Importance of Dows Theory in understanding crypto trading signals

dow theory and signals

July 27, 2020

Reading Time: 4 minutes

The emergence of the cryptocurrency industry has paved the way for the global trading space. These digital assets have revolutionized how investors and traders perceive trading and trading strategies to gain passive and consistent profits. The innovation tied to the Cryptocurrency ecosystem further improves the trading space by modifying and revolutionizing traditional trading methods and creating new trading options.

Some innovations include but are not limited to Crypto trading signals and Crypto calls. The cryptocurrency ecosystem has allowed exchanges such as Binance, Bybit, and Bitmex to actively allow users, investors, and traders to exchange digital assets and trade them to earn a passive income. With the rise of the crypto ecosystem, the need for consultancy and expert advice has risen astronomically. Due to the inherent complexity in trading crypto assets there is often a need of specialized trading experts who offer trading signals such as Bybit signals, Bitmex Signals, and Binance Signals and teach how to understand technical data.

The cryptocurrency financial medium aligns very closely to the traditional financial mediums. Like in traditional financial markets, the more learned and educated the trader the better trading yields are produced. In the Cryptocurrency ecosystem economic theories and methods are definitely needed to transcend into the next level. One very distinct financial theory is The Dow’s Theory.

dow theory and crypto trading signals

Dow’s theory has been at the heart of every financial market. Dow’s theory aids in predicting market trends and market movements. Understanding Dow’s theory and utilizing it has been a prerequisite for success in the trading space.

What is Dow’s theory?

Theorised and developed by Charles H. Dow, the Dow’s Theory is a technical framework that plays a pivotal role in delivering relevant insight into market movements. The theory suggests that the market price constitutes several factors, including outside developments and the past, present, and future details. These factors are crucial in determining the market value of any asset.

Importance of Dow’s Theory:

The importance of Dow’s theory in understanding the crypto trading signals has a great importance. The following tenets are the establishment of Dow’s theory:

Market trends

Dow’s theory suggests that a market consists of three trends, namely:

Primary Trend

The Primary Trend is the major trend that constitutes the main market movement. The market movement can either be bullish or bearish, indicating an upward or downward rise.

Secondary Trend

The Secondary Trend attributes to the corrections in the Primary trend. The period of these trends can range from a few days to a few months. The Secondary trend is also known as the Medium swings as it is a ‘secondary reaction.’

Short Swings or Minor Movements :

Short swings or Minor Market movements constitute the news and opinions of the assets. Modern markets term it as ‘Market Speculation.’

Market Phases

Dow’s theory illustrates that a Market trend undergoes Three phases categorized into the following:

Accumulation Phase

The occurrence of the Accumulation phase is dependent on seasoned investors that receive valuable insights that hold exclusive and inside information about potential movements in the market conditions.

Public Participation Phase

The Absorption phase or the Public participation Phase occurs when the community is aware of the emerging market trend. This awareness primarily leads to significant market activity that enables more investors to invest on the asset.

Distribution Phase

In the distribution phase, investors and traders tend to circulate their accumulated holdings to capitalize on the opportunity. Interestingly, price retraces take place in the market in response to the swing.

Market and News Relationship

Dow’s theory suggests information about the market significantly and actively steers the pricing of the asset. Prices of the asset tend to reflex the information circulating about it. The data can reflect emotions such as fear, hope, expectations and hype.

Market Averages

Dow’s theory further suggests the market averages tend to be indicative of trends. Investors can analyze averages of opposing companies to indicate a potential trend.

Trends and Volume relationship

Dow’s theory illustrates the volume of an asset is indicative of the market activity that an asset experiences. Dow’s theory emphasizes the volume of an asset as an important factor in predicting potential trends.

Continuance of Trends

lastly, Dow’s theory closely relates the Newtonian rule of motion with market movements and trends. Dow suggests that a market will remain in motion unless a trend reversal occurs.

Conclusion

The Dow theory is an innovative approach that still holds to this date. Seasoned traders and upcoming traders abide by the tenets of Dow’s theory. The importance of Dow’s theory in understanding the crypto trading signals has a great importance. We at MyCryptoParadise and our Paradise Team boast an extensive background and experience in the trading space.

Our Paradise Team is on the watch for the best opportunities in the market. Through our tireless efforts, our crypto calls are based on calculated, technical, fundamental analysis, and our proprietary AI-based algorithms. We actively integrate Dow’s theory to provide the best crypto signals and best crypto calls.

Our unique combination helps us optimize the analytics we provide to our valuable Paradise Family VIP members with perfectly timed trading signals ranging from Binance crypto signals, Bitmex crypto signals, and Bybit crypto signals.

Based on intensive research and understanding of Dow’s theory, our hybrid set of market indicators and risk strategies ensure maximum profits with the lowest risks. Our seasoned traders carefully analyze each crypto call for accuracy so VIP Members can make calculated, data-driven decisions.

Did you know, Our ParadiseTeam also offers free crypto signals on telegram! And Yes! We do share best crypto signals that reflect some of our best risk/ reward strategies emphasizing profits instead of stop losses.

Unlike other groups that emphasize “Get rich quick,” we firmly believe in long-term, profitable trading and trading consistently throughout the entire year.

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We aim to provide our ParadiseMembers with as much information as we can to ensure to maximize long-term profit, no matter if we are in a bullish or bearish market. We are a large scale cryptocurrency community providing you with access to some of the most exclusive life changing crypotocurrency signals, analysis, guidance and much more

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