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One of the core principles of technical analysis is that prices move in trends. Subsequently, the goal of technical analysts is to identify the trend in its very early stages of development. While experienced traders may nod their heads in agreement, often beginners face difficulties identifying the trend on the price chart. Lack of experience and practice is to blame, of course. The trend is identified once the turning points of the market are spotted. The technique of spotting the tops and the bottoms on the chart is not clear to everyone and the procedure can become an unpleasant process of trial and error for newbies.
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William Delbert Gann is considered by some to be one of the greatest traders of stocks and commodities of all time. He correctly forecasted that the 1909 September wheat price would reach $1.20, Black Friday of 1929, and the 1930s Great Depression, just to name a few of his calls.
Gann was fond of mathematics and as a result, he spent many years studying the subject in England, India, and Egypt. He believed that the markets follow the laws of mathematics and that there is a relationship between price and time. He later formulated his theory into what is known as the squaring of price and time. Even though he went on to develop many complicated concepts and theories, the Gann Swing Charts remains perhaps one of the easiest to understand. Gann Swing Charts
The main goal of using Gann’s charts is to remove the “noise” from the price charts, which is not only unnecessary but also obscures the interpretation of the price action. Gann put in place an objective, a mechanical procedure – free from emotions and subjectivity – to identify the swings on the price chart.
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