Unlike the stock market, which is open from 9:30 a.m. to 4 p.m eastern time on weekdays, electronic futures trading runs almost 24 hours a day, five days a week. As a result, the trading of stock index futures such as the Dow futures contracts provide overnight and early morning indicators on where the stock market is headed. Futures trading opens on Sunday evening for a week's worth of action.
Dow Futures Trading Hours
Trading in the different Dow futures contracts starts at 6 p.m. eastern time on Sunday evening. Trading closes at 4:15 pm on Friday. During the week, the futures markets close for 15 minutes at 4:15 -- 15 minutes after the stock market closes -- and for 30 minutes at 5:30. The daily trading session runs from 6 p.m. the day before -- starting Sunday through Thursday -- through 4:15 pm the next afternoon. Note that the CME Group, which owns the electronic futures exchange, has its headquarters in Chicago and often posts market times using the central time zone.
The standard Dow Jones futures contract carries a value of 10 times the Dow Jones Industrial Average -- DJIA -- stock index. Besides the round-the-clock trading on the electronic futures exchange, this futures contract trades in the pits of the Chicago Board of Trade exchange during business hours. Additional futures contracts on the Dow Jones Industrial Average include an e-mini contract valued at five times the DJIA and the "Big Dow" futures at 25 times the stock index.
Non-Market Hours Trading
During the hours the stock exchanges are open, the prices of the Dow futures contracts closely match the value of the stock index. During the overnight 15 1/2 hours, the trading in the Dow futures is driven by market conditions in other parts of the world. The Asian stock markets are open during the night and the European markets open several hours before the U.S. exchanges. The value of the Dow futures during these periods can be used as an indicator of where the DJIA will open and move in the next market session.
Trading Dow Futures
If you want to trade the Dow futures on Sunday night before the stock markets open for the week, you need an account with a commodity futures broker. You must put up an exchange-designated margin deposit for each contract you trade. At the time of publication, the initial margin deposit for one e-mini Dow futures was $3,125. You can trade futures in either direction -- opening with a buy order if you think the Dow will go up or selling contracts to profit from a declining stock index.