Price Action trading is the ultimate form of trading. Dow Theory is of utmost importance when trading using Price Action.
Sharing these 6 Important Dow Theory lessons for free which is sold as a ₹40,000 course.
⬇️ A Thread 🧵
It is a technical framework which explains markets movements based on certain rules called the Tenets of dow theory
The 6 tenets are listed below: 👇
1. 3 TREND MARKET
a) Primary trends
• Main movements in the market
• Time frame is large (1yr or greater)
b) Secondary trends
• These trends are corrections in the primary trend
• Direction opposite to the primary trend
• Timeframe is small (few weeks to few months)
c) Minor trends
• Smallest and most insignificant trends
• Smallest time frame ( few hours to few days)
2. MARKET DISCOUNTS EVERYTHING
This tenet is essentially made around the fact that the price of a stock incorporates all the information (any events, results, ratios, earning potential, etc.) about the stock.
Even future events are discounted as risk