Studies of Gann are important for
professional trader, despite the changing of stock and the developing of
trading ways, but it remains popular and essential method of analyzing.
It set necessary by Forex and
ETFs to revisit some of the construction rules and explain concepts, although
Gann angles and its basic construction are still the same.
Basic elements of Gann theory:
Gann angles are used to measure
key elements like price, pattern and time so it is considered a trading tool
and popular analysis. In Gann angles there are the past, the present and the
future in the same time so it is the most debated subject of discussion among
technical analysts.
The first thing should the trader
do when he want to analysis or trade in a particular course is getting idea of
where the market has been , and its relation to the former top or bottom , and
how the trader should use the information to forecast future price action.
Gann angles versus trendlines:
Any professional trader should
draw Gann angles in order to trade and forecast, and this way is considered the
most popular analysis tool of Gann’s trading techniques available. With the
development of ways of trading and technical analysis trader’s resorts to draw
them manually on charts or use computerized technical to place them on screens.
There are different between Gann
angles and trendlines, but few of traders do not feel the need to explore how
and when and why to use them. As we know that a trendline is made by connecting
tops to tops in the case of a downtrend and bottoms to bottoms in the case of
an uptrend, while Gann angle is considered a diagonal line which moves at a uniform
rate of speed.
So the benefit of using Gann
angles comparing to trendline that allows the trader to forecast where the
price is going to be at specific date in the future. So the analyst should know
where Gann angles should be to gauge the strength and direction of the trend,
so it is wrong to say think that Gann angle will always predict where the
market will be. On the other side, trendline does not present long-term
forecasts, although it has some predictive value according to the constant
adjustments that it usually takes place, but it is unreliable.
