Nice range, eh? I thought I'd give an example of squaring a range that doesn't require any fancy Gann square. This method is simply taking a range or price and counting out x amount of bars. If it's a lot of bars, I'll also mark off divisions. (Essentially recreating the Gann square time levels.) I'll count of bars from the start and end of the range. In the chart below I measured off a range of 276 pips. The reason I chose that range is because it was the first move out of the double top. Double tops/bottoms can be tricky. This time it happened to work out from the first top and I haven't worked out the second one yet.
After marking off the range of 276 pips, I then counted out 276 bars. Price fell hard right down to that time marker. A bone fide go long signal. So I waited for the bar to close and went long. Interestingly enough, 276 x 2 = 552 and price had gone 547 pips from the first stop. A near perfect time-price squaring of 276 bars of time and 276 x 2 pips.
Is this a major turn? I don't know, but at worst it's a good counter trend trade for a few pips. And that's what it's all about in the end... forecasting areas of possible/probable reaction, evaluating the trend, and then risking accordingly. In this case since I'm going against the trend, the trade amount is small with a tight stop. As of this writing, it's up 50 pips. Not too shabby.
5 comments:
Hi,
Am I on the right way of thinking ?
http://i44.tinypic.com/4ihbmf.jpg
Thanks,
Robert
Very good. Don't limit yourself to just a straight up range of price. You can also use divisions of the number or even portions of the number if it's large. Like maybe the last 2 digits. (Gann did that with price.)
Square rooting the number is a good method as well. There are all sorts of things to try and you'll be amazed at how they all work.
Hi Chad,
2 questions for you sir:
1. For squaring of the range, do you find that counting the number of bars from the start of the range gets better results or counting the number of bars at the end of the range?
2. I noticed that when you draw the Gann Square like in this picture
http://img145.imageshack.us/i/tp03jan05ej9.gif/
you start drawing the square from the end of the range and not the start.
Will there be a difference in results if i draw it from the start of the range?
I ask this because your picture http://img145.imageshack.us/i/tp03jan05ej9.gif/ is essentially squaring of the range, but theoratically when you square the range, you are supposed to start from the start of the range because you are essentially drawing a 1x1 square in price & time.
Thanks in advance,
Linton
By the way Chad,
Thanks for teaching all your stuff, especially the 8 divisions of price and time.
It caught the highs and Lows of the the S&P 500. See attached.
http://i51.tinypic.com/20k9gkk.jpg
This square was drawn at the end of the range.
Linton, it doesn't really matter where you start forecasting the range from. Because it's all harmonic, as long as you start from a significant high/low, you should be in sync. Certain spots resonate better than others, but it's tough to know which ones will play out better than others until things unfold or you combine other techniques/analysis and find confluence.
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