Your guide to trading the Dow Jones Industrial Average

Why is the Dow Jones important to traders?

The Dow Jones Industrial Average, often referred to as ‘the Dow’, is a price-weighted index that tracks the value of 30 publicly-owned companies listed on the NASDAQ and the New York Stock Exchange (NYSE). It is represented in real-time by the Dow price.

The Dow Jones index has become something of a microcosm for global financial markets, as it has grown to become one of the oldest and most-watched indices in the world. It is often seen by investors and media commentators as an overall summary of the performance of the US stock market.

The index includes some of the world’s largest companies by market capitalisation, including Apple (AAPL), ExxonMobil (XOM) and The Walt Disney Company (DIS), thus making Dow trading popular with many of our clients.

You can track the Dow price in real time on our platform using the Dow live chart.

Dow Jones trading hours

Dow companies are all listed on the New York Stock Exchange (NYSE) or the NASDAQ, both of which trade between 09:30 and 16:30 EST each weekday.

You can trade the Dow Jones index 24 hours a day with Capital.com and monitor the price changes with our Dow live chart.

How to trade the Dow Jones CFD

The Dow price typically provides traders with a high degree of liquidity; it responds well to the volatility of the American markets, to technical analysis and to benchmark support and resistance levels, and also what traders consider important “psychological” levels.  (e.g. 20,000).

Traders also enjoy trading the Dow because they are not just focused on one individual share. They are trading a “basket” of US stocks and so, to some extent, are protected from any one company’s volatility while maintaining exposure to the wider US stock market.

Trade USA 30 - US30 CFD

You can trade the Dow Jones index today using CFDs (contracts for difference). Using CFDs to trade the Dow will allow you to go long or short without having to deal with conventional exchanges.

Dow trends can sometimes be clear to spot on live charts. Some Dow traders find the trends to be well defined across a variety of timescales, making the Dow Jones popular with CFD traders around the world.

Trade CFDs on Dow Jones with Capital.com. Sign up at Capital.com to use our desktop platform, or download our mobile app to start trading on the most popular global markets anywhere, anytime. 

How is the Dow calculated?

Unlike other major indices such as the FTSE 100 or the NASDAQ 100, the Dow is a price-weighted index, meaning stocks with higher share prices are given a greater weight in the index.

In order to calculate the Dow, the sum of the prices of all 30 stocks listed on the index is divided by a divisor, called the ‘Dow Divisor’.

Over time, the divisor has been adjusted to account for additions and subtractions – like mergers and stock splits– that have affected the index, ensuring that the Dow’s numerical value is not affected.

For example, on 26 June 2018, the Dow Divisor stood at 0.14748071991788. At this value, every $1 change in price in a particular stock within the average equates to a 6.781 (or 1 ÷ 0.14748071991788) price movement.

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Why trade Dow CFD with Capital.com

Advanced AI technology at its core: A Facebook-like news feed provides users with personalised and unique content depending on their preferences. If a trader makes decisions based on biases, the innovative SmartFeed offers a range of materials to put him back on the right track. The neural network analyses in-app behaviour and recommends videos and articles to help polish your investment strategy. This hopefully helps you refine your approach when you trade Dow.

Trading on margin: Providing trading on margin (20:1 for major indices), Capital.com gives you access to the Dow Jones index with the help of CFDs.

Trading the difference: By trading CFDs on the Dow Jones index, you don’t buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of its price. CFD trading is no different from traditional trading in terms of its associated strategies. A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with his or her objectives. So whether your view is positive or negative, you can trade the Dow in both directions.

All-round trading analysis: The browser-based platform allows traders to shape their own market analysis and forecasts with sleek technical indicators. Capital.com provides live market updates and various chart formats, available on desktop, iOS, and Android.

Focus on safety: Captal.com puts a special emphasis on safety. Licensed by CySEC, it complies with all regulations and ensures that its clients’ data security comes first. The company allows to withdraw money 24/7 and keeps traders’ funds across segregated bank accounts.

Businesses on the Dow

A list of the current companies that have been included in the Dow Jones index since 26 June 2018:

ExxonMobil has been included in the Dow Jones index since 1 October 1928, when it was then known as Standard Oil of New Jersey.

If you trade the Dow, you will notice that it comprises companies from a wide range of different sectors, including technology, commodities, health and manufacturing. Apple, the world’s first trillion dollar company by market capitalisation, is included in the Dow Jones index.

History of the Dow Jones Industrial Average

The Dow Jones Industrial Average dates back to 26 May 1896 when Charles Dow, founder of Dow Jones and Co. and then editor of The Wall Street Journal, first compiled and published the average to serve as an indicator of American stock market performance.

Dow calculated what became the first average out of 12 purely industrial stocks, none of which remain as part of the index. General Electric, which is still in operation and was part of the original average, was removed from the index in 2018.

The largest one-day percentage gain on the Dow Jones index took place during the 1930s bear market. It gained 8.26 points and closed at 62.10 on 15 March 1933.

The Dow hit its current record of 26,833.5 on 3 October 2018.

Dow-named indices have expanded over the years to include the Dow Jones Transportation Average and the Dow Jones Utility Average.

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