شرح مروحة جان في ميتاتريدر
The Gann fan is a fundamental drawing tool in the MetaTrader platform for trading financial markets. You may have encountered it and even tried using it, but lacked a sufficient understanding to interpret it or incorporate it into your trading strategy.
In this article we will explain Gann's fan, clarify Gann's fan trading strategy, how to draw it, and more.
Let's begin then and learn a new lesson in trading financial markets via MetaTrader!
Jan's Fan Explained
Gann's fan is a technical analysis tool developed by William Delbert Gann, who believed that markets move according to geometric laws and in a cyclical and predictable manner on price charts.
Gann's fans consist of nine diagonal lines on a trading chart to indicate potential support and resistance levels. These lines are drawn at an angle to peaks and troughs, dividing time and price units into proportional sections to predict future support and resistance levels, peaks and troughs, and trend lines, as mentioned.
Gann considered the angle of 45 to be the main angle for Gann fans; however, lines are drawn at angles of 82.5, 75, 71.25, 63.75, 26.25, 18.75, 15, and 7.5 degrees as well.
The fundamental principle of Gann's fan is that when prices break through one angle, they will move towards the next angle. As we learned previously, the 45-degree angle is the primary angle and represents one unit of price movement per unit of time. When the price remains above this angle, the trend is considered upward towards the next angle, and when it falls below it, the trend is considered downward towards the next angle.
How to use Gann fans in trading
Diagonal lines are drawn from the peak or trough at a 45-degree angle to determine the strength of the main trend. You should draw Gann fan lines from the highest peak or lowest trough of a center line at a 45-degree angle extending from the identified reversal level, as in the following example:
Source: Metatrader5 support - Capture date: June 8, 2021
When the price continues to trade within the range of this Gann fan angle, either below or above the key 45-degree angle, the trend is considered to be continuing upward or downward. A breakout from one side to the other suggests a potential reversal of the previous trend.
We will discuss some trading settings on these lines in the following paragraphs, so let's continue reading now and learn how to draw a Gann fan.
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How to draw Jan fans
The Gann fan is available on most trading platforms without needing to be downloaded and installed. You can draw a Gann fan on the MetaTrader platform by following these steps:
From the Insert menu, you need to select Objects, then Gann, and then select Gann Fan from the list as shown in the following image:
Source: MetaTrader platform - USDJPY - 4-hour chart - Data range: June 10, 2021 to June 24, 2021, accessed on June 24, 2021 at 2:15 PM CET. Please note: Past performance is not a reliable indicator of future results.
In an upward trend, a Gann fan is drawn from the last low from which the trend started towards the last high, and the lines are formed based on it as in the following chart:
Source: MetaTrader platform - EURUSD - Daily chart - Data range: August 19, 2020 to June 9, 2021, accessed on June 24, 2021 at 2:15 PM CET. Please note: Past performance is not a reliable indicator of future results.
Gann Lines Trading Strategy
The strategy for trading Gann lines involves understanding the price movements between them, which are:
- The main line is 1:1 at a 45-degree angle, with 4 lines above it and 4 other lines below it.
- Line 2:1 (26.5º)
- Line 3:1 (18.75º)
- Line 4:1 (15º)
- Line 8:1 (7.1º)
- Line 1:8 (82.5º)
- Line 1:4 (75º)
- Line 1:3 (71.25º)
- Line 1:2 (65.75º)
The main line represents the main diagonal support and resistance point in the setup, where continued price movement above it is considered an upward trend, while price movement below it is considered a downward trend.
Similarly, in reversals, a reversal in price movement occurs when prices move from the bottom of line 1:! to the top of it in a downward movement and vice versa in the same way in an upward movement.
However, we must confirm the reversal and not consider the reversal to be true after the first candle closes below or above the 1:1 line, but rather wait for another candle to close. To confirm the trend and for more conservative trading, you can open trades when the price breaks through the 2:1 or 1:2 line.
Setting a stop-loss
As with any trading strategy , the success rate is never 100%.
Extreme volatility and sudden economic events can alter price movements, potentially rendering your forecasts, technical analysis , and trading strategy ineffective. Therefore, it's crucial to always remember to use a robust risk management plan that can safeguard your account during times of crisis and sudden market changes.
When trading the Gann fan strategy, placing a stop-loss order is essential and can be done in the following two ways:
- When trading a breakout, you can place your stop loss above the last high or below the last low on the chart.
- When trading Gann line bounces, you can place a stop loss above/below the last swing established at the time of the bounce, depending on its direction.
Determining the profit-taking level
When exiting trades, you should also set your objectives for doing so. In the case of Gann fan trading, it is important to have a plan for that as well.
When trading breakouts in buy trades:
The first target is determined at the next line of Gann's fan, i.e., in buy trades above the 1:1 line you can take profits at the 2:1 line and the next target is the 3:1 line and so on, taking into account the factors affecting price movement and other technical indicator signals.
When trading breakouts in sell positions:
In the same way, the first target is determined at the next line after the price breaks through the Gann fan. That is, in sell trades, when the 1:1 line is broken, you can take profits at the 1:2 line, and the next target is the 1:3 line, and so on, taking into account the factors affecting price movement and the signals of other technical indicators, as we mentioned.
Disadvantages of Jan Fan
One of the disadvantages of using a Gann fan is that the lines expand continuously over time, and the distance between the lines increases significantly at a certain point.
This would make it difficult for the trader to determine entry and exit points and place stop-loss and take-profit orders, as the price would need to move a considerable distance on the price chart to reach the next level of Gann's fan lines.
Therefore, it is always advisable to use Gann's fan in conjunction with other technical indicators to create a more accurate and comprehensive trading strategy.
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This article does not contain, and should not be construed as containing, investment advice, investment recommendations, or an offer or solicitation for any transactions in financial instruments. Please note that this prior analysis is not indicative of current or future performance, as conditions may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks involved.
