# Dow Theory Dow Theory is an indicator on [Vela](https://vela.luxalgo.com/chart), our next-generation charting platform, written in Pine Script®. Classifies the primary and secondary trend from confirmed swing structure, labeling each pivot HH, HL, LH or LL and flagging failure-swing reversals, with volume confirmation, an optional confirmation index and a market-phase dashboard. Defaults read primary swings 20 bars wide and secondary swings 5, judged on closing prices. For trend traders who want the classic tenets made mechanical. - Indicator in the LuxAlgo Library, by LuxAlgo, published Jun 21, 2026. - Access: free. - Concepts: [Dow Theory](https://www.luxalgo.com/library/concept/dow-theory/) (primary) - Open on Vela: https://vela.luxalgo.com/chart?pineScriptCodeId=qr8wvedfmhuo6yw84murmk4r - Page: https://www.luxalgo.com/library/indicator/dow-theory/ **Dow Theory** turns the oldest codified trend framework into a mechanical chart read: it confirms swings at two degrees of structure, labels each HH, HL, LH or LL, and classifies the primary and secondary trends from the sequence, presuming each in force until a failure swing delivers a definite reversal. Beyond the swing labels, this build charts the remaining tenets of [Dow Theory](https://www.luxalgo.com/library/concept/dow-theory/) too: volume confirmation, index confirmation against a second symbol, and a phase read combining both degrees. ## How to Trade the Dow Theory? - **▲ / ▼ markers**: the primary trend classified from the swing sequence alone: paired rising (or falling) swing highs and lows. - **Reversal tags**: a failed swing, then a decisive close through the prior swing point, the framework's definitive trend-change signal. - **Volume row**: Confirms when average volume on bars moving with the primary trend outweighs volume against it; Diverges is an early caution. - **Phase row**: the two trend states combine into Accumulation, Markup, Distribution or Markdown. Alerts cover trend flips and reversals at both degrees plus index non-confirmation. ## Dow Theory Settings - **Primary Swing Length** (default 20): confirmation width of the swings defining the primary trend. - **Secondary Swing Length** (default 5): swing width for the secondary reactions inside the primary move. - **Price Basis** (default Close): detect swings on closes or on High/Low wick extremes. - **Confirmation Index** (default empty): optional related index compared with the chart's primary trend. - **Volume Window** (default 50): window for averaging advancing-bar versus declining-bar volume. - **Show Dashboard** (default enabled); Swing Lines, Primary Swing Labels, Secondary Structure and Trend Change Markers style toggles default on; Trend Background is off. ## Frequently Asked Questions ### How is Dow Theory different from the Wyckoff Method? Both weigh structure against volume, but this build classifies the trend in force from confirmed swing pairs, while the [Wyckoff Method](https://www.luxalgo.com/library/indicator/wyckoff-method/) reads intent inside ranges through schematic events. ### Why do the trend labels appear so late? A swing confirms only after Primary Swing Length bars print on each side of its extreme, so the default labels a pivot 20 bars after the fact. The lag is intentional: sturdier classifications in exchange for early entries. ### What does the Phase row actually measure? It crosses the two degrees: primary down with secondary up reads Accumulation, both up Markup, primary up with secondary down Distribution, both down Markdown. It is a structural approximation of the cycle, best read beside the Volume row. ## Related indicators - [Structure Volume Profile Setups](https://www.luxalgo.com/library/indicator/structure-volume-profile/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/structure-volume-profile.md - [Short-Term Order Block Rejections](https://www.luxalgo.com/library/indicator/short-term-order-block-rejections/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/short-term-order-block-rejections.md - [Smart Money Concepts (SMC)](https://www.luxalgo.com/library/indicator/smart-money-concepts-smc/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/smart-money-concepts-smc.md - [MSS Sweeps](https://www.luxalgo.com/library/indicator/mss-sweeps/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/mss-sweeps.md - [Structure & Trend Dashboard](https://www.luxalgo.com/library/indicator/structure-trend-dashboard/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/structure-trend-dashboard.md - [FVG + Liquidity Sweep + CISD](https://www.luxalgo.com/library/indicator/fvg-liquidity-sweep-cisd/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/fvg-liquidity-sweep-cisd.md - [HTF Swing Structure Signals](https://www.luxalgo.com/library/indicator/htf-swing-structure-signals/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/htf-swing-structure-signals.md - [MSS Sweep Fib Retrace](https://www.luxalgo.com/library/indicator/mss-sweep-fib-retrace/) (Market Structure): markdown at https://www.luxalgo.com/library/indicator/mss-sweep-fib-retrace.md --- Source: https://www.luxalgo.com/library/indicator/dow-theory/ (LuxAlgo Library). Free to use with attribution: https://www.luxalgo.com/library/license/