The stock market is a place of opportunities and uncertainties. While both of these are essential for unimaginable outcomes, trading in such an unpredictable environment may not be everyone’s cup of tea. Thanks to trading strategies like Gann theory for the stock market that have made life easy for new traders.
The best thing about using a proven strategy is that you can get results without putting your portfolio at significant risks. These methods are designed after in-depth research to save traders from the most common mistakes and inefficiencies.
About Gann theory
Gann theory is a concept that predicts price movements in terms of angles. The concept was given by a successful trader W. D. Gann in the 1900s after he found a relation between stock prices and geometrical shapes, which also helped predict future price changes with respect to time. The whole theory is based on angles and is also known as the Gann angle theory.
Not many people understand Gann. Most are overly biased towards the price factor. It creates opportunities for people who believe in the theory and wish to rely on mathematical patterns to make trading decisions. As the strategy considers both time and price instead of going with any one factor, it heightens the chances of success for them by giving them clarity on the next change in the market. Like Gann said, “When the market is in balance you get a “change in trend.”
Gann theory can be used to study the following:
Time
Stock prices tend to reverse with time. Gann’s time study model helps traders understand when it will happen. Time study involves the analysis of historical data and predicting the future fate of the stock market using that information. It further helps the person estimate any potential fall in the stock price. Please note that it is essential to examine the price fluctuations over different periods.
Price
Gann angles make it highly convenient to track price movements. You can check the angles to get an idea of the price patterns for the chosen stock. This prediction is made on the basis of pivot levels, resistance, and support levels.
Pattern
Pattern study helps you find the movement of the stock and the activity of the investors. It involves the study of trends and patterns that help identify the reversal in the stock movement.
How to use Gann theory?
Traders need to remember a few assumptions made by Gann while using his theory:
- Markets follow geometrical patterns in terms of movement and design.
- Stock market movements follow a time cycle.
- Price, time, and range are the only factors affecting the market.
For more information, you can reach out to a team well-versed in Gann theory.
The bottom line
Buying at the high and selling at the low may not always be the best way to navigate through the stock universe. Traders have to be careful while buying stocks and need to understand how the market functions before anything else. One way to do this is to find a theory or strategy that takes into account the past data to predict the future.
Gann Analysis LLC is your go-to place for Technical Analysis, Algorithmic Analysis, and W.D. Gann Theory. Our forecasts undergo testing using both algorithmic and technical analysis methods and are intended for both traders and investors. If you’re looking to try Gann trending theory to boost outcomes, connect with us today.