Dow Futures Investing Australia – Beginner’s Guide 2021

Fact Checked by Gary McFarlane

Dow Futures are commodity trades that have pre-set prices and dates for delivery in the future. They, in turn, enable investors to predict or even contemplate the future values of stocks. They enable anyone to invest within the Dow Jones Industrial Average (DJIA).  Dow futures contracts can even be traded on leverage, which means that you are only required to put up a fraction of the value of the contract itself.

In this guide, you will find well-researched information that regards passive investing, as well as brokerage solutions that can assist you in getting started with the process of trading Dow Futures in Australia easily. Here, we will discuss the pros, cons, fee structures, and other aspects of dow futures investing.

#1 Broker for Dow Futures Investing – eToro

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Dow Futures Investing in Australia – Step by Step Guide 2021

Picking the right brokerage is an essential part of just about anyone’s investing strategy and has the potential to define how well the investment strategy in question can be executed. We highly recommend eToro due to the fact that it is one of the most well-established brokerages out there, which has been active since 2007 and has served millions of customers on a global scale. To set up an account, you need around 5 minutes, and here’s what you need to do.

  • Step 1: Open an eToro Account: Opening an eToro account is quite simple as well. You have to type in “eToro.com” in your browser, press the “Join Now” button, and fill in all of the information required from your end, such as an email, account name, and password initially.
  • Step 2: Verify Your Identity: Once you successfully create your account, you will need to verify it in order to get access to as many features as possible. This is also a fairly straightforward process, and all you have to do is provide a photo ID (passport, driving license) as well as proof of address (utility bill, bank statement). 
  • Step 3: Fund your Account: Once the account has been both successfully created and verified, you will need to fund it through the usage of FIAT currency. To finish this step, all you have to do is click on “Deposit Funds” and enter the amount that you want to invest, then press “Deposit.”
  • Step 4: Invest in Dow Futures: Once you have your account verified and funded, all you have to do is type Dow Futures in the search bar and press “Buy.”

Choose a Broker

1. eToro – Overall Best Dow Futures Broker Australia

eToro is one of the oldest and most well-established brokerages out there that has remained on the #1 spot for years. It has been the recommended platform for forex investing, commodities, indices, cryptocurrencies, and stocks. It has an amazing iOS as well as Android application that works well and can easily be downloaded and installed at any time.

You can build your Dow Futures portfolio and other investments with ease and benefits by all of the features that are on offer for you by eToro. This includes near-immediate execution of market orders alongside no deposit fees. eToro even gives you access to investments in stocks, CFDs, ETFs, and forex pairs. Additionally, it has built up its reputation for offering an investor program that essentially identifies the most talented traders and optionally shares their knowledge which other traders can mimic.

Security

In terms of security, it is a regulated platform founded in 2007, and is fully licensed in many jurisdictions, and is monitored and audited on a regular basis as a result of all of this.

eToro has even collaborated with FinTech Acquisition Corp and has become a publicly renowned trading company. All of the client funds are kept in secure Tier-1 banks, and all of the personal information is SSL encrypted, which ensures a heightened level of privacy. Privacy and safety are guaranteed as a result.

Features

The stand-out feature of eToro is the CopyTrader feature, which lets you copy the trading habits of other, more experienced traders in an attempt to streamline your experience as much as possible. Additionally, eToro is known for having no fees outside of the inactivity fee, which means that you do not get charged for creating an account or any ticketing or management systems in place. You are only charged from the bid/ask spreads on the assets you trade.

eToro Fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $5
Inactivity Fee $15 (Monthly)

 

Pros
  • All trading is commission-free.
  • The platform is simple to grasp and use.
  • Amazing social trading experience.
  • Many trading options are available for newcomers.
  • SSL Encryption and Two-Factor Authentication (2FA) security measurements.
Cons
  • Withdrawal times can be slow.
  • There is only one base currency per account.

68% of retail investor accounts lose money when trading CFDs with this provider.

2. AvaTrade – Best Alternative Dow Futures Broker Australia

An alternative to the aforementioned brokerages is AvaTrade. This provides you with a “classic” trading platform. AvaTrade includes a lot of modern features, which makes your trading experience a lot easier. AvaTrade was founded in 2006, after which it managed to gather millions of users throughout its years online.

Security

AvaTrade features top-tier security. It complies with ASIC regulations and regularly undergoes audits with the goal of establishing a high level of authenticity and functionality on the back-end. It features 256-bit SSL encryption and is used to prevent customer data from falling into the hands of hackers, for example. Additionally, AvaTrade prevents the leak of sensitive customer data by utilizing McAfee Secure, which is a creation intended to protect important data from being compromised, such as identity documents or card information.

Features

In terms of features, AvaTrade is a fully-featured brokerage that is also extremely accessible by newcomers. There is even a dedicated mobile application called AvaTradeGo, which was specifically developed for trading on the move without putting a compromise on any of the features. There’s a feature called ZuluTrade, an automated social trading platform with additional features alongside it, such as ZuluGuard, which protects users against signal makers’ strategy changes.

AvaTrade Fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $50 after 3 months & $100 after 12 months

 

Pros
  • Fully Regulated.
  • ZuluTrade’s features are exceptional.
  • Fully accessible by newcomers and easy to understand.
  • 256-bit SSL encryption.
Cons
  • Outdated user-interface
  • Not available to residents in the US.

68% of retail investor accounts lose money when trading CFDs with this provider.

3. Capital.com – Secure Dow Futures Broker Australia

Capital.com was originally founded in 2016 and is quite possibly one of the newest platforms out there. However, this young age does come with its own level of pros, as it has some of the most powerful features which are the most relevant to traders of all kinds of skill levels, from beginners to experts. It is clear from the very start that the development team behind this brokerage has put a lot of care into ensuring that all users have access to the educational materials they require to make well-educated decisions when it comes to trading just about anything.

Security

There are security measures in place on Capital.com that play a major role in preventing hacking. There are many hackers that will always attempt to test various exploits to figure out if they can find weak spots that they can take advantage of within a brokerage. Cpaital.com has amazing security and is a reputable brokerage that ASIC regulates. In order to protect customer data from being exploited, they utilize SSL encryption and Transport Layer Security, all of which do an exceptional job at preventing data from falling into the hands of potential hackers. Capital.com even complies with standards laid out by PCI Data Security.

Features

If you are the kind of investor that’s just starting out and want to find a brokerage that will keep you as up-to-date as possible on all of the investment resources you might need, Capital.com is an exceptional choice. Everyone that invests through using Capital.com gets access to a lot of educational content that covers everything from basic investment techniques to the most advanced strategies out there. The Capital.com exchange, however, takes this to the next level by having its own educational application known as Investmate, which allows you to learn how to trade even when you are not in front of your desktop computer. Additionally, each user gets access to a range of markets and a variety of different technical indicators and full TradingView integration.

Capital.com Fees

Fee Type Fee Amount
Commission Fee 0%
Deposit Fee $0
Withdrawal Fee $0
Inactivity Fee $0

 

Pros
  • Fully Regulated Exchange.
  • Investmate mobile educational application included.
  • Many technical indicators and TradingView integration.
  • PCI Data Security Compliant.
Cons
  • Not available to residents in the US.

68% of retail investor accounts lose money when trading CFDs with this provider.

Invest in Dow Futures – Broker Price Comparison

If you are a bit overwhelmed at the different fees charged by the different brokers, here’s a fee comparison table between eToro, Capital.com, and AvaTrade.

Broker Commission Deposit Fee Withdrawal Fee Inactivity Fee
eToro 0% $0 $5 $15 (Monthly)
Capital.com 0% $0 $0 $0
AvaTrade 0% $0 $0 $50 after 3 months & $100 after 12 months

 

What are Dow Futures?

Dow Futures essentially give anyone the opportunity to trade or invest in the Dow Jones Industrial Average (DJIA) stock index. These futures contracts enable traders and investors to bet on which direction they believe this fund moves towards. They are simple to grasp and feature high trading volumes with a lot of available leverage, and this is what makes Dow futures such a popular way to trade within the market.

Best Ways to Invest in Dow Futures

The Dow Jones is calculated as a price-weighted index. The individual pieces of its stocks are added together and then divided by the Dow divisor, which is a figure specifically designed to account for the anomalous impact of stock splits or modifications to the index. That said, you can invest in Dow Futures through CFDs, Futures, Options, Stocks, and ETFs.

Dow Jones CFDs

Contracts for difference (CFDs) are derivatives that take their price from the Dow Jones underlying market. You will never be taking ownership of the asset and, as such, can speculate if it will go up or down in value.

Dow Jones Futures

Futures contracts are the agreements to exchange an asset at a set price on set expiry date. Dow Jones futures specifically do not have an underlying physical asset, and as an index just represents a group of stocks.

Dow Jones Options

Dow Jones options are contracts that essentially give you the right to buy or sell the index at a set price and at a set date.

Dow Jones Stocks and ETFs

You can even trade Dow Jones through ETFs or investment instruments that hold a group of stocks.

Are Dow Futures a Good Investment?

The Dow Jones Industrial Average was established on May 26, 1896, by Charles Dow, who was a reporter for The Wall Street Journal that founded Dow Jones & Company in 1992. It was initially an index of 12 companies and has stood the test of time.

Dow Jones futures reflect expectations about the price of a stock index at a later time. They are agreements between two parties, and there is no net transfer of wealth. The rise or fall in index futures outside of the normal market hours is used as an indication of whether the stock market will open higher or lower the next day.

Dow Futures are a solid investment due to the fact that as an investor, you can utilize the futures contracts to speculate on the direction in the price, and future contracts might only require a fraction of the initial deposit with a broker.

Investing in Dow Futures – What Are the Risks

As is the case with any form of investment, Dow Futures also have their own level of risk associated with them. 

Leverage

Leverage leads to more risk. This is due to the fact that leverage is the ability to margin investments with an investment of only a portion of the total value.

Because of the leverage used in futures trading, you could sustain losses greater than your original investments. There’s also the possibility to realize large profits. However, it’s not the actual asset that you are investing in which carries risk, but the additional risk comes from the nature and process of how the futures contracts are traded.

Ensure that you practice money management through using stop-loss orders and limit potential losses. The best futures traders out there do not over-margin themselves and maintain enough free, uncommitted investment capital with the intention of covering draw-downs in their total equity.

Interest Rate Risk

There’s a risk that the investment’s value will change due to a change in the absolute level of interest risk.

Liquidity Risk

The level of liquidity within a contract can also impact the decision to execute a trade or to not execute a trade. If a trader arrives at a strong trading view, they might not be able to execute the strategy due to a lack of liquidity.

Settlement and Delivery Risk

Each executed trade has a requirement to be  settled and closed at a certain, pre-specified point in time, and daily settlements take the form of automatic debits and credits between accounts with any shortfalls that are recovered through margin calls. As such, brokerages need to fulfill all margin calls. In the cases where clients fail to pay the margin calls, brokers need to take steps to close out positions, and the delayed response to these inconveniences can result in losses for brokers.

How to Invest in Dow Futures with eToro

Within this section, we will showcase simple steps that you can take in order to start Dow Futures investing on eToro within minutes.

Step 1: Open an Account with eToro

If you want to successfully open a brokerage account, you will need to sign up for eToro. eToro is our recommendation due to the fact that it offers you a free account registration option where you can have a brokerage account set up within minutes and gain full access to Dow Futures. All you really need to do is type “eToro.com” in your browser, then just press on “Join Now,” after which you can fill in the required information.

Step 2: Verify Your Account

Once you have successfully completed Step 1 and have created an account, you will need to complete the next step to verify the account in question. This is a process that will require you to submit personal identification documents. This is a process that can be easily and swiftly completed, assuming you have all of the documents in front of you. You will need a photo ID (passport, driving license) and proof of address (bank statement, utility bill), and if everything goes according to plan, your account should be verified very quickly.

Step 3: Fund Your Account

After the account creation process and the account verification process are completed from your end, the next process will involve you funding your account so you can get one step closer to making investments in the brokerage. You can easily make a deposit through the usage of a variety of different payment methods on the platform eToro. All you have to do is click on “Deposit Funds” and enter the amount you would like to deposit for trading or investing. Then press “Deposit,” and your funds will be transferred. eToro will let you make a deposit using credit card and debit card deposits, e-wallet deposits, as well as bank transfers alongside other well-known payment options.

Step 4: Invest in Dow Futures

Once the account has been funded, you can start using eToro in order to conduct Dow Futures investments in Australia. To do this, simply type in Dow Futures in the search bar and click on “Trade” alongside the amount you would like to trade. Then click on “Buy.” Good luck with your Dow Futures Investment strategies, and remember to never invest more than you are willing to lose, no matter what you are investing in.

Conclusion

Throughout this article, we went over everything that you are required to know when it comes to Dow Futures investing. Hopefully, through our step-by-step guide, you are now prepared to start your investment journey with the right level of knowledge. The strategies you end up implementing depend on your specific requirements and expectations but remember that it is always essential to know financial trading methods and how to use trading tools to get the most out of your investments. Picking a reliable brokerage is just the first step of your overall investment journey.

Best Broker for Dow Futures Investing – eToro

1
$50Exclusive promotion
Our score10
  • Buy over 800 stocks with 0% commission
  • Social trading network
  • Copy over 12 million traders and investors
0% Commissionstart TradingOur score 10

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About Milko Trajcevski PRO INVESTOR

Milko Trajcevski is a truly determined content writer with a passion for the crypto industry and has a successful track record of researching and effectively writing articles about cryptocurrency, non-fungible tokens, and blockchain covering the fields of crypto-asset regulations, wallets and exchanges, liquidity, altcoins, DApps, forks, mining, laddering, security and enterprise blockchain technology.