Dow 30 Components – Top 30 Companies, exchange traded symbols, along with the industries and the date they were included in DJIA. So, when the Dow Jones opens for trading, the value is determined only by the relatively few companies that open first. The opening price on the Dow will therefore always be close to the previous day’s closing price. As a result, the Dow Jones will never accurately reflect the true opening prices of all its companies. If you are looking to trade on the Dow Jones, you need to be very careful when you open your position. Whilst the FTSE 100 might ‘hit the ground running’ with all companies opening at the same time, the Dow Jones doesn’t work in the same way. Of course trading the American stock market futures is rarely that straightforward.
One of the advantages of trading the Dow Jones is that there are only 30 corporations in the index. You can get to know each company’s typical share movements and that can help you forecast where the Dow Jones will head next. As with a wide variety of financial markets, investors can spread bet on indices, like the Dow Jones, to either rise or fall.
Therefore, with this trade you make a profit of ?5 for every point that the Dow Jones index moves higher than 13345.0. However, it also means you will lose ?5 for every point that the Dow Jones market moves below 13345.0. If, contrary to your expectations, the Dow Jones fell, then you might decide to close your trade to stop any further losses. As you can see below Mr Bear’s view of the Dow Jones is a history of market declines.
Nevertheless, you will make a loss of ?2 for every point that the Dow Jones market goes lower than 13414. If the futures had fallen and settled at 13334 on the expiry date, then you would end up losing this trade. Let抯 say you spread bet on the Dow to go up, with a ?1 per point stake and attach a Stop Loss order to your trade. If you were trading the Dow this would mean that your position would be closed if the US index moved against you by 30 points. Occasionally someone writes in suggesting that I plot this data on a logarithmic scale for a better view of the last hundred and fifteen years of Dow Jones movements.
I could, but plotting the Dow in dollars better illustrates the Federal Reserves’ exponential inflation of its valuation. The Roaring 1920s’ bull market saw the Dow Jones peaked out at an astounding (at the time) 381 points on 03 September 1929. Today a 381 point daily move in the Dow Jones has no more significance in the chart below than does the entire Great Depression crash. Below is a BEV plot of the Dow Jones daily closing prices from February 1885 to April 2015.