Options Trading System

About DJI Index

The Dow Jones Industrial Average Index (DJIA) was introduced to the world on May 26, 1896 when it was first published in Customer's Afternoon Letter. The DJIA commonly called DOW or DOW 30 or DJI and was created by the Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. The Dow Jones Industrial Average Index is one of the oldest U.S. market indices, after the Dow Jones Transportation Average which was created by Charles Dow in nineteen century as well.

Initially only 12 stocks were included in the DOW index. This number was increased to 20 stocks in 1916 and in 1928 to 30 stocks. Since 1928 the number of stocks included into the Dow Jones index is unchanged.

In the beginning of the twenty century the majority of the companies from the Dow were from the heavy industry sector of the United States economy. Now, only few of Dow stocks are from this sector.

The DJIA index is published at the NYSE (New York Stock Exchange) under the ticker ^DJI (NYSE: ^DJI) and it's a basket of 30 largest publicly traded U.S. companies. Until the end of the twenty century all companies from the Dow 30 basket were traded on the NYSE. In 1999 the Microsoft (MSFT traded on the NASDAQ Exchange) was added to DJI index.
The Dow Jones Industrials index is maintained and reviewed by The Wall Street Journal editors. The DJI index is a price-weighted index.

The number of publicly traded companies has increased substantially since the beginning of the 20th century, yet the DJI still consists of 30 stocks. Even these stocks are the biggest U.S public companies from different industries many financial analysts do not consider the DJI index as a very accurate representation of the overall stock market performance as it was in last century, yet historically it performed very much in line with the broader U.S. market.

Even the S&P 500 index is considered as more accurate indicator of the U.S. stock market sentiment, still, the DOW-30 index is one of the most watched and analyzed indexes all over the globe. Majority of the technical analysts (who analyses global and U.S. economy) pay close attention to the Dow Jones Industrials index.

Beside the financial analysts who analyses U.S. economy and U.S. equities market, there are many financial advisors, institutional and retail traders who rely on the DJI technical analysis for the trading purposes connected directly with the Dow index investing.

There are several ways of investing into the Dow Jones Industrial Index besides buying the stocks from the DJIA basket. One of the most popular ways of DOW investing is the trading of the exchange traded funds (ETF) that track the DJIA performance. The DIA is the Dow index tracking stock (ETF) and is one of the most popular ETFs after QQQ and SPY.

There are many other funds that track the Dow 30 performance and are available to the public. The Rydex Dow funds have become very popular lately by allowing investing pension funds directly into index, to use inverse funds to trade bear market and to use dynamic (double) funds to margin invested amount.

With introduction of the indexes into the futures market the DIA options DJI e-mini futures has become very popular among speculators as well.