Description of Dow Jones Industrial Average (DJIA) Index

The Dow Jones Industrial Average (DJIA) Index, or DJIA or Dow for short, is one of the important measures of how well the U.S. stock market is doing.  It's like measuring the U.S. stock market's "fever". The DJIA is a number that is published daily by Dow Jones and Company, the company that publishes The Wall Street Journal. This one number is based on the stock price of the 30 largest companies traded on the New York Stock Exchange. Since the Dow Jones Industrial Average was first published in May 1896 by Charles H. Dow, General Electric is the only company in the original list remaining today. Over the course of its 100+ year history, many companies have been either added or removed from the index based on how well a specific company represents a part of U.S. industry and how frequently the company's stock is traded. In 1928, the index was first calculated using a divisor. If you add up the stock prices and divide by the current divisor, you have the Dow Jones Industrial Average. As of October 1997, the total market value of DJIA stocks represents approximately 25% of the market value of NYSE stocks and 20% of the market value of all U.S. stocks. The Dow Jones Industrial Average (DJIA) is used as a benchmark for measuring performance in the stock market. Our main objective should be to do better than the market as represented by DJIA.

You can trade the exact components of the DJIA simply by buying and selling DJIA options and futures contracts. What are DJIA options and futures contracts? The answers of these question could be found as consulting the information provided by the futures exchanges. Please, click on the following links to find full details about the subject - Chicago Board Options Exchange and Board of Trade of the City of Chicago (CBOT).

You can also trade shares in an entire portfolio of Dow Jones Industrial Average stocks as easily as you trade shares of a single stock. This is achieved as purchasing Dow Jones Diamonds (DIA), one index-security offered by The American Stock Exchange. A single Diamonds (DIA) share represents a share in the portfolio of the 30 stocks that comprise the Dow Jones Industrial Average, held in the Diamonds (DIA) Trust, and reflect a proper payout of dividends.