Who was WD Gann? And who was John Galt?
This shows step-by step how to draw Gann lines. This example uses the Nasdaq Emini contract and is based upon morning settings on a one-minute chart using the first 13-minute period, as per RAL. However you can use the same methods to set Gann angles over any time period, starting at any point.
For an easy way to draw Gann lines on Erlangerquote (formerly Ravenquote) (takes only a minute), click here.
The basic method is that you calculate the High and the Low over your chosen time frame - in this case, the first 13 minutes of the trading day. That range becomes the "Box size" of the "Y" axis. In this case, the High was 1606 and the Low was 1583, so the "Y" size (vertical) is 23. Because time is your horizontal "X" axis, you choose one "Box size" as 23 minutes. The calculator shows the time markings for the first 11 boxes. You can also download the calculator by clicking on the link below. Now let's get started.
Excel Spreadsheet with Time ("Y" axis) calculations for Gann Angles.
This shows the high and low of the first 13 minute period. Draw horizontal lines to show these, as shown below. In Erlangerquote (formerly Ravenquote), use the "Extended Line" tool which extends the lines in both directions.
Now you need to draw the vertical lines of the first box. Because the box size is 23 points "high", it is also 23 minutes "wide." Because the market opens at 9:30, the first box is drawn at 9:53, as shown below:
Now draw your first Gann Line, a simple 1x1 or 40 degree angle. In Raven, use the "Ray" tool which extends the line in one direction. Start the line at the top of the box, and extend it down to the lower right hand corner of the box. The ray extends beyond that, creating the first Gann angle.
Now draw the next box to the right. This is simply a further 23 minutes, i.e. 9:53 + 23 = 10:16. Then you can draw a 1 x 2 line down, originating in the upper left hand corner of the first box, and ending in the lower right hand corner of the second box, as shown below. The line extends onward, but you anchored it at the lower right hand corner of the second box. Note how prices followed this line down, then left the line at the end of the second box.
Now draw Gann Lines upward from the same first box, this time originating in the Lower Left Hand Corner. Draw your first 1 x 1 line up through the Top Right of the First Box, and your 1 x 2 line through the Top Right of the Second Box, as shown below. Note how prices followed the 1 x 1 line up, and reversed at the end of the second box.
You can also extend boxes downward, every 23 points, as shown below. This allows you to draw a 2 x 1 Gann Line downward, intersecting with the Box that you drew. Note how prices at the open followed this 2 x 1 line down and reversed at the half-box.
This is a summary of the lines you have drawn. The blue labels show where you anchored each line.
As time progresses, you can continue to draw lines and time boxes. Note how each line acts as support and resistance and, once prices move from one line to the next, they then tend to follow the slope of that line. Note also how often times reversals occur at the vertical box lines (time), or at half boxes.
Note also that you can draw the horizontal box point lines all at once using the Retracement Tool on Qcharts or Erlangerquote (formerly Ravenquote). The setup is shown here:
Continuing, here are two illustrations of using the boxes for targets. Once you see a possible 1-2-3 reversal setting up (see numbers, in the chart below) then you can calculate your targets for wave3 and possibly wave 5, using either the Gann Lines and Boxes (first chart below), or a Fibonacci-based wave target (second chart below).
