Gann forex trading system

Gann Bars Forex System.

A trend following system based on the cross-over of 2 exponentional moving averages with MACD and the Gann indicator. This system enables traders to execute multiple trades in the direction of an established market trend.

Indicators: Gann HiLo activator bars, 200EMA, 10EMA, MACD (13,26,9)

Preferred time frame(s): M30, H1, H4, Daily, Weekly.

Trading sessions: Any.

Preferred Currency pairs: Any.

Example: GBP/USD Daily Chart Gann System.

As shown in the picture above, we had 1 losing signal in the down trend (lower highs) and 7 winning signals along the up trend (higher lows).

EMA 10 crosses EMA 200 from below (bullish trend) MACD above 0.00 level Gann HiLo activator bars turns blue.

Go long. Set SL 2 pips below the low of the most recent red Gann HiLo candle.

Target: Risk to reward 1:2 (i. e risking 50 pips to make 100) or close the trade at the first red Gann bar.

EMA 10 crosses EMA 200 from above (bearish trend) MACD below 0.00 level Gann HiLo activator bars turns red.

Sell now. Set SL 2 pips above the high of the most recent blue Gann HiLo candle.

Target: Risk to reward 1:2 (i. e risking 60 pips to make 120) or close the trade at the first blue Gann bar.

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Gems from WD Gann.

Building the best forex trading system requires that we learn some techniques or strategies from world class traders whom have tested and tried different trading methods in live market conditions over a long period of time. One of those traders is WD Gann. He spent a life time experimenting, trading and teaching people the art of trading or speculating as he calls it.

WD Gann charged a fortune for some of his trading courses. (Equivalent to the cost of a house). He also wrote many books which included hidden gems scattered throughout. He also made no secret about not disclosing some of his more powerful techniques. He stated that some techniques were too powerful to be released into the public domain. Read more about William Gann here.

What Gann trading enthusiasts have figured out is that one of his favorite day trading strategies involved his use of natural square numbers. read more here.

It is also clear from his writing that "time" played one of the most important roles in his trading. He also advised traders or speculators to look for price patterns like double or triple bottoms or tops, higher bottoms or lower tops.

From this information we can create the best forex trading system.

We will now take a look at putting some of these elements together. Take a look at the chart below and notice how we can construct a day trading system based on some of WD Gann's techniques.

The above chart is the 3 hour AUD/USD. Any time frame can be used with adjustments to the natural square levels. Shorter time frames require the dividing of the natural square levels by 50% to a more appropriate level.

1. Notice a double bottom price pattern at the natural square level of 0.9100.

2.Notice a powerful bullish candlestick after the double bottom.

3.Notice how price moves above our 7 period exponential moving average. This provides us with our time component.

4.We have our day trading profit target just under or on the natural square level of 0.9225.

It is also important to remember that WD Gann traded both short term and long term. He also developed many different techniques that ranged from using ones discretion in chart reading to pure mechanical methods whereby an indicator was followed for trade execution.

In more modern times outstanding trading achievements have been made by traders whom have put together some of the best forex trading system. Some of those systems can be viewed here.

The above system requires a lot of time to be put in watching for price patterns to develop. Most people like myself have better things to do with life than watch a computer screen all day. The solution is to develop a EA automated trading robot to trade the setup automatically. If anyone would like to join me in creating this Expert Advisor and sharing results gained through tweeking it's performance, please contact me here.

Remember the multi-trillion dollar forex market has enough money circulating for everyone to share.

If you are looking for a proven competition winning system that has already been fully developed I recommend choosing from this collection shown here.

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How do I use Gann Fans for creating a forex trading strategy?

Gann fans are the most well-known of William Delbert Gann's trading tools and have been used for decades to identify support and resistance levels and predict price movements. Forex traders can use Gann fans for trend following or trend reversal for a given currency pair.

Gann believed that the market is cyclical, geometric and predictable. His system relies on a centered ideal angle drawn across a price trend at 45 degrees. There are four lines above and four below the ideal angle, all originating from the same price point and extending into the future at different angles. The resulting shape resembles a traditional Chinese hand fan, which is where the indicator gets its name.

Trendlines are usually drawn through two low points in an uptrend and two high points in a downtrend. They can be drawn through a high and low point if the trader chooses. In fact, the subjectivity of trendline drawing can be problematic for inexperienced Gann fan users.

Continuation or consolidation patterns occur when two fans form effective support and resistance points. Prices are expected to bounce between these the two fans. Bullish markets are indicated when prices are range-bound between two angles higher than 45 degrees, and bearish markets are bound between angles lower than 45 degrees.

The fans follow standard breakout rules when a fan support/resistance level is broken. Gann himself believed that, as soon as a confirmed support or resistance fan was crossed by the price action, the crossed line acts as a barrier in the opposite direction; that is, support fans become resistance fans and visa versa. This is exactly the same as standard support and resistance theory.

Gann fans are often coupled with Fibonacci retracements and clusters to firm up potential support/resistance signals.

WD Gann Trading Theory.

William D Gann is one of the most famous of technical analysts who has managed to capture the imagination of traders. One of the complex trading systems, the Gann methods involve both price and time and is aptly used for forecasting prices. W. D. Gann based most of his research on astrology and numbers and it is rumored that he made over $50 million during his trading career. Gann’s trading methods involve geometry within the price-time series.

Some of famous WD Gann trading tools are:

The Gann tools are usually a standard set of tools available with most default charting packages. In the MT4 platform, the Gann tools can be accessed from:

Insert > Gann Tools section of the menu bar.

Most of Gann’s work rely on Geometry and it is now a well know tenet of W. D. Gann which states, that there was a perfect balance when price rises and falls at a 45 degree angle.

Trading with the Gann Grid.

The Gann Grid is often considered to be a leading indicator as it projects trend lines into the future. The grid comprises of squaring time and price based on the 45 degree angle of the main trend line. When price is trading above the Gann trend line, the market is considered to be in an uptrend and when price trades below the Gann trend line, the market is considered to be in a downtrend. The Gann grid enables traders to decipher the strength of the trend and also predict change of trends.

To plot the Gann Grid, two consecutive highs or lows are connected (the same way as one would draw a trend line). The Gann Grid tool does the rest of the work and creates a grid.

The chart above shows the Gann grid , which is plotted, after connecting two consecutive lows at A and B. It is important to note here that each of the trend lines within the grid could be seen as a trend line. There is no hard and fast rule about connecting highs or lows. Because the market is never in perfect harmony, the Gann grid can be adjusted to suit the current price action.

The chart above shows the adjusted Gann grid . Notice the bold lines that have been highlighted. The Gann grid has been adjusted so that price is as close to the Gann grid lines as possible. This adjusted view of the Gann grid offers a much better view of the markets than simply connecting highs/lows.

Therefore, if we apply the theory of uptrend when price is above the trend line and vice versa, we can see some very interesting observations.

When we zoom into the chart, we can see how price reacts to the Gann grid lines.

Notice how the trends (or corrections) within the major uptrend are depicted using the Gann Grid tool which form support/resistance trend lines. On close observation the Gann grid can also be viewed as a channel. For traders who do not want to get into the detailed Gann trading methods, can merely stop here and use the Gann grid to trade the same was as trading trend lines or channel lines.

Gann states that when price trends along a Gann trend line, the trend is usually strong. The chart below shows how a trade would taken based on the Gann grids.

After plotting the Gann Grid indicator, we look for break of trend line and a retest for short positions. We find a trend line break at point 1. A short term support is found, so we wait for a retest of the trend line at point 3 After price retraces back to this resistance level and fails to break out higher than the down sloping trend line, it is a confirmation of short bias. Short position is taken on a pullback, with stops at the previous failed high and target taken at the support formed previously. Alternatively, stops could be trailed along the most immediate down sloping trend line.

Trading with Gann Fans.

The Gann Fan trend lines are another way to trade using the trend lines, with the option to buy sell on successful break of the trendlines.

The chart below shows how the Gann fans are formed by connecting two consecutive lows. The fan lines are automatically plotted.

In the simplest of illustrations we buy on the break and retest of the Gann trend line, marked on the chart. After a break and retest of the main trend line, a long position was taken, with stops at the previous low while targeting the most immediate trend line to the upside.

The Gann trend lines are projected into the future and thus depict future support/resistance levels.

Gann Trading Methods – A complex forecasting tool.