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CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

How to trade or invest in the Dow Jones

How to trade or invest in the Dow Jones

The Dow Jones Industrial Index, or simply the Dow, is one of the most well-known indices in the world, and home to some of the mightiest stocks on the NYSE and NASDAQ. Learn the different ways to trade Dow Jones with us.

Start trading today. Call +65 6390 5133 between 9am and 6pm (SGT) on weekdays or email accountopening@ig.com.sg for account opening enquiries.

Start trading today. Call +65 6390 5133 between 9am and 6pm (SGT) on weekdays or email accountopening@ig.com.sg for account opening enquiries.

Start trading today. Call +65 6390 5133 between 9am and 6pm (SGT) on weekdays or email accountopening@ig.com.sg for account opening enquiries.

Start trading today. Call +65 6390 5133 between 9am and 6pm (SGT) on weekdays or email accountopening@ig.com.sg for account opening enquiries.

If you are ready to open a position in the Dow Jones, follow these three steps, or discover our full guide below:

1. Decide whether you want to trade

There are several ways to gain exposure to the Dow Jones. You can trade ETFs to gain exposure to individual shares within the index or trade on the index’s value.

2. Create a trading plan

If you’re planning on trading on the Dow Jones, you'll need to decide whether you're a short- or long-term trader – and how you're going to manage your risk.

3. Open a live account

Open and fund an CFD trading account with us. You can simply fill in our application form.

Find out the difference between trading and investing the Dow Jones Index, we explain each method below.

Difference in trading or investing in the Dow Jones

Depending on your personal preference and risk tolerance, you can gain exposure to the Dow Jones by trading with IG. The differences between the two methods are summarised in the table below:

Trading the Dow Jones Investing in the Dow Jones
Ways to trade CFDs Buying shares outright
Market hours 24 hours1 -
Deposit required 5% of trade size 100% of trade size
Timeframe Shorter term Longer term
Liquidity Higher liquidity offered by trading the index than investing

How can you trade in the Dow Jones index?

With us, there are a number of ways to get exposure to the Dow Jones Industrial Average index in three main ways. All have their advantages and disadvantages, so you can choose the one which suits you best.

You can:

Trade on the Dow Jones index directly

With us, you can trade the top stocks on the Dow Jones directly and from a single position. You’ll do this by speculating on the Dow Jones’s price on our platform under the name ‘Wall Street’.

Not only will you get direct exposure to the Dow Jones this way, it’s also more liquid than trading it in other ways. Plus, you can trade it 7 days a week.

To take a position on the Dow Jones index directly, you won’t own any company shares outright. Instead, you’ll trade using leverage derivatives like CFDs.

With derivatives, you can go long (buy) or short (sell) on the asset price. You’ll put down an initial deposit (called margin) to open a larger position, with profits and losses calculated on the full position size, not your deposit. Note that this means your profits or losses could outweigh your deposit amount substantially.

CFDs are commission-free when you trade the Dow Jones index, as charges are included in the spread.

Trade in Dow Jones ETFs

You can get a broad exposure to the entire index by trading in an ETF that tracks the price of the Dow. This means you won’t trade on the current price of the Dow Jones, but rather the ETF’s price, calculated on its net asset value (NAV).

You could trade Dow Jones ETFs on leverage with CFDs, but bear in mind this offers lower liquidity and higher spreads than trading the index directly. Leveraged trades mean you can go long or short on ETFs. However, again, total profits or losses can significantly outweigh your margin amount, as both are based on the total position size.

Trade in Dow Jones shares

With us, if you've got a certain Dow Jones company in mind but don't want to take ownership of the actual shares, you can also trade CFDs on the shares listed on the Dow Jones index – including the likes of Apple and Microsoft.

These are leveraged trades, so you can go long or short.

Trading the Dow Jones index directly Trading in a Dow Jones ETF Trading in Dow Jones shares
Account types CFD trading account to trade CFD trading account to trade CFD trading account to trade
Market hours You can trade our Wall Street market 24 hours a day Monday to Thursday and until 10pm (UK time) Friday, and also our exclusive Weekend Wall Street market from 8am – 10.40pm (UK time) on Saturdays and Sundays. If UK-listed, when the LSE is open - 8am to 4.30pm, Monday to Friday (UK time). When the New York Stock Exchange is open – 2.30pm to 9pm, Monday to Friday (UK time). Also, trade out of hours on top Dow Jones 30 stocks like Apple, Microsoft, Nike, Visa and more. See our after-hours times.
Timeframe Short to medium term. Short to medium term for trading. Short to medium term for trading.
Liquidity and execution 0.0014 second execution speed and unique deep liquidity Higher liquidity offered by trading the index directly. Higher liquidity offered by trading the index directly.
Costs Trading the Dow Jones on the spot (cash) incurs overnight fees, but index futures don’t incur these fees. A commission charge of just 2 cents on each side of the trade for US ETFs CFDs with minimum commission of USD10 (i.e. for online).
Cash (spot) ETF trades incur overnight fees.
No spreads will be charged. For US shares, commission per side will be charged from 2 cents with minimum commission of USD10 (i.e. for online).
Cash (spot) trading incurs overnight fees.

How to start trading in the Dow Jones

If you’re ready to start trading in the Dow Jones, follow these five steps:

  1. Create your trading account
  2. Learn what moves the Dow Jones’s price
  3. Perfect your Dow Jones strategies
  4. Discover what else you need to know about the Dow Jones index

Create your trading account

You can open a CFD trading account.

CFDs (contracts for difference) enable you to enter into a contract to speculate on the price of the Dow Jones index, or the share price of Dow Jones-listed companies. The amount the index or share price rises or falls (so, the difference between the price when you open your position versus when you close it) determines your profit or loss.

Find out the different ways to trade Dow Jones using CFDs below.

Trading CFDs on Dow Jones using shares

If you’d like to trade certain Dow Jones stocks instead, without owning stocks outright, you could trade shares using CFDs.

CFD share trades are leveraged, meaning you’ll put down a small deposit (called margin) to open a larger position and speculate on that Dow Jones company’s share price, rather than buying the shares outright, paying the full share price upfront.

In this way, your initial CFD share trade margin costs a fraction of what it would to buy shares. Just remember that profits and losses are calculated based on the total position size, not your margin amount, and can outweigh your margin significantly.

CFD trades on US shares also attract a commission charge of 2 cents per share and a minimum charge of USD$10. You’ll also be trading on the spot (cash) price with share CFDs, so remember that you’ll incur overnight funding charges if your position is left open for longer than a day.

To open a Dow Jones company shares position:

  1. Go to the CFD trading platform
  2. Select ‘Shares’ instead of ‘Indices’ or ‘ETFs’
  3. Click on your chosen company, for example Apple
  4. Decide whether you want to buy (go long) or sell (go short)
  5. Choose your deal size in terms of number of contracts
  6. Set yours stops and limits
  7. Click ‘place deal’ to open your position
How to trade in the Dow Jones: trading CFDs on stocks

Trading CFDs on Dow Jones using ETFs

If you’d like to trade CFDs, but would like broad exposure to a variety of different Dow Jones stocks all in one trade, then you could trade ETFs with us. Exchange traded funds (ETFs) are investment instruments that track the performance of a basket of Dow Jones stocks.

ETFs attract low commissions – just 2 cents per share on each side of every CFD trade, with a minimum fee of USD 10 for online orders. Just remember, because you’ll be trading on the cash (spot) price, you’ll incur overnight fees if your position is left open longer than a day.

To open a Dow Jones ETF position:

  1. Go to the CFD trading platform
  2. Select ‘ETFs’ instead of Indices
  3. Click on a Dow Jones-related ETF, for example the iShares Dow Jones Industrial Average UCITS ETF
  4. Decide whether you want to buy (go long) or sell (go short)
  5. Choose your deal size in terms of number of shares
  6. Set yours stops and limits
  7. Click ‘place deal’ to open your position
How to trade in the Dow Jones: trading CFDs on ETFs

Trading CFDs on Dow Jones using options

With options you have the right, but not the obligation, to exercise the contract on or before its expiry date. When you trade options via CFDs, you’ll pay an initial deposit (called premium) to open a larger position. You’ll then speculate on the option’s premium for a profit or loss – with both able to significantly outweigh your deposit amount as profits and losses are calculated on the full position size.

Buying options is limited risk as you’ll only risk as much as the premium you pay, but selling options is technically unlimited risk, as there’s no restriction to how much a market’s price can rise.

*Do note that options are opt-in only.

To open a CFD options position on the Dow Jones:

  1. Go to the CFD trading platform
  2. Click on Options’ instead of ‘Indices’
  3. Choose ‘Indices’ as your asset class and select ‘Wall Street’
  4. Decide on your preferred maturity date range – daily, weekly or monthly
  5. Select a call or put option, and whether you want to buy (go long) or sell (go short)
  6. Choose the size of your position
  7. Set yours stops and limits
  8. Click ‘place deal’ to open the position
How to trade in the Dow Jones: CFD options

Trading CFDs on Dow Jones using index futures

You can also trade Dow Jones CFD futures with us, which don’t attract the same overnight funding charges that cash (spot) trading does.

Trading index futures via CFDs means you’re agreeing to trade the Dow Jones at a specific price on a specific date in the future.

This is commission-free, with slightly wider spreads than you’ll find on cash markets.

To open a Dow Jones futures position:

  1. Go to the CFD trading platform
  2. Select the Wall Street index under ‘Indices’
  3. Choose ‘Futures’ instead of ‘Cash’ to trade and select your preferred date range
  4. Decide whether you want to buy (go long) or sell (go short)
  5. Choose your deal size in terms of number of contracts
  6. Set yours stops and limits
  7. Click ‘place deal’ to open your position
How to trade in the Dow Jones: CFD futures

Trading CFDs on the Dow Jones using cash indices

You can trade CFDs on the Dow Jones index using the spot trading (known as cash in our platform), which is derived from future’s price with a fair value adjustment to get as close to the real-time cash price of the index as possible.

Trading Dow Jones index CFDs on the spot (cash) price means you don’t pay any commission charges, and spreads are lower than the futures price, although overnight funding fees apply (unlike with futures). This means cash or spot prices are often best suited to short-term trading strategies, which won’t require leaving a position open for longer than one day.

To open a Dow Jones spot position:

  1. Go to the CFD trading platform
  2. Select the Wall Street index under ‘Indices’
  3. Choose ‘Cash instead of ‘Futures to trade and select your preferred contract value
  4. Decide whether you want to buy (go long) or sell (go short)
  5. Choose your deal size in terms of number of contracts
  6. Set yours stops and limits
  7. Click ‘place deal’ to open your position
How to trade in the Dow Jones: CFD trading

Learn what moves the Dow Jones’ price

If you want to make a profit trading in the Dow Jones, you’ll need to open and close positions at just the right time. For this, it’s essential to have a good understanding of what moves the Dow Jones index’s price.

Here are a few of the main factors that will drive the index price up or down:

Strength of the dollar

The strength of the US dollar will have an effect on the price of the Dow Jones. A strong dollar often means that the index will rise in value, while a weaker dollar will generally mean it falls.

Value of Dow Jones companies’ shares

As the Dow Jones index is made up of companies on the New York Stock Exchange (NYSE) and the NASDAQ, the share prices of those companies will affect the index’s price in turn. As it is a price-weighted index, the performance of companies with a higher share price will have a greater effect over the value of the index compared to those with lower share prices, because they have a greater weighting in how the Dow is valued.

Earnings reports

Similarly to ordinary share prices, Dow Jones companies’ earnings reports will affect the index. Strong earnings in large companies that are heavily weighted in the Dow Jones will often causing an increase in the index’s price, and weak reports will usually mean a decrease.

Economic events

It’s not just the index’s companies themselves that affect the Dow Jones, macroeconomic factors can play a role too. Any geopolitical factors that’ll affect the dollar’s price will likely affect the Dow Jones’ price, too.

News

While macroeconomic events themselves will play a factor, so too will news articles. Widely viewed news, both positive and negative, will affect the index’s price. In particular, news about central bank announcements, changes to fiscal policy in the States and reporting on big events like Coronavirus-related developments or presidential elections will all move the value of the Dow.

Perfect your Dow Jones strategies

There are a few ways you can hone your Dow Jones trading strategy, to ensure the best possible chance of doing well when trading in the index. Here are some steps to follow:

  • Choose your trading style: the first thing to determine is whether you’d suit a short-term, medium-term or long-term trading strategy. There are four main trading styles – scalping, day trading, swing trading and position trading
  • Study charts and price action: poring over daily and weekly charts will help you learn the rhythms of the Dow Jones and the market at large, which will help you get a feel for what the index might do going forward and be able to strategise accordingly
  • Look for trading signals: by studying the Dow Jones price chart, you should be able to tell whether the current trend is bullish or bearish. You can confirm current trends with momentum indicators like the stochastic oscillator or relative strength index (RSI)
  • Follow industry news: you shouldn’t only rely on technical analysis to craft your trading strategy, you should also keep an eye on the news. As we’ve said, macroeconomic events and news articles can materially affect the Dow Jones price, so keeping an eye on the headlines is vital for your strategy
  • Set trading alerts: of course, it’s unreasonable to expect yourself to watch the news or the market constantly. That’s why you can also use trading alerts with us, to get automatic prompts when the market’s doing something important to your strategy. Input your chosen alerts when opening a position and you’ll be notified once your alerts are triggered. You can receive trading alerts via email, SMS or push notification on our platform

Discover what else you need to know about the Dow Jones index

There are traders who spend their lives studying the Dow Jones, and with good reason – there’s a lot to know! Here are a few more things you should know before trading or investing in the Dow Jones index:

How is the Dow Jones’ price calculated?

The Dow Jones Industrial Average index (or the ‘Dow Jones’ or ‘Dow’ for short) is a collection of the largest blue-chip stocks on the NYSE and the NASDAQ. It’s a price-weighted index. This means that the stocks’ share prices affecting the weighting of the index in descending order. So, more expensive shares like Apple will determine the Dow Jones’ price more than smaller stocks with lower share prices.

To determine the Dow Jones’ price, the index’s companies’ share prices are added together and divided by a specially calculated divisor number (as a more mathematically accurate substitute for dividing the share prices by the number of stocks there are in the Dow Jones – which is 30). These companies’ shares will have different weightings each depending on how high their share price is. This means that sudden changes in share price of a heavily weighted stock on the Dow Jones, for example on the day earnings reports are released, can significantly affect the Dow Jones’ price.

What are the Dow Jones’ trading hours?

The Dow Jones index is open during New York Stock Exchange hours, from 9.30am to 4pm Eastern Standard Time. This translates to 2130 to 0400 Singapore time. Bear in mind, though, that this will change in winter due to daylight savings.

However, with us you can trade the Dow Jones index 24 hours a day, Monday to Friday. You can also trade our exclusive Weekend Wall Street, from 8am to 10.40pm, Saturdays and Sundays (UK time).

FAQs

What are the ways you can trade or invest in the Dow Jones?

With us, you can trade in the Dow Jones index via CFDs, and can use it to trade on indices, ETFs, shares and more. You can also trade the spot (cash) price or futures (or forwards).

What are the stocks on the Dow Jones?

The Dow Jones index is comprised of 30 stocks, which are widely considered to be the biggest and best in their respective industries. These include Apple, Microsoft, Nike, Coca-Cola, Boeing, Disney, McDonald’s and Johnson & Johnson, among others.

How do companies join the Dow Jones?

The stocks on the Dow Jones index don’t change often and are hand-selected as titans of their industry. That’s because the caretaker of the Dow Jones index, the S&P Dow Jones Indices company, votes on the stocks to include on the Dow Jones via committee. This means companies cannot apply to join the Dow Jones but are independently chosen by members of the S&P Dow Jones Indices.

1 Where indicated, indices are available for dealing 24 hours a day, between 23.02 Sunday and 22.15 Friday (London time) each week. This will be between 07.02 Monday and 06.15 Saturday (Singapore time) on non-Daylight Savings periods and between 06.02 Monday and 05.15 Saturday (Singapore time) during Daylight Saving periods. Other indices are offered only when the underlying market is open. Please ask dealers for information about public holidays.