One of the most overlooked but actually useful technical tools in forex trading is Gann Grid. You can apply it directly from MetaTrader's tool and use it easily to analyze price movements.
Most of you maybe don't know about Gann Grid yet. Gann Grid is some kind of latticework we see the first time we open Meta Trader 4 on the chart screen, where it's seen as the background plaids between the meeting of vertical and horizontal line. The lines are aligned diagonally
What is the function of Gann Grid?
Gann Grid shows trends which are formed by 45-degree angle (Gann Lines Law). According to Gann's concepts, a line at 45 degree slope shows a long term trend line (whether up or down). When the price above the line is up, market maintains bull/uptrend direction and when the price is below the line, it shows that market is on a bear /downtrend.
The intersection of Gann's point usually signals changes on the main trend. When the price is going down to this line during an uptrend, time and price seeks their balance. The next intersection of Gann's line is the proof that they have found their balance and the possibility that there's a change of trend.
How to Use Gann Grid
In your trading platform display, click on Gann Grid at insert menu.
After you click on it, the screen will appear like this:
Then you can double click on the end of Gann's line, it appears 3 points as shown in the picture above. Afterward, there will appear three points.
The three points have certain functions as follows:
- Place the initial position.
- Move the position of Gann Grid itself.
- Change the angle as well as the slope of Gann Grid.
One thing you need to know that the end of the angle has to lead to an empty position in the chart. How big is the angle? Well, it's up to you. With practice, you will understand how to tailor the Grid. The next stage is drawing horizontal line between the corners of the lozenges, as shown in the picture below :
The function of the horizontal line is as a map from the movement of market break, sideways, and reversal. Next we have to filter the unnecessary signals (fake signal) by using channel or trendline. The channel will determine when we should make open position.
I tried to make an example with the white-dotted trendline. Draw the trendline from the top to the last trend, as shown in the picture below :
Hopefully this article on Gann Grid can give you insights in finding balance within the current market movement by filtering fake signals using the forex trend line. However, Gann Grid is best used with other tools. In addition, it is important to ensure that you could work the Grid before applying it in the market, as it is quite difficult to master.