Dow theory part 2 : identifies three trends

Dow theory identifies three trends within the market: primary, secondary and minor. A primary trend is the largest trend lasting for more than a year, while a secondary trend is an intermediate trend that lasts three weeks to three months and is often associated with a movement against the primary trend. Finally, the minor trend often lasts less than three weeks and is associated with the movements in the intermediate trend.

Now adding my experience I  have seen trades usually take above statement as hard written fact. Well, above written statement may be the best way was to teach anyone about financial market acidimetrically. But it is not same for the trader.

I do not see any problem with Dow statement above. But trader should understand in the trading world they should replace the time parameter like year, weeks,  months or days with his trading time parameters respectively.

Let us see for example.

If I am swing trading where my trading time frame is within in week & I make my entry based on hourly chart, then hourly trend (in this case secondary) should be in the same direction under its immediate bigger trend time frame (primary), which is daily and any time frame less than hourly is your minor trend.

To be continued………

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