Dow Futures After Hours and What Details to Take into Account
Among the many advantages of trading Dow futures after hours over other types of assets, the ability to trade 24 hours a day outside of traditional market hours is extremely valuable.
The futures market operates almost 24 hours a day, 6 days a week, from 6a.m. on Sundays to 5:00pm. on Fridays.
Compare that to the relatively short trading sessions of only stock and ETF traders. 5 hours/5 days a week is a long time for futures traders to trade.
This offers Dow futures after hours traders greater trading flexibility and the freedom to manage positions virtually any time of day.
For stock index traders, E-mini and Micro E-mini futures allow traders to participate in the same markets as Wall Street during the stock market’s relatively short trading hours.
Index traders can more effectively take advantage of events such as missed profits that occur outside of normal trading hours.
Futures Trading Time
The trading time of futures contracts is determined by the respective exchanges. Each category, such as energy or stock indices, has its own opening and closing hours.
The US futures market attracts participants from all over the world. International traders regularly participate in the transparent and regulated futures market, which has many trading opportunities every day.
This includes categories like agriculture, crude oil, energy, stock indices, interest rates, metals, real estate, and weather. The US stock market is a recognized economic barometer of the global economy, and has an international following.
Traders around the world speculate daily on the Dow Jones, S&P 500, Nasdaq, and Russell futures.
What Is Dow Jones?
The Dow Jones Industrial Average (DJIA) was created by Charles Dow in the late 19th century and is the most traded American stock market along with the Nasdaq, S&P 500, and Russell 2000 (a small-cap index).
Given the longevity of the DJIA, it can be argued that it reflects not only the prices of the country’s largest industrial companies, but also how the US economy has developed over the past century.
It originally consisted of 12 stocks, but companies gradually added up to 30 in the late 1920s, forming the Dow 30 we know today. Of the dozens of companies that went public when the index was created, none survived General Electric’s exit in the summer of 2018.
The Dow Jones Industrial Average, commonly known as the Dow Jones 30 or DJI30, is a benchmark index of the American financial markets.
Like the Nikkei 225, the DJI30 is price-weighted according to its components, which means that companies with the highest share prices have the highest weighting in the index, regardless of their actual value in the economy.
Be that as it may, the truth is that Dow Jones is a clear reference for the health of the US economy:
- If the US economy grows The DJI30 rises.
- If, on the other hand, the US experiences a crisis, the Dow Jones Index falls.
Among the companies that make up the DJI30 are Coca-Cola, Walt Disney, Goldman Sachs, and McDonald’s.
Why Do Exchanges Have Different Working Hours?
Exchange trading hours vary from region to region to facilitate local and international market participants to maximize the concentration of buyers and sellers during these hours.
By setting trading hours, the exchange ensures that liquidity is concentrated between the open and close, rather than sporadic trades throughout the day.
If a trade occurs outside of stock market hours, it is typically added to the queue of trades that will be executed after the market opens.
However, if investors do this, their transactions may experience delays between request and execution. Slippage happens because prices can change from day to day, and differently once the opening bell rings.
Convenience of Trading Dow Futures After Hours
Most importantly, Dow futures after hours trading can be done at almost any time of the day, bringing great convenience to futures traders. It can help them identify market opportunities; introduce them to new trading software and analytical tools, and practice in a simulated trading environment.
Determine the best time of day to trade based on your schedule and market focus. Find the most suitable market to trade Dow futures after hours, and allow plenty of time to analyze the price and volume action.
Practice trading real-time futures virtually 24/7 with the free futures demo accounts.
In addition to the ability to trade outside of traditional market hours, futures trading has several distinct advantages over stocks, including lower minimum investment requirements for day trading and high liquidity, among others.
What Is the Best Time to Invest in Dow Futures After Hours?
Dow Jones is one of the three major Wall Street indexes, the other two being the S&P 500, and the Nasdaq.
Investing in Dow Jones can give you great opportunities because it is one of the strongest markets.
The best time to invest in Dow futures after hours is:
➢ When the US market opens, Asian markets were closed for about two hours, but it is still daylight in Europe, and European trading hours are still open. In this case, volume is of great importance.
➢ Once the activity in the American market is finished, contracting will be reduced until 10pm, which is the opening of the Asian market. It is important to know that DJI30 Index CFDs are available 24 hours a day from Monday to Friday, which means more trading opportunities.
➢ In addition, the publication of the American economic calendar is very rich and has not ceased to influence the DJI30. This allows us to choose when to trade if we choose to trade outside of market hours.
Publications To Consider When Investing in Dow Futures After Hours
The publications of the companies that make up the DJI30 have a decisive influence on the price of the index, especially those of American Express, Apple, Boeing, Caterpillar, and Chevron.
Likewise, the following US publications also have an impact on Dow futures after hours trading:
- Fed interest rates.
- Fed appearances.
- Unemployment rate.
- Balance of trade.
- NFP or non-farm payroll.
- Inflation rates.
- GDP growth rate.
- Retail sales.
- Durable and industrial goods orders.
- Business sentiment.
- Consumer confidence.
Any trader should be aware of the US holidays, during which the market is closed.
– New Year.
– Martin Luther King’s Day.
– President’s Day.
– Good Friday.
– Memorial Day.
– Independence Day.
– Labor Day.
– Thanksgiving Day.
Is It Practical to Trade Dow Jones?
Definitely. Investors who use derivatives such as futures and CFDs to trade Dow Jones can do so without a problem for the following reasons:
- The index is well represented in relation to sectors, and is highly diversified.
- Volatility is good; price fluctuations are acceptable to investors, except for positive or negative surprises.
- It is a market with strong liquidity, so investors can find buyers and sellers who can open or close positions quickly. This means that investors enjoy a lot of trading activity.
- The required collateral is normal. The index is valued at $0.50 per point and trades 24 hours a day, excluding 15-minute breaks.
- The so-called «pre market» is open from 8: to 9:30a.m., while the so-called «aftermarket» or «after-hours market» is open from 4:00a.m. to 6:30a.m.
The system that operates the Dow futures after hours market is not the exchange itself, but an electronic communications network (ECN).
Instinet is the first ECN that was originally used for mutual transactions between different institutions. Other ECNs, such as Archipelago, have sprung up to facilitate trading outside of normal business hours. However, because they operate independently and are not interconnected, these networks can offer very different prices for communications and actions.
After-hours prices may not reflect actual price changes, but may be related to customers looking to purchase shares that are overpriced due to low-liquidity. This will be visible at the market opening the following day, with the shares opening at the same price (if there is no impact between them).
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