Guide To Trading the Dow Jones

Guide To Trading the Dow Jones

Of the three major United States indices, it is the Dow Jones stock that most accurately tells of American economic conditions and investor sentiment. Prior to using the Dow Jones in your digital options trades, you’ll need to consider the numerous factors that can influence its value. Also, note that this market is only open for trading from 13:30GMT to 20:30GMT (Monday-Friday). Be sure to time your trades accordingly.

There are a number of economic reports which impact the value of the Dow Jones. Any of the following data can cause investors to start buying or selling the various stocks listed within this index:

  • Manufacturing
  • Employment data
  • Gross Domestic Product
  • Consumer sentiment
  • Housing
  • Crude oil prices
  • Earnings reports (for companies included in the index)
  • Credit ratings

Employment data can really push this index. Whenever this data is disappointing, the Dow Jones usually trends downward. Manufacturing data measures employment and does impact consumer spending. Increased manufacturing will be viewed as a sign of improving economic conditions within the U.S. Consumer sentiment tells of how consumers feel about current economic conditions. Consumers are willing to spend more money during times when they are feeling positive about economic conditions.

Of the top indices, the Dow Jones opens last, opening for trading well after the Asian and European markets have already opened. This allows digital options traders to already have a feel for how global markets are moving. Depending on your location and time zone, you may be able to devote some time to seeing how the Asian and European markets are doing and then plan your Dow Jones trades accordingly. Do note that the Dow is impacted much more by U.S.-based sentiment than it is the actions of other markets.

Digital options traders should have plenty of opportunities to trade the Dow Jones throughout market hours. Since this index is strongly influenced by investor sentiment, turn to fundamental analysis strategies to help you with investment decisions. Although this index can be volatile at times, it also has a tendency to trend in one direction or the other – a price action that can provide you with plenty of earnings.

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