Gann Master FOREX Trading Course No:1
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We start this course by presenting the mathematical methods developed by W.D. Gann. For starters we will say that W.D. Gann was an exceptional mathematician. Gann considered that the only exact science, and universal language is mathematics. Through out time, Gann developed a series of mathematical methods in order to help us determine the: fixed support resistance levels dynamic support retracement extension levels For these methods to be applied easily to our charts, Gann developed a series of instruments that are meant to facilitate the determining of the evolution space of the price in time. After his study trip to Egypt (to the school of Mysteries, the place where Greek mathematician Pythagoras was also taught), W.D. Gann developed a series of market analysis methods that are based on numerology and sacred geometry.
As we can see, Gann started from an exact science of mathematics and developed his methods by applying esoteric approaches: sacred geometry and numerology.We should not be surprised to hear this thing. Gann was a 33rd degree mason and had a perfect understanding of esoteric sciences. Another approach of capital markets developed by W.D. Gann is that of cycles. But we need to know that the cycle theory derives from the applying of the capital markets to the planetary cycles in astronomy. We sill also see this time around that Gann started from pure science: astronomy, but also deepened his studies in the esoteric space when he developed a series of astrological techniques for determining the energetic change points of the price in time. The method developed by Gann is actually a hybrid between astronomy and astrology and for this reason, many name this Gann technique: "astrolonomy"
We will not extend this introduction for too long in order for our future courses to approach each of these with more details. The transforming of prices in degrees. The fact that W.D. Gann marked his course materials with a personal seal is probably less known. This seal is formed out of a circle, a square and a triangle.
The easiest and clearest way by which W.D. Gann tells us that in the development of his analysis techniques are by these geometric forms: the circle the square the triangle As little mathematics as we know, we know that: circle = 360* square= 90* x 4 = 360* triangle= 120* x 3= 360* Gann considered that a movement cycle is equal to 360* or the multiples of 360*. The circle is a perfect shape that includes within itself the beginning and the ending. The most well known cycle is the annual cycle and it represents a 360* movement of the earth around the Sun. The calendaristic date starts on the first of January.
The astrological year starts on the date of 2021 march, the date of the spring equinox. If we wish to mark in our price chart an astrological yearly cycle we will mark it thus:
In the chart above, daily EUR/USD, we notice that we mark the yearly astrological cycles thus: 20132014 20142015 We notice that this cycle debuts as we have said, at the spring equinox. Sometimes this takes place on the 20th of march, as was the case in the year 2013 and 2014 and sometimes on the date of 21 march as will happen in 2015.
In the image above we have added an astrological calendar up to 2020 and we notice the dates that mark the spring equinox. As we have said, an astrological year marks a 360* movement of the Earth around the Sun. As we know, W.D. Gann developed a series of mathematical methods and a series of astronomic and astrologic methods.
For applying the astrological methods, Gann needed on one hand, the zodiac instrument and on the other hand the mathematical placement method of the price in this zodiac instrument. An astrological circle is 360*. In the image below we can see a zodiac circle.
In order to place the price in the zodiac chart, W.D. Gann had to develop a calculus method through which to transform the price in degrees. We know that every day, the Sun makes a movement of approximately 1*. In order to transform the price in degrees we need to make a conversion. In the slide below we have a chart with the conversion factors of degrees.
We see in the chart above that a complete movement cycle, of 360* is subdivided in 8 segments. Now let us take a look and see why we have these levels and how they are determined in our zodiac circle. We were saying earlier that W.D. Gann had a seal that represented a circle ( a 360* cycle) within a square.
As we can see in the image above, the tip of the square is fixed on 20 march, the date of the spring equinox. The square as we know is a geometric form which is a geometric shape which has 4 angles of 90*. If we mark the points where this square touches or zodiac circle perfectly we will notice these things happen at:90/180/270 and 360 or 0*
Add a littLet's take a concrete example from the market and see how we must react in order to transform the price in degrees and we can calculate the support and resistance levels at 90/180/270 and 360*. The first thing we must do is open a blank daily chart and search for the representative maximum or minimum levels. What do we understand from “Representative maximum or minimum levels”?
First of all we understand that they are those specific areas in which the price makes a trend reversal. In other words, we are not interested in the correction areas of a trend but the retracement areas.
If we follow the daily EUR/USD chart we will notice that a relevant Gann pivot, where the price made a top retracement is located at 1.39928.
After we have marked the pivot level we must determine the 360 degrees level. To do this in the following step we will use the following formula : We will find out the square root of the maximal level. Our maximal level was at 1.39928. So calculating would be easier, we move the “.” at 1399.28 The square root of 1399.28 is 37.40. 37.40 2 (360º factor) = 35,40 35,40 x 35,40= 1253,40 This will be our 360º level which we will put in our chart like in the image below.
In the 2nd step we will calculate the 180º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 1, not 2. The square root of 1399.28 is 37.40. 37.40 1 (180º factor) = 36,40 36,40 x 36,40=1324,96 This will be our 180º level which we will put in our chart like in the image below.
In the 3 step we will calculate the 90º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 0,50, not 2. The square root of 1399.28 is 37.40. 37.40 – 0,50 (90º factor) = 36,90 36,90 x 36,90=1361,61
This will be our 90º level which we will put in our chart like in the image below.
In the 4 step we will calculate the 270º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 1,50, not 2. The square root of 1399.28 is 37.40. 37.40 – 1,50 (270º factor) = 35,90 35,90 x 35,90=1288,81 This will be our 90º level which we will put in our chart like in the image below.
In the 5 step we will calculate the 45º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 0,25, not 2. The square root of 1399.28 is 37.40. 37.40 – 0,25 (45º factor) = 37,15 37,15 x 37,15= 1380,12 This will be our 45º level which we will put in our chart like in the image below.
In the 6 step we will calculate the 135º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 0,75, not 2. The square root of 1399.28 is 37.40. 37.40 – 0,75 (135º factor) = 36,65 36,65 x 36,65= 1343,22 This will be our 135º level which we will put in our chart like in the image below.
In the 7 step we will calculate the 225º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 1,25, not 2. The square root of 1399.28 is 37.40. 37.40 – 1,25 (225º factor) = 36,15 36,15 x 36,15= 1306,82 This will be our 225º level which we will put in our chart like in the image below.
In the 8 step we will calculate the 315º level. The method is similar to the one we used on the 360º level. But this time the factor which we will use from our table is 1,75, not 2. The square root of 1399.28 is 37.40. 37.40 – 1,75 (315º factor) = 35,65 35,65 x 35,65= 1270,92 This will be our 315º level which we will put in our chart like in the image below.
We have a few explanations to give which we have not offered through out this course: 1. As we can see, the price movement space of 360* was split in 8 parts. The reason for this is that these segments are called price octaves. If you wish to split these aspects it is done by the same principle as they do it in music: Do, Re, Mi, Fa, Sol, La,Ti, Do. A gamma has eight musical notes. We have also seen that in the case of the Gann pivot (top in our case) we have calculated the square root. Out of the square root we have seen the degree factor (because we find ourselves in a descending movement and we wished to find out the support level). The result of the fall was multiplied with itself and we find out the support level we looked for. In the case in which we find an ascending trend and we wish to calculate the resistance levels, the method is the following:
We mark the major bottom level, which is the Gann pivot level. Out of this price we calculate the square root. We add to the square root the degree factor. We multiply the result with itself and thus we find out the resistance level we have been looking for. As we have seen when we calculate the square root of a price level, in our example 1,39928 the first level we do is move the comma ( our platform now has 4 and 5 decimals). Evidently after we stop calculating and find out the support and resistance result it will be something like:1270,92 . We must not forget to move the comma after the first number. The support level will be 1,27092. In the future course materials we will continue studying the mathematical methods
