Dow Jones Spread Betting Guide

Dow Jones Spread Betting Guide

Dow Jones Spread Betting Guide

arrow_forwardLive Dow Jones Chart
arrow_forwardLive Dow Jones Prices
arrow_forwardWhere to Spread Bet on Dow Jones
arrow_forwardHow to Spread Bet on Dow Jones
arrow_forwardWhere to Spread Bet on US Shares
arrow_forwardGuides to Trading Dow 30 Companies

Nearly all spread betting companies let you speculate on the 30 companies that make up the Dow Jones, see below.

A more popular trade however is the Dow Jones stock market index itself, i.e. speculating on an index of 30 leading US shares. Along with the FTSE 100 and EUR/USD, the Dow Jones is one of the most popular spread betting markets.

Here we talk you through the basics of spread betting on the Dow Jones as well as its component shares.

Readers should note that the Dow Jones stock market index is also known as the ‘Wall Street’, ‘US 30’ and ‘USA 30’.


Live Dow Jones Chart and Prices


What is the Wall Street Index (aka Dow Jones)?

The Wall Street index is based on 30 large publicly owned companies.

Unlike the FTSE 100, it is nearly always the same 30 companies in the index, which is something to bear in mind when formulating your spread betting strategy (changes in the constituent companies is rare).

Trading is from 14:30 to 21:00 (UK time).


Where Can I Spread Bet on the Dow Jones?

A number of regulated spread betting brokers offer live prices & charts on stock index markets like the Dow Jones.

See the stock market comparison table below.


Dow Jones Spread Betting Comparison

Company Index Min
Stake
UK
100
Spread
Germany
30
Spread
Wall
Street
Spread
S&P
500
Spread
NASDAQ
100
Spread
Japan
255
Spread
Apply
Financial Spreads Review £0.50 0.8 (5) 1 (2) 1 (4) 3 0.5 8 Apply
City Index Review £1 1 (+) 1 (+) 1.6 (+) 6 1 (+) 8 (+) Apply
ETX Capital Review £0.50 1 (2,6) 1 (2,6) 1 (2) 5 1 (2) Variable Apply
IG Review £1-5 1 (4) 1 (5) 1.8 (5.8) 5 (9) 1 (3) 8 (30) Apply
InterTrader Review £1 Variable Variable Variable Variable Variable Variable Apply

You can also trade the S&P 500 and NASDAQ 100.


How to Spread Bet on Dow Jones

As an example, let’s assume you are considering trading the Dow Jones, so you go on a financial spread betting website, like ETX Capital, and see they are offering:

Dow Jones Rolling Daily: 11890 – 11892

How this market works.

The Market: Dow Jones Rolling Daily
Spread Betting Price: 11890 – 11892
How This Works: You can spread bet on the Dow Jones Rolling Daily market to move:

  arrow_upward  Above 11892, or
  arrow_downward  Below 11890

This is a ‘Rolling Daily’ spread betting market and so there is no closing date. If you don’t close your trade and the session ends then your trade will automatically roll over to the next session.

If a trade is rolled over then you will normally either receive or pay a small fee for overnight financing depending on the direction of your spread bet.

For further information also see what is a daily spread bet?
Traded Units: Spread bets on indices like the Dow Jones market are made in £x per point.

Where a point is 1 point of the stock market index’s price movement.

E.g. if the Dow Jones moves by 30 points then you would win or lose 30 times your stake.
Stake Size: You choose how much you would like to stake per point, e.g. £1 per point, £2 per point, £5 per point, £10 per point etc.
Brief Example: If you decided on a stake of £4 per point and the Dow Jones moves 29 points, you would win or lose £4 per point x 29 points = £116.


Trading Example | Taking a Long Position on the Dow Jones

Financial spread betting on the stock market index to rise in value

You Decide Whether to Buy or Sell: The Dow Jones moving:

  arrow_upward  Above 11892? or
  arrow_downward  Below 11890?

You Might Decide to Go Long:   arrow_downward  Above 11892
You Pick a Stake Size, Choosing: £2 per point
So Now What Happens?
  • You will win £2 for every point the Dow Jones pushes higher than 11892
  • You will make a loss of £2 for each point the Dow Jones pushes lower than 11892
When Betting on a Market to Go Up Your P&L = (Closing Price – Opening Price) x stake per point
 
Trading Scenario 1 The Dow Jones moves higher and the financial spread betting market is revised and moved to 11956 – 11958.
Close for a Profit? You could choose to keep your spread bet open or close it in order to lock in a profit. In this case you opt to close your position by selling the Dow at 11956.
Your P&L = (Closing Price – Opening Price) x stake per point
(11956 – 11892) x £2 per point
64 points x £2 per point
Your P&L = £128 profit
 
Trading Scenario 2 The Dow Jones moves lower and the spread trading market changes to 11821 – 11823.
Close and Limit the Loss? You could decide to leave your bet open or close it to limit your losses. In this case you choose to close your trade by selling at 11821.
Your P&L = (Closing Price – Opening Price) x stake per point
(11821 – 11892) x £2 per point
-71 points x £2 per point
Your P&L = -£142 loss


Worked Spread Betting Example | Taking a Bearish View of the Dow Jones

Spread betting on the stock market index to fall in value

You Now Choose Whether to Go Long or Short: The Dow Jones going:

  arrow_upward  Above 11892? or
  arrow_downward  Below 11890?

Let’s Assume You Choose to Sell:   arrow_downward  Below 11890
You Select How Much to Risk, Let’s Assume You Choose: £1 per point
Now What Happens?
  • You will make a loss of £1 for each point the Dow Jones rises above 11890
  • You will make a profit of £1 for each point the Dow Jones falls below 11890
When You Sell a Spread Bet Your P&L = (Opening Price – Closing Price) x stake per point
 
Trading Scenario 3 The Dow Jones falls and the market is moved to 11793 – 11795.
Time to Lock in Your Profit? At this point, you can choose to let your spread bet run or close it, i.e. close your trade for a profit. In this instance you choose to close your position by buying at 11795.
Your P&L = (Opening Price – Closing Price) x stake per point
(11890 – 11795) x £1 per point
95 points x £1 per point
Your P&L = £95 profit
 
Trading Scenario 4 The Dow Jones increases and the spread betting market is revised and is set at 11995 – 11997.
Time to Limit Your Loss?At this point, you could choose to leave your spread bet open or close it and restrict your losses. In this case you decide to close your bet by buying the market at 11997.
Your P&L = (Opening Price – Closing Price) x stake per point
(11890 – 11997) x £1 per point
-107 points x £1 per point
Your P&L = -£107 loss


Dow Jones Notes:

  • Online spread betting market from Capital Spreads, 10 November 2011
  • Most spread betting companies will also give you the option of financial spread trading on the Dow Jones in euros/point and dollars/point

Guides to US Stocks and Shares

We have created a lot of individual trading guides for our readers, including guides that cover some of the largest US firms.

For US stocks and shares the guides answer key questions such as, “Where can I spread bet on the stock?” and “Where can I get live prices can charts for the share?”.

Each guide also has a worked trading example.

To access the guides, simply click on the relevant company link below.

Company Code Ticker Live Chart Live Prices Guide
Bank of America BAC Chart Prices Guide
Exxon Mobil XOM Chart Prices Guide
JP Morgan JPM Chart Prices Guide
Microsoft MSFT Chart Prices Guide

Also see:


Where to Spread Bet on US Companies

You can trade a selection of leading US shares with:

AuthorAlex Turner

Senior Editor, SpreadBetMagazine

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