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Saturday
Jun082013

Dow Jones

(QQQ)(DIA)(SPY)(GLD)(SLV)

Emini Podcast

 

Dow Jones -

A Profitable And Liquid Market For Emini Day Traders

Dow Jones Emini Futures are the most misunderstood and least discussed market amongst Emini Futures Traders. I often refer to it as the index the world forgot. The S&P 500 E-mini, as difficult as it is to trade, seems to grab all the attention. A quick Google Search reveals that most Emini Traders and Trainers rarely mention the Dow Jones Emini Futures. It's not that the market has a bad rap, it just seems to have no rap at all. I'm not much of rapper, but hear me out...

History of the Dow Jones Index

The Dow Jones Industrial Average was created by Charles Dow who at the time was the editor of the Wall Street Journal. The index was created in 1896 and is now largely owned by the CME Group. Edward Jones was a number cruncher and business associate of Charles Dow who together with Charles, owned the Dow Jones Company. The index tracks 30 large cap US Companies and is considered a bellwether benchmark for the US economy.

The industrial part of the name is purely historical at this point. Very few of the Dow components deal in what we would typically consider heavy industry these days. Companies that compose the DJIA trade primarily on the NYSE and the NASDAQ. Futures and Options for the Dow Index are traded via the Chicago Mercantile Exchange (CME).

Dow Jones Emini Futures - The Futures Market That Time Forgot

Dow Emini Futures trade under the symbol YM. Each contract controls 5 times the equity of its face value. In other words, if the Dow E-mini Futures are currently trading at $15,200.00, you are controlling the equivalent of $76,000 equity in the Dow 30 large cap stocks. (Contract Specifications)

Leverage - The leverage available to an Emini Day Trader is tremendous. Many brokerage firms allow you to trade the Dow Jones Emini Futures Contract (YM) intraday with only $500 in margin. Using again the example above, you are controlling $76,000 of equity with $500. Leverage of course is a double edged sword and should only be used when properly understood and managed.

Dow Jones Emini Futures vs. Dow 30 Stocks - Most brokers will allow you 2 to 1 margin on individual components of the DJIA. At $500 per contract intraday, the price quoted above equates to 152 to 1. The opportunity available to a well educated emini daytrader is phenomenal.

Per Point Value - The Dow Jones Emini Contract (YM) trades in 1 point increments. Unlike the S&P 500 Emini, points are not broken down by ticks. In the Dow Futures, a tick is a point and is worth $5. While this is the saving grace of many new traders, it may also be the reason more experienced traders opt for the S&P as it pays $50 per point. Upon closer inspection, this reasoning does not hold up.

Reasons For Trading Dow Emini Futures

  • As mentioned, at $5 per point this can be both a great market for beginners and professional emini traders alike.
  • Movement is extremely smooth when compared to the channeling action exhibited by the S&P.
  • Its nature to trend or hold a direction makes it a futures contract that often will support bell to bell trading intraday.
  • Daily average volume is between 150-200k plus contracts per day including the Globex session.
  • The spread is rarely more than 1 tick away on Globex and never more than a tick away during the day session.

 

Dow Jones Emini Futures Charts (YM)

 

Following are examples of both short term and longer term day trading and swing trading setups in the Dow Emini Futures. Keep in mind each point is worth $5 US, per contract traded.

 

Dow Jones Emini  - 200 Point Swing Trade

 

Dow Jones 30 Point Day TradeDow Jones Emini  - 30 Point Day Trade

 

Dow Jones 45 Point Zone To Zone MoveDow Jones Emini  - 45 Point Zone To Zone Trade

 

Dow Jones Head and Shoulders PatternDow Jones Emini  - Head And Shoulders Pattern

 

Dow Jones Big Picture Outlook from 1997 to 2013Dow Jones Emini  - Big Picture 1997 / 2013

 

As you can see in the charts above, from day trades -  to swing trades - to the big picture outlook, Dow Jones Emini Futures are flush with opportunity for even the most discerning Emini Trader.

(All Charts courtesy of dtPro)

 

 

Trading's Not Easy - But It Can Be Simple!


 

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Dow Jones Futures Emini Podcast 05/29/13

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Reader Comments (4)

So 1 point is $5? 10 points is $50? How many contracts can you trade at a time without slippage?

Jun 9, 2013 at 18:03 | Unregistered CommenterWendrell

Do you trade Dow Jones Emini in the live trading room? I took a free trial but I didn't see you trade it. Are you trading it now? If so, can I take the free trial again?

Thank you in advance.

Jun 9, 2013 at 18:05 | Unregistered CommenterSteve

Wendrell,
You are correct on the dollar amounts. During the day session you can comfortably trade 10-20 contracts and not worry about slippage. If you were to experience slippage it would not be more than 1 or 2 points in most cases.

Blessings
DeWayne

Jun 10, 2013 at 23:27 | Registered CommenterEditor

Steve,
Michael rarely trades the Dow in the Live Trading Room as he stays very busy with the other markets. However, if you would like to learn how to trade the Dow Jones Emini Futures (YM) let me know. If you would like to take the Free Trial again send me an email. If you do take the trial again we will trade the Dow while you are in the room. We can also arrange some private coaching if you have an interest.

Blessings
DeWayne

Jun 10, 2013 at 23:29 | Registered CommenterEditor

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