applying gann’s trading methodologies to your markets · magic word (1950) trading vs....
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Applying Gann’s Trading Methodologies to Your Markets
Hima Reddy, CMT
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Disclaimer
The information presented in this Webinar consists of shared thoughts and ideologies, not trading advice. Although Hima Reddy is a Chartered Market Technician and strives to use sound technical analysis, her views and opinions are her own and not in any way those of the Market Technicians Association. Trade securities at your own risk.
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William Delbert Gann
Truth of the Stock Tape (1923) Tunnel Thru the Air (1927) Wall Street Stock Selector (1930) New Stock Trend Detector (1936) How to Make Profits Trading in Puts and Calls (1937) Face Facts America (1940) How to Make Profits Trading in Commodities (1941) 45 Years in Wall Street (1949) Magic Word (1950)
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Trading vs. Forecasting
Gann’s Trading Methodologies include: - Retracements (eighths) - Buying and Selling points - Distinct Trade Management rules Gann’s Forecasting Methodologies include: - Angles - Natural Squares - Cycles
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Trading Methodologies: Phases of a Trade
I. Trend Assessment
II. Signal observation
III. Risk assessment
IV. Order placement
V. Trade initiation
VI. Trade management
VII. Trade exit
VIII. Review
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II. Signal Observation
• Review Gann’s Buying/Selling Point description
• Translation of point into visual aids
• Market example
- Double Bottom
- Exceeding Move in Price
- Rapid Move
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Double Bottom
• Gann Buying Point #8: BUY against double or triple bottoms, or buy on first, second, or third higher bottom and buy a second lot after wheat, soybeans, or cotton makes second or third higher bottom, then crosses previous top.
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Double Bottom
AMX (America Movil stock), weekly, as of December 10, 2010
(10/18/07)
(10/24/08) (3/2/09)
(1/6/09)
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Double Bottom – A Closer Look
(2/10/09)
(2/26/09)
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Double Bottom – Possible Entry Points
AMX (America Movil stock), daily, as of June 30, 2009
(3/30/09)
(4/27/09)
(5/15/09)
(6/23/09)
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Exceeding Move in Price Gann Selling Point #3: SAFEST SELLING POINT. Sell on a secondary
rally after wheat, soybeans, cotton, or any commodity has broken the previous bottoms of several weeks or has broken the bottom of the last reaction, turning trend down. This secondary rally nearly always comes after the first sharp decline in the first section of the Bear Campaign.
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Exceeding Move in Price
JNPR (Juniper Networks stock), daily, as of July 23, 2009
(8/11/06)
(10/9/07)
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Exceeding Move in Price
JNPR (Juniper Networks stock), daily, as of February 11, 2008
(8/16/07)
(11/21/07)
(12/24/07)
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Rapid Move
Gann Buying Point #9: BUYING RULES FOR RAPID ADVANCES AT HIGH LEVELS. In the last stages of a Bull Market in a commodity, reactions are small. Buy on 2-day reactions and follow up with STOP LOSS ORDER 1 cent to 2 cents under each day’s low level. Then when the low of a previous day is broken, you will be out. Markets sometimes run 10 to 30 days without breaking low of previous day.
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Rapid Move
SN12 (Soybean futures, July 2012 contract), daily, as of March 3, 2012
(2/16/12)
(2/29/12)
(2/13/12)
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Application of Gann’s Principles
Using Gann’s favorite numbers
- 50%
Applying Gann’s methods to commonly used technical analysis tools
- RSI
- Williams %R
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50% of Time
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50% of Time
PFE (Pfizer, Inc. stock), weekly, as of September 16, 2011
(3/2/09)
(1/10/10)
(7/1/10)
(11/29/10)
(5/31/11)
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Oscillators - RSI
SBK12 (Sugar No. 11 futures, May 2012 contract), daily, as of March 23, 2012
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Oscillators – Williams % R
PBI (Pitney Bowes stock), weekly, as of September 30, 2011
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Hima Reddy, CMT
(917) 674-4462
www.himareddy.com