Category: Money Tips Date: 2007-05-25
Source: Huatai Securities research the theory of our predecessors sole purpose is to guide the specific transaction. Based on Dow Theory, from the perspective of transaction specific guidance to refine the basic concepts, trends, definitions and the trend line of the painting, how to determine trends and changes in the original, and these concentrates that can be directly used in the technology transactions in the market principle.
The most authoritative book is "The Dow Theory" (Robert? Rea the 1932 first edition, no English translation), book a total of 19 chapters plus an appendix (contains Hamilton's editorials), only 120 pp. Followed by the "stock market barometer" (William? Peter? Hamilton forward, Wu Chuan-hao translation of the introduction of Hainan Publishing House in 1999).
In this paper, Rhea's "Dow Theory" is based on Hamilton's "stock market barometer" for reference, but also Victor to the Dow theory, some of the amendments, according to "Dow theory" language of the order, the points associated with the transaction are summarized as follows (where 6,7,8,9,10,13,14,15 part of the most important contribution to rea on this):
1. Dow Theory evolution. Dow I did not write books of their theory that all articles are published in the early 20th century, the "Wall Street Journal" on. In 1903, Nelson would be included the article to "the stock market speculation ABC" for the first time named "DowTheory (that is, Dow Theory)." In 1922, Dow's successor Hamilton in the "stock market barometer" of the Dow Theory has established a formal structure. This "Dow Theory" on this basis, further development.
2. Hamilton explained that the Dow Theory. Here a little, for details, see "stock market barometer."
3. With regard to manipulation. Market trading rules are subject to a strictly voluntary basis; index during the day clutter are likely to have greater influence of artificial manipulation; sub-return movement may also be subject to artificial manipulation of the local impact; but the main trend is absolutely impossible to be artificially manipulated, but the , the trend may be changing the nature of the.
4. Average tolerance to digest everything. Because the index reflects the overall market behavior of numerous investors, including those in far-reaching vision, as well as the most knowledgeable person, with an average index in the course of its daily fluctuations in tolerance to digest a variety of known, predictable things, as well as the kinds of securities that may affect the company's supply and demand relationship. Even to those natural disasters, but its occurrence after the market index will quickly be assessed and digest, and inclusion of its possible consequences. For this reason, the market index will always be appropriate to expect that the impact of future events (except for God and the government's actions and policies have a major impact on economic development).
5. This theory is not without shortcomings. "Dow Theory" is not a foolproof and you can beat the market system. Successfully use it to help speculative behavior, require in-depth research and objective comprehensive evaluation. Absolutely can not let wishful thinking dominant ideology.
6. Dow's definition of three trends. There are three trends in the market index, all three can be simultaneously. The first trend of the most important, it is the main trends, the overall upward or downward trend known as the bull or bear market, during which may take up to several years. The second trend (trend of sub-return) of the most elusive, it is a major bull market, an important downward trend, or the major bear market rally. Amendments will continue the trend is usually three weeks to several months. The third trend is usually less important, it is the trend of daily volatility.
7. The main trend. Mainly represent the overall trend of the underlying trend, often referred to as bull or bear market, the duration may be less than one year, and even a few years. Correctly judge the direction of the main trend is the speculation of the most important factor of success. There is no known way to predict the duration of the main trends.
Edited in the gold-line
