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Title: What is Dow Theory?【Japan Stock Trading Essentials】

Source: AmiGo Investment School

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the topic of What is Dow Theory.

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Dow Theory is one of the important theories in stock market technical analysis.

This theory was developed in the late 19th century by Charles Dow and his colleague Edward Jones.

Dow Theory focuses on trend analysis in the stock market, and its main principles can be summarized as follows.

1. 
   

   The market has three trends:

   Primary Trend, Secondary Reaction, and Daily Fluctuations.

   
   

2. The primary trend indicates the long-term direction, which can be an uptrend or a downtrend.

   
   

3. The primary trend is identified using past price data, and investment decisions are made based on it.

   
   

4. As a positive market signal, it is important that the primary trend is confirmed.

This theory forms the foundation of modern technical analysis and helps many traders and investors analyze market movements and pursue trends.

The principles of Dow Theory are applied not only to the stock market but also to other financial markets.