The dow theory is teh basic concept by which you can determine demand and supply. It also enables the trader to find the trend in the market by using daily charts. On the daily charts you spot the tops (also signifies supply) and the bottoms ( signifies demand ). These tops and bottoms are also known as support and resistance. The trader buys when the stocks is in uptrend and sells when the stock is in a down trend. He keeps away from the market if the trend is sideways. Understanding of Dwo Theory is an absolute must if you want to do technical analysis. It is the foundation for the further understanding of stock analysis.
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