Hi i'm new to trading but impressed by some Gannsters. one thing i don't understand is that time cycle plays an important role in the Gann approach but what about smart money? if the smart money decides to distribute, it would be impossible for a stock to keep going up. so my question is: is there any subtle connections between Gann's time cycle and the smart money activity? i just don't think one can tell in advance how the smart money will act in a future time frame...but some analysis from the perspective of Gann are very accurate and this completely confuses me... Could anyone shed some lights please? thanks a lot Ken
Either the Smart Money is following Gann -- or, more likely, the dumb money follows typical human behavior - -thereby being consistent with Gann Cycles -- and the smart money just recognizes where the risks and opportunities are.
Well, at least you've not been sucked into the evangelical heart of this nonsense...you temper your apparent belief with caution, an optimistic sign. Patterns in charts, Gann or whatever are spurious anomolies in the multivariatem, multifractal world of the market. Your post hints that you may be beginning to see issues with whatever you've been "taught". If you take time to consider the implications of my first sentence then you'll realise that "really smart money" doesn't listen to anything Mr Gann has to say.
Yes. ignore the urge to follow people who believe in things. Gann, Elliott Wave, Astrology, and most of technical analysis. It doesn't work, it does not hold up under intense statistical studies, but the believers will howl and whine like mad. Try and find longterm successful advisories based on Gann that have been independently monitored. Ignore the people here who claim it works for famous person X (who they don't know, personally). Most here claiming to trade with it successfully don't, most likely. Listen to the people who tell you to learn to trade price, rather than a myriad of indicators; you will be much closer. IF you choose to base your trading on Gann, I feel for you.
There's lots of ways that money can be "smart" in the way i believe you're refering to. As an individual I d caution you against thinking you can pick up this kind of information. It certainly isn't contained in OHLC+V. Instead, work from the point of view of making your money less dumb. You will have already started if you reject Gann, Elliott Wave and other such voodoo. However, withot wanting to get drawn into the minutiae I'd say: 1. Find yourself a trading strategy/concept you like. 2. Critically backtest it to check that it flies - most don't. 3. Develop some money management and trading rules. 4. Paper trade a system that works for a period you're comfortable with. 5. Go to market Continually repeat the process in the background looking for when your system breaks (it probably will), improvements to your money management etc, better trading systems etc. This is a large area of study itself so I'd recommend you look into it yourself. But you might not want to go down that path...in which case, good luck.
Now there are two words you don't often see in the one sentence: "smart" and "Gann". Run now my friend for that way lies madness.
Most of the money out there is "professional" so your definition needs to be sharper than that. Also, money can be "smart" over different time horizons. Smart money often gets talked about as part of the sales pitch of investing and tradiing gurus. Having you been listening to one or more of these types? They often talk of volme spikes being smart money buying at the bottom of a price drop etc, etc. That's just a story to back their proposition to us - utter nonsense really. Generally speaking, smartness of money relates to quality and timeliness of information. You have neither so thinking you can take that track is deceiving yourself IMHO.