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
30-Oct-14 [4:27pm] In the US, the Dow is up 134 points at 17,108 as a great result from Visa is fuelling the rally in broader index.

The credit card company contributed 126 points to the Dow's 134 point rally.

Visa must be cash rich if it can afford to hike the dividend by 20% and announce a $5 billion share buyback scheme.

The Dow Jones would be broadly unchanged if it wasn't for the Visa move, which says a lot about the market after QE3 was brought to and end.

The US stock market will have to stand on its own two feet from now as the safety net has been removed.

Shares in CME Group are trading lower after the biggest futures exchange in the world marginally missed revenue estimates despite being on track for a record month.

Update by David Madden, Market Analyst, IG Index
30-Oct-14 [2:15pm] The Dow Jones has reversed this morning's losses as the market opened this afternoon as a stronger than expected GDP report was released.

Gross Domestic Product grew by 3.5%, up from the forecasted figure of 3.1%.

US Unemployment claims were also released, rising to 287k vs 284k forecasted.

Markets are acting particularly twitchy this afternoon as investors still have the Federal Reserve's statement to digest which was released last night.

The statement stated that the Federal Reserve were to, as expected, wind down its bond-purchasing programme.

The statement also released information regarding short-term interest rates which are set to stay unchanged for a 'considerable time'.

European bourses are currently trading lower during the afternoon session with the FTSE 100 down 34 and the DAX down 88.

Bucking the trend, Wall Street is currently trading up 75 points.

Update by Sam Fox, Trader, Spreadex
30-Oct-14 [10:40am] The threat to US equities from the end of extraordinary central bank stimulus was compounded yesterday by a more hawkish Federal Reserve threatening the possibility of an earlier rate hike if data warrants it.

The rebound in stocks off the lows this month had partly been built off the possibility raised by St Luis Fed President James Bullard that the end of QE could be delayed, as well as the assumption that the Fed would lean towards caution over the global economy and lower inflation.

QE did end and the caution seen in last month's minutes was replaced with confidence in the US economy and the belief that inflation was only temporary.

Stock markets look set to follow through on yesterday's losses as fear over the end of stimulus reverberates.

Whether these losses are sustained could depend on whether investors share the Fed's faith in the strength of the US economy and, for the time being at least, this could largely rest on today's first estimate for GDP growth in the third quarter.

US GDP is announced at 12:20pm (London time) and growth is expected to have slowed to 3% from 4.6% in Q2, but 3% would still be an improvement over the average for the first half of 2014.

Some strong results from Visa bode well for MasterCard, who report immediately before the open.

Futures suggest the S&P 500 will open 9 points lower at 1,973, with the Dow Jones expected to open 9 points lower at 16,965 and the NASDAQ 21 points lower at 4,069.

Update by Jasper Lawler, Market Analyst, CMC Markets
30-Oct-14 [10:23am]

US Indices Dip as Fed Ends QE and Highlights Economic Strength



The Dow and S&P 500 saw some weakness as the Fed statement turned slightly hawkish, despite retaining the 'considerable time' phrasing on the timing of interest rate rises.

The dollar has also seen a boost on the FOMC statement, with the New Zealand dollar also slumping as the RBNZ softened its stance on rates.



Update by ETX Capital
30-Oct-14 [8:06am]

Dow Jones Daily Trading Update

  • The Dow Jones is currently trading at 17,056.
  • In the last session, the market closed up 14pts (0.08%) at 16,996.
30 Minute Chart Analysis

Rising Stock Market The market is trading higher than the 20 period moving average of 17,002.6 and higher than the 50 period moving average of 17,003.2.

1 Day Chart Analysis

Rising Stock Market The stock index is currently higher than the 20 day moving average of 16,639.6 and higher than the 50 day moving average of 16,900.7.

Update by Gordon Childs, Editor, CleanFinancial
30-Oct-14 [7:40am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16770
  • Our preference: Long positions above 16770 with targets @ 17000 & 17060 in extension.
  • Alternative scenario: Below 16770 look for further downside with 16650 & 16515 as targets.
Comment: The RSI is bullish and calls for further advance.

Update by InterTrader
30-Oct-14 [7:40am] US indices traded lower on Wednesday, pressured by shares in the Materials, Automobiles & Components, and Consumer Durables Sectors.

On the economic data front, the Federal Reserve announced the end of QE3 as expected.

The S&P 500 (1982.30) remains above both its 20 DMA (1929.9 - flat slope), and 50 DMA (1967.36 - flat slope).

European markets are expected to open on a flat note.

Update by InterTrader
30-Oct-14 [7:40am] American Shares - Crossing Over their 50 Day Moving Average:
  • Ameriprise Financial (AMP +2.88% to $123.76)
  • Corning (GLW +1.48% to $19.89)
  • Eaton Corp (ETN +1.76% to $65.92)
  • Nasdaq OMX (NDAQ +1.46% to $42.43)
  • Pfizer (PFE +1.38% to $29.49)
  • Safeway (SWY +1.67% to $34.7)
  • Williams (WMB +3.07% to $55.7)
  • Zions Bancorporation (ZION +1.3% to $28.78)


American Shares - Crossing Under their 50 Day Moving Average:
  • American Tower (AMT -1.4% to $95.05)
  • Ametek (AME -1.38% to $50.87)
  • Dollar General (DG -1.12% to $61.97)
  • DuPont (DD -1.69% to $66.8)
  • F5 Networks (FFIV -2.6% to $117.12)
  • Facebook (FB -6.08% to $75.86)
  • International Flavors & Fragrances (IFF -2.18% to $96.52)
  • Kinder Morgan (KMI -2.14% to $38.33)
  • Monsanto (MON -1.15% to $112.18)
  • Valero Energy (VLO -1.94% to $48.53)
  • Xylem (XYL -2.11% to $35.71)


Update by InterTrader
30-Oct-14 [6:15am] While the Federal Reserve kept its 'considerable time' phrase within yesterday's statement, that was pretty much the only dovish part of it, as the US central bank called time on its asset purchase program, as had been widely expected.

The FOMC then proceeded to keep spread trading investors slightly off balance by painting a much more optimistic view of the US economy.

In fact it was a stronger view than could possibly have been suggested only a couple of weeks ago, in the wake of those surprisingly dovish comments by James Bullard about possibly extending QE, given concerns about Europe and a Chinese slowdown.

Given the nature of those comments, the Fed statement was as far away as it could have been from what the market had been expecting.

Fed Statement as Hawkish as it Could Be

The two most hawkish members Richard Fisher and Charles Plosser dropped their dissent in the wake of the end of the bond buying program, while Minneapolis Fed President Kockerlakota dissented on the basis that the decision wasn't dovish enough, and that QE should have continued.

The committee also played down the risk of below target inflation, while stating that the amount of spare capacity appeared to be gradually diminishing, suggesting that if the data continued to improve then we could well see a rate hike sooner than expected.

As always the Fed insisted that any move on rates would be data dependant, but given some of the recent chatter from various voting and non-voting FOMC members alike, the tone of the statement was all the more surprising for its hawkishness.

Particularly as there was no mention of the problems in Europe, the slowdown in China or concerns about a strong US dollar keeping inflation low.

We should see how well founded this confidence in the US economy is later today with the release of the first iteration of US Q3 GDP, which is expected to show a decline from the strong bounce back of 4.6% seen in Q2, to a more subdued 3%.

Weekly jobless claims, after hitting a fourteen year low earlier this month, are also expected to rise ever so slightly to 285k from 283k.

Soon after the release of these numbers, Fed Chair Janet Yellen is due to give a speech in Washington on diversity in the economic profession.

Update by Michael Hewson, Senior Market Analyst, CMC Markets
30-Oct-14 [5:46am] Stock market indices are set to open flat as traders try to decipher last night's Fed moves.

As was widely expected, the plug was pulled on QE.

However, there was no additional sweetener to keep the markets happy, just a reiteration of the 'considerable time' phrase.

The bulls were also put onto slightly awkward footing by the acknowledgement of improvements in the labour market.

Currency traders certainly thought this was a hawkish signal, with significant strength in the dollar across the board, but equity traders are still to make up their minds up about it.

Having rallied earlier in the session, the Dow Jones dropped sharply after the announcement but the commitment to keep interest rates low spurred a rebound towards the close.

The index finished unchanged at 16,987 as investors tried to figure out whether the US economy has enough velocity to sustain itself this time around.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
30-Oct-14 [4:22am] The Dow Jones futures market closed lower on Wednesday. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI remain neutral-to-bullish signalling that sideways-to-higher prices are possible near-term. If the Dow extends the rally off last week's low, the reaction high 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
29-Oct-14 [5:00pm] In the US, the Dow is up 11 points at 17,017, the mood is one of cautious optimism ahead of the Fed meeting.

Traders are waiting for the green light from the US central bank that interest rates will remain rock bottom for many months to come before jumping on the gravy train.

Facebook lost a few friends last night after warning investors will revenue growth will tail off and spending will accelerate.

Update by David Madden, Market Analyst, IG Index
29-Oct-14 [10:30am] The countdown is over and, after eight months of tapering, the Federal Reserve is set to end its quantitative easing program today.

The cut of the final $15bn in monthly asset purchases is widely expected and there is no press conference so it's any change in wording of the statement that will be key.

The FOMC will probably be a non-event insofar as nothing unexpected will happen, but US markets look relatively unchanged at the open and will likely trade in tight ranges before the announcement just in case.

The V-shape reversal in US equity indices has been quite remarkable in the last three weeks; the Dow has now moved back above 17,000, whilst the S&P has surpassed 1,975 and is rapidly approaching 2,000 again.

It's important not to fight the trend, but the parabolic nature of the 1,000 point rebound in the Dow in just over a week is actually a bit disconcerting.

Given the strength of the rally it seems like a new high in the S&P 500 and the Dow is just around the corner, although doing so would be no minor feat.

Under current economic conditions, European markets including the FTSE 100 and the German DAX seem a lot less likely to confirm any new highs, but with no quantitative easing US markets may actually need them to this time to sustain their own growth picture.

Facebook Disappoints Outlook Expectations

Facebook shares are down after hours despite beating estimates after the CFO pointed to a tougher Q4, with the company projected to increase spending next year.

It seems earnings expectations have reached an unsustainable level and the company is now guiding lower so it can increase costs and invest in the future of its business.

Facebook could be as much as 10% lower on the open and is dragging the NASDAQ down with it.

There does appear to be a raised bar for what companies have to do to impress this reporting season; valuations are high and QE is ending, so more is being expected from earnings.

Highly valued tech stocks which have missed estimates are being severely punished, Amazon, Twitter and now Facebook being the prime examples.

Before the bell today there are earnings reports from Fiat Chrysler, Hershey, Wellpoint and Ralph Lauren and after the close sees reports from Visa, MetLife and Kraft Foods.

Futures suggest the S&P 500 will open 1 point lower at 1,984, with the Dow Jones expected to open 8 points higher at 17,013 and the NASDAQ 13 points lower at 4,093.

Update by Jasper Lawler, Market Analyst, CMC Markets
29-Oct-14 [9:52am] Facebook earnings last night saw the stock dive, but were brushed aside by the broader market which seemed intent on advancing as much as possible ahead of the FOMC decision.

The day is clear of data save for crude inventories, allowing plenty of positioning in advance of the result at 6pm London time.

Ms Yellen must walk a fine line, communicating caution on the outlook without spooking the market about a potential slump in global growth.

Ahead of the open, we expect the Dow to start 25 points higher at 17,030.

Update by Brenda Kelly, Chief Market Strategist, IG Index

» 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 - 21 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
28,019 24,588 84 70,291 68,330 98,394 93,002 110,537 12,143 17,535
 
Changes from 14 Oct 2014 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
-6,855 1,382 -82 2,631 -11,982 -4,306 -10,682 -7,930 -3,624 2,752
 
Percent of Open Interest for Each Category of Trader
Long Short Spreads Long Short Long Short   Long Short
25.3% 22.2% 0.1% 63.6% 61.8% 89.0% 84.1%   11.0% 15.9%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
26 21 3 35 21 62 44 97    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
1.1:1   1:1 1.1:1   1:1.4
 
Net Commitment Change (i)  
-8,237  

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 30-Oct-14

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