First part of the theory of Dow
Written by OnlineLoan on 20:03First part of the theory of Dow
It is the first series of ia of article of three about the theory of Dow.
The theory of Dow is about the way of establishing the richness of the nature of the movements at the stock exchange Market. The theory is in the beginning derived from the leading articles written by Charles Dow (1851-1902) a journalist, a first writer of the newspaper of Wall Street, and a cofounder of Dow-Dow-Jones Company.
The theory of Dow later was refined by William P. Hamilton and others.
But Dow itself never employed the term "theory of Dow."
The theory does not look at simply the technical action of analysis and price, but also the philosophy of the market.
Many ideas suggested by Dow and Hamilton became axioms at the stock exchange Market.
The fate of people think: "it will be different this time," but the theory of Dow showed that the stock exchange Market behaves the same thing today as it made 100 years ago.
Charles Dow developed his theory of the analysis of the action of price of the market late in the 1800s.
Dow never wrote really a book on its theory, but it, as writer of the newspaper of Wall Street, to write leading articles on its sights. And it was not until later it with the theory of William Dow of
refining by Hamilton by a series of articles, and later in its book: The barometer of stock exchange Market, that the theory was explained in detail.
But before you can include/understand the theory of Dow, there are three claims which must be accepted.
The first of the latter is that the primary tendency of no market can be operated.
And Hamilton agree with this. It affirmed that the intra-day, of day in the secondary day, and even movements could be inclined with handling because they was right the short movements of a few hours or even of a few days. Hamilton was also referred to the possibilities of various stocks being operated.
The primary and long-term tendency of the market would keep always intact, even if stocks were manipulatedin the shorter term. To operate a market was practically impossible according to Hamilton. Any Marketis just too large so that handling occurs.
In the 90s early the BRITISH government tried to hold British book counters other currencies but even the fourth larger industrialized country in the world could not influence things. The exchange markets are enormous. And in 1979/80 there was an attempt by the brothers of
hunting to operate the price of the money. The money went up out of arrow (temporarily) but only so that it returns to the bottom and for continuous its tendency of bear (after the attempt to drive back the market was discovered).
Secondly, the theory of Dow supposes that all is reflected on the markets. The price on the market represents the total of nap of all the hopes, fears, and hopes of each one in him.
Moreover, of the movements, the incomes, elections, and anything else of interest rate of interest have the price indicated already in the market.
The unexpected events will occur - but they affect only usually the short tendency of limit. The primary tendency remains intact.
Hamilton observed that the markets could sometimes act negatively on good news. It alleged that, in these cases, the look.ahead of the markets of the current events, in other words, when the news is outside - the market already acted and thus one reflects it in the price.
This explains very well the axiom of stock exchange Market: "buy the rumour, sell the news!"
And the third claim to be taken into account when to study the theory of Dow is that it is not perfect. No theory can be.
Hamilton and Dow itself knew this.
The theory of Dow, like any other theory, is right a whole of directives, though, the reliable ones enough.
But the theory provides a mechanism which removes much emotion of your trade. And the emotion is the reason of the number one the majority to fail people.
While taking to you with emotion out of the commercial assistances see what is really there, NOT what you want to see that it is there. And the theory of Dow eliminates ambiguity.
The theory of Dow is extremely effective to identify the primary tendency of any market. One does not envisage it like indicator court of limit.
Neither Hamilton nor Dow envisaged so that the theory envisages the beause in the short run movements which they admitted that such movements could be operated but by no means could the operated primary education movements of the market being.
They were not interested to envisage the tops or exact bottoms of a market, in fact, nobody can surely do that, they were interested by establishing the tendency (primary) principal and to benefit from the great movements. Even if it were to take months, or in certain cases,
of the years.
It is human nature to get caught upwards in the sudden movements of the prices, or forget the principal tendency. But once identified, it is where the great benefit are.
In the following article I receive daily fluctuations, secondary movements and primary goods traffic and the three into the heart of the Dow theory - phass from bull and from the fall of prices markets.
Understand that Dow theory and you has a good entire illustration of, which goes on into your selected market.
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