Gann Fans
Technical trading involves looking at the movement of an asset's price, and then predicting what will happen next, judging only by its movement.
The strategy involves a lot of potential techniques. Technical traders will take a stock chart and overlay all sorts of criss-crossing lines. They then look at the stock movement compared to those lines and use their relative positions to predict potential future moves.
Enter Gann Fans. They represent one collection of lines that technical traders can use.
Using a stock's price movement so far, and pre-established angles, the Gann Fan consists of a bunch of lines, originating from a central point. Together, they resemble one of those retractable fans...the kind you might see in The Mikado, or on sale at the Tokyo airport gift shop.
The various lines of the fan indicate resistance and support levels. If the stock price reaches a line above it, history suggests a tendency for the stock's rise to halt. That's resistance. Meanwhile, if the price reaches a line of support, there's a likelihood the stock could take a bounce higher.
Gann Fans were developed by W.D. Gann, a trader who started his career early in the 20th century. Along with drawing fan shapes on stock charts, he had a penchant for astrological signs, and occasionally peppered his writings with obscure references to things like eclipses and planetary movements. His system assumes a geometric relationship of stock movement, as well as a cyclical nature of price changes.
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Finance: What is a Chartist?26 Views
Finance allah shmoop What is a chartist Well here's a
chart and here's a chart and here's a chart All
right Well these are pages from the investing bible of
a chartist A chartist is an investor really a traitor
as they tend to own stocks for a much shorter
period of time than a longer term Really invest or
type person a chartist relies solely on the patterns The
pattern's right there These are all patterns imputed by the
charts that they you know sitting poor threw for hours
and hours So check out this chart see how the
plotted data closely follows the characteristic line there The characteristic
line basically is plodded through all those dots Yes So
they're going to stare at that try to figure out
where that line is going in the future right Get
the crystal ball or all right Well let's look at
this one where the data forms what looks like Well
the head and shoulders of someone who you know doesn't
have a neck that's Just common pattern in trading And
you know if you stopped looking at it and two
thirds of the way through there it's heading down Well
Maybe you'd be short the stock for a few days
and then you see it bottoming and then you'd be
long and try to make money that way Good luck
All right len look at this chart Where is right
here where the data appears to We'll break away from
the established pattern which was all just kind of boring
Lee along down here And then suddenly everything goes up
Yeah start doing its own thing Well maybe the company
reported a good quarter or ah you know the government
cut taxes again Everything went up So these were the
tools of the chartist The chart's a chartist is the
opposite of a fundamental investor meaning that she doesn't know
or care what the company does for a living Really
she doesn't care about their p e ratio nor their
profit margins nor their debt levels on their balance sheet
nor much of anything fundamental about how their business runs
Chartist just care about the pattern they glean from the
charts and all the charts always work until they don't
And what happens when the meteor hits that is that 00:02:06.0 --> [endTime] predictable on a chart Ah
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