DAX Future Trading
First Published date: 31. October, 2022Last Updated: 23. November, 2022Fact-checked by Adrian Müller
DAX Future trading has proven profitable for many investors and traders. This makes sense, considering how impressive the DAX index is. That’s why many investors and traders are willing to start their journey. If this seems a bit intimidating to you, then don’t worry.
This guide will dive deep into everything you need to know about the FDAX and how you can trade it. We’ll also discuss some essential strategies, trading hours, and fees. So, let’s get started.
Table of Content
What Is DAX Future?
If you’re in the investing space, you must have heard about Futures. It’s difficult to not as they are a very popular day trading market.
Future trading will have a contract. That’s the most important distinction between the two. It refers to the number of different indexes, commodities, and currencies traded. It takes the collective number for all of these.
When compared to the traditional stock market, there are some differences. An important one is that there are no specific restrictions – at least when talking about time. So, traders can buy and sell Futures whenever the market is open.
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The markets are called Future markets trade contracts, and the trades are called “future contracts.” It’s simply an agreement between the seller and buyer stating that a particular asset will be sold or bought for a specific price in the future. These assets can be different currencies, commodities, or indices.
DAX Future is simply that, but Futures traded on the German stock market. DAX refers to the stock index for the German stock market and stands for Deutscher Aktienindex. It was created in 1988. DAX Future is also called FDAX.
Initially, it had a base index of 1000 DAX member companies, which made up 75% of the total market cap on the Frankfurt Exchange. So, these are pretty big companies.
The DAX is based on 30 popular stocks. You’ll find notable names like Volkswagen Group, Lufthansa, BMW, Adidas, Siemens, and more.
What You Should Know About DAX Future
One important thing you should know about FDAX is that the DAX index gets updated with Futures for the coming day. This differs from other indexes, and happens even when the main stock exchange is closed.
This means index members can be removed if they aren’t ranking high, typically the top 45 companies in Germany. However, companies need to be in the top 25 to be added to the stock index and future traded. You must remember that these changes are made on regular dates.
There are some similarities between DAX and FAX Futures, among others. One is similar to other indexes or futures – it has specific requirements for listing securities that can be traded. You would need all the usual documents, such as annual reports, regular financial reports, capital requirements, and even audited earnings reports. FDAX also has higher margin requirements compared to other Futures.
Mini-DAX Future
Along with FDAX, you’ll often hear another term, Mini-DAX Future. This is something you should also know. In essence, Mini-DAX Future is designed alongside DAX Future.
It’s a way for investors to hedge opportunities and gain exposure. Of course, this is meant for global investors. It can also be an excellent way for investors to get exposure to the German benchmark index.
There’s a significant difference – the contract size. Mini-DAX Futures are significantly smaller than the regular future. They’re five times smaller.
Some Key Advantages Over ETFs And CFDs
When discussing Futures, the natural conversation of Futures vs. ETFs or Futures vs. CFDs comes up. You’ll need to understand the advantages to determine which works best for you.
So, let’s take a quick dive into that. Mini-DAX Futures has some key advantages, so we’ll keep these short and to the point.
- Non-existent Management Fees: One of the biggest benefits is that you won’t need to pay any management fees when trading Mini-DAX Futures. Compared to DAX 40 ETF, this can be quite appealing for some investors.
- Trading Tool: Tactical trading tools give investors everything they need to craft a bullet-proof strategy. Although, you need to be smart about it. There’ll always be wins and losses in investing. But the tools give you the platform for success.
- Round-the-Clock Trading Access: You get round-the-clock trading access. This 24/7 access is perfect for trading around big events.
- Capital Efficiency: The margins are also more capital efficient than DAX 40 ETF direct investments.
- Low Tracking Error: The underlying index is tracked accurately. So you don’t have to worry about any tracking errors.
Mini-DAX Future also has some excellent, compelling advantages over CFDs. Two of the most highlight-worthy ones are transparent pricing, high liquidity, and a tight spread during trading hours. Mini-DAX Futures are also regulated with independent exchange surveillance.
Specifications & Detailed Information
| Delivery Month | Opening Price | Daily High | Daily Low | Last Price | Settlem. Price | Traded Contracts | Open Interest | Open Interest (adj.) |
|---|---|---|---|---|---|---|---|---|
| Dec 22 | 12,420.00 | 12,737.00 | 12,390.00 | 12,670.00 | 12,674.00 | 69,058 | 108,001 | 92,334 |
| Dec 23 | 0.00 | 0.00 | 0.00 | 0.00 | 13,072.00 | 0 | 0 | 0 |
| Mar 23 | 12,588.00 | 12,718.00 | 12,588.00 | 12,718.00 | 12,745.00 | 52 | 151 | 141 |
| Jun 23 | 0.00 | 0.00 | 0.00 | 0.00 | 12,882.00 | 0 | 0 | 0 |
| Sep 23 | 0.00 | 0.00 | 0.00 | 0.00 | 12,978.00 | 0 | 0 | 0 |
| Dec 24 | 0.00 | 0.00 | 0.00 | 0.00 | 13,506.00 | 0 | 0 | 0 |
| Mar 24 | 0.00 | 0.00 | 0.00 | 0.00 | 13,181.00 | 0 | 0 | 0 |
| Jun 24 | 0.00 | 0.00 | 0.00 | 0.00 | 13,320.00 | 0 | 0 | 0 |
| Sep 24 | 0.00 | 0.00 | 0.00 | 0.00 | 13,415.00 | 0 | 0 | 0 |
| Mar 25 | 0.00 | 0.00 | 0.00 | 0.00 | 13,607.00 | 0 | 0 | 0 |
| Jun 25 | 0.00 | 0.00 | 0.00 | 0.00 | 13,753.00 | 0 | 0 | 0 |
| Sep 25 | 0.00 | 0.00 | 0.00 | 0.00 | 13,854.00 | 0 | 0 | 0 |
| Total | 69,110 | 108,159 | 92,482 |
How And Where Can I Trade DAX Future?
Let’s dive into some actual trading. How can you trade DAX Future? Well, before you start trading, you must understand one thing, FDAX is a leveraged derivative. You, as the investor, must understand the financial market and general investing rules.
While trading FDAX isn’t exactly rocket science, prior expertise and knowledge will go a long way. Before we dive into how there’s some housekeeping, you will need to understand the differences between trading and investing.
What Are The Differences Between Trading And Investing?
There are two main ways to talk about exposure to DAX. One is trading, and the other is investing. These two are not the same at all. Trading doesn’t involve buying stocks or any funds.
You’ll be using derivatives to make a prediction or speculate its movement. This is different from investing since you’re taking direct ownership when investing. Trading is done over the short term, whereas investing is done over the long term.
How To Trade DAX Future?
There are a couple of different ways traders can trade DAX Futures. Specifically, there are three. Let’s take a more in-depth look at each one.
1. Trading with RSI
The first approach is DAX Future day trading with RSI. It’s a simple approach. The main thing here is the RSI – Relative Strength Index indicator. In this approach, losses can be a part of the strategy itself.
But keep in mind that you don’t aim for losses. Only when it benefits your overall trading strategy and end goal.
When using the RSI approach, you should take only one trade daily. Sticking to this rule requires discipline and self-control.
2. 2-Hour Range Breakout
The second approach is to use the 2-hour breakout. You’ll discover many traders only focus on the first hour or so. But the first hour can be hit or miss. It can be profitable or not profitable at all.
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What you can do instead is focus on the first 2 hours. That’ll give you a better grasp of the market, and the stats can also change drastically. You can cut through all the noise when you wait for the first two hours.
It’ll help you look for better opportunities when trading within a range. In this strategy, you’ll draw two horizontal lines on the low and high for the trading sessions for the first 2 hours. Then, you’ll need to observe the volumes.
3. High And Low Buy/Sell Tactic
One thing you’ll realize pretty early is that DAX Futures tend to follow trends strongly. Trends are always good, as they give you a framework on to base your decisions. Once a trend is established, price action is much more certain.
This is where you can look into 30-minute DAX Future trading strategies. You’ll buy when the price closes above the previous day’s high. When it comes to selling, do the opposite, sell when the price closes lower than the previous day’s low.
Select A Trading Platform
Alright, so the strategies are reasonably straightforward. But to get started with trading, you’ll need to settle on a trading platform. A future trading platform will make your life easier. They’ll typically have all the elements and features you need.
Ease of Use
That’s why it’s important to choose the right platform first. Traders should look into the ease of use. This is important as you don’t want to fumble around with the controls and tools when it’s time to trade. Pick an intuitive and easy-to-use platform, and you should be pretty set.
Order Types
Also, pick one that has multiple order types. This will help with risk management. Trading can be risky but also very rewarding.
It’s still best to constantly think about how to manage your risk best. That’s the mark of intelligent investors.
Commission And Fees
Once you have all this set up, look into commissions and fees. This is also important as not all platforms charge the same fees or commissions. Some are more, and some are less.
Advanced Features
If you’re experienced and want more advanced features, then APIs and mobile support can also be of great value. These will make things much more convenient for you. Most full-service online brokers will have options for future trading. The main idea of choosing a trading platform is to pick one that works best for you.
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The Trading Plan
Ask any intelligent and experienced trader, and the most crucial advice they’ll give you is to have a plan. We have another section on some bonus strategies, but more on that later. Creating a solid future trading plan will help you be more methodical.
You’ll need clearly defined strategies for entry and exit. Risk management rules and guidelines must be there too!
There can be different strategies based on different analyses. You might prefer technical analysis, or you might like fundamental analysis. Based on that decision, your overall strategy might change a lot.
In Futures trading, traders will usually work with three types of plans. Long plans are when you buy Futures and profit on a price increase. A short is the opposite; you buy Futures and profit when the price drops.
Finally, we have the spread. A spread is when you buy Futures simultaneously, and your profit is on the relative difference.
Trading Hours (Regular Trading Day & Last Trading Day)
DAX Future trading hours begin from 8:00 AM and continue till 10:00 PM. This is for Europe, though. If you’re looking at Eastern times, it’s between 2:00 AM and 4:00 PM in the US.
As mentioned before, the margin requirements are slightly higher compared to others. A good time to start trading is at 9:00 AM in Europe.
Regular Trading Day Hours
| Pre-Trading | 02:00 |
| Trading | 02:10 |
| Post Trading (Full) | 22:00 |
| Late 1 | - |
| Late 2 | - |
| Restricted | 22:30 |
Last-Day Trading Hours
| Pre-Trading | 02:00 |
| Trading | 02:10 |
| Post Trading (Full) | 13:00 |
| Late 1 | - |
| Late 2 | - |
| Restricted | - |
Transaction Fees
There are some transaction fees involved with DAX Future trading. Here’s a detailed breakdown of the transaction fees you must keep in mind.
| Type | Fee Amount/per contract or transaction |
|---|---|
| Exchange transactions: Standard fees (A-accounts) | EUR 1.15 |
| Exchange transactions: Standard fees (M- and P-accounts) | EUR 0.70 |
| Position Closing Adjustments (A-accounts) | EUR 2.30 |
| Position Closing Adjustments (M- and P-accounts) | EUR 1.40 |
| TES transactions / Eurex EnLight: Standard fees (A-accounts) | EUR 1.40 |
| TES transactions / Eurex EnLight: Standard fees (M- and P-accounts) | EUR 1.10 |
| Cash settlement (A-accounts) | EUR 1.15 |
| Cash settlement (M- and P-accounts) | EUR 0.70 |
| Position transfer with cash transfer | EUR 7.50 |
Trading Strategies For DAX Future According To Professionals
No trader should start trading DAX Futures without a solid trading strategy. The best thing you can do is to use trading strategies that professionals use.
In trading DAX Futures, strategies like mean reversion, gap, and breakout are the most successful.
Mean Reversion Strategy
In trading, the mean reversion strategy is the opposite of momentum. It’s also the opposite of trend-following. It’s a strategy that assumes that any trends will reverse and return to the mean. You might be familiar with the term regression in statistics.
Data or information that is of normal distribution is likely abnormal. As such, it’s expected to return to the mean sooner or later.
Let’s see an example. Take coin flipping, for instance. When you flip a coin, the chance of it landing on a head or tail is 50-50. If you flip it 100 times, there’s a 67% chance that the interval will be 55 to 45.
The more you flip the coin, the closer you’ll get to 50-50. This is an important trading concept. It’s called the law of large numbers.
Stocks are mean revertive in the short term. Stock markets have sectors that aren’t very correlated. But you need to understand that it doesn’t work in all markets. You can read this guide on mean reversion to better understand.
Gap Strategies
In trading, a gap is referred to as something specific. A gap is a price level that isn’t traded between closing and opening the following day. These gaps occur in any time frame.
Overnight Gaps
Overnight gaps can be very profitable. It happens when news and discrepancies accumulate between the open and the close. The price opens either higher or lower the next day. Here’s another thing, most overnight gaps are called “common gaps.”
It simply means that these things happen frequently and are not as significant, meaning that most of the actions that take place in the market are mostly just noise.
Exhaustion Gaps
Another type of gap is an exhaustion gap. These gaps typically occur after an extended move up or down. If a company’s stocks fall continuously, the company releases a weak earnings report and gaps down at the open.
The market could have predicted that the report would be weak. The prices go up from the open after being gapped down.
Runaway Gaps
Runaway gaps are the opposite of exhaustion gaps. These gaps happen when there’s a sudden move from the base. For example, a company may unexpectedly release good news. This might lead to a gap and an extended move up, which can last for a few days.
Gap trading can be profitable or not profitable. This is because the market is dynamic. By large, all strategies are sort of static. This causes the profitability to vary a lot. Some gap trading strategies are best suited for the long run. Gap trading isn’t as profitable as before, though. You can read this guide for more information on that.
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79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Breakout Trading Strategy
A breakout occurs when the price ‘breaks’ below or above a significant price level. You might need to define the breakout level yourself. That’s the best thing about this strategy.
You can be creative with this strategy and acquire some profits too. This guide does a great job of explaining the strategy in detail.
Trader’s Cheat Sheet
Having a trader’s cheat sheet will give you glanceable information. You can use it to get the most important information you’re interested in.
You’ll find a well-laid-out trader’s cheat sheet here. It has all the important information, such as 52 weeks high, moving averages, and pivot points.
Technical Analysis
Technical analysis can be used to evaluate investments. You can use this discipline to gauge whether an investment is sound or not. It’s used to check whether there are any opportunities in price trends or any particular pattern in the charts.
It’s beneficial in Futures trading since it can predict future price movements. Many analysts believe that you can use technical analysis to determine how a security’s price will move by considering some indicators.
It scrutinizes supply and demand to determine, or at least predict, the effect of security. How its prices, volatility, and volume may change.
Key Takeaways
This guide should give you all the information you need about DAX Futures. Remember that it’s a bit different compared to other indexes. When it comes to trading Futures, it isn’t the same as investing in stocks.
The DAX is a handy benchmark for the German and European stock exchanges. You’ll need to adopt the right strategies to succeed in trading DAX Futures. You’ll find most of the information on DAX Futures on Eurex. News and information are really important. You must understand how the market works to be successful.
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About the author – D. Schmidt
I’m a German stock trader who has lived around the world. I travel extensively and believe that my experiences give me a unique perspective on global markets. I love trading! It’s always exciting to see what happens next. My goal is to help people understand the game so they too can enjoy it to the fullest. In this blog, I will share some tips and tricks that helped me along the way.
