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Once it is not called: Dow, Dow Jones, Dow Jones Industrial Average, DJIA, DOW/USD. The first index in history, which remains active on the American exchanges and Forex.
It represents the total stock of 30 influential US companies. The Dow Jones Industrial Average consists of shares of giant companies that are split between the NYSE and NASDAQ exchanges. For example, American Express, Coca-Cola, Apple, ExxonMobil. Thus, the Dow Jones index reflects the situation in the sector of dominant US economic sectors.
Dow is the average share price of all the companies that are included in it. That is, the market value of companies is not a factor, but a reflection of changes in prices on the exchange. Put, companies with high stock prices affect the index more than companies with low prices.
The Dow Jones Index first appeared in 1896. Its initiator was Charles Dow, editor of the Wall Street Journal of the time. At the end of the 19th century, the index was used to track US market performance. However, today, many believe that it is out of date. They are even taking into account the fact that the Dow Jones Industrial Average remains the most popular index.
The fact is that it includes only 30 companies, and nowadays, it is not enough to conclude business efficiency across the country. The fact that some companies carry out most of their operations abroad is also not taken into account.
DJIA is closer to an indirect indicator of a country’s financial well-being than to an economically active one. Many shareholders prefer instead to focus on the S&P 500 index. But there is no arguing that the Dow remains a critical reference index. It is needed insofar as investors, regulators, and officials pay attention to it.
The Dow Jones Industrial Average is more active from 9:30 a.m. to 4:00 p.m. Eastern time when US stock markets open. But for traders, the index is open around the clock, because the Dow is available through futures and CFDs.
However, the US market watch is the most optimal period of the day for DOW / USD trading. Then stocks and exchange-traded funds are traded together with related futures markets. During regular trading hours on the US stock market, the price of the DJIA futures contract is very close to the value of the index. Traders love to follow the Dow Jones Industrial Average, but many overlook the main nuances, and then there is a higher chance of failure. After all, trading is not just guessing the direction of the index. An essential factor that determines failure or success is risk management.
The goal of the trader is to entice at least a small amount to his side and close the transaction. The winning percentage is also a significant indicator, but such risk-reward plays a vital role. Therefore, always strive to reduce losses and allow others to win, whether it is a long-term strategy or short-term bargaining.