Most traders follow certain philosophies or trading principles in making trading decisions. They also employ proven methods such as the Gann Technique in analyzing the market price movements. This technique has been used since its conception by William Delbert Gann who was a stock trader during his time. He developed this technique in order to have a systematic way of analyzing the possible trading opportunities that would bring profit. The Gann Trading Technique uses angles that present the relationship between price and time. Traders make use of 45° angles that represents 50% of the price that falls between the important high and low points with time and price being considered.
The Gann Technique when applied to trading works on different frameworks. The first of these refers to the psychological framework. Traders have to master all of the concepts and the strategies that pertain to this technique. They have to be able to determine their average limits when it comes to their trading activities every day. Those who are in the trading business also have to know when to apply the Gann Trading Technique in various types of situations. There are strategies that need to be employed in a Bull market or in a Bear market.
The Bull and the Bear markets refer to the upward and downward movements of the prices. The Gann Technique would help the traders to predict where reversals from these different markets would likely to occur. They may not exactly tell when but traders will have the opportunity to earn profit if they know when it could possibly happen. Those who are using the Gann Trading Technique may trade according to the market trends. However, they have to determine that there is consistency in the uptrend or the downtrend when they trade. If there are conflicting tops and bottoms, they may have to wait a little until they are able to identify a firm trend in the market.
Traders who employ the Gann Technique are advised to keep an eye on their price charts especially at the points where they expect it to bounce back. This technique works on finding the support as well as the resistance levels that may come at 25%, at 50% and at 75%. They also have to take note of time as trends come back after some time. It is then important for traders to remember when big changes have occurred in the market because there is a higher chance that the same scenario may occur again.
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