Trading the Dow

[gulam]

Hi Guys,

I wanted to know if anyone can tell me a stockbrokering firm that will allow me to trade the Dow on Margin. I am using Deal 4 Free, but their spread is 5 points, and also their figures don't match with the underlying cash market.

If anyone can suggest me a company that has lower spread and allow me to trade the Dow, I would much greatful.

Thank You

 

[schoe]

Hi Guys,

I wanted to know if anyone can tell me a stockbrokering firm that will allow me to trade the Dow on Margin. I am using Deal 4 Free, but their spread is 5 points, and also their figures don't match with the underlying cash market.

If anyone can suggest me a company that has lower spread and allow me to trade the Dow, I would much greatful.

Thank You

Your best bet is interactive brokers to trade the YM Mini Dow E-Mini its $5 per tick.

 

[gulam]

Your best bet is interactive brokers to trade the YM Mini Dow E-Mini its $5 per tick.

Hi Schoe,

Do you know what kind of spread they have on the Dow? And when you say the Mini Dow, does that represent the actual Dow Cash price?

What do you mean by $5 per tick?

Thank You

 

[Quercus]

Gulam
Take a look at this link to help in seeing what's what with regard to indices/futures etc!
indices guide
The e-mini dow, also known as YM is an electronic mini futures contract with a 1pt spread. Although this can move out a few points and you can also experience slippage! The minimum movement is known as tick and in this case is one point, and each point is worth $5.
The guide should help with a bit of broader information. It is not actually possible to trade most of the indices directly - you have to choose either a futures contract or a derived price such as offered by the SB companies!
Hope this helps
Cheers
Quercus

 

[ChartMan]

None of the SB firm's Dow cash will match the Dow. Their prices are based on the futures, so you would be better off trading the futures. With that, 'what you see is what you get' more or less. Butthey are more volatile and not for the faint hearted....

 

[Trader333]

gulam,

Here is a screenshot of the Dow Mini called YM from Interactive Brokers taken a few minutes ago. As you can see the spread is 1 point and I have highlighted it in a red box. With IB they are not a spreadbetting company so they do not set the spread. The spread is determined by those wishing to trade at the bid or ask price. All IB do is to match the orders between traders.

Also you cannot trade the Dow Cash using a broker, what you are doing is trading the Dow future. The $5 is the value of 1 point move and you have to trade in multiples of this. For example 1 contract is $5 per point, 2 contracts = 2 x 5 = $10 per point etc. It is not like a spreadbet company where you can determine the size of the point that you trade.

I hope helps


Paul

 

[gulam]

Gentlemen, Thanks for you replies.

If I trade the Dow futures YM, can I buy and sell any time during the day like I do with deal4free or is there a set date that I have to sell at?

It would be really nice if anyone can tell me where I can get a 30 day historical prices of the Dow futures.

Thank You

 

[Racer]

Much easier if you just look at the OHLC of the Dow and add a bit at either end..... 😉

 

[Quercus]

Gulam,
During the day, you can go long or short as many times as you like or your account will allow. 😆
There aren't any restrictions like the daytrading stock restriction for "Patterned Day Traders", so the limit on account size is down to the broker you use. You can also hold overnight 😱 but the margin requirement usually doubles for this, and if you don't have the cash the broker will close your position! Hence the sometimes frenzy activity around 15:45 EST - people closing positions before margin requirements go up.
The contract is a three month rolling one, so you have to watch the last few days before "rollover". This is usually mentioned on here so don't worry too much about that for now. At the moment we are trading the Sept contract.
Hope this helps.
Cheers
Quercus

 

[gulam]

Hi Quercus,

When you say your trading the september contract, does that mean that the futures Dow, doesn't correlate with the Dow cash market what we see on Bloomber, and other financial websites? I am used to trading the US30 offered by Deal 4 free which during trading hours follows the dow cash market, but only problem is the spread.

I think I need to learn more about the Dow futures, can you suggest where I can learn more about it?


Oh Also your name Quercus, is that Greek? It soulnds like the one I saw in the Film Troy.
Don't tell me that you look similar to Brad pitt! 🙂

Thanks

 

[Quercus]

Gulam,
I suggest you re-read the indices guide which will help with some of the basics.
Cheers
Quercus

 

[ChartMan]

Currently, the dow futures is about 15 points lower than the dow cash and by and large the difference is fairly constant....

 

[peterpr]

Hi Quercus,

When you say your trading the september contract, does that mean that the futures Dow, doesn't correlate with the Dow cash market what we see on Bloomber, and other financial websites?
Thanks

Futures contracts are pretty well always v close to the actual index and usually signal index moves by a few ticks/seconds. The 'fair-value' price of a future is the index price + or - the cost of holding the underlying securities (ie the interest payable on the cash value), - or + the amount of any dividends payable until maturity (depending whether its a long or a short). If the futures contract gets out of line by more than the 'fair value' price difference, that represents an arbitrage opportunity for anyone to place opposite orders in both the future and the underlying securities simultaneously - in other words a no-brainer guaranteed profit. Such opportunities are watched for constantly by thousands of pros with the cash and systems to make it happen. Their activities pretty well guarantee that the future is, to all intents and purposes, the index, plus or minus the 'fair-value' difference which decreases as the maturity date of the future approaches.

What you are looking at with D4F and any other index SB or CFD provider is THEIR OWN QUOTE, based primarily on the future.

 

[Quercus]

Nice post Peterpr - very clear.
I think the point to note here Gulam is that anything quoted other than the actual future is a "contrived" bid/offer spread calculated by the offeror's computer programme, which takes into account the cash and futures pricing and then adds in it's own "bias" depending on which way the programme is reading the direction of price action to come!
Again, I hope this helps clear the mud. 😱
Q

 

[ChartMan]

The thing to watch with the futures are those wonderful freak out spikes!!! You hardly ever see them on the dow cash .....

 

[Second income trader]

Query

Both on this thread and others I've seen mention of the fact that a Spread Bet quote (for a future date) is different from the underlying. But surely this is not a problem as the profit/loss is relative and as long as the SB quote moves by the same amounts as the underlying there is no issue?

 

[Second income trader]

I'm surprised the threads on trading the DOW aren't more popular than they appear to be, or at least the ones under Indices do not appear to be heavily subscribed to. Is there a thread elsewhere or is the Dow not popular for trading (I'm more interested in short term/swing trading rather than day trading). Thanks all.

 

[ChartMan]

The Dow Intraday thread gets 2000 + reads a week...... Isn't that well read/supported.? Plenty of dow traders in the chat room too.