Gann theory was a concept developed by William D. Gann in the 1900s. He was a successful trader and believed that stock prices change with an angle. An asset can move in different angles. He noticed that price changes were related to natural geometric shapes and predicted future price movements in relation to time. This is why Gann theory is also called the “Gann Angle theory”
He was born in Lufkin, in the city of Texas on June 6, 1878. Using his own style of technical analysis, W.D. Gann was reported to have taken more than 50 million dollars in profits out of the markets. W.D. Gann started trading at the beginning of 1900’s, and in 1908 shifted to New York City to open his personal brokerage firm, Gann & Company.
W. D. Gann believed that the market follows a natural time cycle. His theory was based upon natural geometric shapes and ancient mathematics. Gann theory states that the patterns and angles of an asset on the market can be used as a predictor for the price’s future movements.
The foundation of his trading techniques was based on time and price analysis. This made it feasible for Mr. Gann to verify not only when a trend change was about to happen, but also what the best price would be to enter, or exit that market. So precise were Mr. Gann’s techniques that in the company of representatives of a chief financial publication, he completed 286 trades in a period of 25 market days. Of which, 264 trades were profitable. A trading record that Gann held has never been exceeded by any person since. In presence of a customs inspector, he turned $130 into $12,000 in less than 1 month.
Application Of Gann Theory
Patterns can be studied using both price theory and gann time.
1. Price Study With the help of Gann angles you can track the price movements of stocks. The pivot levels are used to predict the stock’s future price movements. The stock price can also be determined by the resistance and support levels.
2. Time Study. Gann’s time study model gives traders an idea of when the stock’s value can reverse. It is necessary to analyze historical data and determine the stock’s current price. Gann’s time study theory allows traders to estimate when the stock price can fall. To estimate this, it is necessary to examine the stock price movements over different periods.
3. Pattern Study: The use of patterns can help you find stock movements.The pattern study covers the trends and patterns that indicate the reversal of stock movement.
In Below 2 Videos have discussed my understanding of Gann Cycle