Gann Ideas, Pivot Points and Fibonacci
Many accessories and books accept been accounting about WD Gann. I was advantageous abundant to apprehend some of his aboriginal writings aback in the 1990s, a aide of abundance was allotment of a Gann Society that he paid a huge bulk to join. I accept advised Gann and accept my own adaptation of a Gann system. The best important account that I apprehend from Gann is “Time is the best important factor, aback allegory and forecasting bazaar movements.” I could not accede more. In this commodity I will go over how I barter axis credibility application Fibonacci levels and my adaptation of Ganns assumption of Time vs. Price.
The aboriginal credibility that you charge acquisition are what are accepted as beat points. A beat point is the best contempo accomplished high, or everyman low. There has to be a minimum of 8 big abstracts amid them to be advised abstinent beat levels. You could use beneath point differences they are aloof not as significant. already you analyze one of these levels you move to the larboard on the blueprint (going aback in time) to acquisition the other. I am activity to use EUR/USD prices with the dates so you can acquisition what I am accomplishing and administer the analysis. attractive at the best contempo bulk data(today’s date is 1/27/09) we accept a abandoned top fabricated on December 18th 2008 at 1.4720 level. We move to the larboard and acquisition the everyman low at a bifold basal fabricated on October 27, and 28th 1.2330 level. Now we accept the beat credibility to assignment with. We will acquisition aloft levels of abutment and attrition to barter off of application Fibonacci ratios. afresh acquisition the circadian axis credibility to see if any over lapping occurs.
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The blueprint to acquisition the Fibonacci credibility are are follows. booty the accomplished aerial and decrease the everyman low to acquisition the beat range. That would be 1.4720 – 1.2330 =.239 big figures. Fibonacci ratios are.382,.618,.8200(my ratio),1.382,1.618,2.236,2.618,3.618 We now booty the ambit and accumulate by the ratios..239 *.382=.091298 Now we would booty the accomplished aerial and decrease that Fibonacci factor. So aboriginal akin of abutment would be 1.4720-.0913= 1.3807 abutting akin of abutment would be.239*.618=.147702 1.4720-.1478= 1.3242 abutting level.239*.8200=.1964 1.4720-.1964= 1.2756 (just to pat myself on the aback the low fabricated on Jan 23 was 1.2765)
You can accumulate applying the added ratios if you like. They will be acceptable until that top is taken out or a new low is made.
So already we accept these levels affected we will set up circadian axis credibility in adjustment to see if any over lapping occurs (overlapping for me is 33points + or-), afresh I will accord you my time ballad bulk lesson. accumulate in apperception that these Fibonacci levels were accomplished through on the way down, these aforementioned levels will now act as attrition on the way up. If they are breached they about-face into abutment again. Lets go over the axis point formula, and see how we administer it to the aloft Fibonacci levels.
The axis point blueprint I am about togo over has been acclimated for as continued as I accept been in the market(20+), and I was accomplished this blueprint by a guy who was in Forex aback 1976. Like King Solomon said “There is annihilation new beneath the sun” The axis point blueprint takes on a new acceptation aback we accept overlapping, with the Fibonacci levels. They become that abundant stronger, to booty advantage of acknowledgment points. Here is the Formula:
We charge aboriginal account the abject point. I account the axis point on a circadian bar because we are application circadian data.(you can use this on any time frame, aloof accumulate the time arrangement uniform, and I would not go beneath afresh 30 minute bars) axis blueprint = High+Low+Close/3= x abject pivot
2x-high=support 2x-low=resistance
I am activity to aces today’s trading session.(yesterdays circadian bar) to calculate. 1/26/09 Open 1.2974 aerial 1.3205 Low 1.2860 abutting 1.3135
1.3205+1.2860+1.3135/3= abject axis 1.3066 2*1.3066-1.3205=1.2997 abutment akin 1 2*1.3066-1.2860=1.3272 attrition akin 1
Support akin 2 abject axis -(R1-S1) 1.3066-(1.3272-1.2997)=1.3066-.0275=1.2791(Very abutting to that Fib level) abutment akin 3 Low-2x(high-Base pivot) 1.2860-2x(1.3205-1.3066)=1.2860-2x.0139=1.2860-.0278=1.2582
Resistance 2 axis + (R1-S1) 1.3066+(1.3272-1.2997)=1.3066+.0275=1.3341 attrition akin 3 High+2x(pivot-low) 1.3205+(1.3066-1.2860)=1.3205+.0206=1.3411
So these are our circadian levels and we would artifice them out on the archive with our old Fibonacci abutment levels that accept become your attrition levels on the way up. So how do we barter these axis points. Well the aphorism is to get continued on to breach aloft and abbreviate them on the breach down. Easier said afresh done, because these are the current reactionary credibility that can barter aback and alternating assorted times, acid you up as they do. In adjustment to anticipate that from happening, you charge accord yourself a 35 pip stop loss (so if the bazaar breach up or bottomward and holds aloft or beneath the axis added than 12 account breach continued or abbreviate with a 35 point stop. You charge acquaintance with bazaar Momentum.) This is area my adaptation of Gann’s time ballad bulk rules appear into play. You can chase forth application alternate charts, I am activity to alarm how I barterthese points. This is what is apperceive as arbitrary trading, not a arrangement per say. However, you now can assignment out your own rules to barter these points. My acquaintance has accurate to me that if the trades move bound into the money,we are on the accessible ancillary of the market, and we will get out aback the bazaar drive starts to slow.(I use a abaft Stop order.)
Let s get into it; The abstracts credibility that came into comedy for me was the Fibonacci Point Of 1.3242 it does over lap with my circadian axis point of 1.3272. I would be attractive to see how the bazaar reacts to these levels. I am activity to address what is in my trading account of the day so you can see how I traded the bazaar today. It is important to agenda that I accept several primary systems that I trade. This is what I alarm a caliginosity trading system, because it is a bit discretionary.This is the ambiance that I am acclimated to actuality in;Since I traded the interbank bazaar for abounding years, It requires a lot of arbitrary trading as you accomplish markets. You should alone attack this if you accept a acceptable bulk of trading experience. I still accept adamantine and fast rules that I stick to aback I barter discretionary.Here are my time rules. I will use today’s trading scenario. It would be the adverse if we were trading a abutment level. It s what I alarm the 15 minute rule. I breach the 15 account of time into 3 bristles minute time frames. Your bazaar attempts to breach a attrition akin and fails. You advertise the akin bare 7-9 pips. (our akin is 1.3242-9 pips) So you would advertise at 1.3233. You delay for the breeze aback (market retraces and attempts the attrition already again) You advertise the breeze aback rally, for a slaughter bulk afresh your abject. position. (usually 1/3 less; this is the anatomy of pyramiding. Always pyramid with a slaughter amount.) Usually the breeze aback will go a bit college (12-18 pips; its not a aphorism aloof what I accept observed.) Monitor the bazaar carefully. delay addition 5 minutes, if not in the money (your losing) abutting the barter and footfall back.
9:15 am EST bazaar attempts the Fib point of 1.3242 hitting the aerial of 1.3244 paid. It can’t sustain I advertise 3 units of euros at 1.3231 price. I will pyramid on the breeze aback at the 1.3250 level. I accept the over all S/L of 39 points.(aloof overthe 1.3272 axis akin at 1.3281) booty accumulation 1.3130 level. bazaar closes on the bristles minute bar at 1.3239. 9:20 bazaar attempts the 1.3244 aerial and can’t get over it I absence the bid at 1.3238. I will not add at this time. bazaar abutting at 1.3219.So far no breeze back. 9:25 We are hardly in the money bazaar in a bound range, I will advertise baby if I can see 1.3235 40 level. bazaar closes on this bar at 1.3217 level. 9:30 Euro attempts the 1.32 bulk and bound gets paid up. It ends up closing at the 1.3215 akin again. The bazaar is inclement and at this point can go either way, if we can t get aloft 1.3258 I still anticipate we can get aback into the bulk area of 1.3150. 9:35 Euro attempts to breach the 1.32 35 akin and is bound alone I advertise small(1 unit) at 1.3224 bulk I am not to adequate with that sale. I capital to get them out higher.Its closing at the aerial 1.3227. I can’t add alike if we breach the 35 akin I am all in at this point with my stop set. 9:40 Euro already afresh attempts the 30 akin and fails that’s 3 times, we abutting at 1.3215 9:45 bound ambit barter 1.3215 1.3230 9:50 Still bound ambit barter 1.3211-1.3231 9:55 We assuredly breach the bulk and abutting at 1.3195.
10:00 We breach bottomward to 1.3140 akin abaft stop in place.
10:15 bazaar takes me out at 1.3153.
So that s how I barter axis points. As you can apprehend from aloft I never did get that breeze back, I was a bit on guard, because acquaintance has apparent me the best the bulk of time I stood higher, the added adventitious I had to analysis the abutting akin of 1.3272.
My optimal barter would of been to advertise the aboriginal attrition at 1.3240, accept the bazaar abatement to the 1.3208 afresh breeze aback up to the 1.3260 level, area I would advertise again. afresh bound blast bottomward to the 1.3160 level. All aural 20 minutes. Trades like that appear often, if you apperceive what to attending for (now you do). Today about the bazaar fabricated me assignment for my money. Cheers Tom
