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Definition

Charles Dow identified three different lengths of movement in the stock market as part of his "Dow Theory". They were long-term trends which vary from 2 to 10 years or even longer, secondary trends which last from 1 to 6 months, and so-called "daily fluctuations" which last from a few minutes to two weeks. Secondary trends are known as "corrections" in a bull trend and "rallies" in a bear trend. It is difficult to take advantage of secondary trends unless your timing is superb and if you do you will certainly be regarded by the Receiver of Revenue as a "share trader". We suggest that you rather stick to longer-term investments (3 years or more) and hold through the secondary trends.

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