What is the Dow Theory?

Charles Dow believed that the stock market as a whole was a trusted measure of international economic problems and that by evaluating the worldwide market, it was feasible to properly examine those conditions to recognize the direction of crucial market trends in addition to the most likely direction of specific supplies.

Based upon his theory, Charles Dow developed the Dow Jones Index as well as the Dow Jones Rail Index, currently known as Transportation Index, which was initially developed for the Wall Street Journal. Charles Dow produced these indices as he thought that they would give a precise reflection of the financial as well as monetary problems of firms in two major economic sectors: the commercial as well as the transport markets.

Dow theory clarified

The Dow theory is based upon the evaluation of optimum as well as minimal market variations to make forecasts on the direction of the market.

According to the Dow theory [ทฤษฎี ดาว dow theory, which is the term in Thai], the relevance of these upward and descending motions is their placement in relation to previous variations. This approach instructs financiers to review a trading chart and to better understand what is happening with any type of asset at any given moment. With this easy evaluation, the most unskilled can determine the context in which an economic tool is advancing.

Additionally, Charles Dow supported the typical belief among all investors, as well as technical experts that a property price, as well as its resulting movements on a trading graph, already have all needed details already offered, and forecasted in order to make exact predictions.

Dow concept trading strategy

The majority of trading strategies utilized hinge on one essential principle, the pattern. This was a novel concept when Charles H. Dow published his writings at the end of the 19th century. Nonetheless, greater than a century, later on, the Dow Jones Standard market index, developed by the American reporter to show his concept, is possibly now amongst the most followed index in the world.

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