The Dow Jones explained: 30 stocks, weighted by price (and the YM futures)
The oldest U.S. index works differently from the others: 30 companies weighted by share price. Here’s what that means and how YM and MYM trade.
The Dow Jones Industrial Average is the index your grandparents knew from the evening news. It's also the odd one out: only 30 companies, and weighted in a way no modern index would choose. That quirk is worth understanding if you ever trade YM.
A short history
Charles Dow first published the average in 1896 with 12 companies, most of them industrial businesses. It grew to 30 companies in 1928 and has stayed at 30 since. Today it's maintained by S&P Dow Jones Indices, and despite the name it includes technology, health care, finance and retail companies, not just industrials.
Weighted by price, not size
Most indexes give bigger companies more weight. The Dow gives more weight to stocks with a higher share price, no matter how big the company is. A $10 move in a $500 stock moves the Dow exactly as much as a $10 move in a $50 stock, even though the first is a 2% move and the second is a 20% move.
| Dow | S&P 500 and Nasdaq-100 | |
|---|---|---|
| Companies | 30 | About 500 / about 100 |
| Weighted by | Share price | Company size (market value) |
| Biggest influence | Highest-priced stocks | Largest companies |
A stock split, which lowers a company's share price, reduces its weight in the Dow even though nothing about the business changed.
In the Dow, a pricey share counts more than a big company.
The futures: YM and MYM
| Contract | Value of 1 point | Smallest move (1 point) |
|---|---|---|
| YM (E-mini Dow) | $5 | $5.00 |
| MYM (Micro E-mini Dow) | $0.50 | $0.50 |
Because the Dow's level is so high, YM moves many points in a day, but each point is worth less than on ES or NQ. Prop traders see it less often than ES or NQ, but it's available at most futures prop firms. Ticks, points and leverage explains how to compare contracts with different point values.
When the Dow tells a different story
- Tech-led days: the Nasdaq-100 can rally while the Dow lags, because the Dow holds fewer tech giants.
- Value and industrial days: when banks, industrials and health care lead, the Dow can beat NQ.
- One stock's news: a big move in one of the highest-priced Dow stocks can move the whole average noticeably.
Watching how the Dow, ES and NQ move against each other tells you what kind of day it is. That's the last part of this series: how the indexes move together.
This article is for education only and isn't financial advice. Trading futures involves substantial risk of loss. Index rules, weights and contract specifications come from the index providers and exchanges and can change.