Stock Trading Using Dow Theory Tutorial
Dow Theory – The Secret to Analyzing Volume:
Mr Tung Desem words, I make quite a unique title that people get curious about “The Secret” is how “No Secret”, so the “Secret” because of people not in knowledge.
Dow Theory regard volume as one of the things that are important in the Market Analysis.
Volume in this case is the number of transactions in a trading period of time (1 hour, 4 hours, daily, weekly, etc). Volume can also indicate total transaction lot sold.
Volume illustrates the strength of pressure between supply and demand at the time of the price movement occurs. Battle between supply and demand this shows the strength of interest in buying and selling in the market.
Volume is not used to predict the direction trend, but is used to confirm the price movement. Dow said that the “Volume must confirm the trends.” In addition to confirm the interest to buy / sell strong or Dow is not trying to remind us that without the support of the volume is not enough we have to trust the direction of movement of the market.
Conclusion is the first volume can be used to confirm the direction or trends can be used to show that the trend continues going akan (Contact) or akan ended (flat, ranging, reversal).
According to Dow Theory, the volume of the direction of the trend going. When a condition bullish trend should be followed by increased volume. At the time of going correction / reversal is usually marked by a decrease in volume.
If the bullish trend in the condition of the extreme decrease volume, then indirectly the correction will occur / trend reversal
This condition is usually called the Convergence / divergence.
Convergence occurs when the conditions on the bullish trend is also increasing the volume so the Medium divergence condition occurs when the trend is bearish volume decrease. This condition should diwaspadai interest because a decrease in purchasing (buying pressure) can trigger the reversal of trend
Convergence graph below the image on ANTM:
Divergence pattern at BUMI (Market Maker Play’s):
Trading with Dow Theory (Introduction to Peak and Through Analysis)
This term of from Peak and Through is widely used in the methods of Classic TA, Peak = Peak, Through = Valley
Peak and Through analysis is a technique to identify the market trends.
This technique is also One of the basic techniques of The Trend Following as Turtle Trader Following the example picture…
How to read the Peak and Through graphs above is as follows:
In the bullish market conditions will occur Peak conditions Higher / Higher and Higher Through High / Low Higher
Market Simple Description is bullish on the market conditions will likely make a new higher price (higher peak / high) on the market bulish movement, which was followed through the higher (the price correction is happening does not exceed throug / valley (low price) before
So this is a higher peak and higher through
Or in other forms can be described like this:
Meanwhile, on the condition bearsih market conditions that are otherwise going through the lower / Lower Low (new low price) and the lower Peak / Lower High (over correction never exceeds peak / peak of the previous correction)
Sample applications and Peak and Through analysis
On the condition Downtred (bearish) Price will always form a pattern of Lower Peak correction occurred pattern formed lower peak (Peak height is always going to be lower than the previous peak)
Until in the end price is not able to form a pattern Through Lower / Low, but still form a pattern, Lower Peak again so there accumulation rates in situ
Then penetrate lower prices after the peak before then there were confirmed bullish trend there
marked by lower break Peak and before starting the pattern formed Higher Peak (There was a new peak value is higher than the value of the peak / peak earlier)
Meanwhile, the price correction occurs through higher form patterns (Valley / does not occur through the lower valley of / going through the previous).
Questions frequently asked are:
This Peak and Through technique can be used to identify trends and Trading?
The answer: Yes! And can be applied in almost all market !!!
Source: Aditya Raja Ra’du Ar / Mata Dewa
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