Some of the best trading strategies, such as those following Gann ideas, require knowing whether an equity is in an uptrend or downtrend. In the case of Gann, you also want to know what the swing channels are. Uptrends in Gann terminology require knowing whether the nearest peak has been taken out, and downtrends whether the nearest valley has been taken out. Swing direction changes to up when two consecutive highs are encountered and changes to down when two consecutive lows are encountered. What Gann proposed, in effect, was using the trend and the swings to identify the framework for buying and selling.
Trends require more time to develop than swings.
Changing time frame often makes trend identification easier and therefore more reliable. Inc. All rights reserved. Free E-mail Newsletter.