Gann Calculator Explained
Introduction: Gann calculator in the initial days of its introduction got very good response from the traders and investors. Many experienced the benefit of this calculator and expressed their experience and difficulties. I am going to describe all these aspects in this user manual. It is an authentic tool and its construction-base-formulas you can get from my books Gann’s Method . As I have said to all my readers and seminarians before that it is not a secrete tool. It is the simple mathematical formula as given by W.D.Gann and I have just simplified and used it for developing this application. I feel it is the need of the time I should explain how to use this calculator with some example.
Swing Trading: Swing Trading is the base and the mother of this calculator. In my words the definition of Swing Trading is “trade in the direction of the price movement”. Price movement of a stock as explained by Gann and Elliot follows the harmonic motion. One step forward I will say that it follows the random Brownian motion. Who determine this motion? The traders or the investors determine. The behaviour of a trader or investor is again driven by the fear and confidence. I will not use the word greed in this context. As a swing trader you need to find out the price points which generate fear or confidence. These are the points I can name as swing turning points or resistance and support points. Though this is a complex job but now a day it is getting simplified by the use of s/w tools. Gann’s calculator does the job of calculating these swing turning points which I have named as the resistances, supports, buy entry, sell entry points.
Gann calculator: The swing 2 supports and resistance point which I belief as the decisive point for a buy or sell entry, is being named as buy entry and sell entry in the calculator respectively. In gann’s calculator I have used the square root formula and degree to factor formula for calculating the different supports and resistances. I have taken 180 degree factor as 1 and based on this in every 15 degree and its multiple I have calculated the resistance and supports.
You must ask me why 15 degree and its multiples? Considering one full day as 24 hours and one cycle as 360 degree I found each one hour in a day is 15 degree. My second argument is elementary mathematics says that 1 degree as 4 minutes hence one hour is 15 degree .
You must ask me why should I belief on the last hours swing high and low for forecasting the future price? In many statistical tools like MACD, Bollinger band or finding the chart patterns you are using much older data points. Even in intraday chart also if you are using these tools then without your knowledge you are using many past data points. Hence it is nothing wrong in using only two dynamic swings high and low data point in this calculator.
How to use it? Take past one hours swing high and low as input it will calculate the resistances, supports and key resistance and key support levels. The buy entry and sell entry prices calculated by the Gann Calculator are nothing but the Swing 2 resistance and support points. In less volatile day you may encounter the congestion. Congestion is nothing but the buy entry and sells entry prices will be placed very near to each other say with Rs2 to Rs 3 difference. Same also you can encounter in the resistances and supports. In this case change your swing high and low points to a wider one or make the buy entry or sell entry above or below the 1st target point or trade between the band means between any two resistances, supports, and stop loss points. Make a practice to change the swing high and low points time and again in every one hour. If your position runs in profit then use the trailing stoploss technique to maximise profit.
This calculator is working and I have hundreds and thousand of proof for that. If you feel that why I am sharing this wonderful tool with you then I have the simple answer that knowledge is God gifted and I want to share with you. It is upto you to accept it or not. Critics will never stop me sharing the knowledge with any one. I will advise if any one is getting pained my by act of sharing then better stop thinking about this calculator.
My way to identify the swing high and low:
You can follow any one way for identifying the swing high and low.
- High and low price in a particular time frame. The minimum time you must take for the observation is one hour.
- Take the previous days last hour high and low for next days 1st hour trade provided global sentiments must be neutral during the non trading hours of our market.
- If the current price action of the script is trending then take the low or high follows the trend high or low.
- If you encounter congestion then take the high and low in greater time interval.
Now see some examples which I feel will thrill you. I will also explain how you will enter a trade.
Example 1: consider the Nifty spot one hour data from 10 to 11 a.m on 12th august 2008.Its high was 4634 and low was 4598.
Using this data in the intraday calculator I found that my key supports are 4600-4566-4498 and resistances are 4631-4666-4735. You can use this data in the calculator and test its accuracy.
At 11:05 a.m. it has fallen and found support at 4565, 11:30 it touched high 4599 and fallen. Hence it is confirmed in the next half an hour nifty was very much within the band of my calculated support 1 and support 2.
From trading point of view if I miss the chance to enter the short trade at 4611 then better in this junction I will wait or change my data points. Second observation is the bounce from the low 4565 failed to cross the 1st support 4600. So now the support turns into resistance as per basic technical analysis concept for next half an hour. In this junction also I can go short with my initial stoploss as 4611 and second stoploss as 4631 and target as 4565. See in the next half an hour nifty created new low of 4557 at 11:52 a.m.
In this example I have used the past one hour high and low points for my observation and calculated all the resistance and support values for the next hour. It is not guaranteed that I will achieve my target or stop loss in the next one hour. It is just a mathematical assumption based on my observation. I will suggest all of you to treat this calculator as an alternative software tool as you treat all other indicators and tools.
Example 2: consider reliance industry high and low in a time period from 10 a.m. to 12 p.m. on 13th august 2008. It was a trending day for reliance because it was creating higher high and higher low. My Swing high and swing low for this two hour period is 2353 and 2315 respectively.
Using these two values on the gann calculator I got the following values:
Long entry price was: 2331 target 2339-2347-2363-2412
Short entry price was: 2337 target 2329-2320-2304-2256
Since it was a trending market for RIL and it was creating the higher high and higher low and the current price is much above my second target point and trending upward. I will use this swing action to enter a buy trade keeping my 1st stoploss as 2339 which is my key resistance, which turn into the support and my target will be 2363. I will come out of the trade at 2363 or slightly below that because this is the 3rd level of target and important resistance point.
Again I have observed that after touching the high of 2373.65 the price has started retracing back. Now I will change my swing low and high. The low as 2339 and high as 2373.65. The stock price 2339 is the low which the stock has made just before making this high of 2373.65. You can say this is the high following the low. Notice it carefully I have not taken the hourly high or low rather I have taken the latest low preceding the high.
Why this deviation in principle? If the current price action is against the previous trending nature of the price then you need to make this deviation. In the second case scenario if the price continues its trending behaviour then also this deviation in principle will come in to focus.
Using these two values 2373.65 and 2339 I got
Short entry price was: 2358
Long entry price was: 2355
This is congestion because the difference is only Rs 3 /- so now I will shift my focus to the 1st level of target for both the long and short. As per my calculation 1st long and short targets are 2363 and 2349. These two prices will act as my new long entry and short entry points. More precisely I will buy reliance above 2363 and sell below 2349. My stoploss for the sell entry will be 2358-2374-2398 and stoploss for buy trade will be 2355-2339-2314
Observe the second part of the calculator which flags the important support and resistance points. my entry points also coincide with the 1st level of resistance and support.
As you can observe from the chart at 12:35 p.m after drifting to the level of 2362 the stock has a minor bounce back to 2366 and the greater downward action started once it has broken the level of 2349. My target level of short entry was 2342-2326-2277. You can say it as a coincident or a mathematical wonder.
- At 1:30 p.m. stock touched 2341 and bounced back to 2349 level.
- At 2:20 p.m. stock touched the day’s low of 2326 level.
Though Gann’s other method is to calculate the time action but it is beyond the scope of this calculator. You can read all those methods in my book Gann Method
Read the following section for white paper proof:
#1: At 10:20 p.m. taking the nifty future high as 4302 and low as 4279 on the Gann calculator . We have identified the swing turning points as follows. Buy above 4301 for target 4312-4323-4345, stop loss 4279-4246 and sell below 4280 stop loss 4335 and target 4269-4258-4237. At 10:20 Nifty future was trading at 4283
Using the current price and past time squaring action the targets and stop loss was expected to trigger before 2 p.m. . In fact once the swing turning point of sell entry was triggered the 1st target 4269 was achieved within 15 minutes and then it followed the 2nd target and made intraday low of 4256.65 till 2.30
#2: at 11.05 taking RIL future high as 4156.4 and low as 4120 on the Gann calculator . We have identified the swing turning points as follows. Buy above 2135 stop loss 2120-2097 and target 2143-2151-2166 and sell below 2141 stop loss 2156-2180 target 2133-2126-2110-2065. Though the stock was quoting at 2125 at that time but I will not make a short entry because my 2nd target for the short entry is almost achieved. Around 11:30 we got the swing buy price trigger on the chart 2135. As per the current price and past time squaring action the 1st target for the buy entry must come within one hour and 30 minutes from the buy entry trigger time. At 12:08 I achieved my 1st target 2143 and retraced back from 2147 level and touched the short entry trigger price below 2140 at 12:20. And achieved the 1st target around 1 p.m. . . .
Any one can master the gann’s price squaring action just with simple practice and little bit of analytical knowledge and by using the FREE calculator available in my web site www.smartfinance.in
on 2009 i have felt the need to modify this calculator and used the single price point for decession process. This chnage has produced very good result for intraday trade decission. please read the manual associted with it in the Intraday Gann calculator page to know more about the use.
Conclusion: this Gann’s calculator is a mathematical application. It is being developed using the price to price squaring action of Gann’s method. It is my advice to all the traders/ investors to treat this application as an informative and educational tool.
Soumya Ranjan Panda
Disclaimer: The information or data contained in this document is neither guarantees not offers any recommendation to buy or sell any security. The mathematical simulation process used in the Gann calculator or explained in this article does not offer any recommendation to buy or sell any security. The author or the publisher or the developer of this application does not responsible for any kind of trading loss incur by the trader or the investor by the use of this application.
Source by soumya ranjan panda