(b) the zephyr guide: the dow theory is the home of all technical analysis of the market, to which the vast majority of people in the stock market respect due to their professionalism。
Jack & van
There are many similarities between our philosophies and the dow theory. For example, the philosophies were the first to emerge during the time of the spring-autumn war countries, and they later evolved into philosophies, ink and law. Similarly, the dow theory was the first doctrine to describe market patterns, the parent of all market technology analysis, and the cornerstone of the theory of sectarianism in stock market analysis. Moreover, the core idea of the ethics is, for example, that it is natural, that it is the law, that it is the law, that it is the power of all that is created in the heavens and the earth, and that it emphasizes the natural approach, which plays its role in identifying the reverse. Similarly, the dow theory explores the patterns of change in the market from the perspective of natural philosophy and humanity, emphasizing discovery and respect for the patterns. Important points such as its triple dynamics, the law of trends, etc., are at odds with the ethical book. Moralism can make a person a “philosophist”, and learning the dow theory will make you a “thinker” in the investment world。
The core of dold theory
The dow theory has three core ideas, namely, the doctrine of triple motion, the principle of mutual validation and the principle of speculation。
1. Triple motors
The dow theory emphasizes that market behaviour is a psychological act of a natural human being, that it is regular, that markets can be predicted but not measured. Investors can understand what trends are and when they change, but the timing and location of prices cannot be predicted accurately. Why do you say that
According to the dow theory, market trends are divided into three types of movements, namely basic, secondary and daily fluctuations. The pattern of large-level basic movements is that people can be held in control; the sub-level single-motor belt is somewhat deceptive; and small-level daily fluctuations are highly random and cannot be captured. The purpose of this rationale is that the main trends in the market can be predicted, but the specific trajectory of the movement is not measurable。
The day-to-day fluctuations lasted from days to weeks; the secondary campaigns lasted from weeks to months; and the basic campaigns lasted from months to years. These three trends necessarily coexist in any market。
Most stock market investors are keen on the main direction of the market, as secondary movements and day-to-day fluctuations are random, unpredictable and captureable and often do not last long. However, once stock-market trends are formed, the overall trend will continue until a fundamental reversal of the overall dominant trend, despite frequent secondary motion disruptions and daily fluctuations。
This principle also applies to speculators, whose operational objective is to build positions along medium-term trends. Speculators can use the development of short-term trends to observe the signs of change in medium-term trends。
2. Principle of mutual verification
Mr. Dow refers to the principle of cross-certification between different relevant constraints, as well as between different elements and indicators. The constraints of the two are different, but more relevant, which are necessary to establish the principle of mutual validation。
The results obtained in one way need to be validated in another way. The trend of stock price increases and declines can only be established by the simultaneous appearance of two signs of increase or drop. The idea of this principle is to deny the wrong conclusion by powerfully deviating from one another and to verify the right market dynamics through their consistency, which is true only if proven to be correct。
Specifically, for two species or indices of greater relevance, the movement of one species or index can be validated by another when their movements are consistent, which means that the trend will continue; when the movement between them is different, the movement of one species or index cannot be validated by another, which means that it is difficult to continue。
We often find that one market index has reversed its course for weeks or months, while the other one shows the opposite direction. This phenomenon has been described as a departure, and the trend will continue to have only negative uses. Deviations from each other and their corresponding cross-certification principles are always used jointly because they operate in a consistent manner. Mutual validation means comparing technical signals or indicators, thereby ensuring that most of them are mutually validated and point in the common direction. In stock market transactions, there was one of the most serious errors, which was based on the movement of only one index。
3. The theory of speculation
The market already contains our expectations for the market, which are an integral part of the market, so speculation is also an integral part of the market. The market can be predicted precisely because we predict the market, and we and the market that we predict are in opposition. And the reason that markets can be predicted is because of their speculative nature, which is one of the fundamental attributes of markets, which, if not speculative, would not exist。
Market behaviour necessarily includes speculation. It is the most dynamic factor in the market, and it brings to the market important and predictable elements. However, there has always been no firm definition of speculative behaviour, and it might be useful to give a definition of what characterizes speculative behaviour: speculative behaviour is the act of taking positive measures in the hope of achieving what it expects, what it wants and what it believes and which is highly random and uncertain。
If the market responds to the wishes of a large number of investors, that is what we really do; but if the speculation responds to the wishes of a mere government or policy, it may lead to excessive speculation on the market; and if the speculation responds to the wishes of the war-bearers, it will lead to limited speculation. We therefore need to distinguish between market speculation and excessive speculation and extreme speculation。
Methods for analysing market trends (theorem)
1. Main trends
The main trends represent the general trend, commonly referred to as multiple or empty markets, which may last for less than a year or even years. The correct determination of the main trends is the most important factor in the success of speculative behaviour, but there is no known method of predicting the duration of the main trends。
Understanding long-term trends is the minimum condition for successful speculation or investment. A speculator who has confidence in a long-term trend can make a considerable profit if he has the right judgement as to the timing of his entry. With regard to the magnitude and duration of major trends, although there is no clear method of predicting them, historical price trends can be used to provide statistical summaries of major trends and secondary reversals。
The current price trends are very likely to fall within the limited range of historical data averages in both ranges and periods. If a price trend exceeds the corresponding average, the statistical risk of becoming involved in that trend increases. This knowledge of risk assessment, when properly weighed and applied, can significantly improve the statistical accuracy of future price projections。
2. Major multiple markets
The main multi-markets represent a general upward trend, with a mixed downward trend, with an average duration longer than two years. During this period, investment and speculative demand increased and stock prices were pushed up as a result of improved economic conditions and increased speculative activity。
Multiple markets have three phases: the first phase, where confidence in the future is restored; the second phase, where equity reacts to known corporate surplus improvements; and the third phase, where speculative booms and significant stock price hikes — the rise in stock prices at this stage is based on expectations and hope。
The multiplicity of markets is characterized by the persistence of all major indices at high levels, and by the fact that the retreat does not break the low point of the previous secondary reversal, before it continues to rise and innovate at high prices. In the secondary regression, the index does not simultaneously break previous important lows。
Important features of the main multiple markets are as follows:
(1) based on the low point of the previous empty market, the price increase in the main multiple markets averaged 77. 5 per cent。
(2) the average length of periods in the main multiple markets is two years and four months. Of all the historical multiple markets, 75 per cent had a length of more than 657 days and 67 per cent had a period between 1. 8 and 4. 1 years。
(3) the beginning of multiple markets, and the secondary reversal of the last wave of empty markets, are almost indistinguishable from each other and only waiting for confirmation。
(4) secondary reversals in multiple markets have generally fallen more sharply than earlier and subsequent increases. In addition, trades at the beginning of the reversal movement are usually quite large, but at low points they are low。
(5) the recognition date for multiple markets is the high point of both indices moving upwards through the previous correction trend in the empty market and continuing upwards。
3. Empty markets
The main empty market is a long-term downward trend that combines important rebounds. It comes from a variety of adverse economic factors, and this trend will end only if equity prices fully reflect the worst possible situation。
The “critical rebound” between them is characteristic of empty markets, but neither of them will cross the top of multiple markets, nor will the two indices cross the previous medium-term highs. “empirical economic factors” are the result of government actions: interventionist legislation, very serious tax and trade policies, irresponsible monetary or fiscal policies and major wars。
The empty market will also go through three main stages: the first phase, where market participants no longer expect stocks to sustain overinflated prices; the second phase, where sales pressure reflects a decline in economic performance and business surpluses; and the third phase, where disappointment pressures from sound stocks, regardless of their value, are expected by many to cash at least part of the stock。
At the end of the period, the market has become immune to further news and pessimism. However, after a serious setback, stock prices also appear to have lost their resilience, with symptoms indicating that markets have reached a level of equilibrium, speculation has been inactive and sales will not be reduced, but the purchasing power is clearly not enough to push up prices... In an atmosphere of pessimism, dividends have been eliminated, and some large enterprises often face financial difficulties。
For these reasons, stock prices may show a narrow trend. Once this narrow trend is clearly broken upwards, there will be a wave of upwards of the market index, with all the mixed drops remaining at the low of the previous wave. It is time to create a multi-headed speculative position。
4. Secondary regression
The secondary regression is an important medium-term trend, a major reversal of major trends, a significant downward trend in multiple markets, or a significant upward trend in empty markets, usually lasting from three weeks to several months; the regression in this period ranges from 33 to 66 per cent of the main trend after the end of the previous regression. The secondary reversals are often mistakenly assumed to be major shifts, as the initial trends in many markets may clearly be only secondary reversals in empty markets, and vice versa。
When judging whether the medium-term trend is a correction of the trend, it is necessary to observe the trade-off relationship, revise statistics on the history or rate of movement, the general attitude of market participants, the financial position of individual enterprises, the overall situation, policies and many other factors. While it is true that there is a subjective element in the categorization of trends, the accuracy of judgements is of great importance. It is often difficult, if not impossible, to judge whether a trend is a secondary one or the end of a major trend。
Concluding remarks
Indeed, the dow theory does not apply to predicting stock markets or even to directing investors, but rather to a barometer reflecting general market trends. Most people see the dow theory as a technical analytical tool — a very regrettable view. In fact, the greatest thing about the dow theory is its valuable philosophy, which is its whole essence. Reia, the author of the dow theory, emphasized in all relevant writings that the “dow theory” is designed as a tool or tool to enhance the knowledge of speculators or investors and is not a strict technical theory that can be detached from economic fundamentals and market realities. By definition, the “dow theory” is a technical theory; in other words, it is a method of speculating on future price behaviour based on a price model study。
This paper provides only a summary and a summary of the core ideas of the dow theory, which can be read in books such as the stock market barometer and the dow theory if it is to be more fully understood and understood。
*references:
Dow theory, robert raya
The dodge theory - the foundation of market analysis, by chen dong
The stock market barometer, by william peter hamilton
"professional principles of speculation," by victor sporundi
Technical analysis of stock market trends, by john meggie, robert d. Edward
