An Overview of Gann's Theory and Its Application

The core of Gann's theory is to establish a strict trading order for seemingly disorderly markets. The theory includes tools such as Gann's law of time, the law of price, and Gann lines, which are used to determine when and how much prices will correct.

The mathematical structure of Gann's line contains two basic elements of price and time. He skillfully fused price and time with the help of Gann circles, spiral squares, hexagons, and "wheels in the middle". In Gann's theory, the number "seven" is of special importance. He often uses "seven" or its multiples to divide market cycles. He believes that "seven" integrates the ideas of nature, astronomy and religion.

The Gann line is a key concept in Gann's theory and investment approach. The X-axis represents time and the Y-axis represents price, and the symbol is denoted as "TXP". The basic ratio is 1:1, which corresponds to the 45-degree line. Gann also divides it in units of 3 and 8, such as 1/3, 1/8, etc. These lines constitute support and resistance levels for market corrections or gains.

With Gann's theory, investors can more accurately predict market price movements and fluctuations, so as to participate in transactions more robustly. Of course, the theory is not perfect, and it cannot be expected to bring unrealistic returns. But through continuous learning and practice, appreciate its essence, and you will surely gain something.

Gann theoretical system

Gann's theory focuses on the study of market surveying, fusing mathematics, geometry, religion, and astronomy to form a unique analysis system. Because of its highly accurate analysis methods, researchers often focus on its market surveying system. However, Gann also built a complete operating system for timely remediation of deviations in the market surveying system. Combining the two can achieve high accuracy.

In 1949, at the age of 72, Gann published his last major book, 45 Years on Wall Street, a candid account of his decades of success. Twelve of the trading rules are at the heart of the operating system, and he also formulated and strictly enforced 21 trading rules.

Gann argued that trading must follow established rules, not be bought and sold at will or speculated blindly. Market conditions change over time, and investors should be flexible in adapting, rather than sticking to one-size-fits-all views.

Gann cautioned investors to study the market carefully before investing, avoid making wrong decisions that go against the market, and learn to deal with mistakes. Successful investors do not make mistakes, but know how to control mistakes and prevent them from expanding in the face of unpredictable markets; while losers often lose more due to hesitation.

Gann believes there are three major reasons why investors can suffer significant losses:

1. Excessive frequent trading on limited capital. Short-term and ultra-short-term operations require high skills, and blind pursuit of short-term before mastering can easily lead to losses.

2. Stop-loss points are not set to control losses. Many investors allow mistakes to expand losses due to lack of stop-loss mechanisms. Setting and strictly enforcing stop-loss points is a basic skill. Although some investors set stop-loss but fail to implement them, they also cause losses.

3. Lack of market knowledge is the most important reason for losses. Investors do not pay attention to learning and are easily misled by wrong news; or they are born with book knowledge and lack practical experience. Gann emphasizes the accumulation of market knowledge and practical experience, which requires long-term practice to truly understand.

Gann's market measurement system is more abstract and difficult to understand, but its operating system and buying and selling rules are clear and clear. Gann's operating system is mainly based on following the market, separate from the prediction system, helping him to stand undefeated in volatile markets. For modern investors, combiningyingshiAnd other analytical tools can be used to apply these rules more efficiently.