The Gann Grid forex trading strategy is a strategy that demonstrates the usefulness of the intersecting runs of Gann Lines blanketed on the activity chart.
The strategy combines the Gann Grid and the MACD MT4 indicator.
MetaTrader4 Indicators: Gann Grid (default setting), MACD (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: All
Currency Pairs: any + Gold + Oil
Gann Grid Buy Trade Example (Click the image for full size)
Long Entry Rules
There are points on the chart labelled IP (Initial Point) and FP (Final Point) used as points in plotting the Gann Grid and also points referenced 1 – 5 on the chart.
Having said that, we are able to define a buy entry when the following chart pattern are in display:
- Upon the bounce up of price to Point 1, it is expected that price will easily get to the ascending parallel Gann line (point 2). Price curve is expected to move to the first line on Point 3. Before getting to Point 3, the Gann concept states that prices that hold below the ascending line predicts a bull market. With this in mind we can initiate a buy when price is on point 2.
Our best entry for a buy is after seeing price hit point 3 and further down to point 4 (which is an intersection of the Gann line). The Gann concept states that when there’s an intersection of the Gann lines, price curve is expected to break the basic trend. This means we’re expecting price to break above point 5.
Initiating a buy around point 4 is a profitable move, although the market does not always behave as predicted (price didn’t break further much away from point 5 before retracing, we still raked in some happy pips from the move (refer to Fig. 1.0).
- If the MACD histogram is above the 0.00 level, it signals a bull market.
Stop Loss for Long Entry: Enter ≥35 below entry price.
Exit Strategy/Take Profit for Long Entry
Exit or take profit on positions under the following conditions:
- When price curve hits the first intersection of the Gann lines, it implies that a break in the basic trend, a further breach on the next intersection is a sign that a new trend is forming (exit or take profit at this instance).
- If the histogram of the MACD further forms below or crashes into the 0.00 level, it further consolidates our exit or take profit rules.
Sell Entry Rules
Enter a sell order when the following conditions are in place:
- Enter a sell when the price curve holds below the descending line, as seen on Fig. 1.1 (point 2 – point 5).
- If the histogram of the MACD falls below the 0.00 level, it denotes a bear market.
Stop Loss for Sell Entry: Enter ≥35 above entry price
Exit Strategy/Take Profit for Sell Entry
The following rules will define an exit or take profit:
- If price hits the first intersection of the Gann lines, an exit of take profit is advised, but if in anyway price does hit the next intersection of the Gann lines (which implies a change in trend) – an exit or take profit is strongly advised.
- If the histogram of the MACD forms below the 0.00 level, an exit or take profit will do.
About The Trading Indicators
The Gann Grid depicts an intersecting run of Gann Lines superimposed on price chart, with the core principle that the lines form an overlapping 45 degrees relation between time and price i.e. 1:1.
The MACD is an oscillator that combines the Fast EMA (12), Slow EMA (26) and the SMA (9) in one technical study. Developed by Gerald Appel in 1979, Mac D, as it is also called is a common and multipurpose tool deployed in identifying and following strong trends, and also spotting trend reversals.