Stock market trading has become one of the most profitable areas for people who want to invest their money and receive a good investment return. However, there are certain things that a person should keep in mind while investing to receive the best profits on your investment. One should always be on their toes to get valuable information about the market as it can make or break your trade really easily. Here’s where the dow jones’ average comes into play.
In this article, we will tell you about what Dow Jones is all about, what its significance is, how we can comprehend it for user’s play, why it is so popular, and where it is used. Each relevant aspect would be covered in this article.
What is Dow Jones?
The Dow Jones Average is a stock market index that measures the stock performance of 30 large companies in the US Stock exchange, which was first calculated on the 26th of May 1896 by Mr. Charles Dow. He was the founder of Dow Jones and Co and the then Editor of The Wall Street Journal. His business associate Edward Jones, the co-founder of Dow Jones and Co, first compiled and published this average, which has served as an indicator of American Wall Street’s performance.
Dow Jones live chart:
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The first average, which Dow calculated, became the first average with 12 exclusively industrial stocks, none of which remain as
part of the index today. General Electric, which is still operational, was a part of the original average. However, it was removed from the index in 2018.
The percentage gain, which was the largest in a single day on the Dow Jones, took place during the 1930s bear market, which gained 8.26 and closed at 62.10 on 15 March 1933.
What is the record high for the Dow Jones?
Dow Jones record-high 2020 was on Tuesday, Nov. 24, 2020, when the Dow broke 30,000 and closed at 30,046.24.
Why is Dow Jones so important to traders?
So the Dow Jones Industrial Average, commonly referred to as ‘The Dow,’ is basically a price-weighted index that contains the value of 30 Publicly-owned companies listed on NASDAQ and the New York Stock Exchange represented in real-time.
Dow Jones, being one of the oldest and most-watched indices globally, has become a kind of a cosmos for the global financial markets as it can track the performance on the US stock market and is also used by investors, news channels, and media commentators. Sometimes, people refer to Dow Jones as being synonymous with US Stock Market due to its popularity and essential value.
What makes Dow Jones so popular among investors is that it includes one of the world’s largest companies in terms of capitalization, such as Apple and the Walt Disney Company.
What about the Trading Hours?
So the Dow Companies are all a part of NASDAQ and New York Stock Exchange (NYSE) which trade between 9:30 and 16:30 EST on weekdays.
How do I trade Dow Jones CFD?
The Dow Jones CFD (Dow Jones contract for difference) is an agreement between investors (traders) and CFD broker to exchange the difference in Dow Jones indices’ value. Traders can speculate on Dow Jones indices price movements using Dow Jones CFD.
Traders can trade Dow Jones CFD using Hotforex broker.
The Dow price responds very well to the uncertainty of the American Stock Market, Technical Analysis, and the benchmark support and resistance levels. The traders consider important psychological levels, providing a great degree of liquidity.
The Dow is enjoyed by the traders as it’s not just focused on one individual share. It also provides them safety from a single company’s uncertainty and, at the same time, maintaining exposure to the US Market. Traders also get a degree of confidence as they have various stocks to choose from while trading.
One can also trade Dow Jones using CFD (Contract for Difference). A CFD is a financial contract that pays the settlement price of trade between opening and closing. They essentially allow the investors to trade the securities over a concise term. Using CFD for dow allows the investors to go short or even longer without conventional exchanges.
Dow Jones is very popular among CFD Traders worldwide as they find the trends to be well defined across various timescales, and it is also sometimes obvious to spot-on live charts.
What about the businesses on the Dow?
A total of 30 companies are listed on the Dow Jones index since 26 June 2018. Some of them include the medical giant Pfizer inc, Technology majors such as Apple, Microsoft, Cisco, and other major companies such as Nike and McDonald’s. Standard Oil of New Jersey, which is now known as ExxonMobil, has been included in the Dow Jones index since October 1928! Interesting, isn’t it?
Also, you would have noticed that companies included in the Dow are from a wide range of sectors, including Technology, Health, Manufacturing, etc. Apple is one of the biggest.
Even though being the most commonly followed indices, many investors consider it to be inadequate in terms of representation because it only has 30 companies as compared to other indices such as the S&P 500 or Russell 3000, which give a broader view of the market and also, does not use weighted arithmetic mean.
The Dow Jones Transportation Average:
The Dow Jones Transportation is an index that contains 20 companies providing transport services which Charles Dow founded on the 3rd of July 1884, which is older than the Dow Jones Industrial Average. This is calculated on the basis which is same as the Industrial Average. The Dow Jones Transportation Average is the most recognized gauge of the American Transportation Sector, including well-known organizations such as FedEx Corporation, United Airlines Holdings, and American Airlines Group, Etc.
The Dow Jones Utility Average:
The Dow Jones Utility Average is an Index that contains 15 Companies that provide electricity and natural gas across the United States, which was created in 1929 when all utility stocks were removed from the Dow Jones Industrial Average. It contains major companies such as NextEra Energy Inc, Xcel Energy, Etc.
Now that we know everything about Dow Jones Average and its components, It’s now time to hit the market and start investing!
He is an expert in financial niche, long-term trading, and weekly technical levels.
The primary field of Igor's research is the application of machine learning in algorithmic trading.
Education: Computer Engineering and Ph.D. in machine learning.
Igor regularly publishes trading-related videos on the Fxigor Youtube channel.
To contact Igor write on:
igor@forex.in.rs
