# DEFINITION OF GUNN FAN TRADING STRATEGY

Gann trading strategy is a form of advanced technical analysis that expert traders may consider an advantageous approach once they have mastered the principles and practices of support and resistance. Introduced by W.D. Gann, he proposed that the market is innately geometric and cyclical. Gann believed geometric-based and mathematical instruments are necessary to determine the overall price trajectory of the market. From this ideology, the use of geometric angles and ancient mathematics are highly practiced as these have a direct command to price movements.

## GANN INDICATORS

There are numerous approaches in Gann trading, but the most commonly known and highly favorable are the Gann Fan and the Gann Grid.

GANN FAN- Technically, a Gann fan is composed of multiple lines known as Gann angles. These angles are then placed transparently over a price chart to reveal support and resistance lines. In a way, these angles work as a tracer helpful in bringing out price changes. This, too, will indicate viable trading points.

It is composed of 9 diagonal lines roughly resembling a fan. The middle line acts as a center point with four corresponding lines on both sides. Once it is applied to the 45-degree trend, it will automatically reveal specific parameters of:

• 8×1 = 7.1 degrees
• 4×1 = 15 degrees
• 3×1 = 18.75 degrees
• 2×1 = 26.25 degrees
• 1×1 = 45 degrees
• 1×2 = 65.75 degrees
• 1×3 = 71.25 degrees
• 1×4 = 75 degrees
• 1×8 = 82.5 degrees

GANN GRID- While the aforementioned indicator resembles a fan, this one looks like a net that functions as a support and resistance. To utilize such, traders are asked to pick two points that will serve as the base. After this, one can now expand the grid according to the pre-identified spots, and while doing so, the whole figure will appear.

Gann fan provides two methods for opening a trade; the breakout trading and the bounce speculations.

GANN FAN BREAKOUTS- A breakout revealed by one of the Gann fan lines indicates that there is a viable trading spot, and traders are given the opportunity to open a position in line with the breakout movement. However, make sure not to place a trade with the initial candle that closes beyond the Gann line. Level interactions do not always render accurate signals; thus, it is ideal to wait for the second candle to close before placing a position.

GANN FAN LINE BOUNCE- Price reversals from one of the Gann lines indicate that there is a favorable opening position. Similar to how Gann breakouts work, one must wait for a follow-up confirmation before placing a trade.

Placing a stop loss is a generally practiced method that secures the account. To place such on Gann Line Breakouts, wait for the price to break, and the stop loss can be placed below or at the top of the chart. When it comes to Line Bounce, observe the movement of the price, and once it bounces, stop loss can be placed under the bottom or over the top of the latest swing made during the bounce.

The trading activity must be armed with ideal and efficient management. And take profit is an optimum solution to maximize the profitability, all while minimizing the margin for loss. To execute such on Gann Fan breakouts, one is only required to hold the position after the breakout long enough until the price lands on the following Gann support or resistance. As for the Line Bounce, the directives are similar to breakouts; only that, the latter must wait for a price to bounce.

## CONCLUSION

The Gann Fan Strategy is rooted in the ideology that markets have an innate geometrical structure, and to identify persisting trends, the use of geometric and mathematical instruments is advised. This may demand advanced skills, but once learned, it has the authority to guarantee trading success.