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. 

List of Nifty50 ETFs: https://www.tickertape.in/indices/nifty-50-index-.NSEI/etfs

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