Actual Method Calculation - The 'Cash' Dow

In 1992, Dow Jones started using the Actual method , which calculates the index every few seconds throughout the trading day. It uses the actual prices of the 30 underlying stocks to calculate the current value of the Dow.

All our trade suggestions are based on the Actual method calculation. The Actual method is also referred to as the Cash Dow. Stop and Stop Reverse orders that are posted on our web site are based on the Actual method; therefore, make sure you base your Stop and Stop Reverse orders on the Actual method. If you do not use the Actual method you could get in on swing highs and lows that never happend. Don't use the Theoretical Dow method of calculation for entry and exits.

We use the Actual method or Cash Dow of calculating the Dow Jones Index, because it accurately reflects real time trading.  For example, the DIA and the Dow E-mini futures track the the Actual method calculation of the Dow Jones Index.

The Theoretical Dow Jones Industrial Average assumes all index components hit their high or low at the same time during the day. At the end of the trading day, the daily highs for all 30 Dow components are used to calculate the index high for the day, and the same is performed for the index low. Since all index components almost never hit their highs and lows at the same time, the Theoretical high is almost always higher than the Actual, and the Theoretical low is almost always lower than the Actual.

Most web sites such as, Finance.Yahoo.com, CNNmoney.com, MarketWatch.com, BigCharts.com, etc. will show the Theoretical method for the daily, weekly, monthly chart, and use the Actual method for the intraday bars.

Here are a few of the web pages where you can get the Dow data based on the Actual method:

For the Actual Method, use the intraday data from the below web sites (do not use their daily data, it is Theoretical).

http://finance.yahoo.com

http://bigcharts.marketwatch.com (on the right side there is chart options... select 5 days and hourly)

In addition, the Actual method or Cash Dow is the number given in your local newspaper, the national and local news, and on CNBC.