The Dow Jones Industrial Average (DJIA) is one of the most widely followed and oldest stock market indices in the world. The Dow Jones was started by Charles Dow, an editor of Wall Street at the time. The volatility of the Dow Jones is steady and slow as these companies are large cap stocks, moving slowly.
Although, they are very liquid and heavily traded and thus the 20 Dow Jones stock futures represent tickers, and they reduce market risk. Their low volatility help to technically set tight stops that are not reached easily, just as targets can also take time to be hit.
The Dow Jones stock futures comprises of 30 companies who represent significant sectors of the US economy. The stocks of these 30 companies form what is called the “Dow Jones Industrial index”. Keeping a watchlist of the stocks of the 30 companies will help in making informed decisions in Dow Jones trading for both long-term and short-term traders.
One of the methods used in Dow Jones trading today is the dollar-cost averaging method. This Dow Jones trading strategy involves making same amount of dollar of investment in an ETF like DIA at predetermined regular intervals such as the end or beginning of every month or quarter. This will help to buy fewer units of DIA when the index is at elevated levels and more units when the index is at a depressed level.
Using this method lowers the cost of DIA over time, and it will result in an appreciable return if it is followed judiciously, knowing fully well that the DIA trajectory is always upward over an extended period.
Taking a short position in the DJIA: If we are to send a short position on our Dow Jones trading, we do this through the DIA ETF like the Proshares Short Dow30 (DOG), and this is done most times inverse ETFs for short-term trading.
For more aggressive trading of the Dow Jones trading signals, we consider the Ultrashort Dow30 (DXD). Shorting the Dow Jones requires caution and should be done by experienced who understand and know how to manage the risk involved.
Trading the DJIA using options: The Dow Jones trading strategy can also be through analyzing options on the DIA ETF. If you are bullish on the Dow Jones, you can be bullish on the DIA ETF, while a bearish investor could buy puts on DIA. It is important to note that the DIA units trade at about 1/100th the level of the DJIA.
How we trade the Dow Jones?
The first major step in Dow Jones trading today is to study the Dow Jones Industrial index and then decide on the Dow Jones trading strategy you wish to employ. When the industrial index of these companies are on the rise, then it is preferable to consider going bullish (known as “long”) stock trade strategies.
On the other hand, if the Dow Jones industrial index chart is bearish then it is better to go for a bearish bias trading strategies for the 30 Dow Jones Stocks. This chart can be found on Yahoo online stock market and the Dow Jones graph for the industrial index.
How do Subscribers get the Dow Jones Trading Signals?
We send Dow Jones trade commentaries and charts backing our reason to open a position to our Dow Jones trading signals. We send the entry price, take profit and stop loss to subscribers which they can manually enter on their trading platform.
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