Unlike the S&P 500, the Dow isn’t a weighted average and doesn’t represent market cap. Instead, it’s the sum of all share prices divided by the divisor, meaning a one-point change in any stock moves the index by the same amount. That said, the way the DJIA is calculated has changed a lot over the years. Today, it includes 30 companies and it is no longer reported as an average of the total share prices of the stocks divided by the number of stocks included in the index. In conclusion, the DJIA reached its all-time high of 40,051.05 points in May 2024.

Recession of 1957

If it is a mixed bag with some companies doing well and others slipping a little, the DJIA pretty well remains level. The assumption is that smaller companies and those not included in the Dow will experience similar stock movements. In this way, the DJIA is taken as an expression of how the economy is doing. “Still, this is a great reminder of how far we’ve come. Find out about the record-breaking highs of the DJIA and the events behind its growth.

Economic Factors Behind the Record High

Today’s Dow includes stocks from a variety of sectors, including technology, finance, and consumer goods. The Dow Jones industrial average finished above 40,000 for the first time on Friday afternoon, doubling where the index hit shortly after Donald Trump became the 45th president. Despite these setbacks, the DJIA has shown remarkable resilience, bouncing back from downturns to reach new highs.

What Are the Drawbacks of the Dow Jones Industrial Average?

• That said, when comparing the value of the DJIA over time, many financial sites, as we have done above, use an inflation-adjustment calculator such as the U.S.
• For example, during the Great Depression in the 1930s, the Dow dropped dramatically, losing nearly 90% of its value.
• The first large-scale change was in 1932 when eight stocks in the Dow were replaced.
• It took almost four years for the market to bottom out at that time.

That correction was more than 16% lower than its all-time high set in May of the same year, putting the index into a correction but not a bear market. Investors worried that China’s yuan devaluation and the uncertainty over the Fed’s rate increase would push the index further downward. The index closed above 23,000 on Oct. 18, 2017; slightly more than a month later, it broke 24,000. The Dow had two streaks lasting more than 10 days, which had not occurred since 1959. The Dow responded with new highs throughout the latter part of 2019, even though trade negotiations had broken down until November. It hit a milestone on July 11, closing above 27,000, and then another on Nov. 15, closing above 28,000 (in the chart below, milestones are noted).

So, a higher percentage move in a higher-priced component will have a greater impact on the final calculated value. Initially, Charles Dow used a simple average for the 12 component stocks. However, as mergers and stock splits occurred, this method became ineffective. The Dow Jones Industrial Average (DJIA) is a stock market index that tracks 30 major public companies listed on the New York Stock Exchange (NYSE) and Nasdaq.

How Often Does the Dow Jones Industrial Average Change?

The Dow Jones Industrial Average (DJIA) just set a new record close of 45,631.74 on August 22, 2025. This beat the previous high of 45,014.04 from December 2024. These changes are not done often to ensure the index’s stability and continuity. The Dow also lost 26.5% during the Cuban missile crisis of 1962. The Dow finally broke the 30,000 mark the Aurora canabiss stock following year. Uncertainty had been hanging over the markets because of the unprecedented refusal of the outgoing president, Donald Trump, to concede the election to President-elect Biden.

This historic peak came after years of growth, economic recovery, and optimism in the market. By understanding the events and factors behind this achievement, we can better appreciate the significance of this record-breaking moment in stock market history. Record highs are driven by a mix of economic growth, lower inflation, strong corporate earnings, and investor confidence. Fed policy plays a major role, lower interest rates often push the Dow higher.

It hit a low of 41.22 in 1932 (about 908 points, inflation-adjusted).

Active traders can also benefit by using prop firm funding to trade market momentum. The highest Dow Jones Industrial Average close is 45,631.74, set on August 22, 2025. This surpassed the previous record of 45,014.04 from December 2024. The Dow’s all-time high reflects strong tech earnings, cooling inflation, and expectations of future Fed rate cuts. 👉 For active traders, record highs also bring opportunity. At MasterFunders, funded traders can test strategies in rising markets without risking personal savings, trading with firm capital instead of their own.

The chart below shows four of those closing records, as they increase by the thousand. That means companies with higher stock prices move the Dow more, even if they aren’t the largest by market value. The Dow’s new record above 45,600 in August 2025 comes from a mix of strong earnings, cooling inflation, and investor optimism about future Fed policy. The DJIA is a stock index that tracks 30 major U.S. companies, known as the “Dow 30.” It’s one of the best-known ways to measure the U.S. stock market. The Dow posted its all-time high during in December 2024, peaking at over 45,000 points.

Dow 20,000 to 40,000: 2,669 days

• If the stock market or a share price moves on the word of someone who follows the Dow, you are impacted so it is good to pay attention to how the DJIA is moving.
• Stock market gains since the 2008 financial crisis were mediocre in volume.
• These latest changes mark just the 53rd adjustment to the DJIA since its inception in 1896 and highlight a shift toward companies that are more relevant in their respective industries.
• The Dow Jones Industrial Average is a rough overview of the economy – very rough.
• When answering what is the highest the Dow Jones has ever been, it’s essential to recognize that the market has gone through both ups and downs, but continues to grow over time.

The Dow Jones Industrial Average, also known as the Dow or DJIA, tracks 30 large, well-known companies that trade on the New York Stock Exchange and Nasdaq. The Dow kept hitting record highs in late 2024, reaching over 45,000 in December of that year. Companies that become less relevant are replaced with those that better reflect current trends. For instance, a company may be removed from the index when its market capitalization drops because of financial distress. In the early 20th century, the performance of industrial companies was typically tied to the overall growth rate in the economy.

📊 Major Dow Market Corrections and Recoveries

The DJIA is a widely followed stock market index, tracking 30 major publicly owned U.S. blue-chip companies. Because the index is price-weighted, stocks with higher share prices have a greater impact on its movements, which is important for investors to understand when interpreting performance. Its composition has changed to reflect shifts in the economy and the relevance of leading companies, making it an evolving measure of market trends. It has a narrow focus on large-cap firms and lacks representation of smaller companies and certain sectors.

Instead, the total sum of the share prices of the companies on the list are divided by the Dow Divisor. This figure is meant to represent the impact of dividends, stock splits, and other specifics to the stocks included in the Dow. The 2008 stock market crash was more dramatic than any other downturn in U.S. history. This was less than the 90% drop during the Great Depression. It took almost four years for the market to bottom out at that time.

Previously, the Dow had fallen from 11,723 in January 2000 to 9,389 in March 2001, dropping 20% (from 20,520 to 16,434 points, inflation-adjusted). The bout of inflation that followed the COVID-19 pandemic led to another sharp sell-off in 2022. Between Jan. 7, 2022, and Sept. 30, 2022, the Dow declined about 21% from 36,231.66 to 28,725.51. Since the Great Depression, 2007 to 2008 has been the most dramatic period for the DJIA. The market fell more than 50% in just a year and a half because of subprime mortgage and credit crisis that kicked off the Great Recession. Perhaps the most infamous trough was during the Great Depression, in which the Dow lost about 90% of its value over three years.

The Dow Divisor helps maintain its consistency by adjusting for stock splits and other structural changes. The Dow is also a price-weighted index instead of being weighted by market capitalization. This means that stocks in the index with higher share prices have greater influence, even if they are smaller companies overall in terms of market value. This also means that stock splits can impact the index, while they would not for a market cap-weighted index. The Dow set two milestones in 2014 and set 39 closing records. Share repurchases among the S&P 500 companies were 59% higher in the first quarter of 2014 than the first quarter in 2013.

On that day, it closed at 7,286.27, a 37.8% decline from its peak. No one knew if a new bull market had begun until the Dow hit a higher low on March 11, 2003, closing at 7,524.06. The Dow suffered a market correction between August 2015 and April 19, 2016, leading to a 2016 downturn.

Your broker handles everything in the background, so you never have to touch the currency or set foot in a bank. There was even a time in 2016 when the Bank of Japan lowered rates below zero, which is wild. Imagine your bank actually paying you to borrow money instead of the other way around.

How does a carry trade work in forex?

Forex traders diversify their carry trades across multiple currency pairs to manage risk rather than concentrating on a single position. Diversifying carry trade positions reduces exposure to a single economy or currency that is affected by unforeseen economic changes, such as central forex trading sessions bank policy shifts or geopolitical tensions. Diversification helps protect Forex traders against large-scale losses in case one or more carry trades move against them. Interest rates are at their highest at the peak of the economic cycle since central banks act to curb inflationary pressures. The attractive rate differentials continue to support carry trades, but caution begins to surface as growth shows signs of slowing.

Why Is This Strategy So Popular?

• Forex broker platforms provide economic calendars, news feeds, and other market tools that help analyze market conditions and sentiment shifts.
• The assets initially bought with borrowed yen face selling pressure, which then trigger broader market declines.
• Forex trading, in general, includes many strategies that aim to profit from price movements, not just interest rate gaps.

Investors apply carry trade strategies to volatility products by selling options or volatility futures, such as the VIX, during periods of low market volatility. The premiums received from selling options in a volatility carry trade create income if market volatility remains low. Volatility carry trade strategy is effective in stable markets but carries high risk if market volatility spikes unexpectedly. Investors in commodity carry trades borrow at low rates to invest in high-yielding commodities, like crude oil, gold, or other precious metals. Commodity carry trade is driven by the price trends of the chosen commodity.

• The 2024 market correction triggered by the unwinding of yen-related carry trades was not unprecedented.
• Carry trades are long-term strategies, but conditions change that require adjustments.
• Traders should be cautious with leverage when carry trading as it amplifies both potential profits and risks.
• A carry trade is any strategy where an investor borrows capital at a lower interest rate to invest in assets with potentially higher returns.
• For instance, if U.S. interest rates are higher than Japanese rates, a carry trader might buy USD/JPY futures contracts, effectively betting that the dollar will strengthen against the yen.

Traders aim to profit from the interest rate differential that provides a steady return as long as the rates remain stable. There is potential for additional profit if the higher-yielding currency appreciates against the borrowed currency. The trader earns from the interest rate spread and benefits from the increased value of the high-yield currency upon conversion back to the original currency.

By the time you finish reading this blog post, you’ll know the meaning of a carry trade, how to take advantage of it, and the risks involved. Carry traders will be paid while they wait as long as the underlying currency rates don’t fluctuate too far against them. Interest is paid every day to those who are fading the carry or shorting AUD/JPY. As a retail trader, understanding interest rate differentials is like the cherry on top of a profitable trade. It’s a nice little bonus on top of the profits you’d already have from a winning trade. Arbitrage, on the other hand, is when a trader takes advantage of a slight difference in a market’s price across multiple brokers.

Carry trades shape the direction and strength of Forex price movements. Traders borrowed francs to invest in higher-yielding currencies like the Australian dollar, New Zealand dollar, or even some emerging market currencies. Sure, it can earn you a greater profit when things go right, but it can also amplify losses when things go wrong. The second risk category relates to sudden changes in a country’s monetary policy—for instance, a sudden change in the interest rate by a country’s central bank. For the forex retail trader, the difference between a positive or negative carry trade comes down to knowing each currency’s yield.

Who usually trades carry strategies?

Investors use a commodity carry trade strategy to take advantage of “contango” conditions where the future price of a commodity is higher than the spot price. Contango conditions allow investors to buy low and sell high at a later date. Profit in carry trade is determined by interest rate differential, currency appreciation, steady market conditions, and the use of leverage.

A carry trade works by borrowing funds in a currency with a low interest rate and using those funds to invest in a currency that offers a higher interest rate. Carry trade strategy targets profits from the difference in interest rates and appreciation in the value of the higher-yielding currency. Investors have used yen-denominated loans for carry trades for decades because of Japan’s low interest rates, which averaged just 0.1% in the mid-2000s. Both retail and institutional investors borrowed yen and used them to make investments with U.S. dollars and other high-yielding currencies.

What is the Importance of Carry Trade in Trading?

Making money in the forex market isn’t always about hitting the next big move on the chart. Sometimes it’s as simple as the difference in interest rates between two currencies. For those who wish to dig a bit deeper into this puzzle, it’s good to quickly review what academics and practitioners have said. It might look like a relatively small change but a 0.25% rate adjustment in one central bank’s policy ended up unwinding years of USD/JPY trading. Uncertainty, concern, and fear can cause investors to unwind their carry trades.

The investor converts the borrowed funds into a currency with a higher interest rate. The goal of converting the low-interest currency into a high-interest currency is to capitalize on the higher returns offered by assets in this new currency. The investor seeks to benefit from the carry trade by holding or investing in higher interest-rate assets.

Get it right, and a position can earn you money on top of what a profitable trade would pay you. But get it wrong, and the negative carry will eat into your trade’s profits every 24 hours. If you’re long USDJPY, you’ll usually get a positive rollover shortly after 5 pm EST. Of course, this assumes the yen has a lower interest rate than the USD.

Instead of collecting rollover as a profit, you’re paying it every day. It’s like taking out a bank loan for 10% and buying domestic bonds that pay 5%. The positive carry that made USDJPY so popular triggered more volatility than usual as traders raced for the exit. It’s the volatility that occurs outside of things like interest rate decisions.

The difference between the two is what makes or breaks a carry trade. The JPY carry trade is especially popular because Japanese interest rates have historically been very low. Think of it like borrowing money from your bank at a 5% interest rate, and then earning a 10% return elsewhere.

Otherwise, you’ll be unready for the forward bias to suddenly reverse itself, with disastrous results if you’re among those unable to get out of the market in time. Interest rate parity suggests that the difference in interest rates between two countries should be reflected in the forward exchange rates between their currencies. The theory behind carry trading is to borrow one asset to buy another. You’ll remain in a profitable position as long as the interest you’re charged to borrow one asset is less than the interest you’ll receive for the asset you buy. Either currency may fluctuate in value and change your position, however.

Bid vs Ask in Forex: Simple Guide to Quotes and Spreads

While potentially lucrative, they carry significant risks because of exchange rate fluctuations and the possibility of sudden market shifts. The 2024 yen carry trade unwinding demonstrates how changes in monetary policy, such as the Bank of Japan’s interest rate hike, can trigger widespread market disruptions. The strategy can be—in fact, for many international traders, has been—highly profitable during periods of market calm and stable economic conditions. Although carry trades can be profitable, there are a number of dangers involved, particularly with regard to currency rate swings and shifts in central bank regulations. When markets are stable, this strategy can generate steady earnings, but when market conditions change rapidly, carry trades can lead to sharp losses.

Compared to more complex strategies, carry trading is relatively straightforward. Many traders use it as a long-term approach, holding positions for weeks or even months to collect interest over time. Sometimes, traders not only earn the interest rate difference but also benefit if the high-yield currency gains value.

And during this time period, many investors made carry trades involving subprime mortgages. A carry trade is a popular forex strategy where traders attempt to take advantage of differences in interest rates between currencies. These differences may be small but carry trades are often executed with significant leverage to enhance profitability.

You should not invest more than you can afford to lose and should ensure that you fully understand the risks involved. The more you trade, the more you earn! Earn Tier and Reward points on all qualifying trades. Access more than 1,000 markets at competitive costs, with fast execution, and earn Rewards as you trade.

Why trade on MetaTrader 5?

We built FXTM because we thought trading was too exciting to be kept for the few. You can access Stocks through our FXTM trading app, available for free for iOS and Android, or MT5 download available for PC, Mac, tablet and mobile. MetaTrader 5 offers access to Stocks, so if you’re looking to trade Stocks, you’ll need to use MT5.

We agreed to work to keep the cost of trading as low as possible and to offer our services in a spirit of partnership, helping our customers to be profitable traders, not just profitable customers. Complete the registration form Choose the right account to suit your trading needsVerify your new profileFund your account and start trading! FXTM is an international online broker offering financial services in various financial instruments. FXTM is licensed and regulated across several jurisdictions across the globe, giving customers peace of mind when it comes to the safety and security of funds.

Before you use these products, please take into consideration your level of experience, financial objectives and seek independent advice if necessary. You should not spend more than you can afford to lose and should ensure that you fully understand the risks involved. FXTM brand is authorized and regulated in various jurisdictions. Open your FXTM account within minutes. The world’s most popular platform

You will need to fund your trading account though to start making trades. You need a trading account that you have opened with a broker, which you then connect to through the MetaTrader platform. As we’ve mentioned already, it does come with a whole load of tools and lots of opportunity to customise the platform as you wish – which is why some traders don’t feel the need to upgrade to the newer MT5.

Powerful trading platform

• You should not spend more than you can afford to lose and should ensure that you fully understand the risks involved.
• If you prefer to open smaller positions, you can choose to trade either mini lots (10,000 units) or even micro lots (1000 lots).
• Download MT4, the world’s most popular forex trading platform, and start trading with FXTM today.
• Since we launched in 2011, over 3 million people have joined FXTM and thousands of new traders continue to join us every month.
• Access more than 1,000 markets at competitive costs, with fast execution, and earn Rewards as you trade.

You can also create Expert Advisors (also known as Trading Robots) to help you develop your trading strategies and identify the latest market trends. If you’re new to trading, MT4 is a good starting point. You can always try both platforms and see which one works for you. MT5 does include additional tools such as the Economic Calendar and embedded community chat – but not every trader wants these. With MT4, you can monitor the markets in real-time, perform technical analysis with 30+ indicators, and execute trades securely.

Compare trading accounts designed for different goals, from tight spreads, to commission-free trading and specific instruments. MetaTrader is the platform you use to trade on, but any profits you make are made on your trading account with your broker. MetaTrader 4 (MT4) is a free, stand-alone forex trading platform used globally by millions of traders.

Spreads from 0.0.

The FXTM App provides beginner and seasoned traders a sleek, easy-to-navigate interface and MetaTrader powering transactions from behind the scenes. Redeem your points for funds sent directly to your trading account, or withdraw as cash, at any time. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of the FXTM brand based on the legal requirements in his/her country of residence.

Advantage Plus

Complete with MQL5, Expert Advisors, VPS trading and more. Trade with FXTM on a platform you trust. This varies based on the currency pair and your account type, which you can learn more about here.

Popular markets

• Choose from three accounts, each one made to help you find your opportunity.
• MT4 was specifically designed for FX traders, while MT5 was built with CFD, stock and futures traders in mind – although you can still trade FX on MT5, and you aren’t limited solely to FX on MT4 either.
• MetaTrader 5 offers access to Stocks, so if you’re looking to trade Stocks, you’ll need to use MT5.
• MT5, or MetaTrader 5, is a trading platform.
• Both MT4 and MT5 are efficient, innovative trading platforms with many features designed to boost your trading.

The Advantage Plus account has access to the same markets and instruments at no commission with slightly wider spreads. The Advantage account offers spreads from 0.0 on major Forex pairs and the tightest spreads available on other instruments, plus a commission fee. The differences between the Advantage and Advantage Plus trading accounts comes down to spreads and commission. Short-term traders looking to take advantage of volatility. MT4 was specifically designed for FX traders, while MT5 was built with CFD, stock and futures traders in mind – although you can still trade FX on MT5, and you aren’t limited solely to FX on MT4 either.

Can I use MT4 without a broker?

Choose from three accounts, each one made to help you find your opportunity. If Warren Buffet could trade it, you should be able to trade it. That meant no stealth fees and no secrets fxtm broker reviews in our trading stats. With the right licensing and regulation, those who chose to trade with us would be able do so with full peace of mind. Traders ourselves, we saw how the emerging web could bring opportunity to anyone who was ready to take on a little risk and put in the time to learn.

Find peace of mind with a regulated broker where funds are segregated. It all depends on your own unique trading needs. You can use it to open, close and manage trades, as well as monitor and analyse the markets in real-time. Open MT5 and connect to your FXTM account Register for an FXTM account and select the MT5 checkbox

Open MT4 and connect to your FXTM account Register for an FXTM account and select the MT4 checkbox Available on PC, Mac, mobile and tablet, to trade when and where you like. Complete with MQL4, Expert Advisors, VPS trading and more. We are a globally regulated broker, and for the safety of all our clients we offer segregated funds protection. On the Advantage account we offer typically zero spreads on FX majors, and spreads that can go as low as zero on gold.

You’ll be able to add multiple accounts to your profile. Want to trade US stocks only? Traders who want to trade the US stock market. With low minimum deposit and free trade ideas, tools and education, the FXTM Edge Account is a perfect fit for beginners.

Allows for precise pip value calculations, helping to manage risk per trade consistently. ‘Add-ons’ are extra functions that you can use to customise your platform depending on your own specific trading needs. MT4 is often a popular choice with new and beginner traders but it all depends on your personal preferences. Both MT4 and MT5 are efficient, innovative trading platforms with many features designed to boost your trading. Free to download and the industry favourite of FX and CFDs traders worldwide.

Bringing financial market opportunities to global audiences since 2011. Our Advantage account lets you get started from just $200. For example, you could have an Advantage Plus account as well as an Advantage Stocks account.