About the Dow theory of analysis

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famous econom cashbackforexbtct Dow Jones has made outst cashback forex East forex cashbackg contributions in the field of financial investment, and Dow theory is one of the important tools used by investors to analyze the Eastforexcashback of the stock forexcashbackcalculator As the foreign exchange market and the stock market have many similarities, mastering the Dow theory, will also greatly promote the ability to trade in the foreign exchange market Below, will introduce several methods of analysis of the Dow theory  nbsp;Method one: the use of two indices to determine the overall trend of the famous Dow Jones mixed index is composed of 20 kinds of railroads, 30 kinds of industry and 15 kinds of public utilities three parts according to the historical experience, which industry and railroads two kinds of classification index data is very representative Therefore, in determining the trend, Dow theory is more focused on the analysis of railroads and industry two kinds of index changes which any purely an index shown The movement of any one index can not be used as a signal to determine the effective reversal of the trend, the two are indispensable Method 2: According to the change in volume to determine the change in trend volume will change with the main trend changes therefore, according to the volume can also make a judgment on the main trend usually, in the long market, the price rises, the volume increases; price falls, the volume decreases in the short market, when the price In short markets, when the price slides, volume increases; in rallies, volume decreases. Of course, there are sometimes exceptions to this rule, so it is difficult to make a correct conclusion based only on a few days of volume, but only in the analysis of the entire trading process over a sustained period of time. In order to determine the trend of the market, the final conclusive signal is generated only by the movement of the price level, which only provides data for reasonable interpretation in some doubtful cases Method 3: A pattern can replace an intermediate trend A pattern appears in one or both indices and lasts for two or three weeks, but also sometimes for several months, with the price level fluctuating only at a distance of about 5% This shape shows that the forces of buying and selling are balanced Of course, one of the last scenarios is that the supply at this price level is finished, and those who want to buy have to buy. The other scenario is that those who wanted to sell at the intraday level find that the buying atmosphere has weakened and they have to cut prices to dispose of their shares. However, they are more often found in the rest and consolidation phase of a primary trend. In this case, they replace the formal secondary fluctuations. The same direction continues to stay for a longer period of time, this situation normal phenomenon Method 4: the closing price in the first place Dow Theory does not pay attention to a trading day in the highest price, the lowest price, and only pay attention to the closing price because the closing price is the only number of people in a hurry to see the financial version of the time to read, is the final evaluation of the days stock price, most people according to this price for the purchase and sale of the commission which is another This is another time-tested rule of the Dow Theory This rule is useful in determining the future development of the main trend of the movement: Suppose a major uptrend, an intermediate rise at 11 oclock in the morning to reach the highest point, in this hour of the Dow Industrials 152.45 and the closing price of 150.70, the future closing must exceed 150.70, the main trend is considered to continue to rise on the day 152.45 of the high point in the transaction does not count, if the next rise in the day of the high point reached 152.60, but the close is still below 150.70 the main long trend is still uncertain Method 5: Before the reversal of the trend will still play the influence of the main trend of course, before the reversal signal, change the attitude of the market in advance, as if the race running in the signal issued This rule also means that after the trend reversal signal has become clear, a person should also delay his action, but that in experience, we wait until it has been determined before acting more favorably, in order to avoid buying (or selling) before it is ripe naturally, the main trend of stock prices is in constant change long market does not last forever, short market always Reach the bottom of the day when a new major trend for the first time by the two indices, such as regardless of the short period of volatility, the trend will continue for the most part, but the further this trend will continue the less likely this rule tells people: a reversal of the old trend may occur at any time after the new trend is confirmed, as investors, once the commission, must always pay attention to the market  Method 6: Stock market volatility reflects all market behavior The closing price and volatility of the stock market index reflects all market behavior In the stock market, you may feel that the political situation is stable, so buy stocks Some other people may feel that the economic outlook is optimistic so buy stocks There are some people who think that interest rates will be lowered and it is worthwhile to absorb stocks in the market Some more people have insider information that large consortia have emerged to acquire and merge, so to No matter what attitude people have, the rising market price reflects the sentiment, even if it is a different point of view from the opposite perspective, when people have different fear factors, some people think that short selling will gain big, some people think that political turmoil and panic, some people are afraid that the Great Depression is coming some people hear insider news that the major shareholders want to ship out cash, or politicians are assassinated no matter what factors, the rise and fall of the stock market index changes reflect the Mass optimism mass, whether justified or unjustified, moderate or excessive, will promote the rise of stock prices mass pessimism, regardless of blind fear, whether there is a substantive problem or hysteria by other peoples emotions, will be reflected in the market index down to its analysis of the market millions of people each investment in the mindset of people to do something that is not possible to do, investment people should analyze reflect the entire Market mentality of the stock market index stock market index represents the mass mentality, the sum of market behavior index reflects the actual market is optimism on the one hand or pessimism control the big picture Dow theory of these several methods, are after a longer period of practice test, and in the process of continuous improvement and development, mastering the Dow theory of analysis, the trend of the stock market for investors to determine the important Guidance significance

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