DIA [DIAMONDS]

Trading The Dow Exchange Traded Fund - DIA

DIA is the ticker symbol for ‘Diamonds’ Trust Fund which is traded on the American Stock Exchange (AMEX). The average volume for the DIA is about 12 million shares per day.

Similar to a mutual fund, the DIA (Diamonds) is also a fund. The DIA is created by buying the 30 stocks that the Dow Jones Index tracks; therefore, Exchange Traded Funds (ETF) are called Index Funds.  Below are the stocks that the Dow Jones Index tracks.

AA     Alcoa Inc
AXP    American Express Company
BA      Boeing Co
BAC....Bank of America
C        Citigroup Inc
CAT   Caterpillar Inc
CVX...Chevron
DD     Dupont(E.I.)Denemours
DIS    Disney (Walt) Co
GE      General Electric
GM     General Motors
HD     Home Depot
HPQ   Hewlett-Packard
IBM    Intl Business Machines Corp
INTC  Intel Corp
JNJ     Johnson & Johnson
JPM    JPMorgan Chase & Co
KFT Kraft Foods
KO     Coca-Cola Co
MCD   McDonald's Corp
MMM  3M Co
MRK   Merck & Co
MSFT  Microsoft Corp
PFE    Pfizer, Inc
PG      Procter & Gamble
T        AT&T Inc
UTX    United Technologies
VZ      Verizon Communications
WMT  Wal-Mart Stores
XOM   Exxon Mobil

Over all, if the above 30 stocks go up then the Dow Jones Index and the DIA will go up. If the Dow is trading at 11250, then the DIA will be trading around 112.50 per share.
All the major stock indexes have ETF's based on them, including:

ETF's are one of the most practical vehicle in which to invest in a basket of stocks. This allows you to go long [buy] the DIA whenever you get a BUY signal using the Dow Indicator, or go short [sell]  the DIA whenever you get a SELL signal.

Because the Dow E-mini (and S&P e-mini) provide leverage and trade almost 24 hours a day, we still prefer to trade the E-mini’s. The almost around the clock trading of the E-minis substantially reduce gap openings; therefore, it allows for better protection using protective stops and entering the market using stop orders.

The DIA (as well as the E-mini's) can also be traded using options. Options provide leverage and limit the risk exposure.

The Yahoo web site: http://finance.yahoo.com/etf/education provides a thorough guide to ETF’s.

Link to AMEX exchange - DIA: http://amex.com/etf/prodInf/EtPiOverview.jsp?Product_Symbol=DIA