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'.


Dow Jones Prices


Indicative Dow Jones prices:











MarketChangeSellBuy
Above, indicative prices from Financial Spreads: 2,500+ live prices available to Spread Betting and CFD clients.


Stock Market Index Comparison


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

FTSE 100 (UK 100) Daily - Spread Size 1 1 1 1 1 1 1 1
FTSE 100 (UK 100) Daily - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
FTSE 100 (UK 100) Future - Spread Size 4 4-8 6 4 3 4 4 4
FTSE 100 (UK 100) Future - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
Dow Jones (Wall St) Daily - Spread Size 1 1 2 1 2-4 1 1 2
Dow Jones (Wall St) - Min Stake £1 £0.50 £1 £1 £1 £1 £1 £1
DAX 30 Daily - Spread Size 1 1 1 1 1 1 1 1
DAX 30 Daily - Min Stake £1 £0.50 £2 £1 £1 £1 £1 £1
S&P 500 Daily - Spread Size 3 4 5 3 5 3 3 8
S&P 500 Daily - Min Stake £1 £0.50 £1 £1 £1 £1 £1 £1^
NASDAQ 100 Future - Spread Size 3 4-10 4 3 4 3 3 4
NASDAQ 100 Future - Min Stake £1 £0.50 £4 £1 £1 £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
21-Aug-14 [10:45am] US stock markets took a more hawkish Fed on the chin yesterday and managed to eek out some gains contrasting with a sell-off in bond markets that feared a more imminent rate-hike than previously thought.

After a jump in sales at Hewlett Packard overnight, US markets look set to open higher today ahead of the first day of the Jackson Hole central bank conference and earnings from Dollar Tree, Salesforce.com and The Gap.

Futures suggest the Dow Jones will open 20 points higher at 16,999 with the S&P 500 expected to open 1 point higher at 1,987 and the NASDAQ 1 point higher at 4,041.

Fresh from a bidding war involving the other top US dollar stores, Dollar Tree is expected to earn $0.64 per share on revenue of $2.01bn.

Salesforce.com, one of the best known cloud applications, is expected to reporting earnings of $0.12 per share on revenue of $1.29bn.

In a difficult quarter for retail sales, Gap is expected to show Q2 earnings of $0.69 per share on revenue of $3.96bn.

Update by Jasper Lawler, Market Analyst, CMC Markets
21-Aug-14 [9:55am] Wall Street continued to flirt outrageously with the 17,000 level, no doubt emboldened by the bullish earnings comments made from last night's FOMC minutes that will help pave the way for interest rate rises in the US.

Hewlett Packard, the last of the big bellwether US corporates to report, saw its after-hours performance disappoint much like its figures had.

Having beaten market expectations in eleven of the last twelve seasons, it looks like it has made a rod for its own back.

Markets will be wary of any flyaway comments coming out of Jackson Hole today, but with both Federal Reserve chair Janet Yellen, and European Central Bank president Mario Draghi talking tomorrow, that could be when the fireworks start.

Ahead of the open we expect the Dow Jones to start 29 points higher at 17,008.

Update by Alastair McCaig, Market Analyst, IG Index
21-Aug-14 [8:05am]

Dow Jones Daily Trading News

  • The Dow Jones is currently trading at 16,970.
  • Overnight, the market closed up 68pts (0.40%) at 16,980.
30 Minute Analysis

Neutral Stock Market The index is trading lower than the 20-period MA of 16,976.4 and higher than the 50-period MA of 16,946.3.

1 Day Analysis

Rising Stock Market The stock index is higher than the 20-DMA of 16,660.7 and higher than the 50-DMA of 16,849.9.

Update by Gordon Childs, Editor, CleanFinancial
21-Aug-14 [7:41am] US indices were mixed on Wednesday. Shares in the Retailing, Capital Goods and Transportation sectors traded higher while shares in the Software & Services, Food, Beverage & Tobacco and Consumer Services sectors were under pressure.

The FOMC minutes showed the Fed decided to reduce monthly bond buying by $10bn, keeping pace to end the purchase program in October.

The S&P 500 (1986.51) remains above its 20 DMA (1951.5 - flat slope), and its 50 DMA (1958.8 - flat slope).

European markets are expected to start on a negative note.

Update by InterTrader
21-Aug-14 [7:41am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16780
  • Our preference: Long positions above 16780 with targets @ 16985 & 17090 in extension.
  • Alternative scenario: Below 16780 look for further downside with 16700 & 16530 as targets.
Comment: The RSI is bullish and calls for further upside.

Update by InterTrader
21-Aug-14 [7:41am] American Shares - Crossing Over their 50 Day Moving Average:
  • AES Corporation (AES +1.01% to $15.05)
  • Apache (APA +1.08% to $100.34)
  • Boeing (BA +1.41% to $127.35)
  • Danaher (DHR +0.72% to $77.19)
  • Discover Financial Services (DFS +1.44% to $62.12)
  • Freeport-McMoRan Copper & Gold (FCX +1.9% to $36.98)
  • GameStop (GME +1.1% to $41.33)
  • General Electric (GE +1.19% to $26.36)
  • Hormel Foods (HRL +0.74% to $47.86)
  • Jacobs Engineering (JEC +3.14% to $53.9)
  • Navient (NAVI +1.04% to $17.5)
  • Nordstrom (JWN +1.36% to $68.39)
  • Paccar (PCAR +1.18% to $64.3)
  • PVH Corp (PVH +1.87% to $115.77)
  • Rockwell Collins (COL +1.93% to $77.19)
  • Salesforce.com (CRM +0.78% to $55.39)
  • Scripps Networks Interactive (SNI +1.44% to $81.5)
  • Xylem (XYL +1.33% to $38.01)


American Shares - Crossing Under their 50 Day Moving Average:
  • TE Connectivity (TEL -0.73% to $62.34)
  • Total System Services (TSS -0.85% to $31.38)
  • Waters (WAT -0.99% to $103.32)
  • Whole Foods Market (WFM -1.47% to $38.19)


Update by InterTrader
21-Aug-14 [6:09am] Even though there are several negative cues lining up, European shares are set to creep higher this morning.

Hawkish minutes from the BoE and the Fed, Ukrainian troops moving into rebel held territory, weak Chinese manufacturing data overnight and expectations of poor European PMI figures this morning should have traders on the back foot.

Despite this, markets have developed a remarkable ability to shrug off the bad news and have needle-like focus on the good, although no one seems quite sure what that is today.

If markets manage to finish the day in positive territory then it will either be an amazing feat of blind faith or because Mario Draghi unexpectedly decides to put his 'whatever it takes' words into action at Jackson Hole.

US equities continued to climb for the third consecutive day on Wednesday, with the Dow Jones index climbing almost 60 points to close at 16,979.

Stocks had initially fallen after the release of the FOMC minutes which showed a growing number of officials considering an increase in interest rates sooner rather than later.

However, the Dow managed to recover from the initial drop, spurred on by positive earnings data from Home Depot which has benefited from the improving housing market.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
21-Aug-14 [5:07am] The Dow Jones futures market closed higher on Wednesday as it extends the rally off August's low. The high-range close sets the stage for a steady-to-higher opening on Thursday. Stochastics and the RSI remain bullish signalling that sideways-to-higher prices are possible near-term. If the Dow extends the rally off August's low, the 62% retracement level of August's decline crossing is the next upside target. Closes below the 10 day moving average crossing would confirm that a short-term top has been posted.

Update by PipTrade
20-Aug-14 [3:42pm] US Stock Markets

Shares in the US were trading tentatively ahead of the meeting minutes from the Federal Reserve but with the release not until 2:00pm EST it was largely corporate earnings that were driving markets early on.

Shares in Target fell after missing estimates and lowering guidance for the year while Lowes beat estimates but also pulled back guidance for the year. Staples declined on more weak numbers as the company shut down stores as part of its turnaround plan to compete online.

Update by Jasper Lawler, Market Analyst, CMC Markets
20-Aug-14 [10:34am] US markets look set to pull back at the open today.

The NASDAQ hit another 14 year high yesterday and the other major benchmarks are coming off gains in 6 of the last 8 sessions.

After a shock two member dissent in the Bank of England minutes, all eyes will be on whether the dissent from Fed Member Charles Plosser is part of a more widely held opinion to hike rates sooner in the US.

Futures suggest the Dow Jones will open 33 points lower at 16,886, with the S&P 500 expected to open 5 points lower at 1,976 and the NASDAQ 10 points lower at 4,030.

This latest rally in stocks has been supported by some goldilocks economic data that is good enough to support corporate profits but not so good as to risk a change in stance at the Federal Reserve over keeping interest rates close to zero.

Expectations for low rates for 'a considerable period' in the US could be called into question if there are murmurings of a change in sentiment in the latest Fed minutes.

There was one dissenter but comments after the latest meeting from known hawk Richard Fisher suggest the opinion could be more widely held.

There is also a slew of significant corporate earnings today coming from Hewlett Packard, Target, Lowes, Staples and American Eagle Outfitters.

  • HP is expected to report third quarter earnings of $0.88 per share on revenue of $26.98bn
  • Target is expected to earn $0.79 per share on revenue of $17.38bn
  • Lowe's is expected to earn $1.02 per share on revenue of $16.66bn
  • Staples is expected to earn $0.11 per share on revenue of $5.16bn
  • American Eagle is expected to earn $0.00 per share on revenue of $689.94m


Update by Jasper Lawler, Market Analyst, CMC Markets
20-Aug-14 [10:06am] Even with tonight's FOMC meeting minute hanging over the markets and European traders looking a little wobbly, a concerted effort for the Dow Jones to hit 17,000 looks almost inevitable today.

Having closed less than 100 points away from that psychological target should ensure its mesmerising level.

Update by Alastair McCaig, Market Analyst, IG Index
20-Aug-14 [7:34am] US indices gained on Tuesday led by shares in the Retailing, Utilities and Technology Hardware & Equipment sectors.

The S&P 500 (1981.6) remains above its 20 DMA (1951.5 - flat slope), and its 50 DMA (1958.1 - flat slope).

European markets are expected to start on a positive note.

Update by InterTrader
20-Aug-14 [7:34am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16710
  • Our preference: Long positions above 16710 with targets @ 16920 & 16985 in extension.
  • Alternative scenario: Below 16710 look for further downside with 16530 & 16450 as targets.
Comment: Technically the RSI is above its neutrality area at 50.

Update by InterTrader
20-Aug-14 [7:34am] American Shares - Crossing Over their 50 Day Moving Average:
  • AbbVie (ABBV +1.8% to $55.29)
  • Altera (ALTR +1.01% to $34.49)
  • Ameren Corporation (AEE +1.39% to $39.47)
  • Best Buy (BBY +2.81% to $30.75)
  • CBRE Group (CBG +1.02% to $31.75)
  • Dollar Tree (DLTR +0.83% to $54.71)
  • Dominion Resources (D +1.32% to $69.59)
  • Duke Energy (DUK +1.1% to $72.88)
  • Eli Lilly (LLY +1.32% to $62.16)
  • FirstEnergy (FE +1.1% to $33.2)
  • Hess Corp (HES +1.41% to $99.28)
  • Integrys Energy (TEG +1.59% to $67.02)
  • Macy's (M +1.57% to $58.95)
  • Marathon Oil (MRO +2.05% to $39.73)
  • Micron Technology (MU +1.12% to $32.4)
  • Occidental Petroleum (OXY +1.19% to $101.8)
  • Oracle (ORCL +1.89% to $41.41)
  • Peabody Energy (BTU +2.82% to $16.4)
  • Perrigo (PRGO +2% to $150.84)
  • PPL Corporation (PPL +1.31% to $34.09)
  • Target (TGT +1.2% to $59.25)
  • Textron (TXT +0.84% to $38.29)
  • Tractor Supply (TSCO +0.74% to $62.32)
  • Xcel Energy (XEL +1.52% to $31.36)


American Shares - Crossing Under their 50 Day Moving Average:
  • Ingersoll-Rand (IR -1.01% to $61.55)


Update by InterTrader

» 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 - 12 Aug 2014 (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
26,029 33,503 15 67,616 63,373 93,660 96,891 109,918 16,258 13,027
 
Changes from 5 Aug 2014 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
-5,260 3,242 -1,042 122 -9,463 -6,180 -7,263 -6,738 -558 525
 
Percent of Open Interest for Each Category of Trader
Long Short Spreads Long Short Long Short   Long Short
23.7% 30.5% 0.0% 61.5% 57.7% 85.2% 88.1%   14.8% 11.9%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
27 27 4 44 17 72 47 108    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
1:1.3   1.1:1 1:1   1.2:1
 
Net Commitment Change (i)  
-8,502  

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.

Letís 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 donít 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 21-Aug-14

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