What is the Dow Jones index?
The Dow Jones Industrial Average index is also referred to as the US 30 index or the Dow. It is a stock market index composed of 30 large companies quoted on the stock exchange in the USA. The index was established in 1896 by Charles Dow which means it is one of the oldest stock indices with a market capitalisation in excess of $8 (£6.37) trillions at the end of 2019. While similar indices are market capitalisation-weighted, this is not the case with Dow Jones, which is a price-weighted index. Consequently, changes in the price of any of the stocks included can have a positive or negative effect on its value.
Dow Jones is composed of companies representing different sectors except for transportation and utility. The companies are coming from industries such as financial services, technology, oil and gas, pharmaceuticals, personal products, etc. Some of the biggest companies, in terms of market capitalisation, included in the Dow Jones index are Microsoft, Apple, Visa and JP Morgan. Dow Jones provides an overview of the movement of the overall stock market and it serves as an indicator for economic health.
Movement of the Dow Jones index in the last years
A variety of stock related factors can affect the value of the US 30 index because it is a price-weighted index tracking the performance of some of the largest stocks in the US. Also, factors affecting overall economic activity can place additional pressure on the value. Hence, traders should closely monitor for events which may affect stock prices along with the US economic data and the political situations.
In the five-years period since 2016 the Dow Jones had the lowest value of 15,780 at the beginning of 2016 whereas it had an all-time highest price at the beginning of February 2020 when it moved up to 29.400. As you can see, its value nearly doubled in five years. The price chart also shows that there is a continued upward trend extended over multiple decades.
The index also recorded a couple of major pullbacks. One of the last retracements occurred after 15 February 2020 (after reaching a peak of 29,400) moved the value down to 18,200, causing a loss of more than 10,000 points in less than a month. However, the value bounced back up to 23,800 in the following few weeks.
How to trade US 30
US 30 trading can be performed with different types of instruments or assets. Choose the one that provides liquidity, low costs, swift execution and focus on your strategy to trade US 30.
You can use futures contracts to trade Dow Jones. With them, you lock down the price of the asset and you have a defined expiration date. But fixing your price for a predefined period means that you do not have a high degree of flexibility to capture a trading opportunity that may arise until the expiration date. Moreover, US 30 trading with futures means that you cannot liquidate a portion of your position as you need to wait for the expiration date, or you can close the overall position by entering into the opposite contract. Hence, futures contracts may be a complicated trading instrument.
You can decide to trade US 30 using the binary options offered by financial companies. However, as easy as they seem to be, they certainly have some major drawbacks. Namely, the potential for high reward means that there is a high risk which could result in swift losses of your money. The trading on tight time frames is also increasing the risk of losing your money.
Tokenised assets and tokenised commodities are instruments that enable you to profit by opening positions with assets or commodities without owning them. The tokenised assets are created by Currency.com leveraged trading platform with a technology that ensures an easy recording and execution of transactions, elimination of intermediaries and enhancement of safety. With the blockchain technology, Currency.com creates tokens that imitate the performance of the underlying assets and enable traders to speculate on the price movements of the reference asset.
Trading tokenised assets with Currency.com brings numerous benefits for the traders. More precisely, traders have the liquidity to open and close positions as they wish, they are not bound to use only fiat money and they can open larger positions.
Due to the leverage that comes with the tokenised assets, traders can use a lower level of their capital to open a position.
Currency.com gives its clients leverage of up to 1:100 when they trade tokenised assets. Stated differently, if you decide to trade the tokenised Dow Jones index, you will need to provide 1 per cent of the capital for the desired position size. For example, if you put only 1 per cent or $100 (£79.59) of your capital to open a position worth $10,000 (£7,959), you can still generate a substantial profit.
Furthermore, Currency.com gives you the possibility to trade tokenised assets directly with crypto which means that you save time and money incurred by the process of converting cryptocurrencies. You do not need fiat money to trade the tokenised US 30 index because now you can use your Bitcoin or Ether.
Tokenised US 30 trading guide
The process of trading the tokenised US 30 index is simple. You can trade tokenised assets with Currency.com following a few elementary steps:
- Step 1: Sign in on Currency.com and provide the relevant information required with two-factor authentication security;
- Step 2: If you own cryptocurrency it is up to you to decide whether you will trade with crypto or you will use fiat.
- Step 3: You estimate the size of your positions based on the margin provided by Currency.com.
- Step 4: Speculating on the price movements will dictate the type of positions you will open. A price increase will mean that you take long positions while for an expected price decrease you will take a short position.
- Step 5: The contrasting positions coming from the clients of Currency.com trading platforms are primarily linked to each other and the free buy or sell orders are further linked on Capital.com, LMAX Digital or through Binance, Bitstamp, Kraken, NASDAQ, NYSE and Gain Capital.
- Step 6: This step involves the decision when to collect your profits. You choose the best suitable period or price to close your positions and gather the gains earned.
Why trade the tokenised US 30 index with Currency.com?
US 30 trading on Currency.com’s tokenised securities exchange has a number of advantages. Tokenised securities are underpinned by robust and immutable blockchain technology. Opening trade will give you a token that tracks and moves according to the underlying instrument's price.
- One-stop crypto trading platform
Trade the tokenised Dow Jones index with Bitcoin or Ethereum. Benefit from the commodity's price movements without turning your crypto assets into fiat.
Trade the tokenised US 30 index with a tight market spread, benefit from maker rebates and competitive taker fees.
Experienced traders can trade the world's top markets, like the Dow Jones index, with up to 1:100 leverage.
- Effective risk management
Manage your risks and secure your profits with stop loss and take profit orders. Save your assets with negative balance protection.
We have a scalable and low latency order management system, which can execute 50 million trades per second.
Currency.com operates under new Belarusian regulation with best-in-class AML and KYC laws. Regulatory details and fees are upfront.