Dow Theory 101

Dow Theory 101

What the strategy is?
You have to see and apply the Dow theory strategy on Index such as Nifty50 and buy/sell the ETF of the respective index like NiftyBees, SBI Nifty50 ETF etc. 

When the index value say Nifty50 closes above the significant peak on Friday, then a buy signal is initiated in Dow Theory and you have to buy the corresponding Index ETF (NiftyBees in this case) on Monday morning at 9 AM. 

When the index value say Nifty50 closes below the significant bottom on Friday, then a sell signal is initiated in Dow Theory and you have to sell the corresponding Index ETF (NiftyBees in this case, which you were holding) on Monday morning at 9 AM. 


The one sole rule that needs to be followed is the 4% and 4-week rule. Even a day less or .01% less won't suffice. The criteria to choose an ETF to buy is simply it's liquidity. People should be buying and selling it and the orders should not freeze.

Lectures of Dow Theory starts from here: https://learn.goelasf.in/courses/1226349/lectures/27369701



Link for the Dow Theory chart: https://in.tradingview.com/chart/xiPwIbS1/
Green Flags indicate Buy and Red signify sell.
In the recent period, I have marked all the buying opportunities, contrary to other periods.
Blue are significant peaks, while red is significant bottoms.

Q1. Why 15.07.13 and 27.05.19 peaks are significant peaks? - An Important Exception
Video explanation: ** under development


Q2. Why should you see Index Charts and not ETF charts for Dow Theory?
If you will see the Niftybees chart, you will find big candles because of Institutional buying and selling which goes on in pre and post-market. This is why the data chart of an ETF becomes irrelevant for the study of Dow Theory, and we recommend you to conduct your study on Index charts. 

Most common mistake: 


Tracking Error: Tracking Error



    • Related Articles

    • Technical Strategies- 101

      Note: Please use NSE charts as they are updated real time, unlike BSE. MACD: In-depth details about MACD- https://www.investopedia.com/terms/m/macd.asp 12, 26, 9 in MACD is an arbitrary number that has been tested over years. There is no logic behind ...

    • Portfolio Management Quiz Solution

      Solution to Q1: To start the investing journey for any financial goal one should first be clear about the goal i.e. amount required and time of investment. Then they should use the wealth formula to break down the goal in form of SIP. The goal has to ...

    • Support and Resistance- FAQ's

      In case you have doubts about Support and Resistance, you can watch the following sessions: Click the video below for comprehending the theory:  Click the video below for comprehending the implementation:    5 or 15 mins: Intraday 1 or 4 hr: Swing 1 ...

    • How to analyse/ predict the market by Nifty50?

      As per the general trend, one should prefer to take a trade in the same direction of the market movement. Although, this is not applicable to all the sectors, as even if Nifty is bullish, some sector might be in consolidation or correction. The ...

    • Demand and Supply notes

      Hey, Here are the notes of demand and supply strategy. PFA