Gann Trading Strategies

Now that you are familiar with the way the Gann Fan and the Gann Grid work, we will now proceed with
discussing potential trading strategies using each of these tools.

Gann Fan Trading Strategy

The first Gann trading method we will discuss revolves around the fan. We will go through setting entry
and exit points on the chart based on Gann Fan signals. Also, we will implement some rules around how
you can manage your stop loss when trading with the Gann fan.

Gann Fan Trade Entry

There are two alternatives to open trades with the Gann Fan. The first one is to trade breakouts, and the
second one is to anticipate bounces from the diagonal lines.

Gann Fan Line Breakouts – If you spot a breakout through one of the nine Gann Fan lines, then you
should open a trade in the direction of the breakout. However, don’t hop into a trade with the first
candle which closes beyond a Gann line. Sometimes the interactions with the levels are not always so
accurate. In this manner, it is better to wait for a candle to close beyond a Gann line and then to wait for
a second confirmation candle which breaks beyond the initial breakout candle.

Gann Fan Line Bounces – Whenever the price bounces from a Gann line, you can use this opportunity to
open a trade. The same as with the Gann Fan Line Breakouts, after you spot a bounce you should
confirm it with an additional candle.

Gann Fan Stop Loss

In any type of leveraged trading, you should use a stop loss in order to protect your account. Here are
some ideas to consider for placing stop loss orders when trading with Gann Line Breakouts and Bounces.

S/L on Gann Line Breakouts – When the price breaks through a level and you open a trade, you should
place a stop loss below/above a previous bottom/top on the chart.
S/L on Gann Line Bounces – When the price bounces from a level and you open a trade, you should place
a stop loss below/above the bottom/top of the most recent swing created at the time of the bounce.

Gann Fan Take Profit

Now that you know when to open Gann trades and how to protect them, we will discuss some trade
management ideas.

T/P on Gann Fan Breakouts – When the price breaks through a Gann fan level and you open a trade, you
should stay in the trade at least until the price reaches the next Gann Support or Resistance line.

T/P on Gann Fan Bounces – When the price bounces from a Gann fan level and you open a trade, you
should stay in the trade at least until the price reaches the previous Gann Fan Support or Resistance line.

Gann Fan Trading Strategy

Let’s now summarize all these rules into a concrete trading example:

Gann-Fan-Trading-Example

Above you will see the Gann Fan applied to a bearish trend of the EUR/USD chart. The blue thick line on
the image shows the base we use which will calculate the Gann Fan lines at varying degrees. The black
lines on the image illustrate the moments when trades should be opened per our rules. The red lines are
the locations of the stop loss orders for each trade. The green circles show the moments when profits
should be taken on the trade.

Our Gann analysis leads to three trades on this chart. The first one starts when the price breaks through
the 1×1 Gann level. The candle which closes above the breakout candle creates a buy signal on the chart.
The stop loss should be placed near the bottom that was created prior the breakout. The trade should be
held until the price action reaches the next Gann level – the 2×1 level.

We see that the price doesn’t break the 2×1 level, and actually bounces downwards from it. A short
trade should be opened when a candle breaks the support area created prior to the bounce. The stop
loss should be located above the top created just before the downward bounce. This trade should be
held until the price breaks the same diagonal line in the bullish direction. Notice, the take profit signal
comes approximately around the same level as the initial sell signal, which makes this trade a scratch.

The Gann Fan gives another buy signal when the price action breaks the 2×1 line and closes a candle
above the breakout. The stop loss in this trade should be placed below the bottom created prior the
breakout. The trade should be held until the price action reaches the next resistance line.

Gann Grid Trading Strategy

The next trading strategy we will go through concerns the Gann Grid trading indicator. We will consider
how you should open trades, put stop loss orders, and take profits when trading with the Gann grid.

Gann Grid Trade Entry

There are two alternatives to open trades with the Gann Grid. The first one is to look for breakouts thru
the grid levels, and the second one is to spot bounces from the grid levels.

Gann Grid Breakouts – The breakouts in the Gann Grid are traded the same way as with the Gann Fans. If
a breakout appears in the Grid, then you should open a trade in the direction of the breakout. Again, do
not enter trades right after the first candle, which creates the breakout. Make sure you wait for a second
confirmation candle, which extends beyond the breakout candle.

Gann Grid Bounces – When a bounce from a Gann Grid level appears on the chart, you can trade in the
direction of the bounce. But as we just mentioned, make sure that you confirm the bounce with an
additional candle.

Gann Grid Stop Loss

The Gann Grid indicator should also be traded in conjunction with a stop loss order. This way you will be
protected from any surprises against your trade. Let’s now see how we should put in a stop loss in the
two different Gann Grid trading scenarios:
S/L on Gann Grid Breakouts – When the price breaks through a grid level and you open a trade, you
should place a stop loss below/above a previous bottom/top on the chart.

S/L on Gann Grid Bounces – When the price bounces from a Gann Grid level and you open a trade, you
should place a stop loss below/above the bottom/top which is created at the time of the bounce.

Gann Grid Take Profit

But how long you should hold your Gann Grid trades?

T/P on Gann Grid Breakouts – When the price breaks through a Gann Grid level and you open a trade,
you should stay in the trade at least until the price reaches the next level on the grid.

T/P on Gann Grid Bounces – When the price bounces from a grid level and you open a trade, you should
stay in the trade at least until the price reaches the previous level on the grid.

Gann Grid Trading Example

Let’s now apply the rules from above to a practical trading example. Have a look at the image below
which will demonstrate the use of this Gann Grid Trading Strategy in action:

Gann-Grid-Trading-Example

Here we are looking at the daily AUD/USD chart. The image starts with two tops, which are directed
downwards. These two tops are marked with the blue thick line and they are used as a base for the Gann
Grid indicator.

The picture illustrates four trades based on signals from the Gann Grid indicator. The black horizontal
lines on the image show the moments when trades should be opened. The red horizontal lines on the
chart are the suggested places for stop loss orders. The green circles point out the moments when
profits should be collected based on our target rule.
The first trade is short and it comes after the price breaks a grid line downwards. The stop loss order
should be located above the immediate top prior the breakout. The trade should be held until the price
reaches the lower support grid line.

The next trade, which is opened when the price breaks the take profit grid line of the previous trade. In
this case, the price comes close to hitting the stop loss, but the bearish move is resumed and eventually
reaches its target.

Then the price reverses and breaks a grid level upwards. This is a buy signal on the Gann chart. The S/L
should be placed below the bottom created at the time of the reversal. The trade should be held until
the price reaches the next parallel resistance on the grid.

When this happens, the price bounces downwards, creating a new short opportunity. This is a new
reversal and we use the top of the reversal for our stop loss order. The trade is held until the price breaks
the same level it has bounced from.