We’ve compiled a list of some of the best brokers for trading the Dow Jones Industrial Average (DJIA/US 30) including City Index, IG, CMC Markets, Pepperstone and Saxo Markets. All brokers in this list are authorised and regulated by the FCA and we have personally tested each platform, interviewed the company CEOs and compared costs, fees, market access and the different types of account for trading the DJIA.
Compare Dow Jones Trading Platforms
|DOW Trading Platform||Spreads & Fees||Overnight Financing||CFDs||SpreadBetting||DMA||Risk Warning||More Info|
|3.5||SOFR +/-2.5%||✔️||✔️||❌||70% lose money when trading with this provider.||Visit City Index|
|0.005%||na||✔️||❌||✔️||60% lose money when trading with this provider.||Visit IBKR|
|2||SOFR +/-3%||✔️||✔️||❌||66% lose money when trading with this provider.||Visit CMC Markets|
|2.4||SOFR+/-2.5%||✔️||✔️||❌||79.3% lose money when trading with this provider.||Visit Pepperstone|
|3||SAXO RATE +/-2.5%||✔️||❌||✔️||70% lose money when trading with this provider.||Visit Saxo Markets|
|2.4||SOFR +/-2.5%||✔️||✔️||✔️||73% lose money when trading with this provider.||Visit IG|
|4||SOFR +/-3%||✔️||✔️||❌||69% lose money when trading with this provider.||Visit Spreadex|
|3||SOFR +/-2.5%||✔️||✔️||❌||77% lose money when trading with this provider.||Visit XTB|
What is Dow Jones Industrials Index?
The DJ Industrials Index (the ‘Dow’, ticker: INDU) is one of the oldest stock market indices in the world. It was formulated in 1896 by Charles Dow. Currently, it has only 30 component stocks.
For half a century after its inception, the Dow was the most-followed index because of its history and prestige. But as the US economy expanded massively after 1950, Dow’s thirty components gradually under-represented the economy. These days, investors tend to use the S&P 500 as the benchmark. Still, the Dow is a widely-quoted index.
Dow is not cap-weighted but price weighted.
Can you trade the Dow?
Of course, you can. There are multiple financial products derived from the underlying DJ Industrials Index that you can trade with, including:
- Exchange-Traded Funds (link)
- Investment Funds
- Spread trading
Read the GMG Guide on Index Trading.
The biggest ETF based on the DJ Industrials Index is the SPDR Dow ETF (ticker: DIA).
What is the attraction of Dow?
DJ Industrials is often seen as one of the barometers of Wall Street. Given its components, Dow is often seen as a ‘Blue Chip’ index. Investors and traders often like to trade this index:
- Dow offers good liquidity
- Dow has a long history, thus allowing investors to compare price movements easily
- Dow has been a good performer since 2009.
This Index is volatile enough to attract traders. Thus add liquidity of the index.
What drives the DJ Industrials?
Stock markets are driven by a wide variety of factors, including some of the following:
- Macro factors (e.g. GDP, unemployment, business indicators etc)
- Monetary factors (e.g., Quantitative Easing, rates movements, yield curve etc)
- Technical factors (e.g., new highs)
If you are trading INDU short term, you will need to pay attention to news flow and data announcements because they can have massive impact on the index over the short term.
Another area to watch out for are Federal Reserve meetings and the release of FOMC minutes. Any change in interest rates beyond market expectations can cause violent swings in the SPX. For example, if investors were expecting a 0.25% hike but the central bank raised it by 0.5% – this may cause prices swing massively after the announcement.
Studying the reaction of the market to these factors are important.
How to trade the Dow using technical indicators?
To trade the Dow profitably requires a good trading strategy, of which technical indicators may come in handy. Technical indicators include:
- Trend indicators like moving average
- Price action
- Support & resistance levels (see how to trade with technical analysis)
- Patterns like breakout and reversals
For example, you may use the moving averages to judge whether the index is still trending or due for a reaction.
Another favourite indicator is a break of resistance or support levels. Look at the DJ Industrials ETF (DIA) below. It was clear that the breakout above the 275 key resistance last month resulted in a rally into 280 (see below). This resistance, now broken, may even convert into resistance.
Bear in mind, however, the different traders will gravitate towards different trading styles. Therefore you must find the technical indicators that best support your trading objectives.
Alternative Indices For Index Trading
You can read about the major indices in our guide to the best indices for index trading.