What is the Dow theory?
Dow theory was created by Charles H Dow and they are the person introduced indices to the stock market for first time. What is the Dow theory? Dow theory is financial theory that says the market is in an upward trend if one of its averages advances above a previous important high and is accompanied or followed by a similar advance in the other average. Not get it ?? Don't worry example given below will make this easy. For example- If NIFTY makes new high than Sensex is expected to follow nifty How this theory works? 1. The Market Discount Everything: In simple language whether it is Risk factors or whether it is Opportunity in market discount everything with data or information market have. (In fact price tells everything) if price increase there are hopes for opportunities in market and prices decrease there are in fear of risks. 2. Three primary market trends: For long term(about 10 years) there are three trends 1. Up trend 2. Down trend 3. Sideways trend ...