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People entering the world of financial markets, and especially the stock market, are very likely to quickly hear of “the Dow”, “the Dow Jones”, as the first thing discussed when it comes to U.S. indices. But what is the Dow Jones?
The Dow Jones is probably the most popular U.S. index. Although it represents only 30 companies, it is seen as an important gauge of the stock market in what is still the world’s largest economy.
You might often see it abbreviated from its full name – the Dow Jones Industrial Average – to DJIA or substituted with US 30 in some platforms and news sites.
It’s history dates back to 1896 when it was first introduced by the Wall Street Journal’s editor Charles Dow. The average is named after Dow and statistician Edward Jones and its goal was to provide the public with an easy way to understand what the entire stock market was doing, rather than just focusing on individual stocks.
Being the second oldest index in the world, and with its first level reported at 40.94, you can see how the Dow Jones index has withstood the test of time. Standing at 25,800 at the time of recording, it has gone through many drops, most recently the Dow Jones crash 2008.
In this video we explain the index in details, while trying to provide answers to questions like “How is the Dow Jones Industrial Average calculated?”, “How can I trade the Dow Jones?” among others.
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