The oldest of these indices is the Dow Jones Industrial Average index.
What is the Dow?
The Dow Jones Industrial Average (DJIA) is a trade index that shows the thirty most essential companies in the United States. Investors and traders from all countries considered it one of the most valuable trading tools, and traders don’t need to own a US brokerage account to use it. The index is recognised on the trade market as us30, and it includes the largest companies such as Apple, Walt Disney Company, Jonhson & Jonhson, Coca-Cola, and many more.
How to use it?
Traders mustn’t forget that an index is only a tool, and without the correct application, it can be useless. The same happens with the Dow. If you, as a trader, wish to benefit from this index, you should pay close attention to any political news, even if this news is not directly related to the US.
Any change that affects the economy, like Central Bank decisions or reports, has an impact on different levels to the companies listed on the Dow.
Between the events which traders should pay attention to is inflation of the USD, which according to past events, translates to a decrease in the US30. The treasury yields can also affect the trade market, depending on if it is stronger or weaker. Another significant event is the rise or fall of new and old brands in the industry, which can destabilise stocks and the US30 index.
One of the drawbacks of the Dow Jones compared to other indices is that it focuses only on thirty companies, so there is not a wide range of companies that represent different industries. However, the companies inside the index are the broadest and most important, being susceptible to change the rates and numbers whenever they are affected by economic changes.
It would be best if you also kept in mind that the stocks of the companies listed in the Dow index are the most important ones in the industry. Therefore, the investment you will need to do for them are higher than putting your money on other stocks. But it is still one of the safest indices on the market, reducing the risks of the investments that traders wish to make.
The Dow Jones Industrial Average gives the traders a reliable source of the most prestigious companies in the US stock market. It is the oldest and most reliable tool for traders and investors from all over the world, not only in the US.
As every tool and chart used for trading, those who decide to use it must be ready to do research and investigate carefully about global events to benefit appropriately from it.
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