WD Gann’s Three Key Components for Trading Market Swings

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WD Gann’s contribution to the trading world is nothing short of remarkable. It stands out from the rest. The trading strategies developed by WD Gann are widely recognized as exceptional.

The trading strategies of Gann are widely recognized as exceptional and offer a unique approach to trading, unlike most other trading approaches that provide a set of Indicators and rules.

WD GANN
WD Gann

Gann’s approach to the markets was like a puzzle; every piece, such as Price, Time, and Pattern, plays an essential role in revealing the bigger picture. This unique approach distinguishes Gann’s trading techniques from other trading methodologies, offering a broad and distinctive Perspective on the market.

In this article, we will explore some fundamental yet often overlooked aspects of the Gann trading system that enabled him to trade market swings more efficiently. Specifically, we will examine three key components – Price, Time, and Pattern – that Gann applied throughout his trading strategies.

Understanding the significance of Price, Time, and Pattern is crucial in Gann trading strategies. One of the keys to his approach lies in the Three pillars ‘Price, Time and Pattern’.

These elements are not just data points but form the backbone of his trading strategy. A closer look at how these three factors work together will give us a better understanding of Gann’s trading puzzle and open doors to new possibilities.

The Absolute Importance of Price

When you look at the ‘Price’ of an asset, it’s more than just a Number. It represents the collective emotions of traders, including Greed, Fear, and Expectations, all compressed into Numbers.

In traditional technical analysis, ‘Price’ is considered as a Static indicator. However, in the Gann methodology, it’s a Dynamic entity that Interacts with other market Factors such as Time, Pattern, and Volume.

Think of ‘Price’ as a well-crafted story in literature. A good story provides information about the characters, setting, and conflicts. Similarly, ‘Price’ tells the story of the market, including its Trends, Volatility, and Potential future effects.

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Time: The Often-Ignored Component of Market Analysis

Traders often focus solely on Price, neglecting Time as a dimension. However, this is a critical mistake since Time significantly impacts the duration of trends, their reversals, and the extent of those reversals.

Understanding that Time in the market is not linear like a clock is essential. Instead, it has a fractal nature of varying lengths, each with its predictive power.

Knowing the right moment to enter or exit a trade can determine whether it will be profitable or not. Therefore, a wise trader always utilizes Time as a guidepost, combining it with Price and Pattern to make informed trading decisions.

Pattern: The Fine Thread That Holds It All Together

In WD Gann’s trading universe, Patterns play a Pivotal role. They help us to understand the correlation between Price and Time. In simpler words, they help us understand how Price and Time work together in trading the markets.

The patterns that Gann explained in his books and courses are not merely random market fluctuations. These patterns are different and simpler to understand than traditional technical analysis patterns. Instead, they are widely recognized ways that offer valuable insights into the Market’s underlying behaviour.

Though Gann used Geometric shapes in his studies, the core idea can be simplified by focusing on the fundamental principles of symmetry and proportionality that lay the foundation.

The same Laws of Nature, also known as Natural Laws, also apply to Patterns. On a deeper level, these patterns are subject to the same Natural laws that govern the universe, offering insight into the fundamental principles that guide our world.

trading strategies developed by WD Gann

The Confluence of Price, Time and Pattern in Trading 

The combination of Price, Time, and Pattern offers decisive turning and trend-reversal points where one can discover multiple opportunities.

When these three factors come together, it creates a Powerful confluence point, like a crossroads where three mighty rivers meet. Each element brings unique characteristics, and its meeting point offers the ideal conditions for highly Rewarding trading opportunities.

As a trader, it is essential to identify these correlated zones on your trading charts. These are the situations where your analysis pays off, providing the most profitable trading opportunities.

What is the One thing You can do Today to Improve your Trading skills?

Start by understanding how these Three factors of markets- Price, Time, and Pattern – work together.

Price isn’t just a Number. It indicates what market participants and traders think and feel about market sentiments and trends. By looking at prices, you can get clues about whether they are greedy or fearful.

Next, don’t forget about Time. It helps you understand how long a trend could last and when it might change direction. A simple combination of ‘Time’ and ‘Price’ significantly improves your trading results.

Lastly, pay attention to Patterns. These are like the signposts that help you understand how price and time are linked and give you hints about what the market might do next.

Look for spots on your trading charts where Price Time and Pattern come together. These are your golden opportunities to make a profitable trade. Make it a habit to look for these unique spots where Price, Time, and Pattern meet. Doing this will make you one step closer to becoming a smarter trader. – Divesh

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About the author

Divesh Jotwani is an active and full-time trader in the Indian markets. He has spent over 20+ years researching and discovering WD Gann's methods and applying them daily in the markets.