Chalse Dow’s theory of retention retention of larger trends

Чарльз Доу картинка

Dow identified three types of market movement:

1.In an uptrend, each subsequent peak and each subsequent decline is higher than the previous one (bullish trend).

2. In a downtrend, each subsequent peak and decline will be lower than the previous one (bearish trend).

3. With a horizontal trend, each subsequent peak and decline is approximately at the same level with the previous one (sideways, consolidation). Everything is quite simple here. But besides this, there are three more types of market trends: primary, secondary and small. (source

Trailing stop according to Charles Doe theory

Чальз Доу

Based on the described thesis, we can use the proposed theory to hold the position as follows:

To hold short positions

  • Since each subsequent high of the daily candle will be lower than the previous high, it means that we can rearrange the stop loss for the high of the previous candle.

To hold long positions

  • Since each subsequent low of the candle will be higher than the previous one, we also set the stop loss for purchases for the previous low of the candle.

Expert Advisor based on the theory of Charles Doe

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