Gann Fan Forex Trading Strategy
The Gann Fan, trendline by angle technical tools, OsMA custom indicator and the exponential moving average (200) are coupled into one trading strategy i.e. the “Gann Fan forex Trading Strategy.” Newbies and advanced traders alike can adopt and implement this strategy with ease.
MetaTrader4 Indicators: Gann Fan (default setting), Trendline by Angle, OsMA.ex4 (default setting), Exponential Moving Average (200)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: All
Currency Pairs: any
Example of Buy Trade (Click the picture for full size)
Long Entry Rules
Initiate a buy position if the following conditions are in place:
- The angle of 1×1 (also known as the balanced angle) being the most important of all on the Gann Fan, indicates a bulls market is price curve is aligned above it (making it an important support level during an uptrend).
The red area above the balanced angle or angle of 1×1 did push price curve to the area marked “a” on the angle of 2×1. Price dropped back to the major support level on 1×1 angle (point b), from which price further declined (the blue shade area) to the 1×2 angle on “point c.”
The 1×2 angle offered some support for price, but further declines saw price dipping further to the 1×3 angle on “point d.” Our price curve bounced back to the 1×2 angle on “point e.” Going by the Gann Fan rule, we expect price to be pushed downward to experience the 1×3 level before deciding on its next path.
The general buy entry rule when using the Gann Fan is to buy when the price curve is above the 1×1 angle.
- If price holds above the Exponential Moving Average (200), it is an indication that market favors the bulls.
- If the Silver histograms of the OsMA custom indicator is above the 0.00 level, it denotes a bullish signal, howbeit it further consolidates the signal when the price curve is above the 1×1 angle of the Gann Fan.
Stop Loss for Long Entry: Place stop loss on suitable support level below the 1×1 angle, whilst having a trailing stop in place.
Exit Strategy/Take Profit for Long Entry
The following rules will trigger an exit or take profit:
- If price falls below the 1×1 angle of the Gann Fan, an exit or take profit is appropriate.
- If price curve falls below the blue Exponential Moving Average (200) line, it is a reversal alert and an exit or take profit will do.
- If the silver histogram of the OsMA custom indicator crashes into the 0.00 level, it is an alarm that price pressures are to the downside.
Sell Entry Rules
Place a sell order when the following rules or conditions are in display:
- When the price curve falls below the 1×1 angle of Gann Fan, it indicates a bearish trend and as seen on Fig. 1.1, price pushed lower to the 3×1 angle of Gann Fan before bouncing off.
- If price is situated below the blue line of the Exponential Moving Average (200), it denotes a bearish trend.
- If the Silver histogram of the OsMA custom indicator forms below the 0.00 level, it denotes a selling market.
Stop Loss for Sell Entry: Place stop loss on suitable resistance level above the 1×1 angle, whilst having a trailing stop in place.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit on position(s) based on the following rules:
- If price curve form above the 1×1 angle of the Gann Fan.
- If price curve forms above the blue line of the EMA (200).
- If the Silver histogram of the OsMA custom indicator forms above the 0.00 level.
About The Trading Indicators
The Gann Fan is a technical tool developed by William Gann, a renowned Forex trader. The Gann Fan are designed at varying angles from a critical trough or peak on the price chart. The trendline of 1×1 was termed by Gann as the most crucial. If price is aligned above this line, it defines a bull market, while below this line is said to be a bear market.
The Exponential Moving Average (200) is built to provide weight to the most recent data.
Lastly, the OsMA.ex4 is built out of the EMA (12), EMA (26) and SMA (9), making it a good trend following tool.