Charlz Dou - legislator of the axioms and principles of functioning of financial markets

Charlz Genri Dow (Eng. Charles Henry Dow) (6 November 1851-4 dekabrya1902) - American journalist, co-founder of Dow Jones Company sEdvardom Jones and Charles Bergstresserom.

Dow founded «The Wall Street Journal», which has become one of the most respected financial publications in the world.

He also invented the famous Dow Jones Industrial Average Index as part of its study of market movement. He developed a number of principles in order to understand and analyze the behavior of the market, which later became known as the Dow Theory, the basis for technical analysis.

Dow was born in Sterling (CT), I never finished high school. He died in Brooklyn (New York).

I think it is no secret is the fact that our life alternates - black stripe, then a white stripe. And so all the time. Downs typical for anything that might be just. Moreover, not only in our lives, but also in nature. Therefore, the financial markets in this respect is not an exception. Stocks, currencies, various services - all this is changing. That is, we can say that to some extent, the markets still predictable. But such is the current reality. And 150 years ago, the financiers of the world could not make such optimistic forecasts. Markets were chaotic and poorly predictable. Of course, it could not last forever, and once everything had to change.

The first person to find an opportunity to describe the movement of prices in terms of the movement of trends, became Charlz Dou. He is very well observed that if the price is already generate any movement, it is likely it will continue in this direction, what will change it radically.

By the way Charlz Dou is considered to be the ancestor of the current technical analysis. It was he who, with its many developments able to make a contribution to the theory of analysis and prediction of motion graphics.

But time passes, and with it, forget those big names. So today most traders who are faced with the technical analysis are unlikely to know what Charlz Genri Dow created the world famous Dow Jones (Dow Jones). After all, this indicator today is perhaps the most important indicator of the New York Stock Exchange. But NYSE is rightly considered a "barometer" of the US economy. And most of the financial analysts, and just day traders evaluate the state of the US economy is at a given index.

It is believed that if a person is talented, he is talented in everything. This expression is just about Charles Dow. He began his thorny path back in 1851 in a family of farmers. However, Charlz Dou was not too keen on this kind of activity, so at the age of 18 years, left the house, and began working in a provincial newspaper.
Charlz Dou was a good connoisseur of the economy. Even working in the newspaper, he performed well in the economic sphere, and this gave rise to the fact that Charles went to work «The Providence Star» in the newspaper. It is working in the media, he was the most actively engaged in financial journalism. It is also the fact that no one before Charles worked as a journalist in the field, so he was a pioneer here.

The first works of Charles were on precious metals. He described their importance in relation to the global economy, how to look for them, and how to implement it. Initially, of course, it was a small note, but over time they grew into large analytical reports in the industry. Charles Dow was necessary for professional growth, so after a while he decided to go to the New York media «New York Mail and Express». Only now, he already wrote about the mining industry. In fact, Charlz Dou at the time and so made a good career, but still, this step does not become final for him.

Charles Dow was the best friend - Edvard Dzhons, with whom they have established news agency. It was then that they began to work for themselves. We carried out extensive work to gather information, and make it available for analytics stock exchanges.

Of course, at that time companions had enough competition, but fate would have it, that it was they were destined to make the information revolution in the stock markets. In 1883 they released their first newsletter, which was called «Customer's Afternoon Letter». In it the authors pointed out the summary table with the stock price changes throughout the day. This is what gave rise to the top of the wide popularity of Charles Dow.

The reason for the stunning success lay in the fact that such information until such time carefully concealed from the public. Of course, such an analysis was carried out not only by Charles and his companion. This work is done in brokerage companies. Just this information possessed only a very narrow circle of people. There was another important point - this analysis, though carried out, but do it regularly. And in the end it turned out that those who possessed this information, you still could not see the overall picture of the market, because they saw only snatches.

This newsletter, which is published Doe and John, became a real sensation. True, at first, what did not have to make friends, to get the right information. To do this, they used a variety of methods: somewhere overheard somewhere extort traders, somewhere "creep into the confidence" to the right people. In general, we do not disdain to use a variety of ways. However, if at first they were driven to create the idea of ​​quality, in the near future they may see, and their direct benefits that provide data to the Agency. And the large amount of information had the crowd of traders, the more fueled their interest in relation to the dynamics of stock prices. But it could take advantage of - to direct traffic in the right direction.

Over time, about the partners learned more and more people. Of course, the growing popularity of the newsletter. In 1889, the «Customer's Afternoon Letter» has ceased to exist and been replaced by «The Wall-Street Journal». Incidentally, this newspaper is available today, and is one of the most influential media in the United States in this area. It is also interesting that 50 years after the magazine was created, it was not a single competitor who could offer something similar.

It would seem that Charlz Dou gained more popularity, but even that was not all. As soon as Charles and his companion studied avalanche of financial information, track the movement of the price movement charts, they gradually withdrew a single stock market index. Through this index could assess the overall state of the US economy. The scheme was simple: for each stock was assigned equal weight, then the calculation is performed to change the prices, expressed as a percentage. And after that, all the courses were given to the mean.

All that you have read the above, and it was the history of the emergence of the now famous Dow Jones. Today, with the help of a large army of traders determines the overall direction of the market. However, it is only now we know the Dow Jones as one index. And before that there were two. One belonged to the Securities railway companies, and the other - to everyone else. But it is the last index eventually gained worldwide fame and became popular for many years.

It is at this step and Interrupted famous financier Charles Dow, who died in 1902. Today it is difficult to overestimate the impact that the contribution made by Charlz Dou in the development of the stock market with regard to the technical part. It has been over 100 years, but until now no one day in the stock market does not pass, not to mention the name of this, of course, a very talented and popular journalist. If you look at things objectively, it is worth noting that Charlz Dou was successful in all. Whatever he started out, all he gets. Thanks to his efforts, was made a breakthrough in various economic areas. And it is thanks to him, the current generation of traders look at charts completely different. By the way, if we talk about the Dow Jones index, it is worth noting that this applies not only to the stock market, but also to the Forex market. In particular, he led several important principles:

1. The price takes into account all. The famous journalist brought his own theory, according to which any factor, that somehow can affect supply or demand in the market, be sure to be reflected in the dynamics of the index price. Moreover, it is possible to say about anything. Including in the case of any disasters. All this is necessarily reflected in the dynamics of the trade-dependent value of the instrument. Surely, everyone who uses your trading technical analysis, will know how important this tenet.

2. Financial markets dominate three types of trends. By the way, if a little "dig" the story, we see that it was Charlz Dou discovered the fact that the graph is moving with the trend. If the market is a growing trend, it will be displayed as a series of successive highs. And if the downward trend of the market, in this case, each subsequent decline will be lower than the previous one. However, it so happens that the market is in flat. So called lateral movement of the market. In such cases, all the subsequent peak will be about the same level as the previous ones.

In addition, Charles has determined that there are three types of trends: primary, secondary and small. Of course, the most important was considered the primary trend. Dow believes it lasts more than a year. The second trend is intended to correct, if we look at it through the prism of the principal. This tendency lasts approximately about 3 months. "Rollback" Similar to these, are from about one to two thirds of the distance which has been passed by in the time when the main trend has evolved. All small trends that are going on for about a month, it is necessary to consider both the short and should be analyzed as part of a larger trend.

3. The main trend consists of three phases. The first phase - is the accumulation phase. At this time, activated the most enterprising investors. They begin to open long positions. At this time already all unfavorable economic information will be taken into consideration by the market. Then follows the second phase. Now in trade include all those who use technical aspects of following the market. Gradually, all the information that is taken into account by the market becomes more optimistic, and there comes the last phase.

At this time, activated by all traders. It was at this time in the market, you can see the excitement. Especially when different media podkidyvayut news. In addition, when the public begins to talk very pessimistic, it can only mean one thing - most likely, the trend began to decline.

4. Indices must confirm each other. At the time, the Dow also invented two indices. First - industrial. The second - the railway. Dow opinion, whatever the signal, but if it is important, it must pass in the values ​​of the two indices. However, that was then, and now all has changed. But not much. In the current environment, this means that the testimony of any indicator must be confirmed by the testimony of another indicator.

5. The volume of trade is required to give proof of the nature of the trend. Here we must note that if the volume of trade will increase, it should be in those moments when the price moves in the direction of the main trend. And if the volume of trade will decrease, this should be done at the moment of kickback.

6. Any tendency to act until such time until there are clear signals that it has changed. I think that today any trader will be in agreement with me on this statement.