The essence of Gann's theory is to establish a strict trading order in a seemingly disorderly market. The inventor established Gann's time law, Gann's price law, Gann's line and so on. They can be used to find out when the price will be adjusted back and to what price. Gann believes that trading must be carried out in accordance with a set of established trading rules, rather than buying and selling at will and blindly guessing the development of the market. With the change of time, the market will also change, and our investment methods should also learn to follow the changes of the market.
Five buying and selling strategies of Gann theory;
(1) The best buying point in the market: when breaking through the historical high and hitting a new high.
(2) The safest buying point in the market is when the stock price breaks through the previous bottom from bottom to top.
(3) When the stock price falls below the previous top from top to bottom, it must be sold; When the stock price returns to the previous high point after a round of adjustment, it should be ready to sell.
(4) When the stock price falls below the lowest level in history and hits a new low, it may not only lead to panic selling and accelerate the decline, but also lead to a rebound in capital inflows and form a Big bounce. Therefore, investors should pay close attention to the dynamics. Quick response.
(5) The closing price is very important. To judge whether it is a new high or a low innovation and whether an effective breakthrough has been achieved, the reference standard should be the closing price, not the highest or lowest price in the session, because an effective breakthrough can only be considered if the closing price breaks through the historical high or historical low. The intraday breakthrough is likely to be that the banker cheated in the plan, inducing investors to kill or chase up.
Gann's trading rules:
1. Pay attention to the warehouse operation. Diversification of investment will also diversify risks. Although it can't achieve the effect of making money on a large scale, it can produce continuous income.
2. Set stop loss and take profit, and stick to it. This is very important for investors. Stop loss can control the loss within a certain range; Take profit position can prevent excessive greed, miss the best selling opportunity, and finally turn from profit to loss, or even get stuck. There is no specific standard for stop loss and take profit, depending on the individual's risk tolerance and specific stocks. It is usually recommended to stop at 10% and take profit at 20%. It should be emphasized that once the standard is established, don't change it at will, which will make you lose your self-discipline and self-control ability.
3. Don't over-trade. On the one hand, excessive trading will lose too much handling fees, stamp duty and other expenses will make a two-way operation of buying and selling swallow up about 0.5% of profits; On the other hand, excessive trading often leads to misjudgment due to insufficient understanding of stocks.
4. Don't go against the trend. Pay attention to the market trend. For example, in a bear market, even the best stocks will follow the trend of the broader market. Even if there are rising stocks, they will not rise every day, so the best strategy for ordinary investors is to wait and see.
When you are in doubt about the market or your investment decision, you should close your position and leave immediately.
(1) Pay attention to warehouse operation. Diversification of investment will also diversify risks. Although it can't achieve the effect of making money on a large scale, it can produce continuous income.
(2) Set the stop-loss position and take-profit position and resolutely implement them. This is very important for investors. Stop loss can control the loss within a certain range; Take profit position can prevent excessive greed, miss the best selling opportunity, and finally turn from profit to loss, or even get stuck. There is no specific standard for stop loss and take profit, depending on the individual's risk tolerance and specific stocks. It is usually recommended to stop at 10% and take profit at 20%. It should be emphasized that once the standard is established, don't change it at will, which will make you lose self-discipline and self-control.
(3) Don't over-trade. On the one hand, excessive trading will lose too much handling fees, stamp duty and other expenses will make a two-way operation of buying and selling swallow up about 0.5% of profits; On the other hand, excessive trading often leads to misjudgment due to insufficient understanding of stocks.
(4) Don't go against the trend. Pay attention to the market trend. For example, in a bear market, even the best stocks will follow the trend of the broader market. Even if there are rising stocks, they will not rise every day, so the best strategy for ordinary investors is to wait and see.
(5) When you have doubts about the market or your investment decision, you should immediately close your position and leave. Because when confidence is insufficient, the key moment will be indecisive and miss the best opportunity.
(6) stay away from the ice. An active market is the premise of profit. Only in this way can the market expand and the stock price fluctuate greatly. On the other hand, although the deserted stock is easy to be seen by the banker, it is difficult to see the banker's actions without a keen eye, because the reaction is too deserted. Even if you find a dealer to settle in, you may not be able to endure the long and exciting process of washing dishes.
(7) Don't use limit orders. The so-called limit order means that investors enter the entrusted price in advance. This approach may not only miss the best opportunity, but also fail to buy stocks with unlimited potential or sell stocks that are about to plummet. It is best to trade directly at the current price.
(8) Pay attention to the opening and closing of the steam trap. Opening and closing are often the most impulsive and lack of judgment for investors, because the stock price tends to fluctuate the most at this time. Many people think that the trend of 10 minutes after the opening determines the trend of the stock in one day; The trend of 10 minutes before closing determines the trend of the next day. Therefore, if the stock price changes during these two periods, it will blindly follow the temporary trend. In fact, these two times are also the most common time for bookmakers to cheat. If there is no sufficient reason, it is best not to buy or sell 10 minutes after the opening and 10 minutes before the closing.
(9) Transfer profitable funds at any time. If there is a profit, you should immediately transfer some funds to other accounts, so that you can save some income for emergencies, and prevent your self-confidence from expanding due to profit, and then operate blindly.
(10) If you are not fully sure, you can't add positions when it falls to dilute the cost. If the stock starts to fall after buying, it means that your judgment has made a mistake. If you continue to add positions at this time, you will make mistakes again and again. Of course, if you can be sure that the stock can still rise, the decline at this time is only a temporary adjustment. You can boldly increase your position, dilute the cost and amplify the income.
(1 1) Don't be penny wise and pound foolish. Many people always want to sell at the highest point and buy at the lowest point, but in reality, this is very difficult to do. Therefore, if you judge that the market is about to peak or bottom out, you should immediately flee or open a position.
(12) to judge the quality of a stock, don't look at the stock price, just look at the value. Many investors only buy cheap stocks, and once they find that the stock price is higher than that of other companies in the same industry, they will panic and sell too early. In fact, the quality of stocks has nothing to do with the price, but only with the value of listed companies. Often, the higher the price, the fiercer the stock rises, and the lower the price, the less lively it is.
(13) has repeatedly failed, so we should suspend trading and adjust our thinking. Repeated operation failures indicate that there are problems with the stock selection methods and operation methods used in the past. At this time, you should stop trading and withdraw from the market as soon as possible. Find the crux of the problem and correct it before re-entering.
(14) Don't talk nonsense about the top or bottom of the market. Don't guess the top of the bull market, and don't guess the bottom of the bear market. The result of doing that is often more mistakes than fewer.
(15) Don't listen to gossip. The results obtained through self-analysis are the most valuable.
(16) No additional funds can be added for transactions that have incurred losses. After losing money, many investors will be desperate to increase their chips in an attempt to win back the lost money at one time and make a profit at the same time. In fact, if there is not enough reserve funds as a guarantee, the result can only be a vicious circle, which will eventually lead to the break of the capital chain.