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
26-Nov-14 [10:48am] US markets closed near record highs on Tuesday, with the economy estimated to have grown faster than expected in the third quarter.

Shares are looking to rise on the open again today ahead of a busy day of data, with reports crammed in before the Thanksgiving holiday.

With US stock markets closed on Thursday for Thanksgiving, some traders are adjusting their positions in the energy sector ahead of the OPEC meeting, with Exxon and Chevron seeing action.

The result of the meeting is expected to be announced late on Thursday.

Retailers Prepare for Black Friday

The retail sector, which has seen a turnaround in the third quarter led by Wal-Mart, will be in play ahead of the Black Friday holiday.

Sales during the holiday period often determine the entire year's results for retailers and both Black Friday and Cyber Monday are a big part of that.

Amazon shares have been in difficulty this year as expansion has come at the expense of profits; a strong holiday shopping season will go a long way to demonstrating to investors the investments were worth it.

Economic reports include durable goods, core PCE price index, unemployment claims, Chicago PMI and pending and new home sales.

Futures suggest that the S&P 500 will open 4 points higher at 2,071 with the Dow Jones expected to open 34 points higher at 17,848 and the NASDAQ 11 points higher at 4,299.

Update by Jasper Lawler, Market Analyst, CMC Markets
26-Nov-14 [10:04am]

Dow Dips as Consumer Confidence Weighs on Growth Optimism



American markets closed slightly lower after weak consumer confidence data dampened enthusiasm for improved US growth figures.

Japanese stocks dipped ahead of a slew of US data and as Honda fell after under-reporting accidents.



Update by David Papier, Sales Trader, ETX Capital
26-Nov-14 [9:46am] The European stimulus machine let out another murmur of intervention this morning.

ECB Vice President Vitor Constancio claimed that it wouldn't be until the first quarter of 2015 that the ECB would be able to gauge whether the buying of sovereign bonds is necessary to jump start the Eurozone economy.

This followed the announcement yesterday by European Commission President Juncker of a European Fund for Strategic Investment of €300 billion, the first flagstone scheme of the Juncker Presidency.

Unlike the vigorous DAX, the FTSE is continuing its meek week, opening poorly.

However, strong GDP figures from the UK should see more bullish sentiment around the index.

Today saw shares in Thomas Cook plummet despite a 44% leap in earnings this morning, as the shock decision by Chief Executive Harriet Green to step down spooked investors.

Green, who has shepherded Thomas Cook out of its dark days since 2011, was seen as an asset for Thomas Cook, and her loss has been felt heavily on the markets.

Strong Growth Boosts the Dow

In the battle of US data, the strong GDP figures trumped the negative consumer confidence result to allow the Dow Jones to continue its record closing run.

The overall positivity coming from the US expanded into Japan, allowing the Nikkei to close out strong.

Today will see the final flurry of US data before the US markets take a break for Thanksgiving.

Despite the lack of US data, signs of strength or weakness in Black Friday and Cyber Monday sales should significantly affect the US futures at the close of the week.

Finally, oil is still languishing below the $80 per barrel level this morning as it tremors in anticipation for the OPEC summit tomorrow.

With the US quiet on Thursday, even more focus will be on the state of Brent crude oil, as the oil cartel effectively decides oil's short term future.

Update by Connor Campbell, Financial Analyst, Spreadex
26-Nov-14 [9:41am] Last night saw some of the froth being wiped off the top of both the Dow and S&P markets, but not enough to move either out of overbought territory.

A barrage of economic data today will keep traders busy, as tomorrow's Thanksgiving holiday sees Thursday's unemployment claims figures shunted into Wednesday, while Friday's Michigan confidence numbers arrive today too.

Markets will be watching to see which of the usual beneficiaries of Black Friday make a move today, ensuring the likes of Amazon, Apple and Alibaba will be at the top of traders' watch lists.

Ahead of the open we expect the Dow Jones to start 31 points higher at 17,845.

Update by Alastair McCaig, Market Analyst, IG Index
26-Nov-14 [8:07am]

Dow Jones Daily Market Analysis

  • The Dow Jones is currently trading at 17,840.
  • Overnight, the market closed up 16pts (0.09%) at 17,832.
30 Minute Chart Analysis

Neutral Stock Market The market is below the 20 period MA of 17,839.8 and above the 50 period MA of 17,833.9.

1 Day Chart Analysis

Rising Stock Market The stock market is currently above the 20 day MA of 17,599.6 and above the 50 day MA of 17,098.6.

Update by Gordon Childs, Editor, CleanFinancial
26-Nov-14 [7:35am] American Shares - Crossing Over their 50 Day Moving Average:
  • DaVita HealthCare Partners (DVA +0.77% to $75.06)
  • Jacobs Engineering (JEC +1.73% to $48.33)


American Shares - Crossing Under their 50 Day Moving Average:
  • Hormel Foods (HRL -5.19% to $51.32)


Update by InterTrader
26-Nov-14 [7:35am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 17735
  • Our preference: Long positions above 17735 with targets @ 17870 & 17915 in extension.
  • Alternative scenario: Below 17735 look for further downside with 17675 & 17610 as targets.
Comment: The RSI is above its neutrality area at 50%.

Update by InterTrader
26-Nov-14 [7:35am] US indices were mixed on Tuesday.

Shares in the Media, Household & Personal Products and Commercial & Professional Services sectors traded higher while shares in the Energy, Banks and Insurance sectors were under pressure.

The S&P 500 (2067.03) remains above both its 20 DMA (2035.1 - upward slope), and 50 DMA (1983.2 - positive slope).

European markets are expected to start on a flat note.

Update by InterTrader
26-Nov-14 [5:38am] Overnight gains in Asia are set to see European equities track higher this morning.

Yesterday's mixed bag of data from the US led to fairly flat finishes as growth improved but consumer confidence saw a surprising slump.

The US GDP data was better than expected at an annualised rate of 3.9% and managed to keep investors in a good mood despite a weaker reading of 88.7 for consumer confidence.

The cautious optimism pushed the Dow Jones 23 points higher to 17,839, though the strong growth number also helped cap gains as traders fretted about a hawkish Fed.

With the benefit of a little more time to digest the figures, Asian markets have weighed things up and tipped the balance in favour of the bulls by registering modest gains.

Growth will be in focus again today as we get the second estimate for UK Q3 GDP and this will be a good reminder of the growing chasm that's developing between the US and everybody else.

Even though the rest of the global economy looks shaky, financial spread trading markets seem happy to ignore their own domestic plight and instead believe that a rising US can drag up all the other laggards.

How long that can last is anyone's guess.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
26-Nov-14 [5:26am] The positive tailwinds for US stocks continued yesterday after US Q3 GDP came in well above expectations of 3.3%, with an upward revision to 3.9%.

This was helped in no small part by an improvement in personal consumption as well as business investment, though why the increase in consumption rates isn't being manifested in retail sales or durable goods data is something of a puzzle.

Despite this improvement, stocks are starting to look a little tired in this holiday shortened trading week, moving higher at a very gradual pace.

Some of the edge was taken off the GDP numbers by a sharp slide in the latest consumer confidence numbers for November, which slid back to 88.7, when the consensus had been for a move higher to 96.

The decline seems to run counter to the recent trends in lower fuel prices and improving labour markets.

US Data Deluge Ahead of Thanksgiving

It's set to be a busy day for US data with a deluge ahead of tomorrow's holiday with the latest durable goods numbers for October.

Expectations are for a 0.6% decline, following on from the 1.1% decline in September.

US weekly jobless claims are set to come down from 291k to 287k, while personal spending and personal income data for October is expected to show a rise of 0.3% and 0.4% respectively, a significant improvement on the September numbers.

The latest Chicago PMI data for November is expected to slip back from 66.2 to 63 while the latest housing data for new and used home sales is expected to tick higher in October, reflecting an improving housing market.

Update by Michael Hewson, Senior Market Analyst, CMC Markets
26-Nov-14 [4:24am] The Dow Jones futures market closed higher on Tuesday as it posted a new high close for the year. The mid-range close sets the stage for a steady-to-higher opening on Wednesday. Stochastics and the RSI are turning neutral-to-bearish warning bulls to use caution as a correction is possible near-term. Closes below the 20 day moving average crossing would confirm that a short-term top has been posted. If the Dow extends the rally off October's low into uncharted territory, upside targets will be hard to project.

Update by PipTrade
25-Nov-14 [4:22pm] US indices continue to trim their gains, with the Dow showing a distinct reluctance to head back north to 17,900.

Where GDP numbers are concerned, it looks like a case of 'be good, but not too good', since any sign of overheating in the US is likely to bring the Fed hawks to the fore.

A drop in consumer confidence also sparked some worries, but the key fact is that Thanksgiving is, as ever, not going to be an easy period for the bears.

Any dip is still going to be leapt on to eke out some gains to the upside.

Update by Chris Beauchamp, Market Analyst, IG Index
25-Nov-14 [10:39am] Shares are looking to open higher ahead of the latest iteration of US third quarter GDP growth and consumer sentiment.

Markets are also hoping for minimal political instability after the town of Ferguson has seen further rioting in protest over a police killing.

The Dow Jones Industrial Average has gained more than 2000 points from its low on 15 October, with scarcely a pullback greater than 150 points.

Two thousand points in a month and half is not bad going by any stretch of the imagination and may mean that the index is due for a larger pullback on profit-taking sooner or later.

However, while central bank liquidity keeps coming, any dip should attract new buyers.

Oil prices have not made a new low in over a week ahead of this Thursday's OPEC meeting and this has helped the energy sector turn best performing sector.

Gains in energy stocks are distinctly at risk if Saudi Arabia and other nations decide against a cut in production.

Utility Firms Struggle as Fed Moves Closer to Rate Hike

On the bottom end of the S&P 500, utilities were the only sector to post a loss in the last week in the context of the Federal Reserve moving towards raising interest rates which will increase these companies' debt burden.

Utilities shares were the worst performing over the last month and so risk getting into an oversold position.

Should rhetoric from the Fed turn more cautious on a rate hike, we could see a short-term snapback.

Campbell Soup and Tiffany and Co report earnings before the opening bell, whilst Hewlett Packard third quarter earnings are expected after the bell.

This will be the first earnings report since HP announced plans to split into two companies and the share price performance of the two entities will depend on the said department's relative contribution to the top and bottom line.

PC sales have been on the rise in the last two quarters but the question of whether this will continue into the third quarter will impact valuations for the PC part of the split.

Futures suggest that the S&P 500 will open 2 points higher at 2,071, with the Dow Jones expected to open 23 points higher at 17,840 and the NASDAQ 3 points higher at 4,287.

Update by Jasper Lawler, Market Analyst, CMC Markets
25-Nov-14 [10:21am] In the US, we are calling the Dow up 25 points at 17,842 as the US rally knows no bounds.

US GDP is on the calendar for the afternoon, and while the data is expected to show a revision to growth for the third quarter, markets should retain their poise and remain unconcerned, especially as the low-volume rally into Thanksgiving maintains its pace.

Yesterday's US session was something of a snore-fest, a condition that is only likely to intensify as the week goes on.

Update by David Madden, Market Analyst, 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 - 18 Nov 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
50,361 21,646 195 75,701 98,309 126,257 120,150 143,442 17,185 23,292
 
Changes from 11 Nov 2014 (i) Change in (i) Open Interest Changes from
Long Short Spreads Long Short Long Short Long Short
3,748 454 -193 2,887 6,650 6,442 6,911 7,902 1,460 991
 
Percent of Open Interest for Each Category of Trader
Long Short Spreads Long Short Long Short   Long Short
35.1% 15.1% 0.1% 52.8% 68.5% 88.0% 83.8%   12.0% 16.2%
 
Number of Traders in Each Category (i) Total (i) Traders  
Long Short Spreads Long Short Long Short    
24 28 5 37 23 65 52 107    
 
Long/Short Commitments Ratios (i)   Long/Short Ratio
Ratio   Ratio Ratio   Ratio
2.3:1   1:1.3 1.1:1   1:1.4
 
Net Commitment Change (i)  
3,294  

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 26-Nov-14

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