Tips for Trading the DAX 30 Index

The DAX 30 (Deutscher Aktienindex) is a stock market index that represents 30 major German companies traded on Frankfurt exchange. The price of the DAX 30 can be traded online via contracts for difference (CFDs), which let you profit whether the price moves up or down. This article will give you several useful tips to trade the DAX 30.

Factors That Affect the DAX 30’s Movement

The DAX 30 index tracks 30 of the largest German companies, so the first factor affecting its moves is the price movement of these companies. However, as an individual trader, you will not be able to keep track of all the price movement and performance of all 30 companies.

So to track the DAX 30 index efficiently, consider the economic outlook of Germany and Europe in particular, and the global economic outlook in general. When the German/European economy looks strong and the global economic outlook is positive, the DAX 30 index is likely to increase.

Economic reports will give you clues about the health of the Eurozone and German economy. Use an economic calendar and pay close attention to the following data releases:

• Eurozones GDP
• CPI Flash
• German ZEW Economic Sentiment
• German Flash Manufacturing PMI
• German Flash Services PMI
• German Ifo Business Climate

Political events, as well as the European Central Bank (ECB)’s interest rate decisions and announcements, will also affect the DAX 30’s movement. Therefore, you need to keep a close eye on the ECB’s meetings and the speeches of President Mario Draghi. Besides, don’t forget to check news updates on financial portals.

Tips For Trading the DAX 30 Index

1. Prioritize Long-Term Trading

Long-term trading of indices is always better because indices’ trends are often very sustainable.

Most professional traders use a daily chart when trading indices. Some traders also trade on weekly or monthly timeframes.

You should also think long-term when conducting fundamental analysis. Don’t pay too much attention to every economic report published daily or weekly. Try to focus on the big economic picture.

2. Use Long-Term Moving Averages to Determine Trends

Because the DAX 30 is a bluechip index, the upward trend is always mainstream. At the time of writing, the DAX 30 has been in an upward trend for more than 9 years and has increased by about 3 times since 2009 (measured at its all-time high of 13,500 in January last year). Imagine how much profit you could make if you just placed a buy order and kept it rolling over the last 10 years.

So, think about long-term moving averages and try to use “buy and hold” tactics. The moving average lines used by professional DAX 30 traders are SMA (100), SMA (150), or SMA (200).

3. Don’t be Daunted by Fluctuations

The DAX 30 index price will occasionally swing hard. However, you should not rush to act when you see these fluctuations. As mentioned earlier, stock indexes’ trends are usually very sustainable, and prices will often return to the trend quickly after a short period of oscillation. So, don’t try to trade these seesaws or don’t rush to conclude that the DAX 30 trend has reversed.

The Bottom Line

You have now learnt several tips for trading the DAX 30. In general, this is not a difficult index to trade. All you need is perseverance and a cool head. Think of long-term perspectives, eliminate short-term factors, and you’ll soon join the group of successful DAX 30 index traders.