The theory of Dow and its applications

Theory Dow – Who was Charles Dow?

Charles Dow was the son of a farmer and was born in Sterling in 1851. His father died when he was only 6 years old. This forced him to leave school and work as a laborer to support his family.

Later he began his career as a journalist. In 1889, he founded the company “Dow Jones Company”. The Dow Jones company published the first index, designed to represent the movement of the stock market. This index was called “Dow Jones”

Theory Dow- Definition

Dow’s trading theory is based on the analysis of maximum and minimum fluctuations of the market.

According to the Dow method, the importance of these maximums and minimums is a function of their location with respect to the previous maximums and minimums.

This methodology allows you to learn how to read a Trading chart and to better understand what happens in an asset at a specific time.

This simple analysis can allow even the most novice of us to identify the context in which an index of Forex or CFD shares evolves.

Another important point! Charles Dow supported the common belief of all traders and technical analysts that the price of an asset and the resulting swings in a Trading chart have all the information available and anticipated necessary.

Trading according to Dow theory
Basic principle:

The principle of the Dow Method in the technical analysis is to use the maximum and minimum points of the market to determine the context of the market, therefore:

If in a Forex chart you can identify a succession of increasingly high peaks and valleys.