Gann Angles - The Secret of Better Market Timing for Big Profits!

W D Gann was an innovator in technical trading systems and made fortune of over 50 million dollars Gann died in 1955, but his methods live on and traders around the world use them for big profits.

Gann angles are a tool used by many savvy traders Quite simply Gann angles allow you to pinpoint your entry and exit levels for great profit potential. Let’s look at the effectiveness of Gann angles.

Gann based his investment strategy on the fact that by studying the Past, We Can Predict the Future. He assumed the following:

1. Price, time, and range are the only three factors relevant to market movement.

2. Markets are cyclical in nature.

3. The markets are geometric in their design and in function. Gann knew that market movements were a reflection of human nature which is constant over time, and this shows up in repetitive price patterns that can be seen with the right tolls and traded for profit.

Gann’s techniques & use of angles

Based on the above, Gann's used three ways to predict market behavior

1. Price study– This uses support and resistance lines, as well as pivot points and angles.

2. Time study – This looks at historically reoccurring dates derived from natural order.

3. Pattern study – This studies market swings using trend lines and reversal patterns.

Gann Angles

Using Gann angles requires practice, but here are the basics of what you need to do

1. Determine the time units - The way to determine a time unit is to study charts and look at the distances in which price movements occur.

Put the angles to the test and see how they perform.

The intermediate time frame (between 1 and 3 months) tends to produce the best amount of accurate patterns and is the time frame to focus on, rather than say, daily or multi year.

2. Determine the high or low from which to draw the Gann lines –

The best way to achieve this is to complement it with other technical tolls such as Fibonacci levels or pivot points.

Gann looked at what he referred to as "vibrations" or "price swings." He found these by analyzing charts using tools such as Fibonacci numbers.

After the above has done you then need to decide which pattern to use:

Gann looked at what he referred to as "vibrations" or "price swings." He found these by analyzing charts using tools such as Fibonacci numbers.

After the above has done you then need to decide which pattern to use:

1. The two most common patterns are the 1x1, the 1x2, and the 2x1.

These are purely variations of the slope of the line.

For example, the 1x2 is half the slope of the 1x1. The numbers simply indicate the number of units and the slope.

2. Look for patterns to trade the direction will be either downward and to the right from a high point or upward and to the right from a low point.

3. Always look for repeat patterns on the charts The whole basis of Gann’ theories are that markets are cyclical in nature and patterns repeat and can be traded.

Using Gann Angles for Trading Profits.

Gann angles are great for predicting support and resistance levels.

Many other trading methods use support and resistance lines; however Gann angles add a greater insight for traders - in that they are diagonal.

The best Gann Formation.

The optimum balance between time and price is when prices move identically in synch to time. This is present when the Gann angle is at 45 degrees.

There are nine different Gann angles to use.

When one of these lines is broken, the following angle will then provide the next level of support or resistance.

Gann made a lot of money, a fortune in fact of over 50 million dollars and Gann angles helped him to do it, so discover what they could do for you today!
http://www.gann.co.uk

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Leonardo Fibonacci Biography

Leonardo Pisano, now better known by his nickname Fibonacci, also sometimes used the name Bigollo, which may mean good-for-nothing or a traveller. He was born in Pisa, Italy around 1170. At the time, Pisa was an important commercial town and had links with many Mediterranean ports. He was the son of Guilielmo Bonacci, a diplomat for the Republic of Pisa. Guilielmo was responsible, beginning around 1192, for directing the Pisan trading colony in Bugia, Algeria where he represented the merchants of the Republic of Pisa. Bugia, later called Bougie and now called Bejaia exported wax candles. The French word for candle, Bougie, is derived from the Algerian port’s name.

Some time after 1192, Guilielmo Bonacci brought Leonardo with him to Bugia. Leonardo received a North African education under the Moors, and was taught their style of mathematics. Guilielmo intended for his son Leonardo to become a merchant and so had arranged for his education in calculational techniques, especially those involving the Hindu-Arabic numerals which had not yet been introduced into Europe. Later, Leonardo was assigned to do business for the Pisan republic and he travelled extensively around the Mediterranean coast. He was sent on trips to Egypt, Syria, Greece, Sicily, and Provence. He took the opportunity offered by his travel abroad to study and learn the mathematical techniques used in these various regions. He would have met with many merchants and thereby discovered their systems of doing arithmetic.

Around 1200, Fibonacci ended his travels and returned to Pisa. On returning home he began to work on his own mathematical texts, and continued to do so for at least the next twenty-five years. His work played an important role in reviving ancient mathematical skills and he also made significant contributions of his own. The five works we know of from this period are: the Liber abbaci (1202, 1228); the Practica geometriae (1220/1221); an undated letter to Theodorus, the imperial philosopher to the court of the Hohenstaufen emperor Frederick II; Flos (1225), a collection of solutions to problems posed in the presence of Frederick II; and the Liber quadratorum (1225), a number-theoretic book concerned with the simultaneous solution of equations quadratic in two or more variables. Fibonacci lived in the days before printing, so his books were hand written and the only way to have a copy of one of his books was to have another hand-written copy made, in light of this we are lucky to have such record as we do of his work.

Frederick II had summoned Fibonacci for an audience when he was in Pisa around 1225. His achievements were clearly recognised during his lifetime, although it was the practical applications rather than the abstract theorems that made him famous to his contemporaries.

After 1228 by decree the Republic of Pisa awarded Fibonacci a yearly stipend for his pro bono advising to the Republic on matters involving accounting and related mathematical matters. Fibonacci died some time after 1240.

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Gann Angles To Predicting the Market

An Alternative Slant on Market Timing.

W D Gann was a prolific writer and trader, and created a fortune of over 50 million dollars (equivalent to 500 million today!).

Many of his trading predictions were the subject of public record.

For instance, he correctly predicted the 1929 crash a year in advance! Gann died in 1955, but he still holds legendary status as a technical innovator.

By predicting the market using Gann angles, you can add a valuable tool to your trading strategy.

Assumption: By Studying the Past, We Can Predict the Future
Gann based predictions of price movements on three premises:

1. Price, time, and range are the only three factors to consider.
2. The markets are cyclical in nature.
3. The markets are geometric in their design and in function.

Gann believed that human nature was constant, and this showed up in repetitive price patterns that are identifiable, and which can therefore be acted upon to increase profit potential.

Gann's Strategy for Trading Success
Based on the above assumptions, Gann's strategies revolved around three areas of prediction:

1. Price study- This study uses support and resistance lines, pivot points and angles.
2. Time study - This studies historically reoccurring dates derived from natural order
3. Pattern study - These study market swings using trend lines and reversal patterns.

Constructing Gann Angles
Predicting the market using Gann angles requires subjective judgment and practice.

Here is what you need to do:

1. Determine the time units - One common way to determine a time unit is to study the chart and look at the distances in which price movements occur. Then, put the angles to the test and see how accurate they are. The intermediate-term time frame (one to three-month) tends to produce the optimal amount of patterns compared to short term daily, or multi year charts.

2. Determine the high or low from which to draw the Gann lines - The most common way to accomplish this is to complement it with other forms of technical analysis i.e. Fibonacci levels or pivot points. Gann used what he called "vibrations" or "price swings." He determined these by analyzing charts using theories such as Fibonacci numbers.

3. Decide which pattern to use - The two most common patterns are the 1x1, the 1x2, and the 2x1. These are simply variations of the slope of the line. For example, the 1x2 is half the slope of the 1x1. The numbers simply indicate the number of units.

4. Look for patterns - The direction would be either downward and to the right from a high point or upward and to the right from a low point.

5. Look for repeat patterns on the chart - The basis of this technique is the premise that markets are cyclical.

Using Gann Angles for Trading Profits
The most common use for Gann angles when predicting the market is to indicate support and resistance levels. Many other trading methods use support and resistance lines, so what sets Gann's method apart from the rest?

Quite simply, predicting the market using Gann, angles add a new dimension to support and resistance levels, in that they can be diagonal.

The Optimum Gann Formation
The optimum balance between time and price exists when prices move identically to time. This is present when the Gann angle is at 45 degrees.

In total, there are nine different Gann angles. When one of these trend lines is broken, the following angle will provide the next level of support or resistance.
http://www.gann.co.uk

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How Does Elliott Wave Analysis Work?

Elliott wave analysis is based upon the Elliott Wave Principle, which states that investor psychology is the real engine behind the stock markets.

Robert Prechter, Elliott Wave International's founder and president, explains: “The Wave Principle is a catalog of the ways that the crowd goes from the extreme point of pessimism at the bottom to the extreme point of optimism at the top. It is a description of the steps human beings go through when they are part of the investment crowd, in order to change their psychological orientation from bullish to bearish. Since people don’t change much, the path they follow in moving from extreme pessimism to extreme optimism and back again tends to be the same over and over, regardless of news and extraneous events.”

Therefore, Elliott wave analysis involves deciphering the psychological orientation of the investment crowd through the wave patterns evolving in various stock markets. And since we here at Elliott Wave International use Elliott wave analysis on all of the world’s major stock indexes, we're confident we can gauge how investor psychology is trending.

In order to utilize Elliott wave analysis, you must become familiar with the Elliott Wave Principle. The Elliott Wave Principle enables you to properly decipher the wave patterns unfolding in each stock market and then make predictions on which wave patterns are most likely to occur next — this is the basis of Elliott wave analysis.

Each Elliott wave structure carries with it unique personality traits and is followed by another specific and unique structure. Studying these patterns eventually allows analysts to be able to predict both what may occur next, and — possibly even more importantly — what won’t happen next.

http://www.elliottwave.com

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The Secret Of Better Market Timing & Profit Potential

The Fibonacci number sequence and golden ratio is important throughout nature, but traders such as W D Gann made great use of the sequence as a trading tool.

The numbers helped make Gann millions in profits and are useful for any trader to maximize profits.

So what are they and how are they applied to trading?

Let’s find out: Support and resistance levels are important for traders as they help identify entry and exit points when trading.

Fibonacci percentage "retracement" levels based upon the Fibonacci number sequence and golden ratio are used by many savvy traders to improve their entry and exit points.

Fibonacci Numbers and the Golden Ratio
The Fibonacci sequence was printed in the Liber Abaci, written by Leonardo Fibonacci in 1202. It introduced Hindu-Arabic numerals for the first time To Europe, which are at the time was still using roman numerals.

The Fibonacci number sequence came about from the following question:

How many pairs of rabbits can be generated from a single pair, if each month each mature pair produces a new pair, which, from the second month, starts producing?

While the Fibonacci number sequence and golden ratio came about form the above question it produced a number sequence that has importance throughout nature.

After the first few numbers in the sequence, the ratio of any number to the next higher number is approximately .618, and the lower number is 1.618. These two figures are referred to as the golden mean or the golden ratio.

The golden mean and golden ratio
The proportions reflected in these numbers are pleasing to the human senses and appear throughout biology, art, music, and architecture.

A few examples of natural shapes based on the Golden Ratio include: Snail shells, galaxies, and hurricanes DNA molecules, sunflowers and many more.

Many traders have found these numbers important in trading as well and such traders as W D Gann for example, used them to amass huge profits.

Retracement Levels
The two Fibonacci percentage retracement levels considered the most important for traders are: 38.2% and 62.8%. Other important retracement percentages are: 75%, 50%, and 33%. Fibonacci Numbers 3 Uses For Traders

1. Fibonacci numbers Define exit numbers
For example, if three or more Fibonacci price levels come together in a tight zone, a stop loss can be placed above the area which denotes important support or resistance.

Setting stops using Fibonacci retracements give important areas that act as support or resistance, allowing traders to set pre defined exit points in a disciplined manner.

2. Fibonacci levels Decide Position Size
Depending on the risk you are prepared to take per trade, Fibonacci numbers can also define the size of position taken. This is because the distance from the stop is different in monetary terms on all trades.

A stop close to resistance and support may warrant a bigger position than one where support or resistance is further away.

3. Fibonacci numbers Define Profit Objectives
With Fibonacci numbers, once a pattern completes against a Fibonacci price area traders can use them for profit objectives. This clear view of where trades may go helps traders to lock in profits at set levels.

The advantage of Fibonacci numbers are: They allow traders to have specific stop loss and profit objectives IN ADVANCE.

One of the keys to trading any market is discipline most traders simply don’t set profit and loss objectives in advance. They therefore let emotions take over, they get greedy or rely on hope and this creates losses over the longer term. Profits are run to long and lost and losses become bigger than they should.

“Run your profits and cut your losses is the way to make longer term capital gains and Fibonacci numbers incorporated in your trading plan will help you do this.

W D Gann was a trader who understood that using Fibonacci numbers could make large profits and used them with stunning success.

Fibonacci numbers combined with the techniques of WD Gann can help any trader achieve long term capital gains. Check out these great profit tools and incorporate them in your trading as they will help you increase your profit potential.
http://www.gann.co.uk

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What is an Elliott Wave and What Does it Look Like?

Elliott waves are the basic building block of the Wave Principle.

The Wave Principle is Ralph Nelson Elliott's discovery that social, or crowd, behavior trends and reverses in recognizable patterns. Elliott discovered that the ever-changing path of stock market prices reveals a structural design that in turn reflects a basic harmony found in nature. From this discovery, he developed a rational system of market analysis. Elliott isolated 13 patterns of movement, or “waves,” that recur in market price data and are repetitive in form but not necessarily repetitive in time or amplitude. He named, defined and illustrated the patterns. These patterns are Elliott waves.

These Elliott waves link together to form larger versions of those same patterns. They, in turn, link to form identical patterns of the next larger size, and so on. The result is the illustration you see below:

In markets, progress ultimately takes the form of five Elliott waves of a specific structure. As you can see below in the most basic Elliott wave structure, waves (1), (3) and (5) actually affect the directional movement. Waves (2) and (4) are countertrend interruptions.

The two interruptions are a requisite for overall directional movement to occur. And though there are several variations of Elliott waves, all of them fit into the basic structure you see above. The stock market is always somewhere in the basic five-wave pattern at the largest degree of trend. Because the five-wave pattern is the overriding form of market progress, all other patterns are subsumed by it.

http://www.elliottwave.com

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Jesse Livermore Vs. W.D. Gann – Who Was Better?

Jesse Livermore is known to most as the best market player Wall Street has ever heard about, rivaling perhaps even Gann. Livermore is alleged to have engaged in every single biggest stock and commodities moves from 1910 – 1940. He needed to be doing something right to just have survived monetarily for three decades.

Livermore might be a very good model for today’s computer stock trader. In the Livermore era there was no tv, no computing devices, and no world wide web. Even if were able to afford to pay a staff to chart stocks and futures you would not have had 24×7 immediate access to financial data files to keep those charts up to the minute. Any profitable stock trading system that could stand up to the test of time had to use easy to get data, be clear to understand, and be simple to apply. Contemporary technical analysis tools like stochastics and the elliott wave oscillator were out of the question.

His method was based on a trend following system. Livermore only took positions in the direction of the major trend. He opened his position with a minor stake and added to it as the trend persisted in its expected direction. Jesse Livermore said “Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide.”

In or out. Long or short. Regardless of how many gigabytes you might have for your cutting edge, computer-based trading system it all comes down to those two choices. He set objective stop loss levels and bailed out immediately from his entire position whenever a stop was touched. Livermore did not feel pressured to trade each and every single day, neither did he try to catch every jiggle in stock prices. He followed only the major, cyclical trends.

The Livermore System defines the trading ticker in terms of trend and swing. An upswing, for example, is a consecutive series of higher pivot highs and higher pivot lows. An uptrend is a consecutive series of upswings. A downswing is a consecutive series of lower pivot lows and lower pivot highs. A downtrend is a consecutive series of downswings.

Trends and swings are determined by two filters. A larger swing filter and a penetration filter that is one-half the size of the swing filter. A change in trend is a retrace of swing filter size from the last up or down swing. A pivot is the high or low point of each swing. Time is not a thing to consider in the Livermore System or in the making of a swing chart.

Livermore utilized hand drawn swing charts that looked somewhat like a point and figure chart. As a substitute for Xs and Os and box sizes, a Livermore swing chart is a vertical line drawn when prices have moved by a fixed number of points in the opposite direction from the previous high or low pivot.

Livermore utilized penetrations of the pivot points to either add new positions when they occurred in the direction of the trend, or as stop-loss levels when they occurred in a direction opposite to the trend. The Livermore System is somewhat unique because of the role of the penetration filter. Many other swing trading systems use any breakout of a prior pivot high pivot or low pivot as the signal to add positions or as a stop loss level.

All positions were liquidated at the first penetration of a stop-loss level. A second penetration of the next occurring pivot in the direction of the new trend confirmed the new trend. A new trend “failed” when the second confirmation did not occur. In those cases Livermore would reenter in the direction of the prior trend when prices exceeded the size of the swing filter from the failed trend’s highest high or lowest low.

People that are looking for more information about the topic of retirement investing, please visit the web page which was quoted right in this line.
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