Course: The foundations of technical analysis
Lesson Insights
The Dow Theory is a market theory that was developed by Charles Dow, co-founder of The Wall Street Journal, in the late 19th and early 20th centuries. It is considered to be one of the earliest forms of technical analysis, and is based on the idea that market trends can be identified and used to make informed investment decisions.
The Dow Theory is based on the idea that market trends can be classified into three categories: primary trends, secondary trends, and minor trends. According to the theory, primary trends represent long-term market movements and can last for several years. Secondary trends are shorter-term movements that occur within the context of the primary trend, and are often the result of market corrections or consolidations. Minor trends are even shorter-term movements that occur within the context of the secondary trend.
The Dow Theory also states that stock market trends can be confirmed by analyzing the price movements of multiple market averages, such as the Dow Jones Industrial Average and the Dow Jones Transportation Average. According to the theory, when both the industrial and transportation averages are trending in the same direction, it is a sign of a confirmed market trend.
The Dow Theory remains an influential concept in the world of finance, and is widely studied and applied by technical analysts and market participants. However, it is important to note that like all market theories, the Dow Theory is not a guarantee of future market performance and should be used in conjunction with other forms of analysis to make informed investment decisions.
Additional content, strategies, stories, analyses, and tables for this lesson:
"The foundations of technical analysis"
+ for all the other lessons as well!
Strategies - Stories - Tables
Get access for more than 65 strategies, 34 tables and all the extra contents!
Only $19 / month
Activate SHORTS 5Additional content for this lesson:
Demystify the world of trading with our Trading Terminology Shorts category. We bring you concise definitions and relatable analogies to help you understand the ins and outs of stock market trading, making your educational journey even more enjoyable and rewarding.
Discover the titans of finance who've shaped the world of stock exchanges and digital currencies. Dive into the lives and legacies of these financial luminaries and learn about their contributions to the ever-evolving landscape of modern investment.
Dive deep into the world of trading and finance with our comprehensive essay collection, covering a wide range of topics in detail. Explore in-depth analyses of financial phenomena and gain a richer understanding of the mechanisms that drive markets and investment strategies.
Build your financial library with our Reading Corner Shorts category, offering expert recommendations on the best books covering various stock market topics. Learn from the masters and elevate your trading skills with these must-read titles.
Gain a well-rounded understanding of trading techniques and tools with our "Pros & Cons" category. Discover the strengths and weaknesses of various market strategies, indicators, and software to make educated decisions in your trading journey.
Elevate your trading journey with our Learning Pathways Shorts category, offering weekly learning plans that systematically tackle crucial trading concepts. Designed with beginners in mind, these frameworks will help you build your knowledge and develop a solid foundation for stock market success.
Expand your knowledge with our Contrast Corner Shorts category, showcasing in-depth comparisons between different stock market terms, methods, and tools. Uncover the critical differences that can help you build a more robust trading strategy and stay ahead in the dynamic world of investing.
