Dow Jones (DJI) - A Report Brought to You by Q8 Trade
A brief history of the Dow Jones
The Dow Jones or the Dow 30 is an industrial index of the 30 largest U.S. industrial companies on the New York Stock Exchange. Established on May 26, 1896.
The Dow Jones Index is the oldest index in the world and it contains the largest 12 American companies and its first company was General Electric, then the number of listed companies began to increase until their number reached about 30 companies in 1928, and the companies that were included in the index are Chevron and Bank Of America on the nineteenth of February of 2008.
Factors affecting the Dow Jones
Some disturbances occurred for the Dow Jones index more than once due to some political and economic conditions in the world, and the biggest collapse of the Dow was in 1929, where the index lost nearly 50% of its marketing value due to the economic recession that has clouded the United States of America for a period of 4 years .
Only after 20 years has the index returned to its true level, which was before the economic crisis. Another collapse of the index also occurred during the year 1987, when it lost approximately 22% in one day and then returned to rise until 2001, when the events of September atheist occurred that caused great losses to the index, and it reached its highest level During October of 2007, it rose above the level of 14000 points.
During the beginning of 2008, the index lost more than 20% until it reached below the level of 12000 points due to the mortgage crisis, which in turn led to the collapse of huge financial institutions. Its lowest level since September of 2006 to reach below the level of 11000 points, and the index ended its last trading session during 2008 on an increase, but decreased by about 32% below the level of 9000 points in 2008 which is one of the worst years in the history of The indicator in which it reached a level of about 7550 points, and this is the lowest level for several years
Companies listed on the Dow Jones
There are currently 30 listed companies including Coca-Cola Soft Drinks, McDonald’s Fast Food & Restaurants, Intel Computer Chip Manufacturing, Exxon Mobil Oil & Gas, 3M Various Industries Company, ALCOA Aluminum Industry, American Express Financial Services, AT&T Communications , Boeing Aircraft Industry, General Electric, Johnson & Johnson Cosmetics, Merck Pharmaceuticals, Citigroup Banking, United Technologies for Air Conditioning and Cooling Systems, Walt Disney Media and Entertainment and many other companies.
Dow Jones and measuring the performance of the US stock market
The Dow Jones Index, along with the Standard & Poor’s 500 Index, is the most closely watched financial indicator for all financial market participants. The index measures the performance of the 30 largest companies in the United States of America, and many global financial exchanges around the world are affected by the fluctuations that the index knows, such as the London, Paris and Frankfurt stock exchanges.
Although the Dow Jones index is described as industrial, it does not only measure the performance of industrial companies, and the Dow Jones index is described as industrial because it was measuring the performance of the industrial sector only when it was first established.
Currently, the index includes many companies that are active in the financial and healthcare sectors, as well as services. The Dow Jones tracked the performance of the stock basket of the 30 largest companies in the United States of America that have activities in the industrial and financial sectors in addition to the health care and services sectors.
This stock basket is represented by what is called points, and the value of the index is calculated by calculating the total of the shares of the thirty companies listed in the index and dividing it by a number called “DJIA divisor”. This division is changed in the event of a division in the share price of a company (stock split) or any amendment that affects the index’s market value so that the index is not affected by the adjustments that are defined by the shares or the sharp fluctuations in the price of one of the shares, which makes it a different indicator from the other indicators that are calculated by the market value of companies or average stock prices.
Why trade the Dow Jones and what are the main trading signals?
As a result of the Dow Jones industrial average tracking 30 of the most influential companies in the American economy, the index is still attractive to those looking to focus on the shares of major companies.
This may be attractive when the same trends emerge across an asset class, and this can help traders understand market bias, so that they can focus on daily short-term trading strategies in the direction of the prevailing trend. One of the common ways that traders or their trends are measured in the 200-day moving average is simply a 200-day moving average that is applied to the daily chart, and when prices are above this level, traders can consider bullish strategies on long-term trading operations. Short.
Conversely, when prices cross below this level, traders can start looking at bearish strategies in light of expectations that prices may continue to decline and decline.
Dow Jones trading hours and tips
US stock markets open at 9:30 am (AM) and close at 4 pm (PM Eastern Time), and this is a more active trading period for the Dow Jones Industrial Average and its components.
This is not the only time the index remains within reach, however, Dow Jones trading hours are available through futures and CFDs that remain open even when the US markets are closed.
Futures markets open 23.25 hours a day, and CFD markets often reflect this, which allows traders to guess on the Dow around the clock. The most liquid period of the day in the Dow Jones Index is generally around the American market hours, when individual stocks and funds traded through the exchange are traded alongside related futures markets.
Trade management is a major point of focus for traders, and traders should look to reduce losses while letting winners pass, and trade management can help in this end. Traders can consider trade management strategies such as break-even stops, or expand from a winning position in an attempt to remove their initial risk expense, while providing the opportunity to exit a profitable site at increasingly favorable prices.
The most important factors affecting the Dow Jones
Usually when the market is said to have increased or decreased, the Dow Jones index is intended, and there are several factors that influence the movement of the index, whether it is up or down, which is represented in the following:
Monetary policy of the Federal Reserve: Central banks possess many tools in order to control the movement and volume of liquidity of money circulating in the market, and interest rates are the most important and most prominent and even the most powerful of these tools, and that high interest rates mean higher interest for bank savings, which may attract part Of the capital in the stock market. In addition, there is a direct relationship between interest rates and interest rates on government bonds.
Political matters and conditions: There is a fact that explains that politics from the economy and the economy from politics and the Dow Jones index expresses significantly the feeling of investors about the state of the economy, so all indicators are affected by that. For example, the Dow Jones rose more than 23% after the election of Donald Trump as President of the United States of America. This came after markets were optimistic about Trump’s promises to issue a new tax law that includes significant reductions in corporate profits.
Quarterly performance reports from companies: All companies listed on the stock exchanges issue a quarterly report (every 3 months) announcing the company’s financial performance and future expectations, and the reporting period is a period of fluctuation and significant change in the value of financial indicators, including Dow Jones, and it is not possible to know the size of a destination The impact of these reports, but in general, if the performance of most companies is positive, the Dow Jones index will rise and vice versa.
Capital flows: The nature of financial markets at the moment, which depends on electronic trading through the Internet, whether trading stocks directly, or through CFDs brokers has facilitated and accelerated a lot of capital movement between the various global financial markets and stock exchanges, and the value of indicators has become Finance, as well as the shares of companies, are greatly affected by financial flows, which are controlled by many factors, the most prominent of which are the points mentioned earlier and the degree of difference in them from one country to another and from the financial market to another.
For example, after the election of Donald Trump as President of the United States of America, and the optimism of investors with the promises he made, a large amount of money poured into the American markets coming from different parts of the world, especially China, which was suffering from some economic crises, which in turn led to an increase in the speed of rise American indices, led by the DOWJONES index.
Dow Jones trading with Q8 Trade
Dow Jones index trading is now more available to a wide and broad category of traders across the entire world, as it is through this index trading that it is able to take advantage of fluctuations in the overall performance of the US stock market. Although the Dow Jones Index cannot be traded directly, there are many financial tools that allow users to trade the index such as ETFs, options contracts, futures and CFDs, provided by Q8 Trade.
Futures: The Dow Jones index is traded through futures contracts through the Chicago Mercantile Exchange and the Chicago Board of Trade, and it is considered among the most used financial tools to trade the Dow Jones because of the many advantages it provides. This is where more than hundreds of thousands of contracts are traded on a daily basis. Dow Jones futures trading provides significant leverage in addition to high liquidity along with longer trading periods compared to the stock market, because the futures market operates 24 hours a day, from Monday to Friday every week. . Each Dow Jones futures contract has an expiration date, which is on the third Friday of every month, as traders close their positions before the start of this date. The Dow Jones Index can be traded through three types of futures contracts, which are:
$5 contracts (E-mini Dow) are traded via the symbol “YM”, and the value of one contract is equivalent to about 5 USD, while the initial margin is approximately 3575 USD.
Futures contracts with a value ($10) DJIA: They are traded under the symbol (DJ), and the value of one contract is equivalent to about 10 USD, while the initial margin is about 7150 USD.
Contracts with a value of $25 (Big Dow DJIA): They are traded under the symbol (DD), and the value of one contract is equivalent to about $25, while the initial margin is approximately 17875 dollars.
In order to trade one of the types of DOW JONES futures we referred to, you must open a trading account with Q8 Trade.
CFDs: The Dow Jones Index can be traded through CFDs, which are modern financial derivatives that enable traders to buy or sell many financial instruments without owning them. CFDs are traded on the Dow Jones Index in the same way that CFDs are traded on stocks. Trading the DOW JONES index can be considered through contracts for difference, is the best way for beginners traders with small accounts, as brokerage firms that provide these financial derivatives do not require a large initial margin, in contrast to brokerage firms specialized in the field of futures contracts, that is. In addition to the low fees, commissions and high leverage that may reach 200: 1 depending on the financial intermediary.
It is worth noting that trading the Dow Jones Index, like other financial tools, needs a full and deep understanding of how the markets operate, as well as the factors that affect price movements, whether they are basic or technical factors. The Dow Jones trading is very similar to stock trading. Beginner traders should also be fully aware of and fully conversant with the latest political and economic events that will affect the movements of the American stock market, in addition to events that may affect the thirty companies listed in the Dow Jones Index through the publication of profit reports as well as acquisitions and credit ratings from global credit rating agencies.
The Dow Jones 30 is a market capital weighted index, which is continually adjusted in the event that a specific company listed in the index adjusts its value to its price. The value of the index is not calculated by the average price of the total companies listed there, but it is weighted by dividing the price of the shares of the listed companies by a specific number so that the indicator is not affected when a change in the shares of these companies occurs.