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
24-Oct-14 [10:52am] US markets appear a little spooked today as Ebola just got distinctly closer to home for Wall Street with the first case diagnosed in New York City.

Overnight earnings explain a divergence between the Dow and NASDAQ, with Microsoft beating estimates while Amazon's losses are getting bigger.

Craig Spencer, a New York doctor who recently returned from treating Ebola patients in West Africa, tested positive for the virus on Thursday evening.

The Centre of Disease Control, as well as the Obama administration, appears very much behind the curve.

Thanks to a very slow and inactive policy response, as well as not following standard guidelines, the disease has made it to one of the most densely populated cities and one of biggest financial centres in the world.

The threat of an outbreak is getting more serious; the only beneficiaries from this will be the yellow cabbies as New-Yorkers avoid the subway.

Microsoft has stepped ahead of the tech bellwether crowd including IBM, Oracle and SAP by beating estimates and doing so thanks to areas that were considered its weakness, namely mobile and the cloud.

Today will be another important day for earnings including results from Ford Motor Company, Bristol-Myers Squibb, Proctor and Gamble, UPS, Colgate-Palmolive, Nasdaq OMX Group and State Street.

Futures suggest the S&P 500 will open 4 points lower at 1,946 with the Dow Jones expected to open 11 points lower at 16,663 and the NASDAQ 12 points lower at 4,000.

Update by Jasper Lawler, Market Analyst, CMC Markets
24-Oct-14 [9:07am] Last night saw both Amazon and Microsoft post their third-quarter figures.

Amazon's was suitably bad enough to see its shares drop by 9% in after-hours trading, while Microsoft in contrast saw its shares jump 4% higher.

As important as today's Ford and Proctor & Gamble figures are, the eye can't help but be drawn to the start of next week with Twitter and Facebook due to report on Monday and Tuesday.

Now that New York has joined the list of cities with Ebola cases, US awareness about this deadly virus is set to dramatically increase, and that nervousness will undoubtedly be transmitted to US equity markets.

Ahead of the open we expect the Dow Jones to start five points lower at 16,672.

Update by Alastair McCaig, Market Analyst, IG Index
24-Oct-14 [8:08am]

Dow Jones Daily Market Update

  • The Dow Jones is currently trading at 16,655.
  • At the end of the last session, the market closed up 198pts (1.20%) at 16,700.
30 Minute Chart Analysis

Neutral Stock Market The stock market is currently lower than the 20-period MA of 16,655.1 and higher than the 50-period MA of 16,645.0.

1 Day Chart Analysis

Neutral Stock Market The stock market is higher than the 20-day MA of 16,630.3 and lower than the 50-day MA of 16,904.4.

Update by Gordon Childs, Editor, CleanFinancial
24-Oct-14 [7:28am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16360
  • Our preference: Long positions above 16360 with targets @ 16690 & 16760 in extension.
  • Alternative scenario: Below 16360 look for further downside with 16140 & 15975 as targets.
Comment: The RSI is supported by a bullish trend line.

Update by InterTrader
24-Oct-14 [7:28am] US indices jumped on Thursday helped by shares in the Transportation, Capital Goods and Media sectors.

The S&P 500 (1950.82) remains below its 20 DMA (1929.2 - negative slope), and its 50 DMA (1966.8 - flat slope).

European markets are expected to start on a flat note.

Update by InterTrader
24-Oct-14 [7:28am] American Shares - Crossing Over their 50 Day Moving Average:
  • 3M (MMM +4.39% to $145.05)
  • Abbott Laboratories (ABT +2.02% to $42.43)
  • Actavis (ACT +2.51% to $237.21)
  • Autonation (AN +3.21% to $52.11)
  • Autozone (AZO +1.85% to $531.57)
  • Cablevision Systems (CVC +2.27% to $18.45)
  • CarMax (KMX +9.1% to $52.73)
  • Danaher (DHR +2.37% to $77.36)
  • Delta Air Lines (DAL +1.66% to $37.92)
  • Diamond Offshore Drilling (DO +5.97% to $39.6)
  • Dollar General (DG +1.8% to $62.26)
  • Fiserv (FISV +1.42% to $65.09)
  • Honeywell (HON +2.65% to $93.58)
  • Illinois Tool Works (ITW +1.45% to $87.34)
  • Ingersoll-Rand (IR +3.93% to $60.01)
  • Kinder Morgan (KMI +2% to $38.68)
  • Lam Research (LRCX +5.25% to $75.64)
  • Legg Mason (LM +2.1% to $50.58)
  • Northrop Grumman (NOC +3.27% to $129.2)
  • Paccar (PCAR +2.07% to $60.58)
  • Parker Hannifin (PH +6.64% to $116.39)
  • Quest Diagnostics (DGX +2.73% to $62.88)
  • Raytheon (RTN +1.47% to $98.88)
  • Roper Industries (ROP +2.66% to $150.53)
  • Salesforce.com (CRM +2.9% to $57.88)
  • Symantec (SYMC +1.53% to $23.87)
  • Textron (TXT +4.26% to $38.16)
  • Tractor Supply (TSCO +15.82% to $71)
  • Verisign (VRSN +2.08% to $56.34)
  • Visa (V +1.59% to $214.28)
  • Xilinx (XLNX +1.97% to $42.54)
  • Zimmer Holdings (ZMH +4.36% to $104.57)


American Shares - Crossing Under their 50 Day Moving Average:
  • Airgas (ARG -2.05% to $109.06)


Update by InterTrader
24-Oct-14 [6:03am] European equities are set to fall on the open following overnight news that a case of Ebola has reached New York.

Another bout of better than estimated corporate earnings in the US led by Caterpillar (up 5%) had driven the Dow Jones more than 200 points higher to 16,702 during the regular cash session.

However, when the story broke that a doctor in New York had tested positive for Ebola after returning from West Africa, we saw a sharp sell off in Dow futures.

The index saw an initial spike lower of more than 100 points and, whilst it has rebounded slightly at the time of writing, it is still in the red.

Interestingly, whilst European markets are set to take their cue from the overnight moves in US futures, Asian markets seem to have shrugged off the concerns, instead taking their cue from the positive cash session.

Global stock markets have staged an impressive comeback following the recent sell off, but the foundation of the rally continues to look shaky.

All the sources of uncertainty surrounding the world economy are still hanging over us, with prospects for growth being repeatedly revised lower and central banks still having to sing their dovish song to keep everyone happy.

It feels as though it would only take a few traders to get skittish to tip the markets back in the favour of the bears.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
24-Oct-14 [5:16am] The Dow Jones futures market closed higher on Thursday. The high-range close sets the stage for a steady-to-higher opening on Friday. Stochastics and the RSI remain neutral-to-bearish signalling that sideways-to-lower prices are possible near-term. If the Dow extends the decline off September's high, April's low crossing is the next downside target. Closes above the 20 day moving average crossing would confirm that a short-term low has been posted.

Update by PipTrade
23-Oct-14 [3:58pm] Caterpillar has given some tangible credence to the notion that the US recovery is still on track with its better-than-expected figures and improving outlook.

Of the major US companies to have reported so far, over 70% have beaten market expectations and US traders will be hoping for more of the same as they wait for both Amazon and Microsoft to post after today's close.

Slightly denting the good corporate picture being created in the US have been today's US economic data releases.

Rising unemployment claims along with weaker-than-expected flash manufacturing figures have only slightly taken the shine off rises in all three of the major US equity indices.

Update by Alastair McCaig, Market Analyst, IG Index
23-Oct-14 [3:41pm] US Stock Markets

Earnings in the US were much more promising today led by a stellar report from Caterpillar while General Motors and Eli Lilly impressed as the unemployment picture continued to improve after this week's jobless claims.

The four week average of jobless claims hit a fourteen year low indicating further improvement in the US labour market.

Update by Jasper Lawler, Market Analyst, CMC Markets
23-Oct-14 [1:42pm] European stocks remain little changed as investors take to the side-lines to analyse a string of economic data and earnings.

German Flash manufacturing PMI figures came in much better than the 49.6 benchmark, exceeding estimates with a reading of 51.8.

The unexpected figure was the best since July after economists had anticipated a second month contraction.

This has contributed to gains in the DAX this morning which is currently trading up 25 points to 8964.

Heading into the afternoon, the FTSE is drifting slightly into the red.

Supermarkets were once again in the limelight after Tesco reported a 92% fall in profits.

They reported a bigger than expected gap in its finances this morning after finding accounting mistakes had gone back further than initially anticipated.

This has led to the Chairman, Sir Richard Broadbent, standing down after the mishap.

Data this afternoon showed that more Americans filed for jobless claims, coming in at 283,000, much higher than the 269,000 estimate.

However, the market remained unfazed, with futures in the Dow Jones on track to open 130 points higher.

US stock futures have advanced during the premarket after decent earnings from Caterpillar and Boston Scientific boosted sentiment.

Update by Lee Mumford, Trader, Spreadex
23-Oct-14 [10:32am] Rating agency Standard and Poor's have warned that the Eurozone crisis is entering a 'stubborn phase of subdued growth'.

However, signs of a turnaround in Germany and China after October's PMI reports have alleviated some global growth concerns and shares in the US look like opening higher.

China's HSBC manufacturing PMI came in at 50.4, slightly better than expected.

The slowdown in China is very much still happening, but today's PMI alongside the better than expected third quarter GDP growth has raised faith in the central government's ability to guide the economy towards a soft landing with a series of 'mini' stimulus efforts.

The situation in France is looking fairly abysmal after today's PMI numbers as well as the very real prospect that its budget will be disallowed by the EU.

Markets are reacting to the PMIs from Germany which have caused the Eurozone composite PMI to expand in September.

The Markit Manufacturing PMI released in the US is expected to slow in October, a miss may undo jubilation from Germany's numbers as it would exacerbate fears that the weakness in Europe is translating to the US.

Earnings are expected today from Comcast, AbbVie, Caterpillar, American Airlines, Southwest Airlines and United Continental Airlines.

Oil prices trading at four year lows will significantly reduce airlines costs which they are able to pass onto lower prices for customers and investors will be looking for that to be reflected in strong results today.

AbbVie are reporting that they have paid Shire $1.6bn to cancel the agreed merger thanks to a change in US tax rules.

Giant tech companies Microsoft and Amazon report after the close.

Futures suggest that the S&P 500 will open 14 points higher at 1,941, with the Dow Jones expected to open 126 points higher at 16,587 and the NASDAQ 26 points higher at 3,974.

Update by Jasper Lawler, Market Analyst, CMC Markets
23-Oct-14 [10:02am] US markets took a turn lower yesterday as inflation disappointed, and oil traded below $81 to continue its pursuit of multi-year lows, while events in Ottawa added some geopolitical risk into the mix.

Boeing led the Dow Jones lower as 787 costs outweighed higher earnings.

Today pre-market we watch for 3M, economic bell-weather Caterpillar, and post-market we have Microsoft.

At the moment, the slight weakness in Europe is pushing the opening call for the Dow lower by 25 points to 16,595.

Update by Will Hedden, Sales Trader, IG Index
23-Oct-14 [9:34am]

Stocks Dip after Shooting at the Canadian Parliament



A shooting at the Canadian Parliament encouraged a sell off in US stocks, with weak oil prices continuing to weigh heavily on the energy sector.

Tesco is under pressure once again after increasing the estimated size of its accounting black hole to £263m.



Update by David Papier, Sales Trader, ETX Capital

» 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 - 14 Oct 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
34,874 23,206 166 67,660 80,312 102,700 103,684 118,467 15,767 14,783
 
Changes from 7 Oct 2014 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
-5,192 311 -292 -7,834 -11,463 -13,318 -11,444 -13,805 -487 -2,361
 
Percent of Open Interest for Each Category of Trader
Long Short Spreads Long Short Long Short   Long Short
29.4% 19.6% 0.1% 57.1% 67.8% 86.7% 87.5%   13.3% 12.5%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
27 26 6 34 21 65 49 101    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
1.5:1   1:1.2 1:1   1.1:1
 
Net Commitment Change (i)  
-5,503  

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 24-Oct-14

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