Trading using Gann’s 50% rule

Now that you know what Gann’s 50% rule is, you can apply it in trading. But how will you apply it in trading? Do you know how it works? Yes, it gets complicated only if you don’t understand the basics of it. Therefore, we’ll make things easy for you by including the essentials below.

Gann techniques and Financial markets

Gann’s theory will help the trader to study the price, time relationships, and the patterns related to the markets. The market’s future movement can be analyzed by key elements such as price, pattern, and time. So using Gann’s theory, you can find out all these key elements pretty easily if you use it accurately. Every element we are about to discuss has unique characteristics and overlapping quality.  

The primary focus of Gann’s theory is to understand the interlocking relationship among three indicators of market direction and trend. To be said simply, in certain situations, a pattern will have a more significant impact on the market, while sometimes, time and price dominate. However, these elements should be balanced to create the best opportunities for traders to gain more trading success.  

So, using Gann’s theory, the trader can find the best combinations of these elements to execute successful trades. Each element included in balancing will have an impact on the trades individually. If a trader isn’t patient enough to wait for the combination, he might experience losses rather than profits. But this doesn’t mean that Gann’s theory ensures 100% profit. The Forex market will offer both profits and losses, and it is in the trader’s hand to manage it accordingly.  

When you study pattern, you must understand that proper illustration of intermediate, minor, and main trend- indicator and closing-price reversals are important. When you study price, it will include percentage retracements and Gann angle analysis. Likewise, when studying the time element, you must consider cycle timing, swing timing, and historical dates. Once the trader combines all these factors, he will be able to decide the buy and sell positions.

That said, now let’s see how a trader can trade using Gann’s 50% rule.

Using the rule when trading

You already know the principle of this theory. Both time and price must be balanced to attain what you are looking for. It is apparent that the market is in constant change. Therefore, you can’t assume that the market will unfold the way you want. Instead, you should keep analyzing until the market meets the points you want it to be met.

However, as per the Gann theory, the market movement has an order. By using the right tools, it is possible to analyze the movements and to forecast the future direction.

So if you are using balancing points, you can easily predict future movements and prices. Gann theory helps a trader in numerous ways to find the balance. The swing chart patterns are used to find the balance points, and it is one of the methods. The next method is using angles, time, and price to find the balance points. Next is to use the time.

The perfect market will stay balance almost all the time, but it is quite uninteresting as major moves happen when the time is ahead of price and vice-versa. If you are using the tools perfectly, you can find the major moves that occur in the market.

So the above detail offers an extend the idea of the theory, but the problem is applying it in trading. How are you going to do it? How will you apply Gann’s theory in trading? Let’s see!

The very first step that you must make is to create the charts by analyzing the pattern, time, and price. The chart should demonstrate this concept. The next step is to focus on trend indicator charts or swing charts that help the traders with analyzing the size and time duration from swing charts to identify the future time and price targets. Plus, this chart can be used to find the trend of the market.

Once you find the pattern in the swing chart, you can move to the next step. This is to create Gann angle charts. We helped you with Gann angles in the previous chapter, so you might have some basic knowledge on how to do it. Actually, in trading, you have to practice what you learn, only then, you are going to discover better ways and methods to trade.

By using bottoms and tops analyzed with the swing chart, the trader will draw the properly scaled angles. So these angles are used as support and resistance because they deal with uniform rates of speed. Using these angles, the traders can find the future price and direction of the market.

There you’ve learned the ways to apply Gann theory in trading! This is not going to be hard if you follow the theory accordingly.