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The originator of technical analysis - Dow Theory

I. The orig cashback forex of Dow Theory The founder of the theory Forex rebate king the United States Charles H Dow (CharlesHDow) refers to Charles Dows views cashbackinforex theories on the formation of the stock Forexrebateking, it is based on the Dow Jones Industrial and Transportation Stock Price Average created a theory of market analysis to measure the trend of the stock forexrebateindonesia index is usually considered Dow Theory is The foundation of market analysis and technical analysis Most of the widely used technical analysis theories to date have their origins in Dow Theory and are its various forms of development Charles H. Dow pioneered the average stock market price index on July 3, 1884, laying the foundation for a variety of existing indices These indices are a barometer of stock market activity and are an indispensable and powerful tool for technical market analysts 1984 On July 3 (the centennial), the Market Technical Analysts Association (MTA) also presented Dow Jones & Company with the Gollheimer Silver Bowl Award for his contribution to the field of investment research. n Dow never wrote a book on his theories, but published a series of editorials in the Wall Street Journal in the late 19th century expressing his research on stock market behavior until his death in 1903. It was only a year after his death that these articles were compiled in a book by A. Nelson, Common Sense Stock Market Speculation, which was published in one place. In Richard Russos preface to the book, Dows contribution to stock market theory was compared to Freuds influence on psychiatry. In 1922, William Peter Hamilton, Dows assistant and heir to the Wall Street Journal, summarized Dows theories and published The Stock Market Barometer (published by Harper Brothers, New York) book used Dows theory for the first time n Robert Ray and further refined Dows theory, published in 1932, the book "Dow Theory" (Barrons Publishing Company, New York) Dows research is for his invention of the average price of the stock market, namely, industrial stock index and railroad stock index, but the vast majority of its theory in the commodity futures market is also at ease  Second, the key points of Dows theory Dows theory has a central idea, the key point of the theory: the average price of all inclusive digestion he believes that the price of digestion and embodies all the information contains market confidence, economic information, policy and so on reasoning theory is based on the following conditions: Conditions a human operation: the index or securities every day, every week fluctuations may be subject to human action, secondaryreactions ( Secondaryreactions) may also be affected by this limited, such as the common adjustment trend, but the primarytrend (Primarytrend) will not be subject to human manipulation Some people may say that the dealer can manipulate the primarytrend of securities in the short term, if he does not operate, this suitable for the operation of the internal quality of securities will also be subject to the operation of others; in the long term In general, the main trend of the company is still not artificially operated, but the securities are changed to different institutional investors and different operating conditions. Therefore, the market index will always appropriately anticipate the impact of future events and quickly assess the impact of disasters such as fires, earthquakes, wars, etc. In the market, people are constantly evaluating and judging the endless topics such as financial policies, expansions, leaders speeches, institutional violations, GEMs, etc., and constantly reflecting their Therefore, for most people the market always seems difficult to grasp and understand Condition 3 Dow Theory is an objective analysis theory: the successful use of it to assist speculation or investment behavior, requires in-depth research and objective judgment when using it subjectively, will continue to make mistakes and losses I can tell you another secret: 95% of investors in the market using the subjective Operation, the vast majority of these 95% of investors belong to the seven losses, two flat a profit in the seven loss people and I, fortunately, became an objective trader and investor Three, the definition of the Dow Theory trend 1, the definition of the trend: successive upward price peaks and troughs are correspondingly higher than the previous peak and trough, then the market is in an uptrend (1) the basic trend sequentially rising peaks and troughs for the uptrend The peaks and troughs of a sequential decline are downtrends; the peaks and troughs of a sequential horizontal extension are horizontal extensions Characteristics: The most dominant trend, with prices rising or falling broadly or across the board; the duration is usually one year or more; the overall rise (fall) is more than 20%. The market, or bear market, is usually (but not necessarily) divided into three phases Exit or diversification phase: At the end of a bull market, visionary investors accelerate the pace of shipments, when volume is still high, but there is a tendency to gradually decrease on the rally, when the public is still keen to trade Panic phase: Those who want to buy begin to retreat, while those who want to sell are eager to get out of the market, prices accelerate down and volume increases during the panic phase After the end of the panic phase, there is usually a fairly long secondary rally or sideways movement The bottoming phase: bad news is frequently reported and constantly confirmed, but the downtrend does not accelerate and the decline is concentrated on some of the better performing stocks The underlying trend in stock prices is of primary concern to long-term investors, with the aim of buying stocks as soon as possible when a long market forms and selling them in time before a short market forms There are no Two bull or bear markets are exactly the same, and there is no clear time limit (2) Secondary trend: The movement in the opposite direction of the fundamental trend, and has a certain hold on it, so it is also called a corrective trend In long markets, it is an intermediate decline or adjustment; in short markets, it is an intermediate rise or rally The duration of this trend varies from 3 weeks to several months, and its rise or fall is generally (3) Short-term trends, also known as mini-trends, are short-lived fluctuations, rarely lasting more than three weeks, usually less than six days, which have little meaning in themselves, but only give the process of development of the main trend a mysterious and changeable color. Different levels of trends in the market are coexisting Three trends are extremely similar to the fluctuations of the waves Tides, waves, ripples represent the primary trend of the market, secondary trends, short-term trends waves can be predicted in advance, but not the stock price Four, the Dow Theory supplement 1, a variety of average prices must be mutually verified Market trends must be determined by two indices, the two movements are consistent, reflecting the trend is indeed, valid unless Industrial stocks and railroad stocks, both indices issued a bullish or bearish signal, it is impossible to have a large-scale bull or bear market any single index shows the change can not be used as a signal to conclude that the trend is effective reversal of course, the two indices do not have to signal at the same time, but the shorter the interval, the better If the performance of the two average prices deviate from each other, can not be confirmed, indicating that the original trend is still valid, the forecast may There is a mistake (Elliott Wave Theory in this point and Dow theory is different, only requires a single average price to give a signal is sufficient) 2, the volume must verify the trend Dow believes that volume analysis is second, but as verification of the price chart signal of circumstantial value According to volume can make a judgment on the main trend, but the price reversal signal can only be issued by the closing price Trading volume principle.  Volume level is an estimate of the strength or urgency of the market behind the price movement. The higher the volume, the more intense and stressful the market is by analyzing the level of volume with price changes to better estimate the pressure to buy or sell behind the market movement. Short market, the volume of the price increase, the price back to the volume decrease 2, volume divergence in the uptrend, the price does not increase or price back to the volume does not decrease, are the signals that the uptrend is about to change, called the volume divergence in the downtrend, the price is light or the price is not reduced, is the bottom of the downtrend is difficult to sustain the signal 3, the volume of transactions ahead of the price (volume in the price first) whether it is an uptrend in the price of upward pressure reduction, or downward trend in the price down pressure reduction, are through the volume of information pre-responsive to the price itself, which will only be reflected when the price trend actually reverses 4, the sky volume to see the sky price, the ground volume to see the ground price n Granville: volume and price trends in the relationship between individual stock volume and stock price upward market: under normal circumstances, the price rises, the price rises, continue to rise; stock price innovation high, the volume has not reached a new high, the upward trend is difficult to continue; the price rises, the price rises. up momentum is difficult to continue; price up volume reduction (divergence), the lack of upward momentum, the trend has changed; price rise from slow to fast, blowout, volume increased sharply, followed by a large contraction, the beginning of the big fall; continuous rise, the volume increased sharply, the price stagnation (circling), down a harbinger; low, price up volume does not increase, the rise is weak
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