DOW THEORY FOR TRADERS VERY USEFUL FOR TRADERS VERY TO HAM USKO

Dow Jones therodbdurn

1. A VERY PRACTICAL THOERY OF FINANCIAL MARKETS
Volume goes with Trend
Closing Price is
important
Classification of Trends
The Principle of
Confirmations
BANK NIFTYNIFTY 50
PRIMARY TREND | MINOR TREND
Principle of confirmations suggests that both Nifty and Bank Nifty averages reach new highs or new lows
together on a daily closing basis.
ARVIND SHARE ACADEMY
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| SECONDARY TRENDSIX TENANTS OF DOW THEORY
Dow Theory
Charles H. Dow known as Father of Modern Technical Analysis
The Trend Persists
Averages Discount
Everything
Volume confirms the price move. Volume must increase as the trend develops, whether it is a bull or bear
market. It is greatest at the peak of a bull market or during the panic phase of a bear market.
Dow had a strong belief that the closing price each day was the most important price. There is always high
volume at the close of trading, when investors with short and long time frames come together to decide the
fair price.
A trend should be assumed to continue in effect until its reversal has been signaled. This rule forms the basis
of all trend-following principles. It considers the trend as a long-term price move, and positions are entered
only in the trend direction. It simply follows the trend until a signal occurs that indicates a change of
direction.
Dow could reduce the frequency of “unusual” moves in a single stock, that is, those moves that seemed
unreasonably large or out of character with the rest of the market. For example Nifty average the share value
of 50 companies therefore, an odd move in one of those prices would only be 1/50 of the total,reducing its
importance so that it would not distort the results. The average also represented far greater combined
liquidity than a single stock.
A trend should be assumed to continue in effect until its reversal has been signaled. This rule forms the basis
of all trend-following principles. It considers the trend as a long-term price move, and positions are entered
only in the trend direction.
SENSEX NIFTY METAL
1897 DJIA and Railroad Transportation Index | Robert Rhea wrote a book called Dow Theory in 1932