MAKE MONEY TRADING THE DOW JONES, EMINI S&P 500, and the FTSE 100 The US Stock Indices Are The Oldest Surviving In The World The venerable Dow Jones Transportation Index is the oldest surviving share index, having started life in 1884.
Then, in 1896, Dow saw a need for an index of industrial shares and compiled an index of 12 companies.
Over the years, the index was expanded to 30 of the biggest capitalisation shares in the USA.
Even today, the Dow is an accurate indicator of market movements, despite the small number of constituents.
In the UK, the FTSE 100 is the main stock index.
What Is Actually Traded? Today, you can trade index futures, options, ETFs, and in the UK especially, spread betting on the underlying future is very popular.
The other indices have a similar makeup.
The S&P 500 Index is a basket of 500 large cap US shares, the NASDAQ is a basket of almost 4,000 US corporations, weighted towards tech shares.
Also, you can trade ETFs on the index, 2x index, even 3x index - and can trade inverse ETFs (buying when you expect the underlying index to fall).
It is quite a zoo out there.
But for most traders, trading the Dow Jones (and the emini Dow), the S&P 500 (and the emini), and the FTSE offers enough scope for making profits.
As ever, don't get too complicated.
Trading The Dow, S&P 500, FTSE Futures A future on an index is a contract to either buy or sell the index at or before a specified date in the future (hence the name!).
To trade futures, you need to open an account with a futures broker.
Generally, a minimum account size of at least $20,000 is advised.
Here is an interesting chart of the Dow Jones since 1900.
For the 20th century, stocks have given returns on average just over 5% pa.
If we see the same returns for the 21st century, the Dow will reach 2,000,000 by 2099! I would like to be around to see if this happens! Financial Spread Betting Systems Spread betting has become a major vehicle for UK residents in particular to bet against the market - the range of products available is truly huge.
It is attracting very many smaller investors/traders because minimum account size is very low.
To be trade successfully, you need to be prepared for losses (all traders have them).
The key is to try to keep these under control.
Here are some tips: Do not over-trade.
Taking on too many open naked positions can work out, but a series of losses can wipe you out.
Use reasonable stop-loss orders for protection against a major loss.
I use a simple trading system, which includes Elliott Waves, Fibonacci retracements and projections.
Having just a basic knowledge of Elliot Waves is usually enough to catch a few big trending markets a year.
Impulse waves (making a major trend) go in 5 waves, while corrective waves (against the main trend) go in 3 waves.
A glance at a chart (if any timeframe) can often reveal the wave structure instantly.