WD Gann’s Key to Better Market Timing
Besides the great importance of being aligned with the dominant trend when trading or investing, WD Gann proved that there’s also the necessity of discerning a change in those trends (using market timing techniques) as early as possible.
Now, while the absolute top and bottom of a price move is what most newcomers to the markets think is what should be aimed for, a step back and analysis of the statistics will correct the notion that tops and bottoms are what should be the main focus of market timing.
In any time period, there will be an absolute high and low which will occur within that time frame. That is the Top and the Bottom of that market for that time period.
For a Year, which constitutes about 220 trading days, that means if we are trying to target those two single points of the High and the Low randomly, we’d have only 2 chances out of 220 of being correct in our assessments.
The percentage odds of that approach being ‘right-on-the-money’ correct are only .9 %!
Put another way, we have 99.1% odds of missing the High and the Low for the Year!
And, in the investing field, that means, at least half the time, selling too early to find the top (creating losses) and buying too early looking for the lowest low (also creating losses). That translates into loss for the trader and investor who tries to top and bottom pick at least 50% of the time!
‘Hope’ is fictional, Reality is self-defined
Tops and Bottoms to markets ARE Reality and, therefore, define themselves.
Hoping for a price top or bottom before the fact is, by definition, an act of fiction that can eventually lead to Chaos.
Price Tops and Bottoms become ‘self-evident’ by what follows after they’re made.