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    Dow Theory

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    Ajit PAi
    1. Dow Theory originated from Charles Dow's work in the late 19th century analyzing stock price movements and developing market indicators. 2. Dow observed that stock prices moved in trends and published the first market average in 1884 using 11 stocks. 3. There are six main tenets of Dow Theory including that markets move in three phases of trends, stock market averages must confirm each other's movements, and trends persist until definitive signals show they have ended.

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    Dow Theory

    Uploaded by

    Ajit PAi
    204 views40 pages
    1. Dow Theory originated from Charles Dow's work in the late 19th century analyzing stock price movements and developing market indicators. 2. Dow observed that stock prices moved in trends and published the first market average in 1884 using 11 stocks. 3. There are six main tenets of Dow Theory including that markets move in three phases of trends, stock market averages must confirm each other's movements, and trends persist until definitive signals show they have ended.

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    1. Dow Theory originated from Charles Dow's work in the late 19th century analyzing stock price movements and developing market indicators. 2. Dow observed that stock prices moved in trends and published the first market average in 1884 using 11 stocks. 3. There are six main tenets of Dow Theory including that markets move in three phases of trends, stock market averages must confirm each other's movements, and trends persist until definitive signals show they have ended.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    204 views40 pages

    Dow Theory

    Uploaded by

    Ajit PAi
    1. Dow Theory originated from Charles Dow's work in the late 19th century analyzing stock price movements and developing market indicators. 2. Dow observed that stock prices moved in trends and published the first market average in 1884 using 11 stocks. 3. There are six main tenets of Dow Theory including that markets move in three phases of trends, stock market averages must confirm each other's movements, and trends persist until definitive signals show they have ended.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 40

    Introduction to Dow Theory

    By: Aditya www.trend-traders.com

    INVESTING 101 March 20, 2009

    Dow Theory The Genesis of Technical Analysis The origins of modern technical analysis can be traced back to the work and theories of Charles Henry Dow (1851 1902). As a young man, Dow arrived in New York in 1879 to be a reporter for a financial news service. By 1882 he and Edward DJones had founded Dow Jones and Company and were delivering their own news items to Wall Street financial houses. By studying the closing prices of shares Dow concluded that it was possible to produce a market barometer or stock average that could be used by investors to measure the overall performance of the stock market. In July 1884, Dow produced his first market measure calculated from the average of eleven stocks.

    Diffusion of information

    Value of information

    Market Price

    Information out of value

    Sources of information

    DOW THEORY
    There are 6 basic tenets of Dow Theory 1. The market has three movements 2. Trends have three phases 3. The stock market discounts all news 4. Stock market averages must confirm each other 5. Trends are confirmed by volume

    6. Trend exist until definitive signals prove that they ended

    1. The market has three movements

    Major Trend (6 month 1 year) Medium Trend (2 3 month) Minor Trend (daily movement)

    Trend

    2. Trends have three phases

    The Market Cycle


    Accumulation Phase Participation Phase (Bullish / Bearish) Distribution Phase (Excess, Panic, ranging)

    4. Stock market averages must confirm each other

    Inter Market Correlation

    Angka positif menunjukkan pergerakan harga yang searah Angka negatif menunjukkan pergerakan harga yang berlainan arah

    Inter Market Correlation

    Angka positif menunjukkan pergerakan harga yang searah Angka negatif menunjukkan pergerakan harga yang berlainan arah

    5. Trends are confirmed by volume (convergence)

    5. Trends are confirmed by volume (Divergence)

    Peak & Through

    Peak & Through

    Begin and End of Bull trends


    Return line acts as resistance
    BUY

    SELL

    Price

    Trend line acts as support


    www.trendtrader.co.cc

    Peak & Trough

    Optimizing Profit Factor HSI market August 7 2007

    Optimizing Profit Factor HSI market August 7 2007

    Running on 1 minute/ 5 minute chart

    How To Use Peak and Trough Analysis

    www.trendtrader.co.cc

    www.trendtrader.co.cc

    www.trendtrader.co.cc

    SHORT TERM BAR CHART ANALYSIS


    WHO Charge in The market

    Meaning of Bar component


    Opening price Tend to reflect the opinion of the public reacting in emotional way to what happening Closing price .tell us where the daily bull and bears was resolve HIGH represent the maximums power of buyer where supply overcome demand seller took control from buyer Low the maximum power of seller

    UP-DOWN TREND CONFIGURATION

    The trend is determined in accordance with Dow theory. An up-trend is a series of bars with higher highs and higher lows. A down-trend is a series of bars with lower highs and lower lows

    www.trendtrader.co.cc

    When does a Trend Start and End?


    An up trend is started by a bar with a higher high and higher low than the previous bar. Conversely, a down trend is started by a bar with a lower high and lower low than the previous bar.

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