Dow Jones Industrial Average or the Dow 30 - Wall Street 30 Index
The Dow Jones Industrial Average or the Dow 30 is a stock market index that tracks 30 of the largest stocks in the USA. The stocks that are used to calculate this component are picked from 30 biggest companies in the USA.
The DJIA is the most popular and most followed stock index globally. The Dow Jones Industrial Average originally tracked the performance of Industrial stocks but has changed to include stocks from other sectors of the economy. The main criteria being the stocks selected are from the largest American companies.
The DJIA is more volatile than most of the other Top Indices, The DJIA although will over the long term trend upwards it will have more price pullbacks and more consolidations than other stock indices. Traders may prefer to trade other indices other than the Dow Jones Industrial Average if they are more accustomed to trading the more stellar trends found in other top indices.
The DJIA 30 Index Chart
The DJIA 30 Index chart is shown above. On the example above this financial instrument is named as US30CASH. As a trader you want to find a broker that provides this The DJIA 30 Index chart so that you can start to trade it. The example above is of DJIA 30 Index on the MetaTrader 4 Forex and Indices Trading Platform.
Other Information about DJIA 30 Index
Official Symbol - DJI:IND
The 30 component stocks that make up the DJIA 30 Index are picked from the top American companies. The calculation of this index is however different compared to other Indices; the price component of the 30 stocks is divided by a common divisor to come up with this index. This makes this index more volatile than others.
Strategy for Trading DJIA 30 Index
The DJIA 30 Index method of calculation make the Dow 30 index more volatile hence there are more wide swings in the price movements of this index. Although this index generally moves up over the long term because the American economy also shows strong growth and is also the biggest economy in the world.
As a trader wanting to trade this index, be prepared for wider price swing and a little more volatility.
As a trader you want to be biased and keep buying as the index moves up. When the USA economy is doing well (most of the times it is doing well) this upward trend is more likely to be ruling. A good strategy would be to buy the dips.
During Economic Slow Down and Recession
During economic slow down and recession times, companies start to report lower profits and lower business growth prospects. It is due to this reason that investors start to sell stocks of companies reporting lower profits and therefore the stock index tracking these particular stocks will also start to move downwards.
Therefore, during these times stock indices trends are likely to be heading downwards and as a stock indices trader you should also adjust your trading strategy accordingly to fit the prevailing downward trends of the stock market index that you are trading.
Contracts and Specifications
Margin Required Per 1 Lot - $ 150
Value per 1 Pip - $ 0.5
Note: Even though the general trend is generally upwards, as a trader you have to factor in the daily market volatility, on some days the stock may oscillate or even retrace, the retracement may also be significant at times and therefore as a trader you need to time your entry precisely using this strategy: Stock indices trading strategy and at the same time use proper money management rules just in case of more unexpected volatility in the market trend. About money management rules topics: What is money management and money management methods.