The Dow Jones Industrial Average (DJIA), or simply the Dow Jones 30 index, is a stock market index that tracks the performance of the largest 30 publicly traded companies on the New York Stock Exchange (NYSE) and Nasdaq. This index includes what is commonly referred to as “Blue Chip” stocks, representing companies with the highest value and quality.

The Dow Jones index was created by Charles Dow, one of the founders of The Wall Street Journal, and was first published on May 26, 1896. Initially, it consisted of 12 American companies, but over time, this number was increased to 30. The index has become a significant indicator reflecting the overall direction of the U.S. economy.

The calculation of the Dow Jones index

The calculation of the Dow Jones index is based on the prices of its components. The prices of each component are summed, and this total is divided by a number called the Dow Divisor to obtain the index value. The Dow Divisor is constantly updated to ensure the index remains unaffected by external factors.

Among the disadvantages of the index is the fact that it is weighted based on stock prices, which can lead to differences compared to market capitalization-weighted indices like the S&P 500. This means that the percentage movement in the stock price of a high-priced component can have a more significant impact on the index’s value, potentially distorting the analysis of market trends.

The Dow Jones index itself is not a direct investment instrument, but there are various derivative instruments available related to this index, including futures contracts, options, exchange-traded funds (ETFs), and contracts for difference (CFDs). These instruments allow investors to trade based on the performance of the Dow Jones index.

Through brokerage firms like Tradeopol, investors can engage in trading Dow Jones-related CFDs or options. These derivative products provide opportunities to capitalize on movements in the Dow Jones index.

The Dow Jones 30 index includes 30 large U.S. companies, and these companies often come from diverse sectors. The selection of companies for inclusion in the index is not based on specific rules but is determined subjectively by a committee.

Tradeopol offers a platform for investors to trade Dow Jones 30 index-related instruments, providing opportunities to participate in the performance of these 30 prominent U.S. companies.