Successfully Using Gann Indicators : NobleTrading Blog

Friday, March 6, 2009

Successfully Using Gann Indicators

Successful using of Gann tools for finding and exploiting trading opportunities require good timing, talent and knowledge. But ones you are an expert they can offer you above average profits and can offer significant market knowledge as Gann indicators cover past, present and future market on a single screen. The basic requirements of successful Gann set are,

Determination of time-units. Gann studies (preferably) require squaring of time and price; this set up can give the 45 degree angle for 1x1 angle. If the chart is not properly scaled traders can’t draw lines based on angles; instead they can use ratios (e.g.: 2x1 angles indicate 2 unit of price movement for one unit of time).
Time periods. Although Gann indicators can be used to any time periods, they offer better results when used in intermediate time periods (weekly or 10-day charts).
Determination of highs or lows to draw lines. Traders can use recent highest high or lowest low to draw the lines. It would be better to use Fibonacci tools and pivot points to determine these line originating points.
Slops of lines. Gann lines should always be plotted to right side; downwards if from a high (resistance) and upwards if from a low (support). The most used slops are 8x1, 2x1, 1x1, 1x2 and 1x8. Market rotates according to ‘Rule of All Angles’, which is when one angle is broken then the price, moves to next angle.
Clustering with other indicators. Traders should use appropriate time indicators to get better results with Gann indicators. Fore example Fibonacci time zones and retracement levels are excellent tools to use in conjunction with Gann indicators to predict market movements for long time periods.