The third tenet out of the basic six tenets of Dow theory states that stock market discounts all news and information in it’s price, as in this tenet Dow theory suggests that stock price represents sum of all hopes, greed, fears and expectations of all the traders and investors and stock price discounts all information’s.
One must follow technical analysis purely on the basis of price movements of stocks, Dow theory states many such tenets which are basics to keep in mind while implementing technical analysis on stocks.
Samuel A. Nelson – First person to use the term Dow Theory.
What Information’s Stock Market Discount’s?
Stock Market quickly reflects information’s in it’s price, as soon as any information or news is available about stock, market will discount all such information weather it’s related to past, present and also for the future therefore, it becomes easy to analyse future price movements on the basis of technical analysis.
So, the person who is following technical analysis for them Dow theory states that stock market discounts all information in stock prices so one doesn’t need to follow other news and information’s like rate of interests, company announcements and all such information will be reflected in price so all you have to keep an eye on is the stock price movements.
What Stock Market Doesn’t Discount’s?
Stock Market doesn’t discounts natural calamities like Tsunami, Earthquakes etc. All such information doesn’t discounts stock market prices.
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