Dow Jones Index Chart | Dow Jones Futures Online

Dow Jones 30 Index
WKN: 969420 | ISIN: US2605661048 | Symbol: DJI | Typ: Index
USA 30 Futures CFD, based on Dow Jones futures. The Dow Jones Industrial Average tracks 30 US blue-chip companies.

Technical Analysis Dow Jones Index Futures

Trade Index CFDs with Plus500

Trade the most popular Indices around the world like USA 500, US-TECH 100 and France 40 with leverage. Magnify the size of your trades without committing large amounts of capital. Leverage of up to 1:300 allows you to start trading CFDs with as little as 100$ to gain the effect of 30000$ capital!

What is a Stock Market Index?

A stock index is a performance indicator or measure of a country's economy or of an industry sector. For example, Nasdaq 100 represents the largest 100 companies traded on the Nasdaq Stock Exchange. If, on average, the share price of these companies goes up, then the index will rise. Conversely, if they fall, the index will drop.

Most main indices are based on a basket of shares and are thus considered good measures of the current market sentiment. When you take a position on an index, you are effectively investing in the performance of these shares and thus avoid factors that influence the performance of individual companies (such as a lack of market volume). For a full list of index futures CFD offered on the Plus500 platform, click here.

How Does Leverage Work in Index CFDs?

By trading index futures contracts with leverage, you can multiply the value of a trade through the use of borrowed capital, and as such, you can increase the potential profit or loss to be realised from the trade. The available leverage for index CFDs on the Plus500 platform is up to 1:300.

How do You Start Day Trading on the Stock Market Index?

Follow these steps to start trading stock CFDs with Plus500:

  1. If you don’t already have a Plus500 account, open a Trading Account Here.
  2. Complete your account registration and documents verification, then deposit funds.
  3. To search for a specific index, click into the search bar and type the name or symbol.
  4. Consider placing stop orders in advance: you can define the level of profit you would be happy with and/or the level at which you would like to close out the position should the trend turn against you.
  5. Open a trade.

What Is the Dow Jones Industrial Average (DJIA)?

The Dow Jones Industrial Average (DJIA), also known as the Dow 30, is a stock market index that tracks 30 large, publicly-owned blue chip companies trading on the New York Stock Exchange (NYSE) and the NASDAQ. The Dow Jones is named after Charles Dow, who created the index back in 1896 along with his business partner Edward Jones. When reporters on television networks say the phrase "The market is up today," they are generally referring to the Dow.

The DJIA is the second oldest U.S. market index; it is second to the Dow Jones Transportation Average. The DJIA was designed to serve as a proxy for the health of the broader U.S. economy.

Understanding the Dow Jones Industrial Average

Often referred to simply as "the Dow," the DJIA is one of the most-watched and important stock market indexes in the world. While the Dow includes a range of companies, they all largely can be described as blue-chip companies with consistently stable earnings. Some of the companies include the Walt Disney Company, Exxon Mobil Corporation, and Microsoft Corporation.

When the index initially launched in 1896, it included only 12 companies. Those companies were primarily part of the industrial sector, including companies in the railroad, cotton, gas, sugar, tobacco, and oil industry and was in fact a spin-off of the Dow Jones Transportation Average, making the DJIA the second oldest stock market index in the United States.. In the early 20th century, the performance of industrial companies was typically tied to the overall growth rate in the economy. As a result, the relationship between the Dow's performance and that of the economy was cemented. Even today, for many investors a strong-performing Dow equals a strong economy (while a weak-performing Dow likely indicates a slowing economy).

As the economy changes over time, so does the composition of the index. The Dow typically makes changes when a company becomes less relevant to the current trends of the economy, or when a broader economic shift occurs and a change in the composition of the index needs to be made to reflect it. For example, a company that loses a large percentage of its market capitalization due to financial distress might be removed from the Dow. Market capitalization is a method of measuring the value of a company by multiplying the number of shares outstanding to its stock price.

Stocks with higher share prices are given greater weight in the index. So, a higher percentage move in a higher-priced component will have a greater impact on the final calculated value. At the Dow's inception, Charles Dow calculated the average by adding the prices of the twelve Dow component stocks and dividing by twelve. The end result was a simple average. Over time, there have been additions and subtractions to the index, such as mergers and stock splits that had to be accounted for. At this point, a simple arithmetic mean calculation no longer made sense.

Limitations of the DJIA

Many critics of the Dow argue that it does not significantly represent the state of the U.S. economy as it consists of only 30 large-cap U.S. companies. They believe the number of companies is too small and it neglects companies of different sizes. Many critics believe the S&P 500 is a better representation of the economy as it includes significantly more companies, 500 versus 30, which by nature is more diversified.

Furthermore, critics believe that factoring only the price of a stock in the calculation does not accurately reflect a company, as much as considering a company's market cap would. In this manner, a company with a higher stock price but a smaller market cap would have more weight than a company with a smaller stock price but a larger market cap, which would poorly reflect the true size of a company.