DAX 40 Index (GER40) Trading Guide 2024

The DAX 40 (GER40) has a pip size of 1 and a pip value of 1, meaning every full point move in the index equals exactly $1 per contract. That clean 1:1 relationship makes position sizing straightforward compared to currency pairs, where pip values shift with exchange rates.

The contract size is 1, so your exposure scales directly with the number of lots you trade. At a typical spread of 1.5 pips, entering and exiting a 1-lot position costs $1.50 in spread — modest relative to the index's average daily range, which regularly exceeds 100 points. A 50-point move on 2 lots, for example, generates $100 in profit or loss, net of the $3 spread cost.

The DAX was expanded from 30 to 40 constituents in September 2021, adding mid-cap names to better reflect the breadth of the German economy. This change introduced slightly more volatility during earnings seasons, as smaller constituents can swing more aggressively than blue chips. Understanding the composition matters because sector-heavy moves — particularly in autos, chemicals, and industrials — drive the index disproportionately.

The DAX 40 trades from 01:15 UTC Monday through 22:00 UTC Friday, but not all hours are equal. The session structure divides into three distinct phases, each with a different risk-reward profile.

The Pre-Market window (01:15–07:00 UTC) is thin. Spreads widen, volume is low, and price action often reflects overnight futures positioning rather than genuine directional flow. Scalpers occasionally find opportunities here around Asian macro releases, but most strategies perform poorly in this window.

The Xetra session (07:00–15:30 UTC) is where the real action lives. The Frankfurt exchange opens at 07:00 UTC, and the first 90 minutes consistently produce the highest volume and largest directional moves of the day. German economic data — CPI, manufacturing PMI, ZEW sentiment — drops at 07:00 or 09:00 UTC, creating sharp, tradeable reactions. This is the primary window for trend-following and breakout strategies.

The Extended session (15:30–22:00 UTC) overlaps with the US open at approximately 14:30 UTC. When Wall Street opens, DAX volatility spikes again as US economic data (NFP, CPI, FOMC statements) ripples through European indices. A strong S&P 500 open frequently pulls GER40 higher; a weak open drags it down. Traders who ignore US session dynamics while holding DAX positions are flying blind.

Here is something counterintuitive: the DAX 40's clean pip value of 1 actually makes over-leveraging easier, not harder, because the math feels deceptively simple. $100 of risk sounds manageable until you realize a 100-point stop on 1 lot is exactly that — and 100 points can disappear in under 10 minutes during a German data release.

A practical framework starts with defining your risk per trade as a fixed percentage of account equity — typically 1–2%. On a $10,000 account with 1% risk ($100), and a stop placed 50 points from entry, the maximum position size is 2 lots ($100 ÷ $50 = 2). Scale the stop wider during high-volatility events and reduce size accordingly.

Stop placement on GER40 should respect the index's structure. The DAX respects round numbers (e.g., 18,000, 18,500) and prior session highs and lows with surprising consistency. Placing stops just beyond these levels — rather than at arbitrary pip distances — reduces the chance of being stopped out by noise before a move develops.

For multi-day positions, account for overnight gap risk. The DAX regularly opens 30–80 points away from the prior close when significant US or Asian news hits after the Extended session closes at 22:00 UTC. A stop set at 40 points provides no protection against an 80-point gap open. Reducing position size before weekends and major scheduled events (ECB decisions, US CPI) is the most effective mitigation.