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How to Invest in Dow Jones UK – Beginner’s Guide

The Dow Jones Industrial Average is the world’s oldest stock market index – and it’s still going strong. If you invest in Dow Jones industrial average, you will have exposure to 30 of the world’s most profitable and well-established blue-chip stocks. In this guide, we will explain how to invest in the Dow Jones UK, the different types of Dow Jones products, and the best investment strategies.

How to Invest in Dow Jones Quick Tutorial

Before we take an in-depth look at how to invest in Dow Jones UK By following these four simple steps you can make your first investment in the Dow Jones index in less than 10 minutes.

  1. Choose a broker: You will need to find a broker with a few different Dow Jones instruments. We recommend eToro due to their commission-free trading and wide selection of investment products.
  2. Sign-up: Opening an account with eToro takes just a few minutes. Simply follow the prompts and enter the required information.
  3. Deposit funds: Before you can make your first investment, you will need to fund your account. eToro provides several methods to do this.
  4. Invest in Dow Jones Industrial Average: With eToro you can invest in the Dow Jones index using ETFs or CFDs on ETFs and futures. Simply search for Dow Jones or DJ30 to find these instruments.

Once you complete these steps you will be invested in the 30 companies that make up the index. These stocks include blue chips like Apple, Boeing, Coca-Cola, and JP Morgan. Next, we will go into a little more detail on how to Invest in Dow Jones UK.

Step 1: Choose a Dow Jones Investment Platform

To invest in stock market indexes like the Dow Jones index, it’s important to choose the right trading platform or investment app. A good platform has a wide range of instruments, charges competitive (or preferably zero) commission, and is safe and secure to use.

The following are two of our favourite platforms if you are interested in how to invest in Dow Jones UK:

1. eToro – Best Overall Dow Jones Investment Platform

eToroeToro Dow Jones Investing platform has quickly grown to become one of the top stock brokers in the world. This is no surprise due to its zero-commission policy, a wide range of investment products, and its copy trading program.

You can trade stocks, the best ETFs, indexes, commodities, currencies on the platform. As far as index investment goes, you will have access to ETFs and CFDs on the index, as well as the individual shares that make up the index. When it comes to stocks, you have the option to buy the underlying shares of a company or contracts for difference (CFDs) on those shares. If you trade the CFDs you will be able to use leverage and short sell too.

This platform doesn’t charge commission but does charge a spread. The spread is the difference between the buy and sell price and is charged by most brokers.

eToro is well known for its social trading and copy trading features. This allows you to learn from experienced traders, share ideas and copy the trades of experienced investors. When you choose investors to copy, you can review their performance and investing style, as well as their portfolio.

eToro is regulated by the FCA, CySEC, and ASIC which ensures that client funds are separated from the company’s own funds. Client funds are also protected by FSCS insurance.

eToro Dow Jones chart

Pros

  • Large number of asset classes and instruments.
  • Trade futures, ETFs and CFDs on the Dow Jones index.
  • No commissions.
  • Social and copy trading features.
  • eToro is regulated by regulatory the FCA, the main UK regulatory body.
  • The website is easy to navigate and use.

Cons:

  • Limited technical analysis capabilities

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

2. Libertex – Best CFD Platform to Trade the Dow Jones index

libertex logoLibertex is another popular broker that offers CFDs on all the widely traded asset classes and instruments. The platform has a slightly smaller range of stocks and ETFs. Nevertheless, you can trade CFDs on Dow Jones futures and ETFs, and on some of the stocks in the index. You can also trade CFDs on the Dow Jones index itself during the official trading session.

When you trade on this CFD trading platform you will be able to use leverage of up to 20 to1 on indexes, and 5 to 1 on stocks and ETFs. You will also be able to short sell all the same instruments, including the shares in the index. Libertex charges commission which varies according to the instrument but charges a tight spread.

Libertex has proprietary trading platforms and can also be integrated with the popular MetaTrader4 trading platform. This has made Libertex a popular choice with forex traders. You can also trade a zero-risk demo account on the Libertex platform.

Libertex Index CFDs

Pros

  • Good selection of indexes, commodities and currencies.
  • Up to 20 to 1 leverage on indexes.
  • Ability to short sell any asset using CFDs.
  • Competitive spreads and no commission.
  • Compatible with MT4.
  • Regulated by CySec.
  • Educational section with tutorials.

Cons

  • Smaller list of stocks and ETFs than eToro.

74% of retail investors lose money trading CFDs at this site.

Step 2: Choose How You Want to Invest in the Dow Jones

The Dow Jones index includes 30 US companies that trade on the New York Stock Exchange, which are reviewed from time to time. Dow Jones indices are unlike the Nasdaq and S&P 500 where the most valuable companies that meet certain criteria are automatically included. Instead, individual stocks are chosen by a committee with stability being an important factor. The companies in the index tend to be very well established and profitable, rather than rapidly growing. Most Dow stocks also have a respectable dividend yield.

The index is also unique in that it is priced weighted rather than market-cap-weighted. This means companies with high nominal prices have more weight, rather than the most valuable companies. This is worth knowing if you are learning how to Invest in Dow Jones UK.

The full name of the index is the Dow Jones Industrial Average, but it is also known as the Dow Jones, the Dow, DJ30, and US30.

Dow Jones Index Trading

If you are wondering how to trade the Dow Jones index you have several options. Short-term traders generally opt to trade futures or CFDs on the futures. Some CFD providers also offer CFDs on the index itself. The price movements of these CFDs will be very similar to those of the futures contracts, but the trading session is a little shorter.

Because the index only includes 30 companies it is sometimes more volatile than other US indexes. It is therefore favored by day traders and swing traders.

Day traders focus on price movements that last from a few minutes to a few hours. Economic data and company news often play a role in these short-term price movements.

Swing traders look for price moves that last from days to weeks. Typically these price swings will occur within the primary trend channel as the index oscillates between overbought and oversold conditions.

Dow Jones Tracker Funds

Tracker funds are the more traditional way to invest in Dow Jones Industrial Average. Tracker funds, which are also known as index funds, are mutual funds that hold the same stocks as the index in the same proportion as the index. This results in these funds tracking the performance of the index.

Tracker funds have to a large extent been replaced by exchange-traded funds or ETFs. ETFs have lower fees and can be traded on platforms like eToro and Libertex in real-time.

Dow Jones ETFs & Stocks

If you want to know how to invest in the Dow Jones index the easy way, the answer is ETFs. Exchange-traded funds are a cheap and efficient way to invest in baskets of shares. They are traded just like shares and have very low management fees. They also track the price performance of an index very closely. ETFs are typically

There are several ETFs that track the Dow Jones index. One of the most popular, which is also available on eToro, is the SPDR Dow 30 ETF (DIA). This fund has an expense ratio (basically the management fee) of just 0.16% a year.

If you trade CFDs on an ETF you can use leverage, the amount of which varies from one platform to another. Another way to gain leveraged exposure to the Dow is by buying a leveraged ETF. The ProShares UltraPro Dow30 ETF (UDOW) is an ETF that has built-in leverage of 3 to 1. This is a useful instrument for short-term trading on the long side. If you are using CFDs you can also sell this ETF short.

If you are wondering how to invest in the Dow Jones index in other ways, you can consider the individual stocks in the index. You can either buy individual shares to increase your exposure to certain companies or short sell stocks you expect to underperform the index.

Apple (AAPL)

As the most valuable company in the world, Apple needs no introduction. Apple has been one of the best investments in the world over the last few decades. The company is now diversifying into services to ensure that it can maintain its growth trajectory.

Interestingly, while Apple is the most valuable company in the index it ranks at 22nd out of 30 in terms of weight, at just 2.4%. This is due to the index being weighted by price rather than value. This is a good reason to invest directly in Apple shares, rather than relying on the index exposure.

Microsoft (MSFT)

Microsoft is another of the most successful companies in the Dow Jones index. Under new leadership, Microsoft has managed to diversify into cloud computing, which is currently the biggest technology trend. Microsoft is also in talks to buy the messaging platform, Discord. This will give it much-needed exposure to social media the company currently lacks.

The stock’s higher price means shares of Microsoft account for 4.6% of the index. This would be a reasonable position in most investor’s portfolios, so the index is a good way to gain exposure to Microsoft.shares

Boeing (BA)

Boeing was badly affected by the Covid-19 pandemic in 2020. However, travel is now opening up and airlines are reinstating their orders for new aircraft.

Over the years Boeing’s shares have proven to be one of the best ways to bet on the world economy. Boeing accounts for 5% of the Dow Jones index – its fourth-largest weighting. This means you will have a meaningful position in Boeing if you invest in the Dow Jones Industrial Average.

Boeing stock chart

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

Some of the other major companies in the index include:

Step 3: Research Dow Jones Investment

Researching the Dow Jones index is easier than most indexes because there are only 30 shares. This makes it easier to keep on top of all the companies.

Is Dow Jones a Good Investment?

The Dow Jones is a blue-chip index which means it only includes well-established companies with fairly predictable earnings. That puts the index somewhere between an index with higher risk like the Nasdaq 100, and low-risk investments like bonds. The index is suitable for investors who want to grow their capital without being exposed to more speculative companies.

How to Make Money from Investing in Dow Jones

There are lots of different ways to make money investing in the Dow Jones Index. The easiest approach is long-term investing using ETFs. The Dow has generated steady returns over the long term, with periodic corrections and bear markets.

If you have the time, you can also invest more actively, and create strategies that combine the index with positions in shares within the index, or other indexes.

Dow Jones Investment Strategies

Lots of investors have figured out how to trade the Dow Jones index using countless different strategies. It’s really up to you to decide how to invest in the Dow Jones index based on how much time and experience you have. Here are a few strategies to consider:

Dollar-cost averaging is an easy, low-stress way to invest over time. It’s the ideal approach for ETF investing. You simply invest a fixed amount every month or quarter in the same ETF. This means your cost price will average out over time and you don’t have to worry about the timing of individual investments.

Stock picking means choosing individual stocks rather than the index itself. You can create a watchlist of the 30 stocks in the index and then buy and sell individual stocks as market conditions change.

Long/short strategies allow you to profit from the outperformance of one instrument over another while removing some of the market risks. This approach is extremely easy thanks to CFDs. You can open long positions in some Dow stocks while simultaneously opening short positions on other stocks. You can also trade one index against another. For example, if you expect US stocks to outperform UK stocks you can open a long position on the Dow Jones index and a short position on the FTSE100 index.

Hedging is another way to remove some of the market risks. You can short sell an index to hedge a portfolio of individual shares. Or you could invest in the Dow Jones index, and short sell individual shares to hedge the investment.

Step 4: How to Invest in Dow Jones UK on eToro

Now that you know how to invest in the Dow Jones index, you can make your first investment. This slightly more detailed step-by-step guide will help you through the process of opening an account with eToro, our preferred platform.

Step 1: Open an Account

To open an account, navigate to the eToro website and click the ‘Join Now’ button. Enter your email address and choose a username and password.

Sign up to trade Dow stocks

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

Step 2: Verify Your Account

The next step requires you to verify your account and your identity. You will first need to provide some more information, including your mobile number. You will then receive an email and a text message to verify your email address and phone number.

At this point, you will be able to deposit up to £1,600 and verify your identity later. To deposit more than £1,600 you will need to upload an identity document and a utility bill or bank statement.

Verify eToro account

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

Step 3: Deposit Funds

The last step before you actually make an investment is to fund your trading account. This is very easy on eToro and there are several ways to do so, including:

  • Credit Card
  • Bank Transfer
  • Klarna/Sofort
  • E-Wallets: PayPal, Skrill, Neteller

Click on the ‘Deposit Funds’ button on the left of the screen, enter an amount and choose your method of payment. Then simply follow the prompts to complete the deposit.

Step 4: Find Dow Jones Stocks, ETFs, and Futures to Invest in

Now that your account is funded, you can place your first order. But before you do that you’ll need to find the instruments you want to invest in. The easiest way to do that is to use the search bar at the top. For Dow index instruments you can search for the following tickers:

  • DJ30 – to invest in CFDs on the index itself.
  • DIA – to invest in the SPDR Dow 30 ETF.
  • UDOW – to invest in the 3X leveraged ETF.

Choose your US stocks

Step 5: Enter Your Order

You are now ready to enter your order. Navigate to the instrument you want to trade and click on the ‘Trade’ button. You can then select ‘Trade’ to place an order at the current market price, or ‘Order’ to enter an order to trade at a limit price. Don’t forget to specify whether you are buying or selling the index.

invest in Dow Jones

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

You can either select the number of shares you wish to purchase, or the value of the trade. Then you can set a limit price or opt to trade at the market price. You can also select the amount of leverage you want to use. If you select 1X leverage, you will be buying the underlying stock. If you select 2X or 5X leverage, you will be buying a CFD on the share.

Before you commit your order, you can set a stop loss level and a take profit level. These can either be based on price levels or on the maximum amount you are prepared to lose or the profit you be happy to exit with. Finally, click on ‘Set Order’ or ‘Open Trade’ to execute the order.

How to Invest in Dow Jones UK – Conclusion

Despite being the oldest stock market index in the world, the Dow Jones Industrial Average is still a widely followed benchmark index. The companies in the index are amongst the biggest in the world and are all well established.

You should now have a good idea of how to invest in Dow Jones UK and all the different types of instruments you can use to invest in the index. It’s a very liquid index which makes it suitable for active trading – yet it is also a good long-term investment vehicle.

We recommend eToro for investing in the index due to the large number of investment products, including CFDs, ETFs, and stocks related to the index. The platform doesn’t charge commission and you can get started with as little as $50.

eToro – Best Broker to Invest in Dow Jones UK – 0% Commission

eToro Dow Jones Investing platform

67% of retail investor accounts lose money when trading CFDs with this provider. Your capital is at risk.

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About Richard Bowman PRO INVESTOR

Richard Bowman is a writer, analyst, and investor based in Cape Town, South Africa. He has over 18 years’ experience in asset management, stockbroking, financial media, and systematic trading. Richard combines fundamental, quantitative, and technical analysis with a dash of common sense.

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