US30 and Forex represent two different asset classes, however, Contract for Difference (CFD) bridges them together on MT4/MT5, two of the most popular Forex trading platforms. This article aims to uncover the connection between US30 & Forex and explore the specifics of US30 trading. Key points covered include:
- Known as US30 Cash, it enables traders to speculate on the price movements of the Dow Jones 30 Index.
- Both US30 and Forex on the MT4/5 platform are CFDs, widely offered by numerous Forex brokers.
- With flexible trading conditions, investors can engage in US30 trading with a margin of less than $1.
Understanding US30 Cash
US30, which may ring a bell for many as the Dow Jones 30 Index, is actually a Contract for Difference (CFD) derived from the price of the Dow Jones 30 Index. Unlike individual stocks, the Dow Jones 30 Index cannot be traded directly. Instead, investors typically access it through ETFs or the futures market, until the emergence of the US30 CFD.
Commonly referred to as US30 Cash, reflecting the fact that trades are settled in cash.It enables investors to speculate on the price movements of the Dow Jones 30, without the necessity of opening positions in the futures market or replicating the index’s constituents in their portfolio.
US30 CFD & Forex on MT4/5
MT4 and MT5, widely adopted by many Forex brokers, connect US30 and Forex trading together. Many Forex traders find that US30 is available on the same MT4/5 platform they use for Forex trading.
The connection between Forex and US30 trading is rooted in the fact that both belong to the family of CFD trading. Much like US30 Cash, Forex trading MT4/5 is settled in cash, eliminating the need to take delivery of the underlying currency exchange.
How to Trade US30 on MT4/5
Some traders may wonder why they don’t see US30 Cash on MT4/5. The primary reason is that it’s not set as the default symbol in the market watch window by the broker. Let’s use MT5 as an example to demonstrate how to add and trade US30.
Locate the ‘click to add’ option located right below the last symbol in the market watch window. Enter ‘Dow Jones’ in the search bar, and then select ‘US30’ from the drop-down options.
While ‘US30’ is the most common symbol for Dow Jones 30 CFD, some brokers might use alternative symbols such as ‘DJ30’. Hence, it’s recommended to search using ‘Dow Jones’ rather than ‘US30’ directly.
US30 Cash Contract Specifics
1). Contact Size of US30 CFD
CFD is traded over-the-counter which means there is no standalized contract size across all brokers. However, the one in below is the most commonly used:
US30 CFD Contract Szie = $ 1× Index quote
If the Dow Jones Index is trading at 39,000, then one lot of US30 CFD is valued at 39,000 USD. It seems that the CFD contract size is twice that of Micro Dow futures. Does this imply a higher margin requirement as well? We will provide the answer shortly.
2). Margin Requirement of US30
The margin requirement for US30 is lower than that of Micro Dow Futures due to the significantly higher leverage offered in CFD trading compared to the futures market. Leverage ratios of 1:200 are common in CFD trading, with some brokers even offering higher ratios of 1:500 and 1:1000.
Assuming Dow Jones is traded at 39,000, let’s compare the margin requirements between Micro Dow Futures and US30 CFD with a leverage ratio of 1:200:
| Contract size(1 lot) | Min margin(1 lot) | Min trading lot | Min margin | |
| US30 CFD | $39,000 | $180 | 0.01 lots | $1.8 |
| Micro Dow Futures | $19,500 | $231 | 1 lot | $231 |
As shown in the table above, the minimum trading lot size for Dow Jones 30 CFD can be as low as 0.01 lots, with a corresponding small margin requirement of $1.8 when using a leverage ratio of 1:200. With higher leverage, the margin requirement can decrease even further to less than $1.
3). US30 CFD Tick Size
Unlike Dow Futures where the tick size is 1 index point, the tick size of Dow Jones CFD is 0.01 index points only, equivalent to $0.01 for a volume of 1 lot. With the Dow index experiencing daily fluctuations of around 400 index points, this translates to a daily profit or loss of approximately $400 for 1 lot of US30.
However, since the minimum trading lot size is 0.01 lots, the average daily profit or loss can be as low as $4, which is generally affordable for most people.
In US30 pricing, there are two prices quoted at the same time: the Ask price and the Bid price. The difference between these two prices is known as the spread, which represents the primary trading cost.
US30 CFD Trading Cost
The method by which brokers charge fees for Dow Jones 30 CFD varies among brokers. Some brokers may only charge the spread, while others may charge both the spread and commission. The first option, where only the spread is charged, is more popular in the market, with the spread being charged upon the opening of the position.
In the US30 pricing screenshot from the previous section, the spread is shown as 1.2 index points, valued at $1.2 for a trading volume of 1 lot. On the other hand, as mentioned in another article about Micro Dow Jones Futures, the fees for trading Micro Dow are $0.85 per side per lot, totaling $1.7 per round turn.
To summarize:
- Trading cost of US30 CFD: $1.2 per lot, only charged on opening position.
- Trading cost of Micro Dow Futures: $0.85 per side per lot, charged both on opening and closure.
While the trading costs may seem similar between Dow Jones CFD and Micro Dow Futures, it’s essential to consider the contract size difference. Given that the contract size of Dow Jones CFD is twice that of Micro Dow Futures, the CFD can be actually be much cheaper.
However, it’s crucial to note that the spread can differ greatly among brokers. While we used a spread of 1.2 index points as an example, the spread offered by some brokers may be significantly higher.
US30 Cash Trading Hours
Despite the spot price of the Dow Jones 30 Index serving as the anchor for pricing in the cash market, traders don’t need to wait for the opening of the US stock market. US30 Cash trading is available 23 hours a day, allowing for continuous trading opportunities.
After-hours trading is available for many of the constituent stocks of the index. Price movements during these sessions directly impact the pricing of US30 Cash. Additionally, there is a close connection and interaction between the futures and spot markets. Market movements in the futures market can influence the cash market as well.
| US30 Cash Trading Hours (GMT + 8) | |
|---|---|
| US Daylight Saving | Mon 06:00 - Sat 05:00, with one hour daily break 05:00 - 06:00. |
| US Winter Time | Mon 07:00 - Sat 06:00, with one hour daily break 06:00 - 07:00. |
Daylight saving time in the United States commences on the second Sunday of March and ends on the first Sunday in November.
Drawbacks of US30 Trading
The preceding content highlights the benefits of trading Dow Jones 30 CFD, but it’s essential to acknowledge the accompanying disadvantages, primarily related to additional swap charges. On the MT4/5 platform, you can find detailed information about the swap charges directly in the specifications of US30.
To elaborate further, traders will incur or receive swap charges for US30 Cash positions held past 5 PM, EST, depending on the trading direction. As indicated in the screenshot above, presently, traders will incur swap charges for long positions and receive swap for short positions.
Swap charges can significantly differ among brokers, and there’s a possibility that traders may incur swap charges regardless of their position’s direction.
While swap charges do not affect day traders, they can be a crucial consideration for traders intending to hold positions for an extended period.
Forex Brokers offering US30
1). ThinkMarkets
| Trading Symbol | US30 | Max Leverage | 1:500 |
| Contract Size | $10 × Index quote | Regular Spread | 1.2 |
| Platform | MT4/MT5/ThinkTrader | Min Trading Lot | 0.1 lots |
| Regulation | UK FCA, AU ASIC, Japan FCA, NZ FMA, Cyprus SEC, South Africa FSCA | ||
2). INFINOX
| Trading Symbol | US30 | Max Leverage | 1:1000 |
| Contract Size | $1 × Index quote | Regular Spread | 2 |
| Platform | MT4/MT5 | Min Trading Lot | 0.01 lots |
| Regulation | UK FCA, South Africa FSCA, Bahamas SCB, Mauritius FSC | ||
3). Exness
| Trading Symbol | US30 | Max Leverage | 1:400 |
| Contract Size | $1 × Index quote | Regular Spread | 2.6 |
| Platform | MT4/MT5 | Min Trading Lot | 0.01 lots |
| Regulation | UK FCA, Cyprus SEC, South Africa FSCA | ||
4). Oanda
| Trading Symbol | US30 | Max Leverage | 1:888 |
| Contract Size | $1 × Index quote | Regular Spread | 3 |
| Platform | MT4/MT5/FXTRADE | Min Trading Lot | 0.01 lots |
| Regulation | US NFA, UK FCA, AU ASIC, Japan FSA, Singapore MAS | ||
5). Pepperstone
| Trading Symbol | US30 | Max Leverage | 1:400 |
| Contract Size | $1 × Index quote | Regular Spread | 3 |
| Platform | MT4/MT5 | Min Trading Lot | 0.1 lots |
| Regulation | UK FCA, AU ASIC, Cyprus SEC, Dubai FSA | ||
