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
25-Jul-14 [11:49am]

US Consumer Discretionary Sector May be One to Watch



An analysis of S&P 500 sectors suggests that there may be opportunities in consumer discretionary stocks, IG talks to Trevor Neil to find out more.

The trading video also discusses the current state of Brent crude oil, soyabean and German car manufacturer Daimler.



Update by IG Index
25-Jul-14 [10:45am] After a finely balanced session yesterday, with mixed earnings and economics, US markets look set to open lower on the open.

Amazon printed another larger than expected loss last night but Visa and Starbucks got the job done beating earnings and revenue estimates.

Futures suggest the Dow Jones will open 37 points lower at 17,046 with the S&P 500 expected to open 3 points lower at 1,984 and the NASDAQ 16 points lower at 3,967.

Amazon is a stock in the public eye and tends to drive perception on overall earnings for the quarter and as such is likely to act as a drag on the forthcoming session.

Overall though, investors will be aware that more reporting US companies are beating expectations than not.

Starbucks managed to narrowly beat earnings.

The skyrocketing price of coffee this year doesn't seem to have hurt the company so far.

The company is raising prices to offset the associated increased input costs but this is likely to be industry-wide and as such shouldn't affect competitiveness.

Visa continued to benefit from a growing global trend towards consumers using debit and credit cards instead of cash, earning $2.17 per share on revenue of $3.16bn.

The US durable goods orders are expected to grow 0.4% in June, an improvement over the -0.9% decline seen the month prior.

Update by Jasper Lawler, Market Analyst, CMC Markets
25-Jul-14 [9:50am] Poor results from Amazon and Visa weighed on US markets despite Facebook's earnings boosting its shares by 5%.



Update by Adrien Cohen, Market Analyst, ETX Capital
25-Jul-14 [8:04am]

Dow Jones Daily Trading Update

  • The Dow Jones is currently trading at 17,061.
  • In the last session, the market closed down -49pts (-0.28%) at 17,047.
30 Minute Analysis

Neutral Stock Market The index is currently higher than the 20-period MA of 17,051.2 and lower than the 50-period MA of 17,077.6.

1 Day Analysis

Rising Stock Market The stock market is higher than the 20-day MA of 17,028.0 and higher than the 50-day MA of 16,880.3.

Update by Gordon Childs, Editor, CleanFinancial
25-Jul-14 [7:52am] US indices were mixed on Thursday.

Shares in the Consumer Durables & Apparel, Software & Services and Food, Beverage & Tobacco sectors traded higher while shares in the Automobiles & Components, Technology Hardware & Equipment and Capital Goods sectors were under pressure.

The S&P 500 (1987.98) remains above its 20 DMA (1972.9 - positive slope) and its 50 DMA (1944.2 - positive slope).

European markets are expected to start on a flat note.

Update by InterTrader
25-Jul-14 [7:52am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16900
  • Our preference: Long positions above 16900 with targets @ 17130 & 17190 in extension.
  • Alternative scenario: Below 16900 look for further downside with 16830 & 16725 as targets.
Comment: The RSI is mixed with a bullish bias.

Update by InterTrader
25-Jul-14 [7:52am] American Shares - Crossing Over their 50 Day Moving Average:
  • Allegion (ALLE +0.96% to $54.97)
  • CA Technologies (CA +4.51% to $29.64)
  • Fifth Third Bancorp (FITB +1.66% to $21.085)
  • Flir Systems (FLIR +1.44% to $34.6)
  • Flowserve Corp (FLS +5.86% to $76.43)
  • Hudson City Bancorp (HCBK +1.02% to $9.86)
  • L Brands (LB +1.2% to $58.23)
  • M&T Bank (MTB +0.9% to $123.57)
  • Nordstrom (JWN +1.48% to $68.76)
  • O'Reilly Automotive (ORLY +3.52% to $151.77)
  • Tractor Supply (TSCO +6.62% to $65.11)
  • Urban Outfitters (URBN +2.89% to $34.91)
  • US Bancorp (USB +0.64% to $42.73)
  • Wells Fargo (WFC +0.51% to $51.59)
  • Yahoo (YHOO +4.21% to $36.17)
  • Zions Bancorporation (ZION +1.51% to $29.49)


American Shares - Crossing Under their 50 Day Moving Average:
  • Agilent Technologies (A -1.1% to $56.84)
  • Applied Materials (AMAT -0.66% to $21.755)
  • AT&T (T -1.06% to $35.5)
  • Caterpillar (CAT -3.08% to $105.04)
  • Crown Castle (CCI -3.62% to $73.83)
  • Delta Air Lines (DAL -2.76% to $38.07)
  • Diamond Offshore Drilling (DO -4.34% to $47.87)
  • Dr Horton (DHI -11.53% to $21.94)
  • E*Trade (ETFC -2.54% to $20.73)
  • Ensco International (ESV -1.63% to $53.17)
  • General Motors (GM -4.46% to $35.74)
  • Lennar (LEN -3.06% to $39.27)
  • McGraw Hill Financial (MHFI -1.78% to $81.63)
  • NetFlix (NFLX -0.59% to $425.38)
  • Noble Energy (NBL -3.48% to $71.63)
  • PulteGroup (PHM -3.02% to $19.24)
  • Qualcomm (QCOM -6.65% to $76.172)
  • Starwood Hotels & Resorts (HOT -5.53% to $79.11)
  • Wynn Resorts (WYNN -0.59% to $205.03)


Update by InterTrader
25-Jul-14 [7:14am] The Dow Jones futures market closed lower on Thursday. The mid-range close sets the stage for a steady opening on Friday. Stochastics and the RSI are neutral-to-bullish signalling that sideways-to-higher prices are possible near-term. If the Dow extends this year's rally into uncharted territory, upside targets will be hard to project. Multiple closes below the reaction low crossing are needed to confirm that a short-term top has been posted.

Update by PipTrade
25-Jul-14 [6:17am] The S&P 500 closed at yet another record high yesterday, but for the rest of US markets progress was a little harder to sustain.

Economic data continued to come in mixed and the IMF downgraded its growth forecast for the US economy for 2014 to 1.8%.

Yesterday's weekly jobless claims surprised many, coming in at an eight year low of 284k, however that optimism was punctured by some disappointing housing data.

Today's durable goods data for June could well reinforce concerns about weak spending patterns, with a rise of 0.4% expected, an improvement on May's 0.9% decline, but still not indicative of a significant rebound in economic activity in Q2, after a disappointing Q1.

Update by Michael Hewson, Senior Market Analyst, CMC Markets
25-Jul-14 [6:04am] European equities are set to ease on the open, dragged lower by US earnings.

Even though we saw a good day for stock markets in Europe, Wall Street simply bobbed around unchanged.

Early on in the US session, corporate earnings had continued to surprise to the upside, pushing equities higher.

Following this, disappointing new home sales figures raised concerns about weakness in the housing market and highlighted the mixed picture presented by recent economic data.

This meant that the Dow reversed its initial rise to finish flat for the day.

However, after-hours results from Amazon saw US index futures sell off and this will weigh on today's open.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
24-Jul-14 [3:52pm] US Stock Markets

With geopolitics side-lined, stocks in the US got off to a strong start after earnings results from, in the words of Janet Yellen some of the more 'stretched' sectors of the stock market including Biogen, Gilead Sciences and especially Facebook all knocked the ball out of the park.

As the morning progressed the earnings picture was not quite so clear.

Trip Advisor got clobbered down 10% while Caterpillar beat profit estimates but missed on revenues.

Ford earnings impressed but the stock was dragged down by auto peer GM whose profits were crushed by 80% on recall losses.

US yields moved higher after unemployment claims dropped to 284k, the lowest since before the financial crisis in 2006.

The claims number points to a potentially big jobs gain in the July non-farm payroll number which will add to the case for the Fed to raise rates quicker.

New homes sales tumbled to 406k in June below the 504k the month prior and the 480k estimate.

Facebook gapped to new all-time highs after beating earnings estimates on the top and bottom line after hours.

It appears any metric that gets investors concerned, Facebook then go back and put all their huge cash reserves resources into fixing it.

It was first mobile ad revenue that was the problem, mobile ad growth now outstrips desktop, then user growth, then youth user growth but all metrics are growing unlike some social media peers including Twitter.

A shake up at Wal-Mart, the company with a bigger GDP than many countries, saw CEO Bill Simon step down after a number of troubled quarters.

Update by Jasper Lawler, Market Analyst, CMC Markets
24-Jul-14 [10:48am] Geopolitics has been side-lined for now and the focus has switched to earnings results from, in the words of Janet Yellen, some of the more 'stretched' sectors of the stock market.

As it turns out, the earnings performance has been impressive with Biogen, Gilead Sciences and especially Facebook all knocking the ball out of the park, helping US markets look towards a higher open.

Futures suggest that the Dow Jones will open 31 points higher at 17,117, with the S&P 500 expected to open 2 points higher at 1,989 and the NASDAQ 7 points higher at 3,993.

Shares in Biogen flew higher by 11% after reporting 23% earnings growth and a big jump in sales boosted by its successful multiple-sclerosis drugs.

Gilead Sciences have put aside political debate over the pricing of its Hepatitis C drug Sovaldi as sales, profits and its stock price soared.

Facebook continue to impress in the areas that have held back other social media companies, with mobile ad revenue and user growth both seeing big gains and pushing the stock to all-time highs.

Up today are earnings from Ford, Caterpillar, Visa, Amazon, American Airlines and Starbucks.

Update by Jasper Lawler, Market Analyst, CMC Markets
24-Jul-14 [10:22am] US markets had another busy earnings day yesterday as Facebook touched new highs on the back of Q2 numbers and a continued increase in mobile ad revenue.

Tech watchers will be hopeful Twitter can similarly show improvement in its ability to monetise the mobile space, with its numbers expected next Tuesday.

Today's highlights include Amazon and Visa on another hefty day of updates.

After underperforming its more populated index peers yesterday (Boeing and Caterpillar were the laggards, the latter report today), we are currently calling the Dow Jones to open higher by 35 points at 17,120.

Update by Will Hedden, Sales Trader, IG Index
24-Jul-14 [9:44am]

Amazon Faces High Earnings Expectations



With the online retailer set to release its Q2 results, some analysts are suggesting a $400 price target.



Update by 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 - 15 Jul 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
38,017 27,930 8 69,537 82,213 107,562 110,151 124,372 16,810 14,221
 
Changes from 8 Jul 2014 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
6,468 1,415 -299 -901 6,597 5,268 7,713 7,395 2,127 -318
 
Percent of Open Interest for Each Category of Trader
Long Short Spreads Long Short Long Short   Long Short
30.6% 22.5% 0.0% 55.9% 66.1% 86.5% 88.6%   13.5% 11.4%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
33 25 2 41 22 74 49 115    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
1.4:1   1:1.2 1:1   1.2:1
 
Net Commitment Change (i)  
5,053  

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 25-Jul-14

For related articles also see:





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