Gann was a technical trader who introduced some unique methods that are still used by traders today.
Perhaps one of the most interesting concpets is Gann’s view on the relationship between price and time.
Gann amassed a $50 million trading fortune with his methods and there used all around the world by savvy traders seeking bigger trading profits.
Let’s look at the relationship between price and time
In common with other technical analysts Gann believed that market action was cyclical
“What happened in the past will happen again”
To trade with the odds on your side in the future meant looking at past patterns.
The reason this is logical as human nature is constant and this shows up in the markets as patterns as humans ultimately determine the price of anything.
Price and Time
So why is the interaction between price and time so important?
Gann believed that crucial price movements occurred when price and time converged.
These convergences could give advance warning of an important trend and traders could trade for profit at these points.
If price and time did not converge, then time would be considered more important than price.
Time, was considered by Gann to be the ultimate timing indicator.
If you think about it time governs all of nature not just the financial markets.
“Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again”
Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law”
Gann was one of the most important traders in history and his standing is emphasized by the life size portrait of him that greets you when you enter The New York Stock Exchange.
Not only did he introduce the concept of price and time, he was also responsible for a huge volume of work and his writing on the Fibonacci number sequence, Swing trading, Gann angles and many other technical theories are essential reading.
All though sometimes over looked he was one of the first to study human psychology and its importance in terms of market movement, before it become universally accepted.
“We cannot escape it (emotion). In the future, it will cause another panic in stocks. When it comes, both traders and investors will sell stocks, as usual, after it is too late, or in the latter stages of a bear market”
Gann avoided the crash of 1929 but how many booms and busts have we had since then and how many investors got burned?
The fact is, investors ultimately determine the price of anything and are always subject to emotion.
Learn how to step aside from the herd and you can trade in a disciplined way and emerge a winner.
The concept of price and time is one way of doing this.
If you study Gann you know you are studying a trader who is one of the most important of all time and one that has left all his work so others can study and learn from.
Savvy traders all around the world still use Gann’s methods and you should explore further and see how the methods could help you.