How to Trade Stocks - Term of the Day, the Dow (DJIA)

Also known at the Dow Jones Industrial Average,computed by adding the prices of the 30 stocks
The Dow is a measurement of only 30 stocks andtogether and dividing by an adjusted denominator.
their joint price movement in a day. These stocksFrom these numbers we get a high and low for each
are traded on the New York Stock Exchange andday.Currently the Dow is in the 12000 range. This
are the cream of the crop - The Big Boys.number only means something relative to the history
All Dow 30 components can be found online. Sampleof the Dow but over time, one gets enough
stocks include 3M, AT&T, Chevron,information to be able to make predictions for the
Hewlett-Packard, The Coca-Cola Company, andfuture based on analysis of the present and the past.
Wal-Mart. There are 30 total and, if you knowSome people think the ups and downs of The Dow
something about prices, these are not necessarily theare like the gospel.
highest-priced stocks around. They tend to be highlyThey believe that if The Dow went up 3% or down
regarded stocks, well funded and relatively stable.2%, this is representative of the entire investment
They also represent a variety of business elementsmarket world-wide. Others look at The Dow as one
meaning they encompass resources, technology, oil,of several indicators that, when combined with other
retail sales, food, banking, etc.stock groups and various economic factors, can help
The daily average that we hear about on the radio,determine future plans and potential trades. The
in the newspaper, television, and your favorite mobileDow, in my mind, is only one piece in a huge puzzle.
device represents a measurement of market priceWhen you keep track of it over a period time it
movement for all 30 stocks. The average isdoes start to feel like it probably matters!