[AbeSmith]

Hello folks. Sorry if this is a stupid question, but I've been wondering, how is YM calculated? I know it represents the Dow, but I don't know the details and can't seem to find it anywhere. I guess I'm wondering, how is it calculated? What are the factors that make it move one way or another?

[Blu-Ray]

Abe

It's based on the 30 stocks in the Dow Jones Industrial Average. Each stock has a different weight percentage. eg. IBM has the biggest weight at 6.78% of the index and Intel the least at 1.44%.

Here's a link to show you the 30 stocks and their corresponding weight.

http://www.indexarb.com/indexComponentWtsDJ.html


Hope this helps


Blu-Ray

[AbeSmith]

Originally Posted by Blu-Ray »

Abe

It's based on the 30 stocks in the Dow Jones Industrial Average. Each stock has a different weight percentage. eg. IBM has the biggest weight at 6.78% of the index and Intel the least at 1.44%.

Here's a link to show you the 30 stocks and their corresponding weight.

http://www.indexarb.com/indexComponentWtsDJ.html


Hope this helps


Blu-Ray

Thanks Blu-Ray. That helps plenty.

[brownsfan019]

Originally Posted by AbeSmith »

What are the factors that make it move one way or another?

Buyers and sellers move it.

I know it sounds too simple Abe, but when they are more buyers than sellers, price goes up and vice versa. That's about as simple as it can get when trying to figure out what moves any market.

[Soultrader]

Simple. Trader psychology and supply vs demand

[walterw]

Originally Posted by Soultrader »

Simple. Trader psychology and supply vs demand

alias Delta jejeje... :rolleyes:

[GCB]

The Dow Jones Industrial Average is a price weighted stock index which is calculated by special formula based on the stock prices of what are considered the thirty most important companies in the US. These stocks change from time to time. In fact, only GE is left from the original DJIA.

The YM is a index future whose price is totally calculated by supply and demand, the buying and selling of futures. It takes its cues from the DJIA. But the DJIA also takes its cues from the futures markets. So it hard to say which comes first, the chicken or the egg. When the stock market and the futures get out of sync, arbitragers step in a buy (sell) one and sell (buy) the other. It's an amazing process but somehow works out.

Think of the market as sort of the Wikipedia of price. Everyone contributes and somehow we end up with something more or less representative of value, at least over the long run.

[AbeSmith]

Originally Posted by GCB »

The Dow Jones Industrial Average is a price weighted stock index which is calculated by special formula based on the stock prices of what are considered the thirty most important companies in the US. These stocks change from time to time. In fact, only GE is left from the original DJIA.

The YM is a index future whose price is totally calculated by supply and demand, the buying and selling of futures. It takes its cues from the DJIA. But the DJIA also takes its cues from the futures markets. So it hard to say which comes first, the chicken or the egg. When the stock market and the futures get out of sync, arbitragers step in a buy (sell) one and sell (buy) the other. It's an amazing process but somehow works out.

Think of the market as sort of the Wikipedia of price. Everyone contributes and somehow we end up with something more or less representative of value, at least over the long run.

So, let me see if I'm understanding this, the YM moves based on people buying and selling the YM. But when the YM doesn't go in tune with the Dow, then arbitragers step in and buy or sell to keep the YM in line with the Dow.