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The major critic against dow theory is that it only tells us the market trend and fails to tell us its characteristics. It still remains in the top because dow theory is the basic for any modern day analysis.
Dow theory determines the trend but not the detailed analysis like reversal, entry and exits. It still remains the top since its a basic theory to understand other theory.
The major criticism of Dow theory is that it takes a really long time to analyze market trend. But it remains top of any analysis because it’s the first theory that was formulated to study market trend. All other methods available are derived from the Dow theory.
Criticism:- Requires large amount of data(Ex. 2 years), applicable for long term investment i.e. 2-3 months and not for intraday, only market trend can be determined.
Reason for being standard choice for analysis :- Most of the methods are derived from dow, it is proven from a century and its success ratio is more than 50%.
Enormous data of 2 years is required.The investor should take position 3 to 4 months. generally dow theory is used to ascertain the trend.
How ever first to focus on market and attempted to determine demand and supply along with volumes. It is also essential or foundation
to understand other theories.
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