The Dow, Dow Jones Industrial Average or DJIA is one of the oldest and most essential activity indices on American exchanges and Forex. It is calculated based on the performance of the shares of 30 American companies that are currently influential, such as American Express Co (AHR), Coca Cola co (co), Apple (AAPL stock), ExxonMobil (som). Not all shares that belong to DJIA are traded on the same exchange. They are split between the NYSE and NASDAQ.
The composition of the DJIA index reflects the dominant sectors that propel the American economy. And the index itself reflects the average price of shares of large companies that are included in it. Thus, the market value of companies is not a factor but demonstrates the change in the amount of the stock market. This means that companies with higher share prices have a more significant impact on the index than companies with lower share prices.
Wall Street Journal editor Charles Dow created the Dow as a means to track the performance of the US market in an era when the flow of information was limited. It was first published in 1896. As you might guess, the name of the index got from the Creator, as well as from his business partner Edward Jones.
Why industrial? Charles Dow lived in the era of the industrial revolution; therefore, the companies that held leading positions in the market belonged to the industrial and technical sectors. Thus, the name is appropriate. However, it is so accepted that times change, but names remain.
Some people think that not only the name of the index is obsolete, but also the index itself. Although the Dow Jones Industrial Average is the most popular index, it only includes 30 companies and may not reflect business performance nationwide. Also, most companies conduct a significant portion of their operations abroad, making the index an indirect indicator of a country’s financial well-being rather than an economic one. Therefore, many prefer to focus on the S&P 500 index.
But still, the Dow is the primary reference index of financial indicators in the United States. It is essential because of the attention it receives from regulators, investors, and officials.
Trading on the Dow Jones Industrial Average is most active when the US stock markets open, that is, from 9:30 to 16:00 Eastern time. This is not the only time the index is open to traders: the Dow is available through futures contracts and CFDs, and futures markets are free around the clock.
The most optimal period of the day, for the Dow in the US market clock, when individual stocks and exchange-traded funds are traded together with adjacent futures markets.
Traders often turn to the Dow Jones Industrial Average, many fails. Still, trading is more than guessing in which direction the index can move. Risk management is an essential determinant of failure or success in the Forex market. This rule also applies to index trading.
The future is unknown, and the trader aims to attract a chance to his side, a chance, at least for a small amount. Winning percentage is an important indicator, but things like risk-reward also play a crucial role in whether a trader can survive the UPS and downs of trading financial instruments.
You need to seek to reduce your losses by allowing others to win, whether it is a long-term strategy or short-term trading.