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Gann fan - how to build and apply in trading
A variety of tools of technical analysis of the market so widely that it is difficult to identify the most effective algorithms. However, this is not the brainchild of the famous trader William Delbert Anna – fan lines named after him.
In the process of finding a way to predict the market movement, Gunn turned to various Sciences, from geometry to astrology. The result of this work became a theory that binds together time and cost, and formed the basis of a number of technical analysis tools.
Gann fan - theory
Trading platform MetaTrader4 in your Arsenal is a standard set of tools Anna, including the fan. Find the Gann Fan in the "Insert → gun → Gann fan". The tool is plotted on the graph as well as a separate main line and all secondary lines constructed indicator automatically.
The reference point of the fan Anna
In the settings window of the fans manually you can specify values for the following parameters:
the coordinates of the control points of the main line of the fan on a time scale;
the coordinates of the first reference point of the main line of the fan:
the coordinates of the second reference point of the main line on the scale.
Popular still the Gann fan represents a set of rays emerging from one significant point. This point generally is a local price minimum or a maximum on the chart. According to the author, his indicator can not with 100 percent probability to predict a trend change, but it clearly shows the situation on the market when such a change is possible.
Trader William Delbert Gunn.
The basic idea of the tool is that the largest value for the analysis have time for the development of trends and trend slope. The algorithm is based on the assumption that the price of the instrument per unit time changes at a certain average value. This change to each tool differently.
Direct confirmation of this is already known to the average value of the movement of currency pairs in the Forex market. For example, EUR / USD per trading day is an average of 80-100 points, and the pair pound-dollar – 120-150 points.
The method of calculating the angles of the fan
The basis for plotting the Gann fan is the line of Anna, a proportion which is a ratio of 1:1, that is, to increase the unit of time corresponds to an increase in the unit price. These proportions determine the rate trends Anna or angle Anna.
To calculate the speed practically, you need to find the chart has two important peaks or two bottoms, depending on the trend direction, to determine the number of completed items and time, and share the first to the second.
The Gann fan is drawing in the chart
In our case, the growth rates equal to 21 points, and the increase in time, 11 bars. Dividing 21 by 11, get speed 1,909, which in round figures is equal to 1.91. This method of calculation applies for the downward trend.
The system calculates the speed of other rays fans: 2:1, 4:1, 8:1 – for lines above the main, and 1:2, 1:4 and 1:8 for the lines below the fundamental. For this purpose, the speed of the main line is multiplied by the proportion of the secondary: of 1.91 x 2/1 = 3,82 or of 1.91 x ½ = 0,96 - for the lines, following the basic above and below it respectively.
The use of the Gann fan in Forex trading
Determination of trends is carried out on the main line of the fan. It is believed that if the price is above the main line, the market has seen a steady rising trend. If the price has crossed the basic line down, then came the turning point and the market is dominated by bears.
Other lines of the fan can serve as lines of support and resistance. For example, at the first inspection figure basic 1:1 line acted as support, and after crossing price has become a resistance line. In this case the support line is the next line – a ratio of 1:2. But we should not forget that the trend is likely to change to descending (because 1:1 is punched from top to bottom).
The Gann fan in MetaTrader 4
Trading strategies involving the Gann theory, is precisely this use of the developed tools. Using lines of the fan, and can predict future price changes, to understand when and in which direction most likely to move the market.
However, it is believed that the rays which are built automatically by may not match the theories of Anna. More accurate is the calculation and plotting of rays of the fan in manual mode. In the opinion of the traders using to trade the Gann fan, manual construction guarantees the accuracy of predictions of at least 80% of cases.
Recommend two review, to the topic:
Fibonacci Fan
Golden Fibonacci numbers
Trading strategy of Gann theory use these capabilities of these tools, such as:
forecasting market direction;
identifying points of entry and exit;
the levels of limit losses and lock in profits.
More reliably working strategies using additional indicators to confirm the signals obtained by the method of Anna. For more precise analysis can line up a few fans, the intersection of the rays which give a significant price levels.
Two fans in the trade
Well proven combinations of indicators Anna oscillators.
Forecasting using Gann theory gives fairly accurate results, however, a positive effect can only be achieved after a careful study of the basic theory, the construction of accurate instruments and the correct determination of a timeframe. It is believed that Anna techniques are most applicable in the time interval H4, on which there is the least market noise.
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| Category: Forex | Added by: (30.10.2017)
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| Views: 265
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