Gann instruments

Gann is one of the most legendary traders in the history of trading. In a short period of time, he managed to amass a fortune of $50 million, and you can always see his portrait when entering the stock exchange.

In addition to his enchanting success, Gann went down in history for the fact that he made a significant contribution to the development of technical analysis, raising it to a new level and introducing new approaches to working with financial markets.

The most interesting thing is that Gann left us behind a bunch of different tools that are still used in technical market analysis, but, unfortunately, due to the difficulty of writing books on them, no one really fully understands which of the approaches actually helped him make such a fortune .

There is even an opinion among traders that Gann is not telling something, and has not revealed the main secrets of using his tools.

In the default MT4 trading terminal, you can find Gann instruments in the list of instruments. Of course, we will not be able to fully reveal all the secrets of trading with these instruments, but getting acquainted with the basic principles of construction and the signals they give us will be quite enough to understand the principles of working with them. The first and most common instrument is the Ghana Line.

The Gann line is a line that is drawn at an angle of 45 degrees. The author of the tool claimed that the line drawn at this angle is a trend line. If the price is above it, then a bullish trend reigns in the market, and if the price is below it, then a bearish trend reigns in the market.

In order to use the Gann Line, go to the insert menu, open the Gann category and select the Gann Line tool. To construct, you need to select two points, after which the line will appear automatically. Also, when working with the tool, you will notice that the Gann line acts as a strong support or resistance level, so many traders trade to rebound from these levels.

Gann believed that if the price broke through this line, then this indicates a change in the trend in the market, and as a consequence, a change in trend. Therefore, to enter a sell position in a bullish market, we wait for the line to break through from top to bottom, and in a bearish market, the signal to enter a buy position will be the price to break through the line from bottom to top. You can see an example in the picture below:

 The second Gann tool that is built into the MT4 trading terminal by default is the Gann Fan. The fan is a set of lines that are placed at different angles and, when expanded, remind us of a fan. The fan consists of nine rays, with the most basic being the central ray at an angle of 45 degrees.

Gann argued that all nine rays, depending on the price movement, can act as both support and resistance lines, so if the price breaks through at least one of the rays, it immediately rushes to the other, which is our goal when entering a position.

As I already said, the central ray is the main one and shows the direction of the trend, so if the price breaks the ray in one of the directions, this is an excellent signal for a change in trend, and therefore for entering a position. The construction of the fan occurs at two points, but you need to ensure that the center line maintains a level of 45 degrees. You can see an example of a Gann fan in the picture below:

 The third and probably the most widely used of the Gann tools is the Gann Grid. The Gann grid consists of lines at an angle of 45 degrees, which create the actual grid from these lines. According to Gann, these lines are trend lines, so if the price is above the ascending line, then the trend is considered bullish, and if the price is below the descending line, then the trend is considered bearish.  

If there is a breakdown of one of the lines, this signals a change in trend, and therefore a change in trend. By using the grid, you can clearly see approximately where the price will begin to consolidate after the breakout, as well as a possible target after the breakout. The grid is applied to the graph using two points, and in fact, the size of the cells is adjusted manually. You can see an example of a grid in the picture below:

 In conclusion, I would like to note that Gann’s tools are widely popular among traders, however, due to the fact that Gann did not leave his own trading strategy, all instructions were written by his followers, which does not give us a 100 percent guarantee that his tools will be used correctly.