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4 Things You Didn’t Know About Dax Trading

4 Things You Didn’t Know About Dax Trading

DAX is a market index comprising of top 30 blue chip companies in Germany and are listed on the Frankfurt Stock Exchange.

In simple terms, it is the German equivalent of Dow Jones Industrial Average or FT30 index of UK. With DAX Trading you can easily tap into German market and get an advantage of the Europe’s largest economy.

But before you make an effort to invest in DAX, you understand the basic philosophy of investing in any stock exchange. Stocks are considered as riskiest investments by virtue of their legal definition. Any stock or shareholder of any company is not legally entitled to receive any dividends and stockholders are the last persons to receive anything when any company actually liquidates.

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Since risk is high in this type of investment the overall reward is highest too. Stockholders benefit from two types of returns. One they receive the dividends whereas and second, they benefit from the capital appreciation. Capital appreciation occurs when stocks are traded on the stock exchange and they are sold at price higher than what it was initially bought.

Trading in stock exchanges therefore always an important trading strategy of any investor and before you actually start trading in DAX 30, here are simple facts you should know about it:

1. DAX Trading is done in Euros

DAX trading is done in Euros as against the popular belief of German currency. Since the currency of trading is in Euros, therefore, any investor will be exposed to the currency volatility besides taking on the risk of trading in a foreign market.

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Anyone with a base currency in Dollars, therefore, need to make sure he covers exchange risk also before making an investment in DAX 30.

2. The Timing can benefit you

Time and again it has been proved that global markets follow each other. A strong closing of the New York Stock Exchange would often result in a strong first hour. Traders who often trade at both the markets can benefit from both the markets if they plan their trade carefully.

Most of the companies on DAX 30 are also traded on US Stock Exchanges and since European markets start when American markets close therefore traders can better understand which way the values of the stocks listed on the index will move in European Markets.

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3. Companies in DAX 30 are truly global in nature

Most of the companies in the DAX 30 index are global in nature. Listed companies in the index represent 80 countries and any global changes actually have an influence on the DAX 30.

When you are investing in DAX 30, you are therefore exposing yourself to the global economy, therefore, you truly get access to a global index. You invest in some of the top firms in the world and can truly benefit from the rise and fall of global markets as well as domestic markets.

4. DAX is dominated by Automobile and Banking Companies

DAX 30 index mostly comprises of companies in banking and automobile sector. All the major automakers such as BMW, Daimler, Volkswagen etc. Even Adidas as a clothing company is part of the index.

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If you want to participate in a market which is heavily influenced by the manufacturing businesses, this index could be an ideal choice. However, it is also diversified at the same time with other unrelated companies added in the index.

Above is a simple list of facts you should know about DAX Index and what are its risks and benefits. A good investor must always use his funds in a rational manner to reduce the risk and maximize the return. By diversifying investments through indices such as DAX 30, anyone with little bit of investment IQ can benefit.

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Adnan Manzoor

Data Analyst & Life Coach

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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