Step by step : How to make the Dow Theory into a powerful trading indicator
Dow theory is a market analysis theory developed by Charles Dow, co-founder of Dow Jones & Company and The Wall Street Journal. It states that the market is made up of three movements: primary, secondary, and minor.
The primary trend is the overall direction of the market, either bullish (upward) or bearish (downward).
The secondary trend is a countermovement within the primary trend, and the minor trend is the short-term fluctuations within the secondary trend.
In this article, we will be demonstrating how to create a Dow theory indicator in Python using historical data for the Dow Jones Industrial Average and the Dow Jones Transportation Average.
Step 1: Importing Libraries
In this step, we will import the necessary libraries for data manipulation and visualization. We will use Pandas for data manipulation and Matplotlib for visualization
import pandas as pd
import matplotlib.pyplot as plt