When to buy and Sell using Dow Theory?

[Shiva]

Buy – Higher top and higher bottom with volume is Bullish trend. This should be a good volume in the recent day and this volume is nothing but the strength which signifies the price and create a long position with the expectation for the price to go up when it crosses the previous top.

Sell – Lower top and lower bottom with volume is bearish trend. I create a short position to sell the stock when the price crosses the previous bottom.

[Darshan Arvindbhai Shah]

First of all we need to open a Line chart with at least Two years of time frame

then we have to identify the Major Tops & Major Bottoms

After Identifying the Major Tops & Major Bottoms We have to name them as Higher Bottoms & Higher Tops in Sequence

to identify an Up Trend as well as Lower Bottoms & Lower Tops  Sequence to identify the Down Trend

 

Once we identify the trend weather if it is a Up Trend or Down Trend we have to Spot

the Entry price & Exit Price   ( Exit price can be either Target or in worst can it can be Stop Loss )

 

Now ,

Lets See How to Spot the Entry Point & Exit Point

There will be 3 Major Trends can be seen in the market

1. An Up Trend

2. A Down Trend

3. Sideways market

We need  to initiate any Entry & Exit Point only in Trending market to make profitable Trade by using Dow Theory

We must avoid Sideways Market or we can say we must avoid to initiate any trend when there is no conform Trend visible

 

That Means it is absolutely Important to identify the Trend First :

Lets see how to identify An up Trend

First of all open the Line Chart for at least Two Years

then mark all Tops & Bottoms then name them as Higher Bottom & Higher Tops

Higher Bottom  is the bottom price compare to its previous  bottom &

Higher Top is the price which is higher  compare to the previous Top

Ann  then

Make a Sequence of Higher Bottoms & Higher Top to confirm the Up Trend &

Make a Sequence of Lower Tops & Lower Bottoms to confirm the Down Trend

 

Now , When we are in an Up Trend and  Price goes up and crosses above the Higher Top

we can BUY  &  Previous Higher Bottom to the price on which we bought will be our  Stop Loss

 

And When  we are in Down Trend and Price goes Down and crosses Below the Lower Bottom 

we can SELL & Lower Top to the price on which we Sold will be our Stop Loss

 

[Ganesh Ramanan]

create long position  – spot double top – top may not be equal but equivalent,duration 1 month,increase in volume of second top

create short position – if the curve going behind previous botton

[Pradeep]

BUY- HB – HT with high volume, buy at previous top and stop loss at previous bottom.

SELL- LT-LB with high volume, sell at previous bottom and stop loss at previous top.

[Hema]

Buy – Higher bottom and Higher Top with high volume is a bullish trend. Here we can create a long position to buy and sell the stocks

Sell – Lower Top and Lower Bottom with high volume is a bearish trend.  Here we can create a short position to sell and buy the stocks.

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