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Joe wrote:
>Just like to hear what other traders thoughts on this.
Here's how I use Gann. This is my main market tool, but it is by no means
the only one. I believe in support and resistance, and use Gann to identify
angular S&Rs, along with the more conventional horizontal S&Rs. I did not
learn this from anything but hunch... WD might have a good laugh at this.
I'd love to have some constructive criticism from anyone in the know. From
what I gather, this is pretty arcane stuff, and probably best flavored with
individual tastes.
Somewhere in the last 15 years, I read that a 45 degree Gann angle
represented a one point change per bar on a daily chart. This is also
called a 1X1 line. Since I was using Ensign/DOS at the time, the Gann
drawing tool required an "angle" input for the "main line" (1X1), and I
naturally used 45. I kept finding that the lower-angled lines (at least on
most of the daily charts I was using), were much more true to the price
action, whereas the higher angles essentially never saw price action. So I
began dividing the 45 by 2 to acheive better concurence with the price
pivots. I finally hit on 5.625, which is the 1X8 line (i.e., 45 divided by
8). Typically, then, all of my fans on a daily chart use this angle from
the pivot to expand around. The other, greater-angle lines are still there,
just not as prominent. I do not fit my fans to the prices on the chart, but
I do look for correspondence between the prices and the fan lines that are
already there.
I then look for markets which are finding several occurrences of
support/resistance along a particular angled line, preferably from some
distance back in time. The more reactions to this line, the better... it
looks more and more like a "natural." When most of my other parameters are
met (oscillators turning, price in tune with one or more MAs with
encouraging action (e.g., looking for a bull move above an increasing moving
average), etc., AND at the same time, the S/R Gann line is breached, that
starts to look like a market I want to open a trade in. I generally trade
off of hourly or shorter charts to find my entry, but this is one of my
favorite selection criteria to locate the markets I want to follow on an
intraday basis. Sometimes I will trade the swings (reactions) on a shorter
term basis, but find they are not always as reliable for multi-day moves.
I know this chart is busy... I had to cut off everything but the 14,3,3
stochastic to get it to post, but I wanted to point out the violation of the
fan line "A" (which is in fact the 1X8) and the nice move that resulted... I
would suspect the violation of the horizontal line "B" would be likely to
yield even better results (kind of obvious and has nothing to do with Gann).
I believe there is also a time factor to Gann Fans. The Ensign/DOS software
puts bullets on the horizontal to identify future turning points, but I
couldn't ever figure out how to use them. This chart comes courtesy of
Ensign/Windows, which does not include the bullets on the fans.
So here's a question... can anyone identify a recent breakout on this chart
of a longer-term fan line that MIGHT indicate this as a candidate for a
trade on the long-side sometime in the next couple of days?
Dick Crotinger
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