According to Gann's theory, there are universal natural laws in stock and futures markets, and the price trend of the market is not chaotic, but can be predicted by mathematical methods. Its essence is to establish a strict trading order in a seemingly disorderly market, which can be used to find out when the price will be adjusted back and to what price.
Factor one
1, excessive trading on limited capital. That is to say, the operation is too frequent, and the short-term and ultra-short-term in the market require high operating skills. Before investors have mastered these operating skills, too much emphasis on short-term will often lead to no small loss.
Factor 2
2. Investors did not set a stop loss point to control losses. Many investors have suffered huge losses because they have not set a suitable stop loss point. The result is that their mistakes are allowed to develop indefinitely and their losses are getting bigger and bigger. Therefore, learning to set a stop-loss point to control risks is one of the basic skills that investors must learn. There are also some investors, even some market veterans, who have set a stop loss point, but they have not resolutely implemented it in actual operation, resulting in huge losses due to ideological differences.
Factor three
Lack of market knowledge is the most important reason for losses in market transactions. Some investors do not pay attention to learning market knowledge, but take it for granted or subjectively imagine the market, and can't tell the truth from the false. As a result, he was misled by mistakes and suffered huge losses. There are also some investors who just use the knowledge they have learned from some books to guide practice and apply it indiscriminately, resulting in huge losses. Gann emphasized market knowledge and practical experience. And this kind of market knowledge often takes a long time to really understand in the market.