There is no doubt that Forex is the world’s biggest financial market. At the same time, it is the most liquid market in the entire world. That is why millions of new traders come to the market every years. Still, currencies are not the only assets you can traded to make big money regularly. Apparently, there are some other assets that are liquid enough to let you enjoy stable profits at all times. In particular, you can trade futures, CFDs (contracts for difference), stocks and stock indexes.
Another thing is that not every single company out there can give you such an opportunity to trade such a great variety of assets. Even fewer Forex brokers can actually give you the access to the world’s leading stock exchanges.
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When it comes to choosing promising stock indexes, DAX is probably one of the most prominent representatives. DAX is the major German stock index. It embraces German «blue chips». Not so long ago, the index set an all-time high after hitting 12 000, thereby allowing savvy traders and investors to make a lot of money by investing in it. More and more experts assume that DAX is likely to continue its way up to new all-time highs.
DAX: Benefits, Peculiarities and Prospects
For starters, some people may be surprised by such a strong rally shown by DAX at first sight. Indeed, the deflationary pressure in the Eurozone is getting stronger. Germany is no exception despite being the locomotive of the European economy. At the same time, the situation around Ukraine and the sanctions against Russia harm the European economy in general and the German one in particular since Russia is a major economic partner and a major source of energy carriers for Europe. On the other hand, we can see the U.S. economy reviving (the annual GDP growth is reported to have reached 5%, which is quite a lot for a developed economy).
Still, Germany and France are the 2 major economies in the EU and the Eurozone. Even during times of crises and economic stagnation these tend to show more stable economic results, especially as the situation around Greece is being gradually resolved.
Well, maybe the superficial picture looks not so good for the German stock index, but the price is still setting new highs. Since March 2014, the index has gained 31,98% from 9.342,94 up to 11.901,61. This is quite a lot for a stock index.
True Factors Behind DAX Rally
The first reason to consider is the ECB’s quantitative easing announced in late January by Mario Draghi. Investors lay big hopes on the QE program. They assume that over 1000 billion euros of excessive liquidity is going to have a major impact on the overall economic and financial situation in the Eurozone since the bad debts of national banks will be cut considerably.
The second factor to pay attention to is the devaluation of the common European currency triggered by the mentioned QE as opposed to the Fed’s policy (the Fed tapered its own QE and is going to start raising the interest rates in the near future). The Euro has already dropped by 20% and 10% against the U.S. Dollar and the British Pound respectively, which is a benefit for European exporters, including German ones.
The next reason to back the idea is the situation in the global oil market. Crude oil has depreciated by 50% over the last couple of months.
The bottom line is that the overall bias in the market of DAX is still bullish. Technically, the situation last looks like a bull market as well. Still, this is just a highly probable scenario. No one can predict the situation for sure. With that in mind, it is necessary to monitor the situation and read the news. ActivTrades experts provide the client with daily fundamental and technical reports, which may help a lot in trading financial markets today.
