Forex Trading With Gann Market Timing

Does Gann'southward Yearly Division Strategy Really Work For Market Timing?

Market timing is the deed of finding the right 'fourth dimension' to buy and sell that will produce the nearly profits with the to the lowest degree amount of risk.

For over 20 years, I have spent the majority of my professional life focusing on one matter in relation to trading...Market TIMING. The reason is unproblematic; I have a very low tolerance for risk and big draw-downs of uppercase.

Market timing is the human action of finding the right 'time' to purchase and sell that volition produce the nigh profits with the least amount of adventure. Yet, most who write almost market 'timing' tend to focus more on PRICE, not TIME. Note that TIME, non PRICE, is highlighted in the words "Market Timing".

Well-nigh serious students of the markets have heard of Due west. D. Gann, with various levels of conventionalities, atheism and respect. Since this article is not about the person of Gann, I'll leave it at that, with the exception that I personally consider him an authority on the subject of 'market timing'.

Gann's teachings stressed 1 important fact; Time is more important than Price. Below is one such quote from Gann:

"Time periods from high or low levels are of greater importance than cost resistance levels...".

 I have establish this to be logical and true. When dealing with toll resistance levels, they often cause price to react when touched. Even so, the length of 'time' of that reaction is anywhere from momentary to a complete reversal in trend. More ofttimes than not, it is closer to momentary than it is to an outright reversal.

For example, nosotros have all seen price reach some price resistance level, mayhap react to it for some small period of fourth dimension (minutes, a few hours), then break through it and head towards the next price level, and so the next. While knowing what the price resistance levels are is important and valuable, knowing 'when' the market is probable to make a height or bottom is even MORE Of import AND VALUABLE.

There are many special methods and techniques that will provide you with the 'time' when a superlative or bottom is most likely to occur. In my book (not a Gann book), "Marketplace Forecasting Secrets", I reveal methods found to be amazing. In this article, I volition be discussing one of Gann's market place timing methods that deals with yearly fourth dimension divisions.

Much of what Gann taught had to exercise with dividing fourth dimension periods into equal parts. Unremarkably, this would exist dividing some whole part by eight. If dealing with the degrees of a circle (360), he would suggest dividing information technology by 8. When dealing with the price range from bottom to tiptop, he would suggest dividing information technology by 8 to get price levels. And when it came to the agenda year (365 days), he also suggested that it be divided by 8. And that is what we are going to do in this demonstration.

Our focus is going to be on the WEEKLY fourth dimension-frame nautical chart, where each price bar represents one trading week. Since each calendar week has v trading days, we volition utilize Fri of that week for the date of that week.

If you divide the twelvemonth by eight and convert the resultant days into weeks, y'all end up with viii weekly periods from 1/viii to 8/8 of the year. Co-ordinate to Gann, he states that all "of these periods are important to watch for a change in trend". Nonetheless, he further states that the most important are 13, 17, 26, 35, 39 and 52.

Obviously we cannot expect that each and every twelvemonth a significant market peak or bottom is going to occur at EVERY unmarried one of these time periods. Withal, if this data is to be useful to united states of america, it has to exist a lot better than picking arbitrary values out of mid-air. Also, nosotros cannot await an important pinnacle or bottom to always fall exactly at those intervals. A more than reasonable expectation, in lodge to be useful for market timing, is to allow a footling 'jerk-room'. Then we volition allow for the weekly height or lesser to be no more than ONE weekly bar early or late. Besides, some of those weekly intervals are not exact divisions of a twelvemonth as we had to 'round them' from the daily counts.

Gann stated that we are to first from "extreme low and extreme loftier dates". We may all have different views equally what constitutes an 'extreme' depression or high, then I will employ dates that are difficult to argue every bit beingness significant tops and bottoms in the SP500 market.

In my investigation of this method, I discovered that it worked quite well from some meaning marketplace tops and bottoms and not then well with others, fifty-fifty though some of these used were every bit 'farthermost' as you lot tin can go. My decision from this experiment is that if you find the count series working quite well early in the series, yous will really want to pay attention to the rest of the counts.

For example, the count series did not work well from the extreme top of week 10/12/2007, which was the final top before the market place turned extremely bearish as the result of the economical crisis. All the same, the previous extreme top of calendar week 7/20/2007, which arguably could have been 'the' official starting time of the crunch in the Stock Market, produced very expert results.

The 10/12/2007 summit formed 12-weeks following the first top of 7/20/2007. That is within i bar of the xiii count.

The post-obit significant weekly swing lesser formed on week 19 rather than 17.

27-weeks resulted in the next weekly trend correction with a swing bottom (1/25/2008).

35-weeks resulted in the next major trend correction with a swing bottom (3/21/2008).

39-weeks resulted in the next minor trend correction with a pocket-sized swing bottom (4/18/2008).

52-weeks resulted in the next major trend correction with a swing bottom (vii/18/2008).

Now, I would like to also mention that the major tiptop of week v/23/2008 was at the count of 44-weeks. seven/8 of the year is 45.5 weeks.

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Now let'southward use a more than current example that has yet to complete one full year. We will start this count from the major balderdash trend superlative of week 4/xxx/2010.

14-Weeks later forms a significant weekly swing tiptop during week 8/half-dozen/2010. If yous follow my YouTube (search FDates in YouTube to find my channel) videos you lot would see a forecast I made for this top in accelerate, thus proving the value of using more than than one method for forecasting market tops and bottoms.

18-weeks later formed the last major weekly bottom during week 9/3/2010. Since then, the SP500 has been extremely bullish upwards till the time of this writing.

This week is week ending 10/22/2010 and is the count of 25-weeks. This is ane-week shy of the 26 count. And then we would be on the scout for a weekly swing to form out of either the 25, 26 or 27-calendar week bar. This gives a dainty time-frame to use with other methods in order to 'narrow' our timing downward. Thus, we would evidently await a weekly top to grade no later than calendar week ending 11/5/2010 for the 26-calendar week interval.

So to answer the question as to whether Gann's yearly sectionalization strategy works or not for market timing, I would have to respond "yeah and no". In other words, I believe information technology to be valuable when used in conjunction with other valuable methods.

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