Trading on Impulse

In one of Gann's writings.. I don't recall which one.. he said something along the lines that the initial move contains the vibration of a given market. I've described the technique elsewhere in this blog when discussing using the Square of Nine. I'd like to revisit the concept because it's really the simplest thing to do and a simple technique for even the noobiest of Gann students to employ.

My buddy Soso also came to the same conclusion independently and worded it very well (considering English isn't his native tongue at that!) I've quoted this elsewhere in my blog and I think it's worth quoting again:

"If you think about it, to trade, we don't really have to arrive to the vibration factor of time through some calculations, it is also possible and much simpler through simple observation when trend changes the first 2 swings or so can tell us the vibration factor of time." - Soso Beton

So the big question is what is a vibration factor of time? I don't know exactly know what it means to Gann or by Soso, but I do know that how I do it works and works well.

The first thing is to accept the concept that price and time are equivalent the same way that Einstein says space and time are equivalent. Therefore, it doesn't matter if price moves x amount of points or x amount of distance because the units of measurement are unified. There are a lot of ways to unify price-time. Squared charts where each point of price is x minutes/days/bars seems to be the "standard". I have issues with how a lot of Gann software/authors use this approach, but that's a deeper topic I've talked about already and don't feel like talking about again.

But basically I prefer to square the range. Again, there is a post somewhere in my blog showing how to do that.

This first chart is a simple example where I had squared the range to create a Gann Square. Inside the square are a bunch of fan lines for the 1x1, 1x2, etc. diagonals from the 4 corners. For now, ignore those. The lines to pay attention to are the dark purple grid lines. I use these to measure price and time within the square. As you can see, the first impulse move up went 5 squares of price. That move in price will have an echo in time. By counting over 5 squares of time, there was a distinct change in trend almost to the bar. This wasn't quite the top but was pretty darn close. (Gann preferred to divide things by 8ths. However, I divided this square by 9ths in order for price to hit the line flush. The concept would still work for 8ths, but it's easier to count 5 exact squares of 9ths instead of 4 1/2 or 4 1/3 squares. Drawing horizontal and vertical lines through the fan intersections are a way to pick up those 1/2, 1/3, and 1/4's.)

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Up next is an example where the impulse move wasn't substantial.. only 2 squares of 8ths, but the 2 squares of time was dead on for the end of a down move and the start of a major up move.

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And for the third and final installment I present a chart where the moves aren't as orderly, but the technique was still valid in finding a bottom.

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If you study the posted charts, you'll also a lot of other ways in which a Gann square and fan lines can be combined to map out paths for price. Just remember... this isn't about predicting the future. It's about knowing when the future has arrived and risking accordingly. Happy Trading.

Edit - If the charts aren't showing up, here are the links:

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