What is the Gann Fans formula and how is it calculated? Gann fans, named after creator W.D. Gann, are a form of geometric technical analysis based on the assumption that markets are cyclical in nature. Gann fan theory suggests that prices and time form derivative patterns. For example, the most important Gann line is a 45-degree line stretching from the present and extending throughout time, forming an ideal balance of time and value. Gann believed that this 1 price unit x 1 time unit relationship was a natural line of support when price trends are ascending.
The fans of Gann fan theory are different relationships between time and important price tops or bottoms that are represented by lines drawn at different fan angles from the main 45-degree fan line. Bullish fan lines are drawn above the 45-degree line, and bearish fan lines are drawn below the 45-degree line.
There is no specific formula for drawing Gann fan lines. Gann identified nine basic angles that can serve as predictable support/resistance thresholds when a price top or bottom corresponds with one. These nine angles are: 1×8 (82.5 degrees), 1×4 (75 degrees), 1×3 (71.25 degrees), 1×2 (63.75 degrees), 1×1 (45 degrees), 2×1 (26.25 degrees), 3×1 (18.75 degrees), 4×1 (15 degrees) and 8×1 (7.5 degrees).
The underlying premises of Gann fans have been called into question over time, and this form of technical analysis is not used very frequently. Many believe that markets do not operate in such geometrically clean patterns; even if they did, the subjective nature of individual traders drawing fan lines across a price chart would make Gann fans very difficult to use correctly.
Understanding the Gann Studies FACEBOOK TWITTER LINKEDIN By JUSTIN KUEPPER Updated Jan 9, 2020 Predicting the future is impossible, right? If he were around today, W.D. Gann would beg to differ. His first prophecy is believed to have happened during World War I, when he predicted the Nov. 9, 1918, abdication of Germany's Kaiser Wilhelm II and the end of the war. Then, in 1927, he wrote a book called “Tunnel Through The Air” that many believe predicted the Japanese attack on Pearl Harbor.
His financial predictions were perhaps even more profound. In early 1929, he predicted that the markets would probably continue to rally on speculation and hit new highs… until early April. In his daily financial publication, The Supply and Demand Letter, he delivered financial forecasts focusing on both the stock and commodity markets. As this publication gained notoriety, Gann published several books—most notably “Truth,” which was hailed by The Wall Street Journal as his best work. Finally, he began releasing the techniques that he used to make these forecasts: the Gann studies.
What Are the Gann Studies? In 1908, Gann discovered what he called the “market time factor,” which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Here's how his techniques work. Gann based predictions of price movements on three premises:
Price, time and range are the only three factors to consider. The markets are cyclical in nature. The markets are geometric in design and in function. Based on these three premises, Gann's strategies revolved around three general areas of prediction:
Price study: This uses support and resistance lines, pivot points and angles. Time study: This looks at historically reoccurring dates, derived by natural and social means. Pattern study: This looks at market swings using trendlines and reversal patterns.
Gann Studies 1 Image by Julie Bang © Investopedia 2020 Figures such as these are the building blocks of the Gann studies.
Constructing Gann Angles Before we begin, it is important to realize that this form of analysis—like most forms of technical analysis—is not set in stone but constructed out of empirical methods. Without further ado, here is the process used to construct a Gann angle:
Determine the time units: This is one of the empirical processes. One common way to determine a time unit is to study the stock's chart and take note of distances in which price movements occur. Then, simply put the angles to the test and determine their accuracy. Most people use intermediate-term (such as one- to three-month) charts for this as opposed to long-term (multi-year) or short-term (one- to seven-day) charts. This is because, in most cases, the intermediate-term charts produce the optimal amount of patterns. Determine the high or low from which to draw the Gann lines: This is the second empirical process, and the most common way to accomplish it is to use other forms of technical analysis—such as Fibonacci levels or pivot points. Gann himself, however, used what he called “vibrations” or “price swings.” He determined these by analyzing charts using mathematical theories like Fibonacci. Determine which pattern to use: The two most common patterns are the 1×1 (left figure above), the 1×2 (right figure above) and the 2×1. These are simply variations in the slope of the line. For example, the 1×2 is half the slope of the 1×1. The numbers simply refer to the number of units. Draw the patterns: The direction would be either downward and to the right from a high point, or upward and to the right from a low point. Look for repeat patterns further down the chart: Remember this technique is based on the premise that markets are cyclical. Again, this requires some fine-tuning with experience in order to perfect. Because of this, the results will vary from person to person. Some people, like Gann, will experience extraordinary success, while others—who don't use such refined techniques—will experience sub-par returns. However, if the system is followed and sufficient research is put into finding the optimal requirements, above-average returns should be attainable. But remember, technical analysis is a game of odds—add more technical indicators to increase your chances of a successful trade.
Using Gann Angles Gann angles are most commonly used as support and resistance lines. But many studies have support and resistance lines. What makes this one so important? Well, Gann angles let you add a new dimension to these important levels—they can be diagonal.
Gann Studies 2 Image by Julie Bang © Investopedia 2020 Here you can see how Gann angles can be used to form support and resistance levels. Diagonal trendlines are commonly used to determine times to add to existing long positions, to determine new lows and highs (by finding significant breaks of the trendline), and to help discern the overall trend.
The Bottom Line Is it possible to predict the future? W.D. Gann probably thought so, and he seemed to have proved it with his wildly successful returns. The system is relatively simple to use but difficult to master. After all, it was Gann's uncanny ability to fine-tune his techniques that led him to enormous profits—the average investor is not likely to obtain these kinds of returns. Like many technical tools, Gann angles are best used in conjunction with other tools to predict price movements and profit.
How To Use Gann Indicators FACEBOOK TWITTER LINKEDIN By JAMES HYERCZYK Updated Apr 30, 2020 Gann studies have been used by active traders for decades and, even though the futures and stock markets have changed considerably, they remain a popular method of analyzing an asset's direction.
Newer trading areas, such as the foreign exchange market and the invention of exchange-traded funds (ETFs), have made it necessary to revisit some of the construction rules and application concepts. Although the basic construction of Gann angles remains the same, this article will explain why the changes in price levels and volatility have made it necessary to adjust a few key components.
Basic Elements of Gann Theory Gann angles are a popular analysis and trading tool that are used to measure key elements, such as pattern, price and time. The often-debated topic of discussion among technical analysts is that the past, the present and the future all exist at the same time on a Gann angle. When analyzing or trading the course of a particular market, the analyst or trader tries to get an idea of where the market has been, where it is in relation to that former bottom or top, and how to use the information to forecast future price action.
Gann Angles vs. Trendlines Of all of W.D. Gann's trading techniques available, drawing angles to trade and forecast is probably the most popular analysis tool used by traders. Many traders still draw them on charts manually and even more use computerized technical analysis packages to place them on screens. Because of the relative ease traders today have at placing Gann angles on charts, many traders do not feel the need to actually explore when, how and why to use them. These angles are often compared to trendlines, but many people are unaware that they are not the same thing.
A Gann angle is a diagonal line that moves at a uniform rate of speed. A trendline is created by connecting bottoms to bottoms in the case of an uptrend and tops to tops in the case of a downtrend. The benefit of drawing a Gann angle compared to a trendline is that it moves at a uniform rate of speed. This allows the analyst to forecast where the price is going to be on a particular date in the future. This is not to say that a Gann angle always predicts where the market will be, but the analyst will know where the Gann angle will be, which will help gauge the strength and direction of the trend. A trendline, on the other hand, does have some predictive value, but because of the constant adjustments that usually take place, it's unreliable for making long-term forecasts.
Past, Present and Future As mentioned earlier, the key concept to grasp when working with Gann angles is that the past, the present and the future all exist at the same time on the angles. This being said, the Gann angle can be used to forecast support and resistance, strength of direction and the timing of tops and bottoms.
Gann Angles Provide Support and Resistance
Image Image by Sabrina Jiang © Investopedia 2020 Using a Gann angle to forecast support and resistance is probably the most popular way they are used. Once the analyst determines the time period he or she is going to trade (monthly, weekly, daily) and properly scales the chart, the trader simply draws the three main Gann angles: the 1×2, 1×1 and 2×1 from main tops and bottoms. This technique frames the market, allowing the analyst to read the movement of the market inside this framework.
Uptrending angles provide the support and downtrending angles provide the resistance. Because the analyst knows where the angle is on the chart, he or she is able to determine whether to buy on support or sell at the resistance.
Traders should also note how the market rotates from angle to angle. This is known as the “rule of all angles”. This rule states that when the market breaks one angle, it will move toward the next one.
Another way to determine the support and resistance is to combine angles and horizontal lines. For example, often a downtrending Gann angle will cross a 50% retracement level. This combination will then set up a key resistance point. The same can be said for uptrending angles crossing a 50% level. This area becomes a key support point. If you have a long-term chart, you will sometimes see many angles clustering at or near the same price. These are called price clusters. The more angles clustering in a zone, the more important the support or resistance.
Gann Angles Determine Strength and Weakness
Image Image by Sabrina Jiang © Investopedia 2020 The primary Gann angles are the 1×2, the 1×1 and the 2×1. The 1×2 means the angle is moving one unit of price for every two units of time. The 1×1 is moving one unit of price with one unit of time. Finally, the 2×1 moves two units of price with one unit of time. Using the same formula, angles can also be 1×8, 1×4, 4×1 and 8×1.
A proper chart scale is important to this type of analysis. Gann wanted the markets to have a square relationship so proper chart paper as well as a proper chart scale was important to his forecasting technique. Since his charts were “square”, the 1×1 angle is often referred to as the 45-degree angle. But using degrees to draw the angle will only work if the chart is properly scaled.
Not only do the angles show support and resistance, but they also give the analyst a clue as to the strength of the market. Trading on or slightly above an uptrending 1×1 angle means that the market is balanced. When the market is trading on or slightly above an uptrending 2×1 angle, the market is in a strong uptrend. Trading at or near the 1×2 means the trend is not as strong. The strength of the market is reversed when looking at the market from the top down. Anything under the 1×1 is in a weak position.
Gann Angles Can be Used for Timing
Image Image by Sabrina Jiang © Investopedia 2020 Finally, Gann angles are also used to forecast important tops, bottoms and changes in trend. This is a mathematical technique known as squaring, which is used to determine time zones and when the market is likely to change direction. The basic concept is to expect a change in direction when the market has reached an equal unit of time and price up or down. This timing indicator works better on longer term charts, such as monthly or weekly charts; this is because the daily charts often have too many tops, bottoms and ranges to analyze. Like price action, these timing tools tend to work better when “clustered” with other time indicators.
Conclusion Gann angles can be a valuable tool to the analyst or trader if used properly. Having an open mind and grasping the key concept that the past, present and future all exist at the same time on a Gann angle can help you analyze and trade a market with more accuracy. Learning the characteristics of the different markets in regard to volatility, price scale and how markets move within the Gann angle framework will help improve your analytical skills. 常用工具：江恩百分比线
