{"id":557,"date":"2021-05-23T11:32:55","date_gmt":"2021-05-23T11:32:55","guid":{"rendered":"https:\/\/stockezy.com\/?p=557"},"modified":"2021-05-23T11:32:55","modified_gmt":"2021-05-23T11:32:55","slug":"what-is-gann-theory-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/stockezy.com\/what-is-gann-theory-in-the-stock-market\/","title":{"rendered":"What is Gann Theory in the Stock Market? How To Use Gann Indicators"},"content":{"rendered":"

Are you new to the stock market and wondering what is \u2018Gann Theory\u2019?<\/p>\n

Don\u2019t worry! I am here to help you out. Today, I am going to discuss a more than a century-old trading strategy. This strategy involves the use of Gann Theory and I am going to tell you all about it from A through Z.<\/p>\n

\"What<\/p>\n

What is Gann Theory?<\/strong><\/h3>\n

Gann theory was a concept developed by William D. Gann<\/a> in the 1900s. He was a successful trader of his time and believed that the change in the stock price has an angle to it. In other words, an asset moves in angles. He observed that the change in price was related to the natural geometric shapes prevailing and predicted the future movement of price with relation to time for any stock. This is why the Gann theory is also known as the \u2018Gann Angle theory\u2019.<\/em><\/p>\n

Gann trading strategy is still in use and if correctly applied, can predict an asset\u2019s movement up to at least 90% accuracy. W. D. Gann was of the opinion that there exists a time cycle in nature that applies to the market as well. The discovery of his theory was based on natural geometric shapes, astrology, astronomy, and ancient mathematics.<\/p>\n

According to Gann theory, the angles and patterns formed by an asset in the market can be used to predict the future movement of the price.<\/p>\n

Who was William Delbert Gann?<\/strong><\/h3>\n

William Delbert Gann or W. D. Gann or William D. Gann was a finance trader and astrologer who developed various technical analysis tools such as the Gann angles. He was also fond of sharing his knowledge in the form of writing and hence authored numerous books and courses on trading. He is known to author the first-ever book to be written on the share market named \u201cThe Truth of Stock Tape\u201d<\/em>. He made over $50 million before he died in 1950 and ruled Wall Street for over 50 years. He had a trading accuracy of over 92%.<\/p>\n

Moreover, he invented the spiral chart often known as the \u2018Square of Nine\u2019<\/em> chart.<\/p>\n

What is the \u2018Spiral Chart\u2019 or \u2018Square of Nine\u2019 chart?<\/strong><\/h3>\n

This chart is used to apply the Gann trading strategy or Gann theory. It is a nine by nine matrix of numbers from 1 to 81 arranged in a counter-clockwise spiral. The number 1 is placed in the center and the numbers after it are placed in a spiral out from it. The picture below will give you a clear view.<\/p>\n

\"What<\/p>\n

Here you can observe that the numbers are moving in an anti-clockwise spiral in an increasing order starting from 1 in the center. Once a spiral\/cycle\/bracket gets completed, it moves on to the next one. For example, 2-3-4-5-6-7-8-9 are in one bracket after which the number 10 gets placed in the next bracket.<\/p>\n

This Gann indicator has cardinal and ordinal numbers. Cardinal numbers are the ones in Blue and ordinal numbers are the ones in Yellow. You\u2019ll also notice that the ordinal numbers are square numbers. W. D. Gann explained that any number that falls on any of these numbers works as strong support or resistance depending on the stock.<\/p>\n

An interesting fact about the numbers present in the Gann square is that they follow a certain harmonic pattern. For example, the number 52 has the number 27 next to it. This can be calculated as follows<\/p>\n