Later this desire led him to the New York stock exchange, where he opened his broker company 5 years later. However, real success found him when he forecast the capitulation of Germany in the World War I. As a great sportsman of present time said, the main thing that is left after a person is their legacy.
William Delbert Gann
Well, Gann left a great intellectual baggage after himself. Financial markets are very dynamic in essence, which, naturally, makes them attractive for speculators. The level of volatility variability of markets can be different. Rate fluctuations on Forex can differ in frequency and amplitude. In other words, though chaotic at he first sight, fluctuations of quotations presuppose a certain degree of order in their structure. The ability of a speculator to identify this data timely guarantees that their forecasts will have a real basement and come true in the end. Which means that all actions on the market are cyclic and can be forecast.
An argumentative forecast of the market dynamics is an indisputably important factor of success of any speculative trade. These points of balance between the price and time let the player forecast future rates and detect the priority vector of further market dynamics. Gann developed a lot of instruments meant to help the analyst trader define the aforementioned points:. If the market remains in perfect balance for a long time, it is of no particular interest for trading as no significant movements are to be expected.
When analyzing the market according to Gann, the main attention is paid to the interrelation of time, price and the patterns. Thus, for successful market forecasts one should know how to use squares, circles, angles, lines etc. What is more, each figure is to be used at the right moment and in the right order. All the aforementioned reveal the main drawback of the theory — it does not suit inexperienced traders. Draw the angled trend line and the drawing tool will populate the various angled lines which could act as future support and resistance areas.
The Gann Fan tool consists of 9 diagonal lines — a middle line and 4 lines on each side of the middle line. If the Gann Fan is applied on a 45 degrees trend, the default parameters of the indicator are going to be as follows:. The other levels of the indicator appear automatically. These are shown as the blue lines on the chart.
However, the price also creates breakouts through the Gann lines, so when you spot a Gann fan breakout, you should expect the price to continue further to the next level.
As you see, this happens quite often on the image above. The next indicator we will discuss is the Gann Grid. To apply the Gann Grid on the chart you should pick two points on the chart which you use as a base for the drawing tool.
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Then you stretch the indicator based on these points and the rest appears by itself. When you apply the Gann Grid successfully, this is what you should see on the chart:. The image illustrates the way the Gann Grid indicator works. The thick black line is the base movement we take for our grid.
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At the beginning and the end of the plotted black line, we have the two bottoms that form the base. As you see, the size of the black line equals the size of each side in the blue rectangles.
Gann Swings XVI Indicator - Trend Following System
As you see, the price action interacts with the gird in a similar way as illustrated earlier with the Gann Fan. We also have breakouts in the levels, which can signal potential price moves in the direction of the breakout. Now that you are familiar with the way the Gann Fan and the Gann Grid work, we will now proceed with discussing potential trading strategies using each of these tools. The first Gann trading method we will discuss revolves around the fan. We will go through setting entry and exit points on the chart based on Gann Fan signals.
Also, we will implement some rules around how you can manage your stop loss when trading with the Gann fan. There are two alternatives to open trades with the Gann Fan. The first one is to trade breakouts, and the second one is to anticipate bounces from the diagonal lines. Gann Fan Line Breakouts — If you spot a breakout through one of the nine Gann Fan lines, then you should open a trade in the direction of the breakout.
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Sometimes the interactions with the levels are not always so accurate. In this manner, it is better to wait for a candle to close beyond a Gann line and then to wait for a second confirmation candle which breaks beyond the initial breakout candle. Gann Fan Line Bounces — Whenever the price bounces from a Gann line, you can use this opportunity to open a trade. The same as with the Gann Fan Line Breakouts, after you spot a bounce you should confirm it with an additional candle. In any type of leveraged trading, you should use a stop loss in order to protect your account.
Here are some ideas to consider for placing stop loss orders when trading with Gann Line Breakouts and Bounces. Now that you know when to open Gann trades and how to protect them, we will discuss some trade management ideas. The blue thick line on the image shows the base we use which will calculate the Gann Fan lines at varying degrees. So once the data was collected it was a logical step to find a way to make it available.
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With that in mind How to Trade Like W. Gann has been written. In its original form this lesson is challenging to study, because there are no charts. But after compiling the price data and constructing a chart, it was amazing how his words came to life. There is a wealth of information hidden there, because 30 years of trading experience went into the writing of it. This gave rise to more questions.
Why did he act in one way at this point and another way at that point? This leads to a detailed study of Form Reading. The book does not give the final word on the subject, but it does endeavour to probe the mind of a great trader to see what he might have been thinking.