Dow Jones Financial Spread Betting
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Dow Jones Spread Betting

Dow Jones Spread Betting


Note: Rather than being called the Dow, Dow Jones or Dow 30, in spread betting and CFD trading, the Dow is often called 'Wall Street' or the 'US 30'.


Indicative Dow Jones Prices














MarketChangeSellBuy
Above, indicative prices from Capital Spreads.


Stock Market Index Comparison


A stock market index comparison table covering the Dow Jones (Wall St) and other popular markets:

Typical In-Hours Spread Sizes

FTSE 100 (UK 100) Daily 0.8 1 1 1 1 1
Dow Jones (Wall St) Daily 1 1 1 1 1 2
DAX 30 (Germany 30) Daily 1 1 1 1 1 1
S&P 500 (SPX 500) Daily 3 4 5 3 3 6
NASDAQ 100 (US Tech 100) Daily 5 4-10 3 4 4 2
CAC 40 (France 40) Daily 1 1 1 1 1 3
ASX 200 (Australia 200) Daily 1 5 3 1 1 8
Japan 225 Daily 8 8 13 10 10 15
Hong Kong Daily 8 10 20 20 20 25
Stock Indices - Minimum Stake £1 £1 £0.5 £1 £1 £1
Comparison Notes.


Where Can I Spread Bet on the Dow Jones?


You can speculate on the Dow Jones, as well as the FTSE 100 and other stock market indices, with providers like:

US Stock Market Analysis and Trading News


Date Trading Update
28-Aug-15 [10:05am]

Dow Jones Daily Trading Update

  • The Dow Jones is currently trading at 16,516.
  • In the last session, the market closed up 379pts (2.33%) at 16,673.
30 Minute Indicator Analysis

Falling Stock Market The stock market index is below the 20-period MA of 16,606.3 and below the 50-period MA of 16,570.2.

1 Day Indicator Analysis

Falling Stock Market The stock market index is below the 20-DMA of 17,074.8 and below the 50-DMA of 17,525.3.

Update by Gordon Childs, Editor, CleanFinancial
27-Aug-15 [10:35am] Dow Jones to open 165 points higher

We are expecting the Dow Jones to open 165 points higher at 16,450

The comments from Mr Dudley are still echoing around Wall Street.

The events of the past week have led traders to believe that interest rates will not rise in the US next month, and after Mr Dudley’s remarks yesterday dealers are now not so sure if there will even be a rate rise this year.

Update by David Madden, Market Analyst, IG Index
27-Aug-15 [8:34am] Positive US and Asian sessions leads to strong start for European indices

Trading got off to a much better start this Thursday.

Last night’s Dow surge and this morning’s Chinese rebound leading to a positive open for the European indices.

Whilst a last minute panic saw yesterday’s European sell-off intensify just before the close, fears over the sustainability of the US markets’ early gains proved to be premature.

The Dow Jones ended the American session up by 600 points after New York Fed President William Dudley called a September lift-off ‘less compelling’ than it was even a week ago.

This renewed appetite for risk carried over into a predictably choppy Asian session that did eventually see the Shanghai Composite post its biggest one-day jump since the start of July.

The good vibes continued into the open of the European markets, with the FTSE sporadically hitting a 100 point increase whilst the DAX consistently trades over 200 points higher.

Of course, there is a long way to go until the end of the day (and the week, given the muted Wednesday trading that followed ‘Turnaround Tuesday’).

There could still be a lot more volatility left.

However, Tuesday’s gains came despite the continued freefall of the Chinese markets.

Today’s gains are following a second positive session for the Shanghai Composite and a sustained surge by the US markets.

This suggests there might be a bit more weight behind the sea of green currently lighting up the European trading floors.

Update by Connor Campbell, Financial Analyst, Spreadex
26-Aug-15 [11:25am] Stock Markets Looking Very Confused

With big candles in both directions on the charts, for the FTSE 100 and German DAX, it is very difficult to work out if the market has bottomed out.

The markets could easily go either way (sorry).

The Dow Jones however is looking a lot more bearish.



Update by Joshua Raymond, Chief Market Strategist, IG Index
25-Aug-15 [10:41am] 330pt Move Higher for the Dow?

We are expecting the Dow Jones to open 330 points higher, at 16,200, as the bounce back gets underway.

Dennis Lockhart reiterated his point that the Fed should increase interest rates this year, but fewer and fewer traders feel that a rate hike will happen next month.

If China’s financial markets remain uncertain, Mr Lockhart may not get his way and we could be looking at a rate rise in 2016.

Update by David Madden, Market Analyst, IG Index
25-Aug-15 [9:45am] US markets set to open higher as Europe rebounds

Despite another slide in Chinese equity markets we’ve seen a broad based rebound in European markets.

After the rout of the last few days, as investors take a breather, and commodity prices rebound from their recent multi year lows.

As the US gets set to return after a rollercoaster Monday session which saw the Dow flash crash 1,000 points lower at one point, we could be well be starting to see the first signs of some stabilisation, after five consecutive daily declines.

Given the ferocious nature of recent declines it also seems that expectations that the Federal Reserve may look at easing back on their willingness to push rates higher at next month’s FOMC meeting.

In comments reported last night Atlanta Fed President Dennis Lockhart while reiterating that he still expected rates to rise soon, he was slightly more nuanced about the timing, in contrast to comments made earlier this month, where he said the bar was quite high for not acting.

Given the declines seen in the past fortnight there is an expectation that the bar to not acting could have been lowered somewhat.

Has the Sell-Off Finished?

Despite an expected recovery today the jury still remains out as to whether we’ve seen the end of the recent sell-off.

Some elements of the US tech space still trading at eye wateringly high valuations.

That being said, US economic data, inflation expectations notwithstanding is still doing better than most with the services sector still performing fairly robustly in contrast to the manufacturing sector, which is showing signs of weakness.

Today’s latest services PMI from Markit is expected show a little bit of a slowdown in August to 55.1 from 55.7, though consumer confidence is expected to improve to 93.4 after a sharp drop off in July to 90.9.

The Dow Jones is expected to open 370 points higher at 16,241.35.

The S&P500 is expected to open 42 points higher at 1,935.21.

Update by Michael Hewson, Senior Market Analyst, CMC Markets
24-Aug-15 [4:02pm] US Futures Go Limit Down

The Dow Jones, S+P 500 and NASDAQ 100 futures all went limit down before the open of US markets for their worst start since the financial crisis.

At one point the Dow Jones was set to open down by 1,000 points before actually opening 900 points lower.

The NYSE instituted ‘rule 48’ to help stem volatility concerns by giving designated market makers the option not to show prices before the open.

High beta tech stocks were living up to their name; shares of Twitter and Netflix opened down -8% and -12% respectively.

WARNING: Volatility up 78%

In a sign of how strained the volatility became, the VIX index rose by 78% today to its highest level since 2011.

It’s possible that was a massive shakeout at the bottom of a downturn in the market.

However, with the Dow Jones moving up and down by hundreds of points within minutes, many investors are likely to think twice about holding on for another leg higher.

Update by Jasper Lawler, Market Analyst, CMC Markets
24-Aug-15 [3:40pm] Will the Dow and DAX See Bounces Tomorrow?

Here's a quick look at Tuesday.



Update by Joshua Raymond, Chief Market Strategist, IG Index
24-Aug-15 [3:19pm]

US losses cool...after truly staggering 1,000 point plunge



As expected the US open brought with it a tsunami of selling.

The Dow Jones hurtling to a 1,000 point drop in the first few minutes of the session.

The US markets soon stabilised, but the Dow still fell below 16,000 for the first time in nearly 18 month,, and at points has threatened to post the worst one-day decline in its history.

Things could, potentially (hopefully?), continue to calm if Dennis Lockhart is extremely dovish in his comments this evening.

However, there is still a long way to go until the Atlanta Fed President speaks, with investors looking down the barrel of some pretty terrifying losses.

Update by Connor Campbell, Financial Analyst, Spreadex
24-Aug-15 [11:24am]

Dow Jones to Enter Correction Territory for First Time Since 2011



So far, since the initial yuan devaluation on 11 August, estimates suggest that the global markets have haemorrhaged around $5trn in value.

In fact, £40bn today alone has been lopped off the FTSE, with the UK index now only a 5% decline (a figure easily achievable this week given how nervy investors are at the moment) away from entering a bear market.

Six and a half year lows for Brent Crude and WTI merely compounded a truly dismal day.

All of a sudden the Greek-inspired volatility of June and July doesn’t look so bad in comparison.

Things are so bad on the markets at the moments that there is almost nothing interesting to say.

The DAX and CAC followed the same pattern as the FTSE, seemingly happy to sit at 3% declines with the German index beating its UK counterpart to reach bear market status already.

And the worrying thing is it could all worsen this afternoon with the opening of the US markets.

By and large last week saw the ringing of the bell on Wall Street hinder, not help, the markets.

With the Dow Jones entering correction territory for the first time since 2011 things don’t look like they will be any different this afternoon.

The US brings with it the only notable piece of (ostensibly) non-China-related news this evening, as Dennis Lockhart speaks to the 2015 Public Pension Funding Forum.

Lockhart has been the most fervent beater of the FOMC’s hawk drum in the past month, stating that it would take a ‘significant deterioration’ in the US economy for him not to vote for a September lift-off.

It will be interesting to see, then, if the $5trn disappearing act the markets are currently witnessing is enough reason for the Atlanta Fed President to want to kick the rate hike can a bit further down the road.

Update by Connor Campbell, Financial Analyst, Spreadex
24-Aug-15 [10:16am] Updated Dow Jones COT Report

The latest COT Report (Commitments of Traders) for the Dow Jones futures market has been released by the CFTC, please see our Dow Jones COT report below.

Readers should note that we have also updated our Stock Market COT Summary Report.

Update by Gordon Childs, Editor, CleanFinancial
24-Aug-15 [9:06am] The Market Mayhem Continues



Update by David Papier, Sales Trader, ETX Capital
20-Aug-15 [11:24am] Investors and Analysts Remain Confused

After last night’s FOMC meeting minutes failed to provide much clarity on the rate hike situation, the US jobless claims, joined by the Philly Fed manufacturing index, will be the main focus of this afternoon.

Those meeting minutes saw the Fed express fears over the China slowdown and lifeless US inflation; worryingly, these minutes were from before the market-rocking yuan devaluation AND Wednesday’s weak CPI figures.

Once again this has left investors and analysts’ alike scratching their heads over the likelihood of a September lift-off, something that had previously looked so certain across the last 6 weeks.

Update by Connor Campbell, Financial Analyst, Spreadex
20-Aug-15 [9:35am]

Stocks Sell-Off After Dovish FOMC Meeting:





Update by Craig Inglis, Head of Product Development, CMC Markets

» For more see Stock Market Trading News & Analysis.

Readers please note:


Where Can I Find Live Spread Betting Prices and Charts for the Dow Jones?


We do show indicative Dow Jones spread betting prices, please see above.

The CFD chart below also offers readers a helpful look at the US stock market index.


The Plus500 chart above is usually based on the Dow Jones futures contract (not the daily market).

If you want to check live spread betting prices and charts for the Dow, you may need a financial spread betting account.

A spreads account would also let you speculate on short-term daily Dow Jones markets. Users should note that accounts are normally subject to suitability, credit and status checks.

Should your application be approved then you can log on and study the charts and the current prices. These are normally free. Having said that, you might get the occasional sales letter or email from the spread trading company.

Of course, if you do trade then, before starting, you should note that CFD trading and financial spread trading carry a high degree of risk to your funds and can result in losses that are greater than your initial investment.

Advanced Charts for the Dow Jones


Although charting software/packages can vary across the industry, to help your analysis of the Dow Jones, they often come with useful tools like:
  • Drawing features and options e.g. Trendlines, Fibonacci Arcs, Fans and Time Zones
  • Different display options e.g. candlestick charts and bar charts
  • A host of different time periods e.g. 1 minute, 3 minute, 5 minute, 15 minute, 1 hour, 1 day etc.

Charts on the Financial Spreads platform also include advanced features like:
  • BackTesting, Custom Indicators and Optimisation functions
  • Helpful overlays e.g. Ichimoku Clouds, Parabolic SAR, EMA, Envelopes etc.
  • Technical indicators e.g. Williams %R, True Strength (TSI), Chaikin's Volatility, Aroon, Forecast Oscillator, Price and Volume Trend, Linear Regression etc.
  • Automatic email notifications that trigger when a market hits a pre-set level

Sample Dow Jones chart from Financial Spreads

Dow Jones Trading Guide - Example Chart


The following financial spread betting firms give account holders access to real time trading prices and charts:

Dow Jones Index Commitments of Traders Report - 18 Aug 2015 (i)


Futures Only Positions, CBT , Code 124603, (DJIA Index x $5) (i)

Reporting Firms (i) Non-Reportable Positions (i)
Non-Commercial (i)
Commercial (i) Total Reportable (i)
 
Commitments (i) Open (i) Interest Commitments
Long (i) Short (i) Spreads (i) Long Short Long Short Long Short
20,578 31,045 2,434 59,309 44,467 82,321 77,946 93,447 11,126 15,501
 
Changes from 11 Aug 2015 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
-257 -628 2,316 -2,003 -5,563 56 -3,875 -1,391 -1,447 2,484
 
Percent of Open Interest for Each Category of Trader (i)
Long Short Spreads Long Short Long Short   Long Short
22.0% 33.2% 2.6% 63.5% 47.6% 88.1% 83.4%   11.9% 16.6%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
29 22 5 32 20 64 44 99    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
1:1.5   1.3:1 1.1:1   1:1.4
 
Net Commitment Change (i)  
371  

Also see:

Spread Betting on Individual Dow Jones Companies


Simply click on the company you're interested in spread betting on. As well as indicative prices and charts, we talk you through the most popular spread betting questions on that Dow 30 company:
  • Where can I spread bet?
  • How to spread bet on that American company?
  • Where can I trade commission free?
  • Etc
Company Name Symbol Dow Jones Stocks
Spread Betting Guides »
Charts &
Prices
3M MMM 3M Spread Betting MMM Charts & Prices
Alcoa AA Alcoa Spread Betting AA Charts & Prices
American Express AXP American Express Spread Betting AXP Charts & Prices
AT&T T AT&T Spread Betting T Charts & Prices
Bank of America BAC Bank of America Spread Betting BAC Charts & Prices
Boeing BA Boeing Spread Betting BA Charts & Prices
Caterpillar CAT Caterpillar Spread Betting CAT Charts & Prices
Chevron CVX Chevron Spread Betting CVX Charts & Prices
Cisco CSCO Cisco Spread Betting CSCO Charts & Prices
Coca Cola CCE Coca Cola Spread Betting CCE Charts & Prices
Du Pont DD Du Pont Spread Betting DD Charts & Prices
Exxon Mobil XOM Exxon Mobil Spread Betting XOM Charts & Prices
General Electric GE General Electric Spread Betting GE Charts & Prices
Hewlett Packard HPQ Hewlett Packard Spread Betting HPQ Charts & Prices
Home Depot HD Home Depot Spread Betting HD Charts & Prices
IBM IBM IBM Spread Betting IBM Charts & Prices
Intel INTC Intel Spread Betting INTC Charts & Prices
Johnson and Johnson JNJ Johnson and Johnson Spread Betting JNJ Charts & Prices
JPMorgan Chase JPM JPMorgan Chase Spread Betting JPM Charts & Prices
McDonalds MCD McDonalds Spread Betting MCD Charts & Prices
Merck MRK Merck Spread Betting MRK Charts & Prices
Microsoft MSFT Microsoft Spread Betting MSFT Charts & Prices
Pfizer PFE Pfizer Spread Betting PFE Charts & Prices
Procter and Gamble PG Procter and Gamble Spread Betting PG Charts & Prices
Travelers TRV Travelers Spread Betting TRV Charts & Prices
United Technologies UTX United Technologies Spread Betting UTX Charts & Prices
UnitedHealth UNH UnitedHealth Spread Betting UNH Charts & Prices
Verizon VZ Verizon Spread Betting VZ Charts & Prices
Wal-Mart WMT Wal-Mart Spread Betting WMT Charts & Prices
Walt Disney DIS Walt Disney Spread Betting DIS Charts & Prices


Individual Shares Spread Betting Guides


For more individual equities guides, also see:

Financial Spreads » "With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." » read Financial Spreads review.


About the Dow Jones


The Dow Jones Industrial Average, often referred to as the Dow, Dow 30 or Dow Jones, is one of the world's most well known markets.

The Dow represents a selection of thirty of the biggest American public companies. It's used to measure the performance of these corporations whilst also reflecting the state of the American economy and, to a degree, the world economy.

In spread betting and CFD trading, rather than being called the Dow, Dow Jones or Dow 30 it is often called 'Wall Street' or the 'US 30'.


Dow Jones Spread Betting: Firms with High Share Prices are the Most Important


If you want to profit from trading the FTSE 100, the biggest corporations are the most important. Because of the way the FTSE 100 index is weighted, movements in the share prices of the largest corporations affect the FTSE 100 index more than price movements in the shares of smaller companies.

Trading the Dow Jones However, the Dow Jones Industrial Average is not 'price weighted'. This means that a one point increase or decrease by any share in the index will have the same effect as a one point increase or decrease of any other share.

As of April 2012, share prices on the DJIA range from around $8-9 (Bank of America and Alcoa) to almost $210 (IBM).

So, a 10% shift in IBM's share price (around $21) would account for a large movement in the Dow Jones index (around 160 points).

However, a 10% shift in Bank of America's share price (around $0.90) would only lead to a very small change in the Dow Jones (around 7 points). This isn't because IBM is a bigger corporation, it is because IBM's share price is much higher.

The other high value shares to watch out for in the Dow Jones are, as of April 2012, Caterpillar, Chevron and McDonalds.


Dow Jones Stock Market Index: Different Trading Times


The Dow is based on Wall Street however, not all 30 companies that make up the DJIA are based on America's East coast.

So, when the Dow Jones opens for trading, the value is determined only by the relatively few companies that open first. The opening price on the Dow will therefore always be close to the previous day's closing price.

As a result, the Dow Jones will never accurately reflect the true opening prices of all its companies.

If you are looking to trade on the Dow Jones, you need to be very careful when you open your position. Whilst the FTSE 100 might 'hit the ground running' with all companies opening at the same time, the Dow Jones doesn't work in the same way. Investors should monitor opening and closing prices so they can be confident of opening a position at the right time.


Dow Jones Spread Betting: Know the Shares


One of the advantages of trading the Dow Jones is that there are only 30 corporations in the index. Therefore it's easier to keep an eye on each of the component companies and what's happening to their share price.

Some traders believe that it is good practice to have a number of shares that you regularly follow. The aim of this is to get to know these shares and become familiar with their price movements.

Keeping tabs on all FTSE 100 companies is tough, it's hard to know exactly what is happening to all the shares at any given time. However, watching 30 Dow Jones stocks is more manageable. You can get to know each company's typical share movements and that can help you forecast where the Dow Jones will head next.
Advert: Dow Jones Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on the Dow Jones with Financial Spreads.


Where Can I Spread Bet on the Dow Jones for Free?


Speculating on the stock market always comes with a degree of risk. However, if you would like to use a Demo Account, that allows you to practice spread betting on a wide range of markets, please see below for further details.

When you think about which investment option is right for you, don't forget that, in the UK, financial spread betting is currently tax free*.

If you are trying to find a low cost financial spread betting website then keep in mind that you can trade the Dow Jones without having to pay any commissions or brokers' fees through companies such as:

Free Demo Account


If you would like to use a Demo Account where you are able to try out online spread betting, and speculating on markets like GBP/USD, gold, the FTSE 100 and the Dow Jones, then look at: Each of the spread betting companies listed above offer a Test Account which lets users apply a range of trading orders, test new trading ideas and review stock market charts.




How to Spread Bet on the Dow Jones

How to Spread Bet on the Dow Jones?


As with a wide variety of financial markets, investors can spread bet on indices, like the Dow Jones, to either rise or fall.

If you go to the Financial Spreads platform, you can see that they have priced the Dow Jones Rolling Daily market at 13343.0 - 13345.0. This means that an investor could put a spread bet on the Dow Jones index:

  Dow Jones Spread Betting Example Moving above 13345.0, or
  Dow Jones Trading Example Moving below 13343.0

When you spread bet on the Dow Jones index you trade in £x per point, where a point is one point of the index itself. As a result, if you invested £4 per point and the Dow Jones moves 26 points then that would be a difference to your profit/loss of £104. £4 per point x 26 points = £104.

Rolling Daily Indices Markets

This is a Rolling Daily Market which means that there is no set settlement date for this market. You do not have to close your position, should it still be open at the end of the trading day, it simply rolls over to the next trading day.

If you do let your position roll over into the next day and are spread betting on the market to:

  Dow Jones Trading Example Go higher - then you are charged a small overnight financing fee, or
  Dow Jones Trading Example Go lower - then a small payment is normally credited to your account

For more information see Rolling Daily Spread Betting.


Dow Jones Index - Rolling Daily Trading Example


Now, if you think about the spread of 13343.0 - 13345.0 and assume that:
  • You have analysed the indices markets, and
  • You think that the Dow Jones index will increase and move above 13345.0
Then you may go long of the market at 13345.0 and invest, for example, £5 per point.

Therefore, with this trade you make a profit of £5 for every point that the Dow Jones index moves higher than 13345.0. However, it also means you will lose £5 for every point that the Dow Jones market moves below 13345.0.

Considering this from another angle, if you were to buy a spread bet then your P&L is worked out by taking the difference between the final price of the market and the initial price you bought the spread at. You then multiply that price difference by the stake.

Therefore, if after a few days the US stock market moved higher then you might think about closing your trade and guaranteeing your profits.

Taking this a step further, if the stock market did go up then the spread might change to 13380.4 - 13382.4. You would close your spread bet by selling at 13380.4. As a result, with the same £5 stake your profit would be calculated as:

P&L = (Closing Price - Initial Price) x stake
P&L = (13380.4 - 13345.0) x £5 per point stake
P&L = 35.4 x £5 per point stake
P&L = £177.00 profit

Trading the American stock market is not simple. In the above example, you had bet that the US index would rise. Of course, the stock market can fall.

If, contrary to your expectations, the Dow Jones fell, then you might decide to close your trade to stop any further losses.

So if the spread pulled back to 13313.1 - 13315.1 you would close your position by selling at 13313.1. This would result in a loss of:

P&L = (Closing Price - Initial Price) x stake
P&L = (13313.1 - 13345.0) x £5 per point stake
P&L = -31.9 x £5 per point stake
P&L = -£159.50 loss

Note - Dow Jones Rolling Daily spread quoted as of 11-Sep-12.


How to Trade Dow Futures

How to Trade Dow Futures


Looking at a site like InterTrader, we can see they are currently offering the Dow Jones December Futures market at 13408 - 13414. This means an investor could speculate on the Dow Jones index:

  Dow Jones Futures Trading Example Closing above 13414, or
  Dow Jones Futures Trading Example Closing below 13408

On the expiry date for this 'December' market, 21-Dec-12.

As with the daily market above, you trade the Dow Futures in £x per point. So if your stake is £5 per point and the Dow moves 27 points then that would make a difference to your profits (or losses) of £135. £5 per point x 27 points = £135.


Dow Jones Futures Trading Example


If we take the above spread of 13408 - 13414 and make the assumptions that:
  • You have done your analysis of the American futures market, and
  • Your analysis suggests the US index will settle above 13414 by 21-Dec-12
Then you could decide to buy the market at 13414 and risk, for the sake of argument, £2 per point.

With this contract you make a gain of £2 for every point that the US index moves higher than 13414. Nevertheless, you will make a loss of £2 for every point that the Dow Jones market goes lower than 13414.

Put another way, with spread trading, your profits (or losses) are worked out by taking the difference between the closing price of the market and the price you bought the market at. You then multiply that price difference by the stake.

So, if on the expiry date, the Dow Jones closed at 13488, then:

Profit / loss = (Closing Value - Opening Value) x stake
Profit / loss = (13488 - 13414) x £2 per point stake
Profit / loss = 74 x £2 per point stake
Profit / loss = £148 profit

Of course trading the American stock market futures is rarely that straightforward. In the above example, you wanted the Dow to rise. Of course, the stock market index could fall.

If the futures had fallen and settled at 13334 on the expiry date, then you would end up losing this trade.

Profit / loss = (Closing Value - Opening Value) x stake
Profit / loss = (13334 - 13414) x £2 per point stake
Profit / loss = -80 x £2 per point stake
Profit / loss = -£160 loss

Note - Dow Jones December Futures market taken as of 27-Sep-12.


Risk Management: Spread Betting on the US Stock Market with a Stop Loss


You can put a limit on the size of your position to help reduce your potential losses without impacting your upside. You can also employ smaller stake sizes such as £1 per point or $1 per point.

Let’s say you spread bet on the Dow to go up, with a £1 per point stake and attach a Stop Loss order to your trade. If the US stock market goes up by 120 points then you would make 120 points x £1 per point = £120.

You are also able to trade the markets in Euros and Dollars. If you want to trade in dollars then 120 points x $1 per point = $120.

Of course if the market went against you, dropping by say 90 points, then with a £1 stake you would lose 90 points x £1 per point = £90.

Obviously this would be a fairly poor start. However, with firms like Financial Spreads you can add a Stop Loss at let's say, 30 points.

If you were trading the Dow this would mean that your position would be closed if the US index moved against you by 30 points. Therefore, instead of losing £90, you'd only lose 30 points x £1 per point = £30.

However, assuming you correctly predicted the direction of the market, your upside would still be £120.

Note that Stop Losses are not guaranteed, if a market slips then your Stop Loss is closed out at the next traded price. If you don’t want that risk then you can use a Guaranteed Stop Loss, these are guaranteed to close your trade even if the underlying market slips (gaps).

A number of firms like Financial Spreads, InterTrader and Capital Spreads automatically apply a Stop Loss to every trade. You can upgrade to a Guaranteed Stop Loss but that normally comes at a small premium (normally a wider spread).


Advert: Dow Jones Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on the Dow Jones with Financial Spreads.


Trading Risk Warning
'Dow Jones Spread Betting' edited by Jacob Wood, updated 28-Aug-15

For related articles also see:




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