DAX 40 Trading Strategies and Tips


Popularly known as the DAX 30, the giant German stock exchange index allows ten more companies to become DAX 40 starting from September 2021. The index comprises some of the largest German publicly listed companies that trade on the FSE (Frankfurt Stock Exchange). The index launched its services in 1988 and started with a 1,000 base value. The Xetra system calculates the DAX price for each second of trading.

Unlike many other trading indices, DAX 30 index is performance-based. It considers the company’s cash disbursements, capital gains, and dividends when determining the net stock price. DAX 30 is the equivalent and worthy competitor to FTSE 100 UK and CAC 40 in France.

DAX Forex Trading Strategy

The DAX 30 or the new DAX 40 is one of the largest and most active indices traders use globally. Its high degree of liquidity, extended trading hours, and some of the tightest trading spreads are some of the factors that make it a favorite for many traders. DAX FSE trading hours start from 09:00 GMT to 17:45 GMT.

Most of established and reputable forex trading platforms that provide the DAX index offers traders before and post-market indications. Giving the market indications helps the traders to gauge the expected opening time for the markets, and after the closing time, where quoted.

Another reason the DAX 40 index is a favorite market for many traders is that it is easy to spot. Unlike some technical patterns that make it hard to tell the direction of the price or market trends on many timeframes, DAX patterns are clean and easily readable. Forex traders worldwide want to gain more trading exposure or add to what exposure to equities they have, using DAX as their trading strategy.

DAX Trading Tips and Strategies

Before entering into a trade, the trader should understand fully the medium they want to use and the product they are trading. DAX is versatile, and traders use it for different activities such as trading futures, forex, and spreads. It is also crucial for the trader to know the reasons behind entering each trade and not fall victim to market noise.

Like many other trading strategies, trading DAX 30 or DAX 40 requires discipline, consistency, and for one to be psychologically up to trading. It is also similar to any trade that involves buying and selling financial assets with reasons for entering and exiting a trade at the most appropriate time.

The best time to trade DAX 30, which will soon be DAX 40, is when the liquid condition in the market is at its high levels. Traders risk blips or spikes that might break away from the standard trading patterns if they trade in markets with low liquid conditions. The following tips will help you to become a better trader with DAX.

  • Avoid entering any trade before a major data release because you will be risking. After a release, wait for the dust to settle, and then make your move. Do not gamble with the fact that the data release might be in your favor.
  • Before placing a long or short trade, ensure that you have a firm stop loss put first.
  • Do not buy into the idea that you can make faster profits by buying at the bottom and selling at the top. It might work in some cases, but it might increase risks on some impossible trades.
  • Even when trading DAX 30 or DAX 40, it is crucial to maintain a comprehensive recording of all your trades. Keeping a record allows you to look back at your reason for entering the trade, your feelings at the time, and trade progress and outcome. The records also help prepare you for the following trades because you learn how to correct the mistakes.
  • It is always advisable to decide what your risk-reward is before entering any trade. For example, you can make three units by risking one unit.
  • It is imperative to be in a good place before you start trading. Do not carry out an emotional trade and do not trade because you are bored or do not have anything better to do. Even using the detailed DAX 30 index will not bring you much success if you are tired or distracted.
  • One of the mistakes many traders make is placing large amounts of their capital on a single trade in the hope that it will work positively for them. Even if you feel too strongly about a trade, resist placing large amounts of money on just one trade. Limit your risk exposure by placing your capital on several open trades.
  • Test your technical analysis tools rigorously if you use them to decide the DAX 30 levels to trade. Ensure that you are comfortable before entering any trading –positions, and do not forget to determine your entry, exit, and stop-loss points.
  • Trading trends using DAX 30 can be short-term or long-term. Before trading, you should first select the timeframe that works best for your trade. It could be a one-hour time frame, a week, a few weeks, or a monthly time frame, and so on. You can also choose multiple time frames to better your chances of making a profit.

Wrapping it up

Trading can be challenging whether you do it full-time or part-time. Some trading strategies make the trading sessions even harder to cope with, but with a constant update of your trading techniques and study of the different strategies on offer, there is no reason you cannot succeed. DAX 40 offers traders various products to trade, and with the right trading platform to help you discover your weakness and strengths, it should be one of the best strategies to use.