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
20-Oct-14 [4:47pm] In the US, the Dow is down 41 points at 16,339.

IBM posted its poor number ahead of schedule, and the tech company announced its intention to dump the loss-making chip manufacturing division which will cost it $1.5 billion.

The move in IBM wiped roughly 80 points off the Dow, which could see the index struggle to catch up with the S&P 500 and NASDAQ, both of which are in positive territory.

Apple is biting at the $100 mark ahead of its results which are expected after the closing bell.

The iPhone maker has struggled to stay above the $100 level whenever it has exceeded this area.

Update by David Madden, Market Analyst, IG Index
20-Oct-14 [2:20pm] European bourses are trading significantly lower to open the new week, with London's FTSE 100 down 60 points, whilst the German DAX is down substantially, trading off by 130 points prior to the opening of American markets.

US futures are also looking to follow suit with the Dow Jones set to open around 100 points lower this afternoon.

US corporation IBM has today announced that Q3 earnings fell below market expectations and as such, shares are down 8% pre-market to $167.

With a thin economic calendar set for the rest of today, investors will now be focusing in on the earnings season which gets into full swing throughout this week as earnings for over 100 US companies are set to be released.

After the past two weeks, investors will be hoping for stronger numbers in a bid to claw back the damaging losses seen recently.

Update by Sam Fox, Trader, Spreadex
20-Oct-14 [10:45am] Updated Dow Jones COT Report

The latest COT Report (Commitments of Traders) for the Dow Jones futures market has been released by the CFTC, please see our Dow Jones COT report below.

Readers should note that we have also updated our Stock Market COT Summary Report.

Update by Gordon Childs, Editor, CleanFinancial
20-Oct-14 [10:45am] Having rebounded fiercely off the lows at the end of last week, US markets look set to continue their upwards motion ahead of a big week for corporate earnings.

We are due to see 128 S&P 500 companies reporting performance during Q3, including Apple after today's close.

Futures suggest that the Dow Jones will open 48 points higher at 16,428 with the S&P 500 expected to open 5 points higher at 1,891 and the NASDAQ 12 points higher at 3,827.

There are nine days to go until the US Federal Reserve is expected to end quantitative easing.

The era of free money is coming to a close, so markets are no longer a one-way bet.

The dramatic moves seen in markets last week were both to the up and downside are an indication that investors are now willing to play either on the long or the short side.

This is a positive thing for a functioning market to have both buyers and sellers but because markets have been dominated by one single large buyer for so long, The Fed, markets have become dislocated.

Corporate earnings will be key to whether the dislocation, and resulting high valuations caused by the Fed, can be justified.

Update by Jasper Lawler, Market Analyst, CMC Markets
20-Oct-14 [9:46am] Today will see IBM, Apple and Halliburton continue the US reporting season.

To date, 80% of the US corporates have managed to beat market expectations.

This goes some way to endorsing the high profit multiples that companies have, while at the same time asking how institutional analysts have so frequently undershot with their expectations.

Ahead of the open, we expect the Dow Jones to start 39 points higher at 16,419.

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

Dow Jones Daily Market Update

  • The Dow Jones is currently trading at 16,432.
  • In the last session, the market closed up 287pts (1.78%) at 16,396.
30 Minute Chart Analysis

Neutral Stock Market The index is below the 20 period MA of 16,462.2 and above the 50 period MA of 16,360.7.

1 Day Chart Analysis

Falling Stock Market The stock market index is trading below the 20DMA of 16,724.9 and below the 50DMA of 16,912.6.

Update by Gordon Childs, Editor, CleanFinancial
20-Oct-14 [7:24am] American Shares - Crossing Over their 50 Day Moving Average:
  • Alliance Data Systems (ADS +3% to $259.72)
  • Berkshire Hathaway (BRK/B +1.77% to $137.09)
  • Bristol-Myers Squibb (BMY +2.44% to $50.42)
  • CH Robinson Worldwide (CHRW +1.68% to $67.98)
  • Costco Wholesale (COST +1.38% to $124.65)
  • Crown Castle (CCI +2.01% to $80.84)
  • Dollar Tree (DLTR +2.77% to $56.575)
  • Dr Horton (DHI +6.15% to $21.56)
  • Dr Pepper Snapple (DPS +2% to $63.09)
  • Facebook (FB +4.57% to $75.95)
  • Fedex (FDX +2.76% to $156.12)
  • Home Depot (HD +1.53% to $90.24)
  • Humana (HUM +1.99% to $128.23)
  • Intuitive Surgical (ISRG +3.01% to $470.24)
  • Mead Johnson Nutrition (MJN +9.89% to $100.23)
  • Regeneron Pharmaceuticals (REGN +8.49% to $369.64)
  • Reynolds American (RAI +2.47% to $58.48)
  • Sherwin Williams (SHW +2.56% to $217.01)
  • Simon Property (SPG +1.29% to $168.42)
  • Union Pacific (UNP +2.28% to $106.4)
  • Weyerhaeuser (WY +1.85% to $32.99)
  • Whirlpool (WHR +2.94% to $150.04)




Update by InterTrader
20-Oct-14 [7:24am] Dow Jones Technical Analysis (30 mins chart)
  • Dow Jones pivot point: 16140
  • Our preference: Long positions above 16140 with targets @ 16475 & 16590 in extension.
  • Alternative scenario: Below 16140 look for further downside with 15975 & 15770 as targets.
Comment: The RSI is above its neutrality area at 50%.

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

The S&P 500 (1886.76) remains below its 20 DMA (1940.1 - negative slope), and its 50 DMA (1967.3 - negative slope).

European markets are expected to start on a positive note.

Update by InterTrader
20-Oct-14 [6:11am] Amid a generally better than expected corporate earnings season, consumer sentiment in the US managed to surpass estimates on Friday, reaching a seven year high.

In reaction, the Dow Jones accentuated its initial bargain hunting rally and finished the day 272 points higher at 16,387.

European stocks are set to open higher this morning as the positive momentum from continues.

There have been no especially positive headlines out over the weekend, and the same storm clouds of Eurozone recession, Ebola, the end of loose monetary policy and whatever else was being blamed for the sell off, are still hanging over the market.

However, such a steep and rapid move to the downside seems to have quelled the markets need to correct.

Quite how investors will react to this week's data and earnings deluge is another story though, and with sentiment remaining so fleeting, it could quite easily turn on a whim again.

Update by Jonathan Sudaria, Market Dealer, Financial Spreads
20-Oct-14 [6:10am] If nothing else, last week's volatility has shaken a number of investors out of a long running complacency that all was well with the world and particularly stock market valuations.

While we still closed lower for the fourth week in succession, the resulting snap back on Thursday and Friday will inevitably have made the bears much more cautious about being caught out again, and that could well provide a short-term floor.

It will also have emboldened the bulls in the belief that, irrespective of whether the data is good or bad, central banks have their backs, and that indices could well resume their upward momentum.

Reasons for Sell Off Remain and Bullard Doesn't Get a Vote

Life and markets, in my experience are rarely that simple, and the bulls could well find themselves in for a rude awakening if they return to their previous naÔve complacency.

Even allowing for last week's sharp snapback, the underlying reasons behind the sharp falls remain unresolved.

This is true irrespective of whether the Federal Reserve chooses to extend its QE program beyond the end of this month, as suggested by the St Louis Fed's James Bullard last week, which is by no means a given as Bullard doesn't even have a vote on the committee.

One thing that did come out of last week's volatility was the realisation that interest rates were unlikely to be raised any time soon.

However, anyone who seriously believed that was likely to happen obviously hadn't been paying attention to recent economic numbers, or the inflation data and the declines in oil prices since June.

Update by Michael Hewson, Senior Market Analyst, CMC Markets
20-Oct-14 [5:00am] The Dow Jones futures market closed higher on Friday. The high-range close sets the stage for a steady-to-higher opening on Monday. Stochastics and the RSI remain neutral-to-bearish signalling that sideways-to-lower prices are possible near-term. If the Dow extends the decline off September's high, April's low crossing is the next downside target. Closes above the 20 day moving average crossing would confirm that a short-term low has been posted.

Update by PipTrade
17-Oct-14 [4:38pm] In the US, the Dow Jones is up 245 points at 16,362.

Strong consumer confidence, combined with robust results from blue-chip stocks, is fuelling the rally.

Bank of New York Mellon and Morgan Stanley proved that Wall Street banks rule the roost.

General Electric's earnings per share marginally missed estimates but the change of strategy away from finance and more concentration on the industrial side of the business pleased traders.

Update by David Madden, Market Analyst, IG Index
17-Oct-14 [3:28pm] US Stock Markets

US markets opened sharply higher today as the spill over effect of James Bullard's comments yesterday continued to underpin sentiment. That being said it still looks likely that US markets may well finish a turbulent week lower than where they finished last week.

Shares in focus included Google after the US technology giant missed expectations on profits, after the bell last night, coming in at $2.8bn down 5% from the same period last year. Revenue expectations also came in short.

Apple shares are also in focus after the company unveiled its new iPad Air 2 and iPad Mini 3 at a press event yesterday.

General Electric latest earnings also came in ahead of expectations, as did Morgan Stanley.

On the economic data front US housing starts for September rose by more than expected to 6.3%, partially reversing the revised 12.8% decline seen in August.

Update by Michael Hewson, Senior Market Analyst, CMC Markets

» For more see Stock Market Trading News & Analysis.

Readers please note:


Where Can I Find Live Spread Betting Prices and Charts for the Dow Jones?


We do show indicative Dow Jones spread betting prices, please see above.

The CFD chart below also offers readers a helpful look at the US stock market index.


The Plus500 chart above is usually based on the Dow Jones futures contract (not the daily market).

If you want to check live spread betting prices and charts for the Dow, you may need a financial spread betting account.

A spreads account would also let you speculate on short-term daily Dow Jones markets. Users should note that accounts are normally subject to suitability, credit and status checks.

Should your application be approved then you can log on and study the charts and the current prices. These are normally free. Having said that, you might get the occasional sales letter or email from the spread trading company.

Of course, if you do trade then, before starting, you should note that CFD trading and financial spread trading carry a high degree of risk to your funds and can result in losses that are greater than your initial investment.

Advanced Charts for the Dow Jones


Although charting software/packages can vary across the industry, to help your analysis of the Dow Jones, they often come with useful tools like:
  • Drawing features and options e.g. Trendlines, Fibonacci Arcs, Fans and Time Zones
  • Different display options e.g. candlestick charts and bar charts
  • A host of different time periods e.g. 1 minute, 3 minute, 5 minute, 15 minute, 1 hour, 1 day etc.

Charts on the Financial Spreads platform also include advanced features like:
  • BackTesting, Custom Indicators and Optimisation functions
  • Helpful overlays e.g. Ichimoku Clouds, Parabolic SAR, EMA, Envelopes etc.
  • Technical indicators e.g. Williams %R, True Strength (TSI), Chaikin's Volatility, Aroon, Forecast Oscillator, Price and Volume Trend, Linear Regression etc.
  • Automatic email notifications that trigger when a market hits a pre-set level

Sample Dow Jones chart from Financial Spreads

Dow Jones Trading Guide - Example Chart


The following financial spread betting firms give account holders access to real time trading prices and charts:

Dow Jones Index Commitments of Traders Report - 14 Oct 2014 (i)


Futures Only Positions, CBT , Code 124603, (DJIA Index x $5) (i)

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

Also see:

Spread Betting on Individual Dow Jones Companies


Simply click on the company you're interested in spread betting on. As well as indicative prices and charts, we talk you through the most popular spread betting questions on that Dow 30 company:
  • Where can I spread bet?
  • How to spread bet on that American company?
  • Where can I trade commission free?
  • Etc
Company Name Symbol Dow Jones Stocks
Spread Betting Guides »
Charts &
Prices
3M MMM 3M Spread Betting MMM Charts & Prices
Alcoa AA Alcoa Spread Betting AA Charts & Prices
American Express AXP American Express Spread Betting AXP Charts & Prices
AT&T T AT&T Spread Betting T Charts & Prices
Bank of America BAC Bank of America Spread Betting BAC Charts & Prices
Boeing BA Boeing Spread Betting BA Charts & Prices
Caterpillar CAT Caterpillar Spread Betting CAT Charts & Prices
Chevron CVX Chevron Spread Betting CVX Charts & Prices
Cisco CSCO Cisco Spread Betting CSCO Charts & Prices
Coca Cola CCE Coca Cola Spread Betting CCE Charts & Prices
Du Pont DD Du Pont Spread Betting DD Charts & Prices
Exxon Mobil XOM Exxon Mobil Spread Betting XOM Charts & Prices
General Electric GE General Electric Spread Betting GE Charts & Prices
Hewlett Packard HPQ Hewlett Packard Spread Betting HPQ Charts & Prices
Home Depot HD Home Depot Spread Betting HD Charts & Prices
IBM IBM IBM Spread Betting IBM Charts & Prices
Intel INTC Intel Spread Betting INTC Charts & Prices
Johnson and Johnson JNJ Johnson and Johnson Spread Betting JNJ Charts & Prices
JPMorgan Chase JPM JPMorgan Chase Spread Betting JPM Charts & Prices
McDonalds MCD McDonalds Spread Betting MCD Charts & Prices
Merck MRK Merck Spread Betting MRK Charts & Prices
Microsoft MSFT Microsoft Spread Betting MSFT Charts & Prices
Pfizer PFE Pfizer Spread Betting PFE Charts & Prices
Procter and Gamble PG Procter and Gamble Spread Betting PG Charts & Prices
Travelers TRV Travelers Spread Betting TRV Charts & Prices
United Technologies UTX United Technologies Spread Betting UTX Charts & Prices
UnitedHealth UNH UnitedHealth Spread Betting UNH Charts & Prices
Verizon VZ Verizon Spread Betting VZ Charts & Prices
Wal-Mart WMT Wal-Mart Spread Betting WMT Charts & Prices
Walt Disney DIS Walt Disney Spread Betting DIS Charts & Prices


Individual Shares Spread Betting Guides


For more individual equities guides, also see:

Financial Spreads » "With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." » read Financial Spreads review.


About the Dow Jones


The Dow Jones Industrial Average, often referred to as the Dow, Dow 30 or Dow Jones, is one of the world's most well known markets.

The Dow represents a selection of thirty of the biggest American public companies. It's used to measure the performance of these corporations whilst also reflecting the state of the American economy and, to a degree, the world economy.

In spread betting and CFD trading, rather than being called the Dow, Dow Jones or Dow 30 it is often called 'Wall Street' or the 'US 30'.


Dow Jones Spread Betting: Firms with High Share Prices are the Most Important


If you want to profit from trading the FTSE 100, the biggest corporations are the most important. Because of the way the FTSE 100 index is weighted, movements in the share prices of the largest corporations affect the FTSE 100 index more than price movements in the shares of smaller companies.

Trading the Dow Jones However, the Dow Jones Industrial Average is not 'price weighted'. This means that a one point increase or decrease by any share in the index will have the same effect as a one point increase or decrease of any other share.

As of April 2012, share prices on the DJIA range from around $8-9 (Bank of America and Alcoa) to almost $210 (IBM).

So, a 10% shift in IBM's share price (around $21) would account for a large movement in the Dow Jones index (around 160 points).

However, a 10% shift in Bank of America's share price (around $0.90) would only lead to a very small change in the Dow Jones (around 7 points). This isn't because IBM is a bigger corporation, it is because IBM's share price is much higher.

The other high value shares to watch out for in the Dow Jones are, as of April 2012, Caterpillar, Chevron and McDonalds.


Dow Jones Stock Market Index: Different Trading Times


The Dow is based on Wall Street however, not all 30 companies that make up the DJIA are based on America's East coast.

So, when the Dow Jones opens for trading, the value is determined only by the relatively few companies that open first. The opening price on the Dow will therefore always be close to the previous day's closing price.

As a result, the Dow Jones will never accurately reflect the true opening prices of all its companies.

If you are looking to trade on the Dow Jones, you need to be very careful when you open your position. Whilst the FTSE 100 might 'hit the ground running' with all companies opening at the same time, the Dow Jones doesn't work in the same way. Investors should monitor opening and closing prices so they can be confident of opening a position at the right time.


Dow Jones Spread Betting: Know the Shares


One of the advantages of trading the Dow Jones is that there are only 30 corporations in the index. Therefore it's easier to keep an eye on each of the component companies and what's happening to their share price.

Some traders believe that it is good practice to have a number of shares that you regularly follow. The aim of this is to get to know these shares and become familiar with their price movements.

Keeping tabs on all FTSE 100 companies is tough, it's hard to know exactly what is happening to all the shares at any given time. However, watching 30 Dow Jones stocks is more manageable. You can get to know each company's typical share movements and that can help you forecast where the Dow Jones will head next.
Advert: Dow Jones Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on the Dow Jones with Financial Spreads.


Where Can I Spread Bet on the Dow Jones for Free?


Speculating on the stock market always comes with a degree of risk. However, if you would like to use a Demo Account, that allows you to practice spread betting on a wide range of markets, please see below for further details.

When you think about which investment option is right for you, don't forget that, in the UK, financial spread betting is currently tax free*.

If you are trying to find a low cost financial spread betting website then keep in mind that you can trade the Dow Jones without having to pay any commissions or brokers' fees through companies such as:

Free Demo Account


If you would like to use a Demo Account where you are able to try out online spread betting, and speculating on markets like GBP/USD, gold, the FTSE 100 and the Dow Jones, then look at: Each of the spread betting companies listed above offer a Test Account which lets users apply a range of trading orders, test new trading ideas and review stock market charts.




How to Spread Bet on the Dow Jones

How to Spread Bet on the Dow Jones?


As with a wide variety of financial markets, investors can spread bet on indices, like the Dow Jones, to either rise or fall.

If you go to the Financial Spreads platform, you can see that they have priced the Dow Jones Rolling Daily market at 13343.0 - 13345.0. This means that an investor could put a spread bet on the Dow Jones index:

  Dow Jones Spread Betting Example Moving above 13345.0, or
  Dow Jones Trading Example Moving below 13343.0

When you spread bet on the Dow Jones index you trade in £x per point, where a point is one point of the index itself. As a result, if you invested £4 per point and the Dow Jones moves 26 points then that would be a difference to your profit/loss of £104. £4 per point x 26 points = £104.

Rolling Daily Indices Markets

This is a Rolling Daily Market which means that there is no set settlement date for this market. You do not have to close your position, should it still be open at the end of the trading day, it simply rolls over to the next trading day.

If you do let your position roll over into the next day and are spread betting on the market to:

  Dow Jones Trading Example Go higher - then you are charged a small overnight financing fee, or
  Dow Jones Trading Example Go lower - then a small payment is normally credited to your account

For more information see Rolling Daily Spread Betting.


Dow Jones Index - Rolling Daily Trading Example


Now, if you think about the spread of 13343.0 - 13345.0 and assume that:
  • You have analysed the indices markets, and
  • You think that the Dow Jones index will increase and move above 13345.0
Then you may go long of the market at 13345.0 and invest, for example, £5 per point.

Therefore, with this trade you make a profit of £5 for every point that the Dow Jones index moves higher than 13345.0. However, it also means you will lose £5 for every point that the Dow Jones market moves below 13345.0.

Considering this from another angle, if you were to buy a spread bet then your P&L is worked out by taking the difference between the final price of the market and the initial price you bought the spread at. You then multiply that price difference by the stake.

Therefore, if after a few days the US stock market moved higher then you might think about closing your trade and guaranteeing your profits.

Taking this a step further, if the stock market did go up then the spread might change to 13380.4 - 13382.4. You would close your spread bet by selling at 13380.4. As a result, with the same £5 stake your profit would be calculated as:

P&L = (Closing Price - Initial Price) x stake
P&L = (13380.4 - 13345.0) x £5 per point stake
P&L = 35.4 x £5 per point stake
P&L = £177.00 profit

Trading the American stock market is not simple. In the above example, you had bet that the US index would rise. Of course, the stock market can fall.

If, contrary to your expectations, the Dow Jones fell, then you might decide to close your trade to stop any further losses.

So if the spread pulled back to 13313.1 - 13315.1 you would close your position by selling at 13313.1. This would result in a loss of:

P&L = (Closing Price - Initial Price) x stake
P&L = (13313.1 - 13345.0) x £5 per point stake
P&L = -31.9 x £5 per point stake
P&L = -£159.50 loss

Note - Dow Jones Rolling Daily spread quoted as of 11-Sep-12.


How to Trade Dow Futures

How to Trade Dow Futures


Looking at a site like InterTrader, we can see they are currently offering the Dow Jones December Futures market at 13408 - 13414. This means an investor could speculate on the Dow Jones index:

  Dow Jones Futures Trading Example Closing above 13414, or
  Dow Jones Futures Trading Example Closing below 13408

On the expiry date for this 'December' market, 21-Dec-12.

As with the daily market above, you trade the Dow Futures in £x per point. So if your stake is £5 per point and the Dow moves 27 points then that would make a difference to your profits (or losses) of £135. £5 per point x 27 points = £135.


Dow Jones Futures Trading Example


If we take the above spread of 13408 - 13414 and make the assumptions that:
  • You have done your analysis of the American futures market, and
  • Your analysis suggests the US index will settle above 13414 by 21-Dec-12
Then you could decide to buy the market at 13414 and risk, for the sake of argument, £2 per point.

With this contract you make a gain of £2 for every point that the US index moves higher than 13414. Nevertheless, you will make a loss of £2 for every point that the Dow Jones market goes lower than 13414.

Put another way, with spread trading, your profits (or losses) are worked out by taking the difference between the closing price of the market and the price you bought the market at. You then multiply that price difference by the stake.

So, if on the expiry date, the Dow Jones closed at 13488, then:

Profit / loss = (Closing Value - Opening Value) x stake
Profit / loss = (13488 - 13414) x £2 per point stake
Profit / loss = 74 x £2 per point stake
Profit / loss = £148 profit

Of course trading the American stock market futures is rarely that straightforward. In the above example, you wanted the Dow to rise. Of course, the stock market index could fall.

If the futures had fallen and settled at 13334 on the expiry date, then you would end up losing this trade.

Profit / loss = (Closing Value - Opening Value) x stake
Profit / loss = (13334 - 13414) x £2 per point stake
Profit / loss = -80 x £2 per point stake
Profit / loss = -£160 loss

Note - Dow Jones December Futures market taken as of 27-Sep-12.


Risk Management: Spread Betting on the US Stock Market with a Stop Loss


You can put a limit on the size of your position to help reduce your potential losses without impacting your upside. You can also employ smaller stake sizes such as £1 per point or $1 per point.

Letís say you spread bet on the Dow to go up, with a £1 per point stake and attach a Stop Loss order to your trade. If the US stock market goes up by 120 points then you would make 120 points x £1 per point = £120.

You are also able to trade the markets in Euros and Dollars. If you want to trade in dollars then 120 points x $1 per point = $120.

Of course if the market went against you, dropping by say 90 points, then with a £1 stake you would lose 90 points x £1 per point = £90.

Obviously this would be a fairly poor start. However, with firms like Financial Spreads you can add a Stop Loss at let's say, 30 points.

If you were trading the Dow this would mean that your position would be closed if the US index moved against you by 30 points. Therefore, instead of losing £90, you'd only lose 30 points x £1 per point = £30.

However, assuming you correctly predicted the direction of the market, your upside would still be £120.

Note that Stop Losses are not guaranteed, if a market slips then your Stop Loss is closed out at the next traded price. If you donít want that risk then you can use a Guaranteed Stop Loss, these are guaranteed to close your trade even if the underlying market slips (gaps).

A number of firms like Financial Spreads, InterTrader and Capital Spreads automatically apply a Stop Loss to every trade. You can upgrade to a Guaranteed Stop Loss but that normally comes at a small premium (normally a wider spread).


Advert: Dow Jones Spread Betting, sponsored by FinancialSpreads.com.
You can spread bet on the Dow Jones with Financial Spreads.


Trading Risk Warning
'Dow Jones Spread Betting' edited by Jacob Wood, updated 20-Oct-14

For related articles also see:




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