DID YOU DOW THEORY?
Many ways and systems are used by investors and traders in getting profits, both fundamentally and technically. However, among the many options available, there is the most basic theoretical science, which is obligatory for you to know in helping to market market analysis, namely Dow Theory.
Dow Theory or Dow Theory is the basic theory of technical analysis first publicized by Charles H. Dow (1851-1902) at the 255 Wall Street Journal. Dow is a journalist and editor of the Wall Street Journal, and founder of Dow Jones and Company. Dow's first research was done by distributing stocks on Wall Street into two groups, the Industrial Index and the transportation Index. He said industrial developments would be followed by expansion in the transport sector, as factories needed transportation to distribute their products.
In 1880 he moved to New York, where he met someone working on Wall Street and worked as a mining stock reporter. He soon became a famous journalist and was able to do financial analysis. Even Dow, can handle a large amount of confidential information. In late 1880, Dow moved to work for "Kiernan News Service", where he met his colleague Edward D. Jones, who coincidentally turned out to be a Dow fan.
Technical Analysis was born from the ideas of Charles Dow and his partner Edward Jones who worked in the Dow Jones and Company company since 1882. These ideas were published in the Wall Street Journal and are currently accepted by most technical analysts although most do not know source.
Some market theoretical methods according to Dow's Theory include:
1. The forex market has 3 different swing swing patterns (swing), long swing, long swing and short swing.
2. The market has 3 phases consisting of an initial purchase phase by investment experts, a buying phase by the public when they are later attracted and follow experts' steps, and sales phase by experts when prices have reached its peak to realize its profit (profit taking phase) .
3. All news and rumors have been discontinued by the market as reflected in the price itself.
4. Inter-markets are always closely linked, the movement of one type of market can affect other markets (intermarket relationships).
5. Trend strength is always confirmed by the volume of trade (especially for existing markets).
6. Trend will continue to move until there is a signal that implies a reversal movement. Generally if there is a 20% decrease (for uptrend) the trend direction will tend to be bearish (bearish).
For long-term forex traders Charles Dow's theory would be very useful. On the contrary for short term traders or daily traders the theory is less applicable because traders will likely act before there is a valid confirmation. For long-term traders understanding these different phases will be crucial to determine the right momentum of trade, as the leading investor Warren Buffet once said: "first will enter the innovators, then the imitators (imitators) and the last ones idiots ".
Forex traders, the understanding of 3 swing and 3-phase movement patterns will be useful, while markets that report the news and rumors are less likely to be remembered as most of the portion of the forex market movement is controlled by the central bank that has always released important issues to the entire world media on-line. It all appears transparent, and the central bank can also regulate the liquidity of its country currencies.
Dow Theory or Dow Theory is the basic theory of technical analysis first publicized by Charles H. Dow (1851-1902) at the 255 Wall Street Journal. Dow is a journalist and editor of the Wall Street Journal, and founder of Dow Jones and Company. Dow's first research was done by distributing stocks on Wall Street into two groups, the Industrial Index and the transportation Index. He said industrial developments would be followed by expansion in the transport sector, as factories needed transportation to distribute their products.
In 1880 he moved to New York, where he met someone working on Wall Street and worked as a mining stock reporter. He soon became a famous journalist and was able to do financial analysis. Even Dow, can handle a large amount of confidential information. In late 1880, Dow moved to work for "Kiernan News Service", where he met his colleague Edward D. Jones, who coincidentally turned out to be a Dow fan.
Technical Analysis was born from the ideas of Charles Dow and his partner Edward Jones who worked in the Dow Jones and Company company since 1882. These ideas were published in the Wall Street Journal and are currently accepted by most technical analysts although most do not know source.
Some market theoretical methods according to Dow's Theory include:
1. The forex market has 3 different swing swing patterns (swing), long swing, long swing and short swing.
2. The market has 3 phases consisting of an initial purchase phase by investment experts, a buying phase by the public when they are later attracted and follow experts' steps, and sales phase by experts when prices have reached its peak to realize its profit (profit taking phase) .
3. All news and rumors have been discontinued by the market as reflected in the price itself.
4. Inter-markets are always closely linked, the movement of one type of market can affect other markets (intermarket relationships).
5. Trend strength is always confirmed by the volume of trade (especially for existing markets).
6. Trend will continue to move until there is a signal that implies a reversal movement. Generally if there is a 20% decrease (for uptrend) the trend direction will tend to be bearish (bearish).
For long-term forex traders Charles Dow's theory would be very useful. On the contrary for short term traders or daily traders the theory is less applicable because traders will likely act before there is a valid confirmation. For long-term traders understanding these different phases will be crucial to determine the right momentum of trade, as the leading investor Warren Buffet once said: "first will enter the innovators, then the imitators (imitators) and the last ones idiots ".
Forex traders, the understanding of 3 swing and 3-phase movement patterns will be useful, while markets that report the news and rumors are less likely to be remembered as most of the portion of the forex market movement is controlled by the central bank that has always released important issues to the entire world media on-line. It all appears transparent, and the central bank can also regulate the liquidity of its country currencies.
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