Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

BASIC TECHNIQUES

Applying Gann Angles

To Computer Charts
Tried and true and far from being discarded, Gann
angles are daily tools for some traders. Heres how
to use two of W.D. Ganns central ideas in todays
computerized environment.

of a chart are totally different things and should not be

confused. Squaring a chart is scaling data into uniform
proportions, while Gann squares are squares
containing a numerical sequence that W.D. Gann
used to forecast future swing points. Applying Gann
angles is a logical, mathematical method that requires
only a few drawing tools to reproduce, or they may be
applied to data via a personal computer.
Here are two specific methods of preparing and
implementing Gann techniques, updating the hand
method with the use of software.

rader William D. Gann became

famous in the early 20th century
for his ability to forecast exact
price targets in the stock and
commodity markets. To arrive
at his forecasts, W.D. Gann used a combination of GANN BY HAND
methods, ranging from simple counts and angles to Before we examine Gann techniques with the use of
correlating natural events. Of course, many securities software, lets look at the theories behind them.
that exist now did not
exist then, and volatility
is very different from
what it was in his time.
However, the geometrical
relationships that he
applied to data appear to
work equally well on
modern data.
Of the work that he
passed along, two of
perhaps the best known
but often misunderstood
techniques are Gann
angles and the squaring
of data on charts. Gann
squares and the squaring

FIGURE 1: SOYBEANS. This hand-drawn chart of 1948 soybeans depicts W.D. Ganns basic techniques of drawing trendlines.
(Reproduction courtesy of John Wiley & Sons.)

by Brent Aston
Copyright (c) Technical Analysis Inc.

Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

PATRICK FITZGERALD

Squaring: That Gann was fascinated

by squares is evident in his work; he
squared price and time, and he used a
repeating count of four. To draw Gann
angles, it is essential to set up your own
chart the way that Gann did so that it is
squared. Take a look at Figure 1.
A perfect square is equal in both
width and height, with four equal
sides and four right angles. Gann
hand-plotted his data onto graph paper that consisted of small squares
combined into larger squares containing 16 of the smaller squares.
That square ratio is simply expressed
as 4x4 (that is, 16 squares = 4x4).
The same ratio of width to height
can be expressed as 1x1 or 1-to-1.
When Gann plotted price on his
charts, the data was in a 1-to-1 ratio,
indicating one point to the square on
the vertical axis, and one day (or one
bar) to the square on the horizontal
axis. This ratio one point to one
day works well with some
securities, but not all. Some securities
require the use of fractions or
decimals for the points.
Ganns method of squaring tends
to confound many would-be practitioners. However, squaring charts by hand
can be as simple as drawing a line and
putting data on a 1-by-1 grid. A 1-by1 grid works well on the grains, and
that is what I use.
Beginning with one day of data for
wheat contracts and a daily range of
five points, draw a line on the vertical
axis five squares long. If the close
were one point from the high, it would
be one square lower than the top of the
line just drawn. The horizontal space
from the day before (if any) should be
one square wide (Figure 2).
If the next bar has a four-point
range that closed two points higher
than the previous high and had a
low one point lower than the close,
it would be plotted in relationship
to the first bar, one square over
for the day, and from one square
below the close of yesterday to
three squares above it. The third
bar plotted on the next day has a
range of 3, a close that is one
point lower than the previous close
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Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

and a high that is one point lower than

the previous high.

proportionally. Heres how to do it using

SuperCharts or TradeStation.
The process is surprisingly similar to squaring
Gann angles: Why Gann angles have a
charts by hand. Be aware that when using some
correlation to the market may be explained
software programs, the angles are not always
by the fact that humans instinctively respond
accurate, depending on your monitor, its
to ratios like halves, fourths, and even thirds,
resolution, or your display hardware. You
perhaps because the human mind likes to
may find it useful to get a protractor or a 45have a sense of order. Artists certainly know,
degree angle-drawing tool to check the
intellectually and instinctively, that the eye
accuracy of the line angles. When adding,
moving, or configuring angled trendlines,
will follow a line and that we perceive the
always check the angle by clicking on it to
world in a series of relationships that the
make sure that it has not been distorted in
mind finds familiar.
FIGURE 2: TRIAD OF BARS. Here are three
some way.
hand-drawn bars and a 45-degree Gann angle.
Using the wheat contract as an example,
Adding Gann angles by hand: On a handdrawn chart, only a straightstart by selecting the recedge is needed to line up the
tangle drawing tool. For ease
1x8 1x4 1x3
1x2
opposite corners of a square
of drawing, begin with round
and draw a 1-to-1 angle. A
numbers like 20, 110, or 330.
The 1x1 line
45-degree
protractor or a variable-angle
Put the tool on the selected
angle
drafting tool can be used to
level and begin drawing a
measure other angles. W.D.
rectangle that is 10 points
Gann arrived at the other
high by 10 days wide. Use
2x1
ne
i
l
angles by dividing a large
full points, not quarter points,
4th
square up into 64 smaller
again for ease of drawing.
1
x
squares (8x8) (Figure 3).
Full points wont work for
3
ine
3rd l
Excepting the 3x1 and the
everything, but they usually
1
ne 4x
2nd li
1x3 lines, Gann angles were
work for wheat.
drawn from either the top or
If the dimensions are
The
1st line 8x1
bottom corner of the large
accurate,
it is not important
large
square
square to various points
where the rectangle is drawn.
where the smaller squares
In Figure 4, the rectangle has
intersect the larger square.
been drawn on a September
Specifically, Gann angle FIGURE 3: SQUARE. Gann derived nearly all his angles by drawing them on an 8x8 square, wheat chart from 260 to 270
lines radiating outward from using the intersections of the internal boxes and the external box; 3x1 and 1x3 are derived in the vertical axis and from
the bottom left-hand corner differently.
August 2 to August 16 on
were drawn in a counterthe horizontal axis (count
clockwise direction from that corner to the point where the top only the spaces between bars to reduce confusion). Clicking on
of the small square in the lower right-hand corner intersects the the rectangle between corners makes it possible to drag it
larger square, resulting in an 8x1 line. Likewise, the next line accurately into place.
Now, using a trendline tool, put a 45-degree angle line on the
was drawn to the point where the second square from the
bottom intersects the large square, resulting in a 4x1 line. The screen. Line it up with the rectangles corner by clicking on the
3x1 line intersected a point a third of the distance from the line and dragging it until it lines up with one corner of the
bottom to the top of the large square. Then a line was drawn to rectangle (Figure 5).
Now begins the sometimes frustrating sequence that squares
the point that was four squares from the bottom, resulting in a
2x1 line. Finally, the 1x1 line was drawn to the opposite corner. the data and concludes the squaring process. Open the format
Following that series of lines, Gann angle lines radiate from price data dialog by right-clicking on the screen to bring up a
the bottom left corner to the same points, beginning with the dialog box. Select the scaling tab. Adjust the scale using the
first small square in the upper left-hand corner and proceeding user-defined maximum and minimum boxes. Adjust it for a
across the top of the square. These Gann angle lines resulted in larger or smaller scale by increasing or decreasing the values in
the converse angles of 1x8, 1x4, 1x3, and 1x2.
the boxes until the 45-degree line goes exactly from one corner
of the rectangle to the opposite corner. This involves some trial
and error but may be simplified by increasing or decreasing the
SQUARING GANN CHARTS WITH A COMPUTER
These days, of course, computers are by far the preferred method for values with round numbers. As the line gets closer to the
collecting, plotting, and analyzing data. The Gann process of targeted corners, however, smaller and smaller numbers are
squaring charts is simply a matter of getting the data aligned required for accuracy.
Copyright (c) Technical Analysis Inc.

Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

FIGURE 4: SQUARING CHARTS ON A COMPUTER. Here is a rectangle that has been set
up in preparation to be squared.

FIGURE 5: DRAWING A LINE. Have your computer draw a perfect 45-degree line and place
it on the corner of your Gann square. It usually wont go to the opposite corner correctly
because your chart has yet to be squared.

At this point, note that the rectangle has changed and

continues to change shape until the rectangle finally becomes
square (Figure 6). The line may have to be moved back to the
corner(s) after each change in scale. It may be advisable to use
the magnifying feature in Windows or magnifying software
such as Loupe for greater accuracy. If SuperCharts magnifying
feature is used, the scale will change, throwing off the lines and
angles. (When youre finished, leave the 45-degree angle line
on the screen to be used later.)
If done correctly, the chart should now be squared as in
Figures 6 and 7 and ready for Gann angles. Once charts are
squared, 45-degree angles or any other angles can be accurately
represented in only one way. Lines parallel and perpendicular
to Gann angles may also be added to a squared chart.

Gann tool 1x1 line

overlays hand-placed
1x1 line

45 line
(1x1)

DRAWING GANN ANGLES

WITH A COMPUTER
Many software programs come with
various Gann angle drawing tools.
The Gann fan tool in SuperCharts
can be used to turn on all of the
various angled Gann angle lines at
once or each individually.
Now go back to the chart that you
have just squared, select the Gann

FIGURE 6: ADJUSTING THE SCALE. Using your softwares scale adjustment (format price
data in Omega products), adjust the vertical scale until the 45-degree line goes perfectly
from one corner of the box to the opposite corner. When it does, the chart is squared.

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Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

Gann Fan

-45 degree angle

1 x 1 Gann

10 x 10 square

FIGURE 7: GANN FAN PARALLEL TO THE 45-DEGREE ANGLE. Once the scale is adjusted
and the 45-degree line is in place, the Gann fan can be aligned confidently.

fan tool, and find a major pivot point. Apply the Gann fan to the
chart (Figure 8). One or more lines should be seen radiating out
from that point. Click on the fan to open the dialog box and click
on the line that reads format selected Gann fan, then click on
the properties tab. The Gann fan must be set to the appropriate
direction up or down for your chart. If the price goes up
from your chosen pivot, the fan must be set to the up/right
direction; if the price goes down, select down/right. In the time/
price Gann lines part of the dialog box, select only the 1x1 line
to start by clearing the checks from all the other Gann angles.
Next, adjust the programs Gann angle. Beginning in the
same dialog box, find the input box next to the points per bar;
inside this box is a default number. Increase or decrease this
number until the 1x1 Gann fan tool plot is at a 45-degree angle.
The angle of the Gann line should change when the number is
changed. If the 45-degree angle trendline is still on the chart,
the points per bar number can be adjusted until the lines are
parallel (Figure 7). Once the squaring and setting of the points
per bar are complete, the scale and spacing can be changed
without affecting the relative position of the fans, although they
will look different because they are effectively being stretched
to a different scale.
Once youve gotten the right number of points per bar, put
it on the chart using the text tool. Having the number on hand
for reference purposes allows you to add more Gann fans
and use it for future reference. Unfortunately, the pointsper-bar number rarely works on other contracts of the same
or different securities. However, having the number can
speed up the process of zeroing in on the right angles when
putting Gann angles on other charts of the same security.
Gann fans can be duplicated by using the tool that allows
you to add a parallel drawing object. After clicking on any
Gann fan, you may drag it to any location on the screen. The
color and style of various fans can be altered for clarity.
Now, the other Gann angle lines listed in the dialog box

FIGURE 8: SEPTEMBER WHEAT AND GANN FAN. September wheat declines into the
summer but rallies to the Gann fan line as autumn approaches. Once a chart is squared on
your computer, you can put on a Gann fan and turn on or off the angles you want displayed.

can be turned on as needed. Fans can be added in any of the

four possible directions up/right, down/right, up/left, and
down/left.

PLACEMENT
Gann fans can be started at various points, such as pivot points
and Gann angle intersections, as shown in Figure 9. Gann angle
lines can begin and extend outward to important swing points
where trends change direction.
Some experience using Gann angles may reveal new and
interesting relationships in the data. In Figure 9, which is a chart
of the September Standard & Poors 500 index contract, a Gann
fan angled upward off a previous high helps to define the
support and resistance (point A) of a subsequent movement
into new highs.
After last years pullback in the autumn, the price stayed
within the upper 1x4 and 1x3 angles. Strong trends like this can
be a high percentage move in price and time. Although the red
rectangle was a square when the chart was originally squared,
changing the scale has made it look longer than it is high.
Despite being stretched, the Gann angle lines should line up at
the same points that they did when the chart was still squared.

PRACTICAL APPLICATIONS
Having squared a chart and applied Gann angle lines to it, how
is it used? W.D. Gann was of the opinion that the 45-degree
angle line was the most important line on the chart. He went on
to say that when the 45-degree angle line was broken, the trend
has changed.
Study Figure 10. Almost everything in this chart is keyed off
the angles coming from the peak at the upper left. Each time the
price got near a Gann angle line, it reacted by vibrating around
the Gann angles. Often, the price continues to follow these lines
until market conditions cause the price to break through. That
is often a sustained move.

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Stocks & Commodities V17:12 (515-520): Applying Gann Angles To Computer Charts by Brent Aston

Once a Gann angle line is crossed, the price

usually moves in the direction of the next closest
line. However, when a Gann angle line is rapidly
approached by the price but not crossed, the price
will often seem to bounce and move rapidly away
from that support or resistance.
The price generally gravitates toward the nearest
of intersection points, where the Gann angle lines
cross. If the volatility is great, this can happen
quickly, taking only one or two days.
Not all charts will have a price movement that
stops in the exact center like the wheat chart shown
in Figure 10, but clearly this one did (point A). In
May and June 1999, the price was going through
several closely spaced Gann angle lines from above
and below. This is a zone of congestion and slow
trending, but in the wide-open spaces during
February, March, and April, wheat had room to
run. Further, after three years of downtrend, the
wheat price did not cross into the lower right-hand
portion of the Gann square. Does this suggested
support forecast an upcoming bottom?
Using this example (Figure 10), some Gann
theories can be assessed by examining the results
of squaring the wheat chart and placing Gann
angles on it. Does the price vibrate around these
Gann angle lines? Was the 45-degree angle
important? Did the 45-degree angle define the
trend? It appears so.
Using overbought and oversold indicators, or
trend indicators and any number of other indicators
with Gann angles has intriguing possibilities. For
example, when the price has been moving down
and comes near an intersection, we might find that
the relative strength indicator (RSI) or stochastic
indicator is oversold and may suggest a divergence.
Such verification may improve a traders odds of
success.

CONCLUSION

1x4

1x3

1x1

FIGURE 9: S&P FUTURES. As the Standard & Poors futures contract rebounds off historical highs,
Gann lines from previous pivot points provide support and resistance at a variety of locations.

FIGURE 10: SEPTEMBER WHEAT. Prices move down along a 1x1 angle to point A, where they bounce

Once charts are squared, Gann angles are not upward. Subsequently, angles drawn equidistantly after the low is in place identify that reaction as the
subject to changes in scale. When applied correctly, center of the downtrends progress.
they are certainly not random, and they show
significant areas of support and resistance. Further,
they can be something of a roadmap, showing where and how REFERENCES AND RELATED READING
price action will behave in both price and time.
Hartle, Thom [1999]. Gann Swings And Intraday Trading,
Finally, the process of squaring charts and adding geometric
Technical Analysis of STOCKS & COMMODITIES, Volume
Gann angles can be time-consuming, either by hand or by
17: October.
computer. While applying Gann theory by computer may be Kaufman, P.J. [1998]. The New Commodity Trading Systems
quicker and simpler in some ways, it still takes careful scrutiny
And Methods, 3d edition, John Wiley & Sons.
to use computerized Gann angles to their greatest advantage. Krausz, Robert [1997]. A W.D. Gann Treasure Discovered,
Once done, however, it is best to focus on the basic lines such
Geometric Traders Institute, 1835 US 1 South 119, Suite
as the 1x1 angle and look for price action to track and react to
352, St. Augustine, FL 32086, 512 443-5751, fax 512 443it, no matter if by computer or by hand.
7119, Internet http://www.fibonaccitrader.com
Marisch, Gerald [1990]. The W.D. Gann Method Of Trading,
S&C
Brent Aston is a private trader.
Windsor Books.
Copyright (c) Technical Analysis Inc.