The Gann Fan Indicator

The Gann Fan Indicator

The Gann Fan Indicator

The Gann Fan indicator is one of several Gann tools any trader can find in most of the trading platforms available nowadays. Named after W. H. Gann, a great trader, this indicator has a very specific principle behind it which we will be exploring in the rest of this article. The key concept used when trading with this tool are angles and they help you determine dynamic support and resistance levels and the perfect timing for buying call and put options, depending on the way the market is behaving. Keep reading and learn how to use this to increase the success rate of your trades.

The Gann Fan Indicator | Nine lines

The Gann Fan indicator is made out of nine diagonal lines. Each of these lines is set at a certain angle and these angles represent the ratio between time and price movements. The ideal balance is struck at 45 degrees. The reason why Gann based his theory on angles is because of Market Geometry and the fact that the events that happen in the market are cyclical. This means there is certain uniformity to everything you experience while trading. All you have to do with this indicator, essentially, is to find a point at which you want to place it and find it in the tool list of your trading platform. The fan will spread from the point you choose, so it is recommended that you pick a high or a low (depending on the market) for that.

The Gann Fan Indicator | A simple principle

So how does the Gann Fan indicator work? Well, it’s fairly simple. The lines that originate from the starting point you choose represent support and resistance levels. Once the price of your asset breaks one of these lines, the following one takes over the role of support/resistance level (again, depending on the type of market you’re dealing with). This means that you know exactly what the next price corridor is once a certain level is broken, which allows you to trade continuously, without having to recalibrate your predictions. Depending on the market activity, the price will always be at certain angles, and you will always know what its levels are. In other words, no matter what happens, you will immediately know what to expect next.  

The Gann Fan Indicator | Conclusion

The Gann Fan indicator can be an extremely useful trading tool, but you have to be familiar with the concepts of support and resistance first if you want to use it efficiently. It allows you to always have a clear idea of what to expect next and not to waste any time recalculating, no matter what kind of market is in front of you and how much trading is going on. However, if you think you need more tips before you can tackle this subject, remember that everything you need to know can be found right here on our website.

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Author: Ben Prescott
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