TradeStation Help
W.D. Gann was a famous trader during the first half of the century who developed a combination of mathematical and geometric principles, which he applied successfully to trading. A Gann Fan is an analytical drawing tool used to identify price breakouts and the strength of those breakouts. The Gann Fan is drawn using a series of angled lines that "fan" out from a single point. These angled lines indicate a price to time relationship that may be relatively fast or relatively slow, depending on the size of the Gann angle.
To help define the time and price line, W.D. Gann took a square and divided it into equal units. He then drew a 45-degree angle line through the square. This became known as the one-by-one time/price line-the time unit equals the price unit; therefore, as the price moves, it tracks along a perfect 45-degree angle because time and price are in perfect balance.
On the other hand, if it takes two units of time for the price to advance one unit that would give you a 2 X 1 time/price line which tracks at approximately a 26.5-degree angle. Conversely, if it takes one unit of time for the price to advance two units, you will have a steeper 1 x 2 line tracking at approximately a 63.5 degree angle. Breakout strength is determined by analyzing the relationship between a market's price and time. For example, a market that moves from $50 to $60 in one week charts differently than a market that moves $50 to $60 in a single day.
Gann Fans are based on the importance of historic or prominent highs and lows. Gann Fan angles can be thought of as trendlines drawn from prominent market tops or bottoms at certain angle(s) determined by the price and time relationship of the market charted. Gann angles are similar to support and resistance levels. If price activity breaks out of one angle, the market will probably trade in that breakout direction until the next Gann angle is met. Generally, a market remaining above a rising line is considered bullish and its resistance level is the next Gann line. Similarly, a market remaining below a falling line is considered bearish. The balance line is drawn at 45 degrees. Breakouts above or below this balance line indicate possible trend changes.
Gann Fans only provide significant results when applied to charts using a Linear because Gann Fans require that each one-point move always remain equidistant from the next, regardless of the price level. The appearance of the Gann angle also depends on the range of numbers that appear on your vertical price axis and the bar spacing defined when you formatted your Chart Analysis window.
Gann Fans can only be applied to charts using Linear scaling. To change your chart's scaling to Linear, see Changing the Chart's Y-Axis. You can also use the shortcut menu for a selected object component (identified with small squares) to change the drawing properties such as Color, Style, Weight, and any object specific settings.
Gann Fans can only be applied to charts using Linear scaling. To change your chart's scaling to Linear, see Changing the Chart's Y-Axis.
icon.When drawing a Gann Fan over an uptrend, the fan should be drawn upward to the right from a market low, and in a downtrend, the fan should be drawn down to the right from a market high. For more information, see Format the Settings of a Gann Fan.
After a Gann Fan is applied to a chart, you can reposition the drawing object at any time to evaluate another group of bars.
Using this tab, you can modify the values used to draw a Gann Fan. The three factors determining how a Gann Fan is draw are the Time/Price Gann Lines, the direction of the Gann Fan, and the points per bar. Following is a description of how each factor is calculated.
Formatting the Alerts of a Drawing Object