Figure 1 shows an example of a Swing chart. The method he used to monitor trends and filter out any random market noise was the Swing Chart. To confirm a trend was in progress, he would look for lower highs and higher lows to form after a major reversal in trend. Gann’s main trading philosophy was to trade with a close stop loss and select the most opportune trades in the direction of the main trend. Please examine each chart closely as there are some important points on them. Therefore, follow your profits up with a STOP LOSS ORDER, or get out when you get a definite indication that the market has reached a turning point and that the trend is changing.”Īs a picture is worth a thousand words we will now look at some charts. Always figure that YOU CAN BE WRONG and that the market could reverse. Wait for a definite indication that it is going higher or lower, before you take a position for a long pull trade. “THE BEST WAY TO TRADE: The most money is made by swing trading, or in the long pull trades, that is following a definite trend as long as the market trend is up or down, you must learn by rules to wait until the market gets out of a rut or a trading range. Long periods of rest and relaxation protect your health and help your judgment which will result in profits later.” There comes a time when you should stay out, WATCH and WAIT until you determine a DEFINITE CHANGE IN TREND. You cannot make money by trading in the market every day or by getting in and out every day. “TIME TO STAY OUT OF THE MARKET: This is something important for everyone to know. Gann taken from his last book, How to Make Profits in Commodities. He believed that you did not have to be in the market all the time to make money. Gann’s work included Money Management Rules and Trading Psychology concepts expounded by many of today’s top traders. Read The Law of Vibration: The Revelation of W.D Gann By Tony Plummer Gann always said “History Repeats” and repetition was his way for students to get the message. Just the same the pattern of information remains identical throughout all of his published work. The knowledge outlined in his works can easily be overlooked due to the abundance of information he presented. Other tools such as The Square of Nine, Square of 144, Square of 90, Hexagon Chart and Gann’s various Master Calculators will be covered in future articles Gann’s books are required reading for any trader or analyst who wishes to understand the basic ways to view any market. This article will cover many of Gann’s important time and price tools. Gann had an arsenal of price tools he taught students and it was reputed he charged $5000 for a weekend course in the early 1950’s, before his death in 1955. Elliott believed that markets most commonly retraced 61.8%, 50 % or 38.2% of the previous range. Gann believed that markets most commonly retraced 1/2 (50%), 5/8s (62.5%) or 3/8s (37.5%) of the previous range. Elliott believed that there were 3 impulse waves in a Bull or Bear trend, with the possibility of an extended 5th Wave to give Gann’s 4th section. Gann believed that Bull or Bear campaigns took 3 or 4 sections to complete the move. Elliott – shared some similar beliefs about market activity. Gann and the creator of Elliott Wave theory – R.N. He used this knowledge to formulate trading and technical analysis techniques which students could follow to identify support and resistance levels for most free trading markets. His knowledge of mathematical and astrological relationships was very advanced. A very religious man and a 33rd degree mason, Gann claimed he learnt about forecasting price movements from the Bible. Gann was a prolific researcher throughout his lifetime with interests in numerology, weather forecasting and astrology.
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