Trade On Dax40: Principles of Day Trading

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This is actually one of the easiest ways to make money but also lose it. Day trading comprises purchasing and then selling an instrument to make a quick profit. The holding period may fluctuate from a couple of seconds to several hours, but it doesn’t go beyond the duration of a trading day. Trade on DAX40 is one of the most popular these days for day trading.

A carry-over of one’s position to the next day doesn’t qualify as day trading. This practice necessitates a fast and well-timed reaction by a trader, typically in larger volumes that cover smaller profit margins.

trade on dax
Day Trading

Generally, smaller profits on higher volumes give day traders an acceptable profit margin. A large portion of day trading happens on margin enabling traders with limited capital to take long positions equivalent to several times their trading capital.

You can day trade on DAX40 and other global markets using various tradeable assets such as derivate instruments (futures and options), bonds, commodities, stocks, and forex. So what are the principles of day trading?

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The Principles of Day Trading Include:

High Volatility

If you intend to day trade regularly and generate profits a couple of times, you should have high volatility. It’s not just crucial in pricing products such as bonds and equities, but it’s also pivotal in pricing other everyday products such as options.

High Liquidity 

The simplicity of buying and trading in large amounts evens out trading and ensures efficiency and price equality.

Marginal Leverage

No levelheaded person would commit to trading actively and regularly if they have to maintain large amounts of trading capital. Trade on DAX40 gives you a certain degree of leverage. Therefore, the intrinsic value of leverage is that it enables merchants to trade higher shares with limited capital.

Low Transaction Expenses

Everyday trading should not bring about high transactional costs. Brokers offer bargains whereby the per unit trading cost goes down the more you trade in higher volumes. Low costs are a must for day trading if you’re going to generate profits.

See also: How to master the CFD trading technique 

Information Accessibility

Markets change based on news, and as a day trader, you have to keep a close eye for information on assets you trade. Unfortunately, not all brokers and trading platforms will provide you with quick access to news on instruments.


Add-ons such as message notifications on smartphones may stay restricted to specific instruments such as the top 30. Therefore, easy accessibility of news becomes a must-have when choosing day trading instruments.

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Which Instruments Can You Day Trade?

Commodity Futures

Futures on commodities such as gold and crude oil make them good instruments for day trade. Day trading commodity futures also enables traders to diversify their trading portfolios from the typical index-based or equity trading.

Trade on DAX40 like Index Futures

One of the most high-volume day trading instruments is futures on common indices such as the S&P 500, Nasdaq, trade on DAX40, Hang Seng, etc.

trade on dax40

Index futures are highly liquid, less volatile, and have low transactional expenses. Thus, day traders well-accustomed to trading futures benefit from the high leverage offered by index futures trading.

Bond Futures

Bond futures may not be the ideal day trading instruments due to their high capital requirements. Nonetheless, bonds offer high volume, high liquidity, high volatility, and low transactional costs because they have a lower risk profile. Also, day trading bonds provide traders with a much-needed diversification of their trading portfolios.

Forex Instruments

Forex markets operate 24/7, which makes forex instruments the perfect fit for short-term day trading because they offer low transactional costs, high liquidity, high volatility, and low capital requirements. However, if you’re dealing with forex instruments, you should proceed with caution and select suitable currency pairs that match day trading needs, such as EUR/USD.

See also: How to Make Money Trading Forex? (Complete Guide to Forex Trading)

Futures on Highly Volatile Stocks

Just like index futures, futures on highly volatile stocks are common-day trading instruments. However, it would be best to be careful about picking futures on the correct underlying stocks because the list of volatile stocks changes regularly.

Final Thought

Day trading is an intense and thrilling undertaking that novice traders are often attracted to. You can try your hand at trade on DAX40. However, day trading has its concerns; therefore, no trader should attempt to use it unless they’ve acquired sufficient knowledge about its principles.

See also: How to Trade Cryptocurrency – A Beginner’s Guide


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