How to Trade Dow Jones Index Futures

Its sources – reports from governments, private industries, and trade and industrial associations – are authoritative, and its historical scope for commodities information is second to none. Dow Futures are financial futures which allow an investor to hedge with or speculate on the future value of various components of the Dow Jones Industrial Average market index. The futures instruments are derived from the Dow Jones Industrial Average as E-mini Dow Futures. Choose between many native strategies, such as Trailing Stops, OCO, Brackets and many more, or create your own with custom formulas. Also, please be advised that all orders are handled at our server levels instead of your computer.

Eurodollar Packs allow you to simultaneously buy or sell an equally weighted, consecutive series of four Eurodollar futures contracts. There are always 37 Packs listed for trading at a given time, designated by a color code that corresponds to their position on the yield curve. Use micro futures and options to trade a slice of the liquid futures and options markets with the same efficiency as standard contracts with less upfront commitment. A futures contract is a legally binding agreement between two parties to exchange money or assets at a future date based on the price of an underlying index.

Free Futures and Options Brochures from CME Group

For additional information about rates on margin loans, please see Margin Loan Rates. Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading security futures, read the Security Futures Risk Disclosure Statement. Structured products and fixed income products such as bonds are complex products that are more risky and are not suitable for all investors.

The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you. SRB Capital Management (d.b.a. ITG Futures) is not affiliated with nor does it endorse any trading system, methodologies, newsletter, or other https://forex-world.net/strategies/grid-trading-strategy-explained-and-simplified/ similar services. Mini futures and options contracts allow investors to fine-tune their exposure and position sizes because these mini-sized products cost less than the standard futures contracts. Each one-point move in the E-mini Dow futures contract equates to $5.

What Is the Difference Between the Dow Jones and Dow Jones Futures?

Whereas the counterparty is betting that the underlying index value will increase. When the final settlement date arrives, whoever made the wrong bet is obligated to pay the other party based on the Dow’s value. To arrive at the value of the contract you would take the tick value (either $0.50 or $5) and multiply it by the value of the DJIA Index. When you open a position, the broker will set aside the required initial margin amount in your account.

The futures contract price is closely connected with the index price during an American trading session. However, futures contracts, unlike indices, are traded practically around the clock, that is why they may significantly move away from the previous index value during an Asian or European session. At 1/10 the size of the benchmark WTI futures contract, Micro WTI Crude Oil futures offer active traders a more precise tool for managing crude oil exposure without sacrificing transparency. The account detail page offers a comprehensive view of your entire account; including cash balances, open trade equity, option values and net liquidating value. Additionally available on this page are your margin balances; including initial and maintenance requirements, total equity and your trading power. Trade the Micro E-mini Dow Jones for only 59¢ commission plus exchange and NFA fees.

The E-mini Dow Futures Contract (Product Code: YM)

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Investors who do not participate in the futures markets can use the Dow futures as a forecasting tool. The E-mini Dow $5 futures contract allows you to gain exposure to all 30 Dow-listed companies by trading a single contract. It is important to understand the benefits and risks involved with Mini Dow futures before placing a futures trade.

Platform

Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI. Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors.

• It means that a trader has less risks and more opportunities to make money.
• Kiril is a CFA charterholder with over 10 years of investing experience.
• The Micro E-mini is one-tenth the size of the E-mini, and represents 50 cents per point with a margin requirement of about $800, as of July 2023.
• There are now two Dow futures contract sizes available, both of which trade on the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME).
• The two parties in a futures contract are basically betting on where the DJIA will trade on a specified day in the future.

The smaller size enables you to fine-tune your index exposure for greater control over the risk/reward ratio of your investment. If a futures position is held overnight, customers must margin their futures account with 100% of exchange minimum margin requirements. Futures account intraday margining for all products except Bitcoin is 50% of initial margin https://currency-trading.org/education/what-determines-the-strength-of-a-currency/ requirements. This is where you can manage your trading contracts, including futures, options and spreads. You may list as many markets as you wish and choose between dozens of different columns of information from the exchange. From there you may trade directly or from the DoM, view charts, see contract information and other functions as well.

One of the most significant benefits of that is the incredible difference in speed and reliability of ALL orders being held at either the exchange or at co-located servers. Having strategies run from a user’s computer is usually not an option for experienced traders. Keep track of your filled orders, as well as your P/L on the day. If you are trading multiple accounts you can view fills for each separate account within the same window. Select futures, options or spreads and choose between dozens of indicators and chart types or use your own formulas to create your own.

• This is known as the “final settlement date.” As such, if you are looking to speculate on the DJIA, then trading Dow Jones futures is a good place to start.
• In such a case, a trader receives more information from the market and can make efficient decisions quicker.
• The high degree of leverage that is often obtainable in commodity interest trading can work against you as well as for you.
• Still, Dow index futures are a popular tool for getting broad-based exposure to U.S. equity or hedging such positions.

Mini Dow futures may also be spread against other popular stock index futures. The value of the Dow futures is often quoted before the stock market opens as an indicator of how the market will react during the trading https://trading-market.org/what-is-a-stop-limit-order/ day. The underlying value of Dow futures is based on the Dow Jones Industrial Average, an index of 30 major U.S. companies. Trading Dow futures is one way traders attempt to profit from the value changes of the DJIA.

On May 6, 2019, the CME launched the Micro E-mini Dow Jones Futures (MYM). It comes with a contract size of 50 cents ($0.50) multiplied by the closing value of the DJIA. So if the Dow Jones closes at 25,000, the contract value will be $12,500 (25,000 x 0.5). Beware, though, that leverage cuts both ways, magnifying losses as well as gains. A drop of 1,000 points on the Dow would nearly wipe out your $5,500. The company is comprised of four Designated Contract Markets (DCMs).