The Dow Jones Industrial Average, DJIA or DJ 30, is also commonly referred to as the ‘Dow’ or ‘Dow Jones’. It’s a price-weighted average comprising 30 top stocks from the New York Stock Exchange and the NASDAQ. It’s one of the world’s oldest indices, established in 1896. Some of the largest and most valuable companies are included in the index such as Walt Disney, Apple and Microsoft.
Trading the DJ 30
The Dow Jones is a highly desirable asset and can be traded through multiple brokerages who provide clients with a strong CFD offering on indices.
Traders who are interested in taking advantage of the strong performance of the companies listed in the index can buy or sell Dow CFDs as any other tradable asset.
Trading Dow Jones CFDs also allows for the use of leverage, which can magnify traders’ potential returns even with a small initial investment.
What factors affect the price of the Dow Jones?
Due to the popularity of the Dow Jones and the tremendous performance of the companies that comprise the index itself, the Dow is considered to reflect the health of the U.S stock market as a whole.
Therefore, speculators tend to keep a close watch on the strength of the U.S dollar and the U.S economy as a strong dollar will likely lead to an increase in the value of the index while dollar weakness tends to cause depreciation across the board.
Geopolitical events and economic developments that can affect the U.S economy will also have a pronounced effect on the Dow. (e.g. the recent Sino-American trade tensions had a largely negative impact on the dollar as well as the revenues of the companies tracked by the index).
As such it’s important to keep abreast of any news reports and earnings releases in order to determine the future direction of the market.
Did you know…?
While the U.S stock market is only open during normal business hours, trading the Dow through a CFD brokerage allows for round-the-clock trading. However, it’s also worth noting that the most active trading period is still during normal U.S market hours.
Therefore, traders who seek to take advantage of high liquidity, tight spreads and fast order execution should aim to take into consideration the time schedule and adjust their trading strategy accordingly.