dow theory forex trading

lows. Secondary (compared to waves and representing corrections in the primary trend, normally retracing between one-third and two-thirds of the previous trend movement and most frequently about half of the previous move). A Trend Is Assumed to Be Contiunous Until Definite Signals of Its Reversal. Figure below, based on large swings in the index value. Its important to note that the forex market continues to move in the same overall direction until or unless a primary trend change takes place. This is why these traders buy worthless e-books, and currency top rated forex brokers in the world trading systems, for a few hundred dollars - and expect them to work. They are usually under six days in duration. Dow Theory is the basis of technical analysis of financial markets. The Bear Market Phase 1: Distribution. There are a lot of theories that you can study as part of your Forex education - but anyone wanting to learn Forex trading technical analysis, should look at Dow Theory.

Forex trading odds, if your trading signals give you more profits than losses, you can still make big consistent gains over time. For example: in the sell-off in September 2008, the S P was measured from its high of about 14,000 in late 2007. Primary trends, either up or down, are the overall direction of all markets reflecting economic conditions. The Averages Must Confirm Each Other. When prices break below 1300, they confirm the previous low at the end of 2000, making it clear that a bear market is underway. Prices decline faster than at any time during the bull market and fail to rally. Phase 2: Increasing volume.

The reality is these e-books and systems never work - and traders need to understand that Forex trading is simply an odds game and Dow Theory helps you play the odds for longer term currency trading success. Averages had to close higher than a previous peak or lower than a previous trough to be significant. Market Price Movements, primary movements can commonly be identified in terms of "bull" or "bear" market. There are six fundamental principles of the Dow Theory that fully explain its operation. The Averages Discount Everything. In other words, its the general trend of the overall market.