks, ETFs, bonds and futures to 400+ forex and CFD assets. Hundreds of thousands of traders have opened an account with the multi-regulated brokerage. Clients can get started in three easy steps while 24/7 customer support is available to assist new users.
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SimpleFX is an online broker specializing in CFD and cryptocurrency trading, with multi-currency accounts, STP execution, low pricing and no minimum deposit. Bringing innovation and gaining recognition at numerous industry events since 2014, SimpleFX now caters to retail traders from over 190 countries, boasting a client base exceeding 200,000 active users.
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Fortrade is a multi-asset, multi-regulated broker with branches regulated by the FCA, CySEC and ASIC among others. The brand offers trading opportunities on a wide range of instruments including stocks, bonds, commodities, forex, indices, cryptocurrencies and ETFs, with competitive fees and support for MetaTrader 4 and a proprietary platform.
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Established in 2005 in Australia, FP Markets is an ASIC- and CySEC-regulated broker boasting an extensive suite of tradable assets. Its Standard and Raw accounts cater to traders at every level, while it packs a punch in the tooling department, from the MetaTrader suite and intuitive TradingView to actionable trading ideas from Trading Central and AutoChartist.
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Established in 2005, FXOpen is a multi-regulated broker that has attracted over 1 million traders. Designed for active trading, it provides access to a growing selection of more than 700 markets and supports high-frequency trading, scalping, and all forms of algorithmic trading using expert advisors (EAs).
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Infinox is a UK-based and FCA-regulated broker that offers diverse trading products thanks to its STP and ECN account types and support for MetaTrader 4, MetaTrader 5 and a proprietary platform. Clients can also benefit from a free VPS that can support automated strategies and a social trading platform, catering to both beginner and seasoned traders.
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Hantec Markets was established in Hong Kong in 1990. Initially, the company concentrated solely on the Chinese and Taiwanese markets. In 2008, the broker rebranded and expanded its presence in the UK, Australia, Japan, and various other countries, before enhancing its footprint in Latin America in 2022. Hantec now stands as a multinational brokerage with 18 offices across Europe and Asia.
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Amega is an offshore STP broker offering CFD trading fon forex, stocks, indices and commodities with very high leverage up to 1:1000 and a zero-commission pricing structure. Traders access markets through the MT5 platform and can test the broker's services through a demo account.
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Admirals is a multi-regulated broker with an excellent range of leveraged instruments, including forex, stocks, indices, ETFs, commodities, cryptos and more. The broker supports the MetaTrader 4, MetaTrader 5 and TradingCentral platforms. With both spread betting and CFDs available and thousands of instruments, this broker provides more flexibility than most rivals.
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FXPrimus is an award-winning CySEC-regulated brokerage offering CFD trading on 200+ instruments via the MetaTrader 4, MetaTrader 5 and cTrader platforms. The choice between a competitive commission-free account and two affordable raw spread options make this an accessible broker for anyone seeking forex, stocks, indices and commodities with high leverage.
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RaceOption is a binary options broker operating from the Marshall Islands. With over 1,500 clients, the broker aims to offer fast funding, low fees and a secure trading environment. Traders can access over 100 binary options and CFDs, plus copy trading and weekly prizes.
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FXCentrum is an offshore broker that offers highly leveraged, commission-free trading on diverse instruments with tight spreads. Traders can access forex, equity and commodities markets via MetaTrader 5 or the proprietary FXC platform and use the award-winning ZuluTrade platform for copy trading.
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Exinity provides flexible low-cost trading in FX, commodities, indices and equities alongside unique education and support provided by teams located across the world. Now operating in the Middle East, through regulation from the Financial Services Regulatory Authority in Abu Dhabi and the Financial Services Commission of Mauritius, Exinity provides a range of services to traders and investors looking for new opportunities in the financial markets.
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FXTM is a forex and CFD broker established in 2011 and operating across four continents. The company is secure and regulated by leading authorities, including the FCA. Offering 1,000+ markets and three account types, they cater to all levels of trader.
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Capital.com offer CFDs on a range of markets with competitive spreads and zero commissions. The broker also offers the Investmate app, negative balance protection and leveraged trading.
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Trading 212 is a European and UK-regulated CFD broker that also offers stock investing and ISAs. It’s best known for its commission-free trading model and beginner-friendly app, which has helped it attract 2.5 million users and £3.5 billion in client assets.
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LegacyFX is a multi-asset broker offering an MT5 download & free signals.
How To Compare DAX 40 Brokers
As one of the leading indices in the world, the DAX 40 is available to trade with many UK and international brokers. The competition this draws means that investors can access low fees at reputable brokers but also that investors must spend time comparing them. We have detailed some of the key areas you should look at closely when comparing brokers:
- Costs – this is one of the most important aspects to look at, particularly if you are a high-volume trader opening and closing positions on the asset multiple times a day or every few days. The two main ways DAX 40 brokers make their money is through commission and spreads. Although some brokers will advertise zero commission, make sure to look closely at the instrument’s spread as this may include a hefty markup from the firm. On the other hand, some brokers may offer close to a 0.0 pip spread and then charge large commissions. To give you an idea of how much trades cost, IG charge £3 commission on its DAX 40 ETFs. Brokers should list any deposit and withdrawal charges, expense ratios on ETFs, inactivity fees and currency conversion charges. Fees can also be impacted by whether the firm is a market maker or a no-dealing desk (NDD) broker.
- Trading Platform – although some DAX 40 brokers will have an in-house platform, many will provide access to MetaTrader 4 (MT4), MetaTrader 5 (MT5) or TradingView. Each of these has its pros and cons, so work out what your investing strategy will be for the DAX 40 (i.e technical or fundamental analysis) and then look for the features on the platform that will allow you to execute this strategy. For example, MetaTrader has an abundance of built-in and community-built indicators, making it a popular choice for those undertaking technical analysis.
- Customer Service – technical issues are likely to occur when investing over a long period, which is why it is important to ensure you have access to real-time support with DAX 40 brokers. The index’s main trading hours are on weekdays, so 24/5 support may be sufficient, although there are some brokers now that provide 24/7 support. The best companies have live chat, phone and email contact methods, making them easily available to all.
- Regulation – we always recommend choosing a regulated DAX 40 broker. The FCA and CySEC are both examples of reputable regulatory authorities. These agencies provide more protection to investors and monitor the firms they regulate to ensure they comply with the rules. In addition, many DAX 40 brokers are members of an investor compensation fund, which insure clients up to a certain amount should the broker go into insolvency.
What Is The DAX 40?
Overview
The DAX 40 began as the DAX 30, which was established in 1988 and contained the 30 largest companies on the Frankfurt Stock Exchange by market capitalisation. In September 2021, the 30 became 40 when ten new companies were added to the index, meaning DAX 40 brokers could offer a more diversified index. It is also known as the GER 40, the DE 40 and the Deutscher Aktien Index. One explanation for the change is that the Frankfurt Stock Exchange wanted to shake things up after the 2019 Wirecard scandal.
This index is a blue-chip index, which means it contains some of the most famous companies in the world, including BMW, Siemens and Airbus. This, alongside the fact that it is the primary index for Germany, Europe’s largest economy, means that it is trusted by many investors around the world.
The DE 40 is a performance-based index, which means dividends are taken into account. This is not the case with many indices elsewhere in the world. Prices are calculated every second by Xetra, which is an electronic trading system. The Frankfurt Stock Exchange is also home to the MDAX index.
Composition
The concentrated nature of the DAX 40 has led to many comparing it with the Dow Jones, which consists of 30 US companies. Despite being relatively concentrated when compared with indices like the UK’s FTSE 100 or the Nasdaq 100 and S&P 500 in the USA, the addition of ten new companies in 2021 did allow DAX 40 brokers to offer a more diversified index and reduce the influence of any one company.
The GER 40 covers several different sectors of the economy, including automobiles, financial services and clothing. The chemical industry represents around 16% and the insurance industry around 10%. Although there are other indices linked to the Frankfurt Stock Exchange, roughly 80% of the average market cap of the FSE is represented by the DAX.
Opening Hours
DAX 40 brokers support investing during the FSE’s opening times, which are 07:00 to 21:00 GMT on weekdays, although some offer opportunities to trade extended hours. City Index allows investors to buy and sell the instrument from 23:00 GMT on Sunday to 21:15 GMT on Friday (with regular trading breaks).
What Is The DAX 40 Used For?
German Economy
Given that companies on the DAX 40 must have a legal or operating base in Germany, the index can provide a strong indication of the strength or weakness of the German economy. That said, there are only 40 companies on the index and, despite being spread across multiple sectors, there are still large numbers of companies unrepresented, which limits its value as an indicator of the domestic economy. In addition, many of the companies have strong links to other economies, particularly the US.
Global Economy
Many of the companies available from DAX 40 brokers, such as BMW and Porsche, focus heavily on overseas markets, making the index a good indicator of the global economic mood. For example, the DE 40 may lose value if the US economy goes into recession as this could reduce exports and revenue for some of its members. In fact, around three-quarters of sales from DAX 40 companies are earned abroad. Some investors may therefore use DAX 40 brokers to help assess global economic performance.
Diversification
Warren Buffet said that “a low-cost index fund is the most sensible equity investment for the great majority of investors.” The diversification that indices provide makes them popular choices for investors and the DAX 40 is no different. One company may lose value in a day but if others have increased their share price, this may still mean investors achieve a profit once the investing session closes.
Trade & Speculate
DAX 40 brokers are popular with traders around the world because the index provides an opportunity to profit from changes in its value. Some investors may wish to keep their money in the DAX 40 for months and years in the hope that its value increases over time. Others may look to profit from an upcoming announcement. For example, if the European Central Bank or Federal Reserve is meeting to decide interest rates. The latter is a riskier approach but may produce greater profits, though sometimes it is better to watch the dust settle after a major announcement and then make your move.
Live Price Chart
How The DAX 40 Works
Qualification
DAX 40 companies must be on the Frankfurt Stock Exchange and have at least 10% of their shares held by the public (i.e not by insiders). This is also referred to as the free-float methodology. New members must report two years of positive earnings before interest, taxes, depreciation and amortisation (EBITDA) and have a legal or operating base in Germany. The company must also be listed in the Prime Standard segment of the Frankfurt Stock Exchange, which has higher transparency standards than the General Standard segment.
Changes
The DE 40 index is reviewed every quarter with any changes determined by the Board of the German Stock Exchange. Companies lose their place if they are no longer in the top 45 and gain a place on the index if they enter the top 25. This avoids unnecessary changes to the index if a company were to temporarily move just outside of the top 40. The changes are then updated on the platforms used by DAX 40 brokers.
Weighting
When investing with DAX 40 brokers, it is important to remember that not all companies affect the index in the same way when their value changes. Companies with larger market caps impact the index more than smaller ones, although no single company can have a weighting of more than 10% of the index. An example that shows this weighting in action is that, in October 2020, SAP dropped 20% but only produced a 2.6% decline in the index, despite being the largest company at the time.
Key Facts
- A high of 16,271.75 was reached in 2022
- The return in 2019 on the DAX 40 was +25.48%
- The addition of ten new companies in 2021 reduced the impact of each company
- Since 2010, there have been three years with negative returns (2011, 2018 and 2022)
- Between January 1999 and December 2022, the average annual return of the DAX was 4.24%
- On the DAX’s 40th birthday, 15 companies present when the index was established were still there
Biggest Players
Below we have listed the largest companies on the index that most DAX 40 brokers will also have available as stock instruments to trade:
- Linde (LIN) – a global industrial group with a market cap of $165.20bn
- SAP (SAP) – a software company with a market cap of $141.24bn
- Siemens (SIE.DE) – the largest industrial manufacturing company in Europe with a market cap of $128.60bn
- Porsche (P911.DE) – automobile company with a market cap of $113.28bn
- Deutsche Telekom (DTE.DE) – telecommunications company with a market cap of $108.85bn
- Airbus (AIR.PA) – aircraft manufacturer with a market cap of $100.19bn
- Allianz (ALV.DE) – insurance company with a market cap of $96.90bn
- Merck kGaA (MRK.DE) – a multinational science and technology company with a market cap of $86.24bn
- Mercedes-Benz (MBG.DE) – an automobile company with a market cap of $84.46bn
- Volkswagen (VOW3.DE) – an automobile company with a market cap of $81.62bn
Why Trade With DAX 40 Brokers?
There are several reasons why traders may wish to invest in the DAX 40:
- Diversification – the DAX 40 is made up of 40 different companies. This means that investors are not putting all their eggs in one basket and, should one company fail, the impact is reduced.
- Easier To Spot Trends (Sometimes) – some say that it is easier to spot trends when trading the DAX 40. This makes it more attractive to those undertaking technical analysis and may open up more opportunities for profitable positions.
- Large Market Cap Companies – because the index is made up of the 40 largest companies in Germany by market capitalisation, all the firms in it have a market cap of at least $9.16bn. These large companies are often a safer investment than trading penny stocks.
- Hedging – some traders may use DAX 40 brokers to hedge against other assets they hold. For example, the Euro is often negatively correlated to the index. This is because, as the euro strengthens, it makes exports from Germany (and the wider Eurozone) more expensive, which can impact the profits of firms in the DAX 40. Therefore, one holding euros may wish to invest in the DE 40 to protect their position should the euro decline in value.
How To Invest In The DAX 40
Indices cannot be invested in directly with brokers in the same way that you may invest in an individual stock as they are not an instrument in themselves. Instead, many use derivatives that track the value of the index. DAX 40 brokers like Admiral Markets offer ETFs and CFDs that do this.
Tracker ETFs are the simplest way to invest in an index as the fund’s performance will be specially designed to mimic that of the index. CFDs are leveraged derivatives, which means you can gain more exposure to the index, though for increased risk.
Other derivatives that DAX 40 brokers may offer include futures, options and spread betting. Exchanges like Nadex offer DAX 40 binary options contracts. In addition, you can choose to invest in individual companies within the index. We look at how to review these companies in more detail below.
Choosing A DAX 40 Stock
When choosing constituent stocks to gain full or partial exposure to the index, there are a few important considerations. The key idea is to assess the intrinsic value and fundamentals of the company. Have a look at the company’s income statement, balance sheet and cash flow, which some DAX 40 brokers may provide access to directly.
A large positive free cash flow can indicate that the company’s financial health is strong. It is also important to ensure you buy the stock at the right time. This means entering the market when the stock is undervalued rather than overvalued. Indicators like the p/e ratio and forward p/e ratio can help to understand the value of the stock. Also, look at what the analysts are saying and whether they are bullish or bearish.
Volume
Volume data showing the number of shares traded for a particular period helps confirm when a price movement in a DAX 40 stock is significant. The price of a stock may move sharply but, if the volume is low, you should be cautious before adding weight to this. The higher the volume, the stronger the signal. Investors often use volume as part of their technical analysis strategy to understand whether a trend is strengthening or whether it is losing momentum and possibly indicating a trend reversal.
Not all DAX 40 brokers have access to the same level of data. After all, data costs money. When choosing a broker, look carefully at what they can offer you.
Volatility
Volatility in the DAX 40 creates opportunities for traders to profit. That said, too much volatility can create unnecessary risk. The main measure of local volatility is called beta, which compares a stock’s return with a corresponding benchmark. So, if the beta is 1.5, this means the stock moves 150% for every 100% in the benchmark. Numbers below 1 indicate that the stock is less volatile than the benchmark. Another way to look at it is that, if the DE 40 rises 5%, a stock with a beta of two would move 10%.
DAX 40 Broker Investing Strategy
Before picking a strategy to use with DAX 40 brokers, you need to get your timing right and operate when the market is most liquid. This is often in the first hour of the asset’s trading session, which means you need to be up early before the session opens to see whether there has been any overnight news that could influence the market. We would also recommend limiting exposure to 2% account capital on all open positions. Those using technical analysis may want to adopt one of the following popular strategies.
Range Trading
The DAX 40 sometimes fluctuates within a range between a support (lower) level and resistance (higher) level, rather than trending either positively or negatively. Those that can identify this limited range can profit from these fluctuations. The first step is to draw the support and resistance levels on the chart using horizontal lines. There must be at least two points where the price has failed to pass both the support and the resistance levels. Bollinger Bands can also be used as an indicator. We recommend you use candlesticks to look for signs that the price movement is reversing once it reaches either the support or resistance levels.
Suppose the price is approaching a defined resistance level. You may then identify a shooting star candlestick, which indicates that the price movement may go from positive to negative. Next, open a short position and close it once the price reaches the support level. You can also use a stop loss to protect against any significant breakouts from the range.
Bullish/Bearish Engulfing Patterns
Another strategy that can be used with DAX 40 brokers is the bullish/bearish engulfing patterns. The bullish pattern appears when the price has been dropping and then there are two candlesticks (using either a one-hour (H1) or one-day (D1) timeframe) – the first is a bearish candlestick and the second is bullish and completely covers the first. The higher the second candlestick rises, the stronger the signal. It indicates that the downward trend could be reversing. A bearish engulfing pattern is the opposite, where a positive trend reverses to become a negative one.
DAX 40 Tips
News
Always follow the news when investing with DAX 40 brokers. The index can respond heavily to current events so you must be aware of these to help you navigate the market. Examples of key events include interest rate decisions of the Federal Reserve or European Central Bank, changes in national governments, significant constitutional events like Brexit, terrorist attacks or a slowdown in major global economies like the US and China. Also, keep an eye out for changes in the value of the EUR/USD currency pair, which can impact the revenue of stocks on the DAX 40 as many of them have multinational operations.
Bloomberg, Yahoo Finance and Reuters are excellent and reliable sources of news impacting the markets. Much of this information is free, although some stories may sit behind a paywall. The Motley Fool is another good source of analysis, much of which is easy for beginners to understand.
Many DAX 40 brokers themselves often have market news, forecasts and economic calendars on their websites that you can use for free. In addition, there is market analysis and data on the Frankfurt Stock Exchange website.
Educational Resources
We recommend that investors of all abilities make use of the educational resources provided by DAX 40 brokers, particularly beginners and those without experience in trading the index. The best brokers will have the following:
- Glossary – these provide a list of trading jargon with clear and concise definitions
- Webinars – DAX 40 brokers may host a mix of live and pre-recorded webinars, which may be free or come at a cost
- Guides/Articles – DAX 40 brokers may put together a simple guide explaining what the index consists of and how they recommend trading it
- Tutorial Videos – we recommend watching tutorial videos if you learn visually as they can often help to explain complex factors influencing the index in a simple way
Automation
Investing in the DAX 40 using automated trading may involve copy trading or algorithmic investing with a bot. Copy trading can be an excellent choice for beginners who want to mimic more experienced traders. Some DAX 40 brokers offer this directly but many copy traders charge for this service.
More experienced investors may wish to develop their own bots to trade the index. Apart from saving time, this also helps remove human emotion from the equation. MT4 and MT5 have their own programming languages (MQL4 and MQL5), which you can use to develop their bots. Other platforms will often provide API access for self-built automation tools.
Backtesting
Backtesting is an important part of any investing strategy used with DAX 40 brokers. No trading strategy is perfect and it requires constant refining to make it more successful. Testing the system on historical DAX 40 data can be a useful way to identify its strengths and weaknesses and make appropriate changes.
Journals
Many retail traders fail to learn from their mistakes and end up repeating them. One way to avoid this is by keeping an investing journal, perhaps on an Excel spreadsheet, and reviewing it to adapt your strategy. Important details to note in the journal are the opening and closing positions, position size, date, strategy and, of course, whether the trade was successful or not.
Bottom Line On DAX 40 Brokers
Investing with DAX 40 brokers from the UK is an excellent way to profit from volatility in the German economy and gain exposure to a diversified basket of European stocks. The best firms are those that provide simple, low-cost access to the index, such as via a tracker ETF and have market forecasts and analysis. When trading the index, it is important to remember that it is not just impacted by the German economy but also global events, given the multinational operations of many of its members.
To see our list of the five best UK brokers offering the DAX 40.
FAQ
Which DAX 40 Brokers Are The Best?
The best DAX 40 brokers are those with low trading fees (low or zero commission and/or raw spreads), a good investing platform like MT4 or MT5, excellent customer support options and a strict regulator like the FCA.
What Are The DAX 40’s Opening Hours?
The main Dax 40 trading hours are 07:00 to 21:00 GMT on weekdays. However, some brokers offer extended hours, which operate after the FSE has closed.
What Factors Can Influence The Price Of The DAX 40?
The DAX 40 can be influenced by a range of factors including, interest rate decisions of the ECB and the Fed, economic growth forecasts in Germany and elsewhere in the world, changes in national governments and events like Brexit.
What Is The Difference Between The DAX 30 & The DAX 40?
The DAX 30 is the predecessor of the DAX 40. In 2021, ten companies were added to the index to make it the DAX 40.
Do All Companies On The DAX 40 Affect The Index In The Same Way?
No. Companies have different weights on the index depending on their relative market cap. The larger the market cap of the company, the more its performance will impact the index. No company can hold more than a 10% weighting.