Dow Theory. In the end, Dow Theory. The beginning is the most important thing. It’s the foundation, the basics.
First, please allow me to apologize.
To catch your attention, I deliberately chose a strong title.
If anyone felt uncomfortable, I’m sorry.
However, in this article, I intend to deliver something that gets to the heart of the matter.
I would be grateful if you read it through to the end.
Dow Theory is known.
I’ve read the book and watched the videos.
Yet, when I open the chart, I don’t understand.
Where are the highs, where are the lows?
Is it in an uptrend now or not?
If this situation continues,
I must tell you something tough.
Knowing Dow Theory and being able to use it are two completely different things.
It’s not that you lack knowledge.
You simply don’t have a procedure to apply on the chart.
■ Check whether this applies to you
□ You can explain Dow Theory, but can’t quickly identify highs and lows on the chart
□ You’re always unsure which highs and lows to use as reference
□ Even when you can say “It’s an upward trend,” you can’t explain why
□ You enter trades without realizing the directions differ between higher and lower timeframes
If two or more apply, what’s written in this article is the source of your confusion.
■ There is only one Dow Theory to use in trading
Dow Theory comprises several ideas.
However, in trading, you use only one of them.
Whether highs and lows are rising (higher highs and higher lows) or falling (lower highs and lower lows).
If both highs and lows keep rising, it’s an uptrend.
If both highs and lows keep falling, it’s a downtrend.
Merely updating a high once does not make a trend.
What matters is that the sequence of higher highs and higher lows or lower highs and lower lows continues.
■ The confusion comes from not having a method to determine highs and lows
The idea is simple.
Still, you get confused on the chart because you haven’t decided where to regard as highs and lows.
Prices do not move in a straight line.
They go up a little, then down a little, repeatedly.
If you treat all those small rises and falls as “highs” and “lows,”
the trend you see will change every time you look at it.
It will seem to be rising at times and falling at others, with your judgment wavering.
Dow Theory that does not define which highs and lows to look at cannot be used.
It’s a bit harsh to say, but
Searching for highs and lows without a standard is like trying to measure length with a ruler that has no markings.
■ What you can learn from the video
・ On an actual chart, which highs and lows to use as references
・ How to judge a trend without being misled by small fluctuations
・ Where to determine whether a trend continues or has ended
・ How to think when the higher and lower timeframes point in different directions
■ Who this video is for
・Those who know Dow Theory but can’t apply it to charts
・Those who always hesitate about where to take highs and lows
・Those who want to be able to explain the rationale for a trend in their own words
From here on, I will thoroughly explain using actual charts in a video.
▼ This part is paid