Investment Articles

I am often asked why I prefer the mini-Dow over the S&P Emini. While any index will do, I especially like the mini-Dow index.

Because of the faster movement of the Dow versus the S&P 500, the mini-Dow more closely follows it’s big board parent.

So if it is just a matter of speed, then the mini-Russell would be even better right? Not exactly. The problem with the Russell is the low volume. This will no doubt change in the future. The mini-Dow had too low a volume for my money just a couple years ago, but that has now changed.

One more reason why I prefer the Mini-Dow is that I like no-cost tools, and it is much easier to find a reliable Dow chart. In fact there are many free-online charts that work just fine.

No matter which Index you prefer, I feel it is an advantage to watch the big board chart, and not the mini chart. I also prefer the 5 minute time frame. (the one minute time frame can help with entries at times, but be careful, it can give many head fake moves too).

Many traders watch both, which is what I did years ago before deciding to focus on the big board. Here’s why. I found that I would not move on what the mini chart was telling me unless I confirmed it with the big board. A popular confirmation among traders. It finally hit me that if I would not make a trade without confirming it with the big chart, then why did I need the mini chart at all?

When I dropped the mini chart and focused on the big board movement, my trading improved. I have since confirmed this strategy with Hundreds of my students and other traders. Just recently, one of my students who moved on to using the mini-chart (a paid service I might add), came back to our style and is now focusing on the no-cost big chart we use. He also confirmed that his trading improved, and he now sees why I focus on the big one.

The mini chart (even in the 5 min time frame) is like trading with a 1 minute chart. There are too many head fake moves that get you in a trade before it has fully developed. The big board averages some of those moves out for you. It keeps you on the sidelines when you should be. Sure, you might not get in as early on some runs, but in the long term it will save you!

It is difficult to catch any move from top to bottom or vice-versa, but by watching the big board you can fairly easily get a nice chunk out of the middle. A few nice chunks a week will keep you from needing a bail out plan!

Doug West has worked in Financial Planning and Investment training for over 20 years. Listen to his online radio show at:

Forget day trading stocks and learn how to trade the mini index!