DAX is one of the largest stock indices in Europe and the world. When forming the index, the prices of the Frankfurt Exchange are taken as the basis. The index includes 30 large German companies. In simple words, the DAX index shows the average value of the German market.
Characteristic of an Asset
As already mentioned, DAX includes many of Germany’s largest companies such as: Adidas, BMW, Deutshe Bank and others. Each company holds a certain percentage of the asset. Accordingly, work with the asset should be carried out taking into account the current position of the companies included in the asset in the market, namely capitalization, the state of the entire industry in which the company operates. But the index includes quite a lot of companies, considering that each of them affects DAX differently, it becomes quite difficult to carry out analysis.
Therefore, it is much easier to analyze not the state of individual companies, but the state of the economy of the country as a whole. This approach is much easier and quite effective, because many will agree that the position of the largest companies in the market has a rather strong impact on the economic performance of the country. Therefore, a trader wishing to earn on DAX must first use fundamental analysis.
What Affects the Index?
The most powerful impact on DAX is the baseline of the country’s economy, i.e. Germany’s GDP. After GDP, this index is influenced by the overall situation in the country, namely unemployment, retail trade, industrial production, consumer price index and others. Such information is publicly available and can be found on any news site. Economic calendars are the most suitable for such purposes, from which it is possible to learn not only the current state of affairs, but also various forecasts. Here everything is simple, in case the key factors of the economy deteriorate, DAX will react by falling if the index improves. At the same time, the strength of the reaction will depend on how important the news is.
It is worth noting that DAX is influenced not only by economic indicators. The growth of the index may also be influenced by events on which the state of the economy will depend, for example, a natural disaster, a political strike.
Technical Analysis of DAX
If you prefer to use exclusively technical analysis of the market situation in the trade, the tool from TradingView will be a great choice. Open items designed to raise the index only when the value «Actively Buy» is set in all four periods. Accordingly, «Active Sale» will be suitable for price reduction transactions.
Here it is important to bear in mind that a trade can only be opened when all values are the same. If even one value is different, it is worth refraining from conducting a trade.
On which Platforms can you use this Index?
Today, most platforms are able to work with the DAX index. Some have the option of choosing different options that offer some advantage. Therefore, there should be no problems with site selection.