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Tagged: Deamdn, Price, Supply, Technical Analysis
The major Critics against Dow Theory is a Long term investment plan with a minimum time period of approximately 2 years.
It remains on top of any analysis, because of the Old but Golden Concept which is behind the Demand & Supply. Buy when Demand is relatively stronger than Supply and Sell when the supply is relatively stronger than Demand.
Criticism for Dow Theory ;
1.There is a lag in identifying a change in the primary trend and it shows only after it has happened.It is biased towards a late recognition in trend.
2.Does not differentiate between a primary and secondary trend and it is easy to make mistake about trends. It does not strictly define trends.
Dow theory is still important because most of the technical analysis is based upon its tenets . The Elliot Wave Theory also is based on it.
Dow theory is used for only long-term perspective, not for short term perspective. It is the strongest of all Long term analysis.It clearly derives demand and supply.
Cons-The analysis is slow.
It does not show strength.
We need to check the charts for 2 years. Cannot be used to do short term trading and intraday trading.
It is still used as it is still the best option to show the trend, if it is bullish or bearish.
it is used for traders who likes to hold the shares for a month or more than that. It cannot be used by daily traders. We should pick the chart for 2 years and do the analysis. So that we can analyse the trend and trade according to it.
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