Gann’s Method Geometry of Making Profit by Mr Soumya Ranjan PandaGann’s Method 3rd Edition November 2011 “ Tcan only say that [Link] method is one of the mathematical wonders. If you belief in the Vaastu geometry for designing your home or office then equally you must accept the Gann’ method for predicting the stock price“ -RanjanGann’s Method Disclaimer M/s Smart Finance is an independent publisher of “Gann’s Method”. Examples given in the book are for the education purpose only. Opinions or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be considered as an offer to buy or sell security of any kind. The author, M/s Smart Finance does not assume any responsibility or liability resulting from the use of such information, judgements, formulas or opinions for trading or investment purpose. M/s Smart Finance #32/34, Mangalinagar Ist street, Arumbakkam, Chennai-600106. ph: 9840348971 [Link]Gann’s Method “ Gann’s study has deeply inspired me to think beyond the cosmos. I think the entire universe is a perfect [Link] the planets in the universe are in their perfect trajectory since million and billion years . Hence it is nothing wrong in using the geometry for price time forecasting ” -RanjanGann’s Method Preface This book is having 8 chapters starting with the basic Gan wheel to the advanced Gann tools. The chapter -1 contains the basic gann wheel explana- tion , the number and the degree relation etc. From 2™ chapter to 5" chapter I have discussed the dif- ferent relations of price, time and degree. In that course also you will find various interesting tricks and techniques to predict a trade . Chapter-7 has all the acceptable Gann [Link] - 8 explains 34 intraday trading techniques. The complete understanding of this book will surely help you in making an accurate trade decision. -RanjanGann’s Method “ For me Gann was one of the best mathemati- cians of his time and has done a great work which is beyond the thought process of his contempo- rary mathematicians” -RanjanGann’s Method Acknowledgement This work is one of my most important achieve- ments in life . I convey my sincere thanks to all my well wishers, friends and clients who have supported me in this course of development. My special thanks to my wife who is the 1* reader of this entire manuscript before it has gone to press for publishing. Her continuous support and encouragement made me to finish this work for the well being of the society. I have made an attempt to present the entire concept in the simplest manner but as a human being me too have some limitations in thought process . Your feed back is highly valuable to bring the modifications in my future editions. Soumya Ranjan PandaGann’s Method “Putting theory into practice is the best job which one can do. In this book I have made an attempt todoso” -RanjanGann’s Method CONTENTS, Page No Chapter 1: Introduction to Gann’s Method 10 Chapter 2: Squaring Price With Price 25 Chapter 3: Current Price and Past Time 37 Chapter 4: Price Range and Time 49 Chapter 5: Price Range and Time In Current Trend 67 Chapter 6: Gann’s angle and dynamic principles 91 Chapter 7: Gann Tools and Technique 17 Chapter 8 : 34 Intraday Trading Techniques 131Gann’s Method Introduction to Gann’s Method Chapter 1 “ p Introduction to Gann’s Method 1.1 Introduction 1.2 Gann wheel 1.3 Gann wheel analysis 1.4 Degree to Price relation 1.5 Constructing Gann’s channel 10Gann’s Method Introduction to Gann’s Method Chapter 1 Introduction to Gann’s method 1.1 Introduction : William. D. Gann was one of the most successful traders of his time. Born in Lufkin, Texas on June 6, 1878 A.D, started commodity trading and stock market trading in 1902, and moved to New York City in 1908, opened his own broking firm, [Link] & Co., he died on June 14, 1955 at Miami,Florida. His use of Natural Law and geometric proportions based on the circle, square, and triangle in the Stock and Commodities markets are effective today as they were 50 years ago. His techniques work in any market. His methods are seen to be a bit unusual and even mystical to many traders, but they have proven themselves time and again over the past century. 11Gann’s Method Introduction to Gann’s Method The key point of his work is that he establishes the relation between the price and time after converting it into degrees. Neither I am a Gann expert nor I have attended any seminar conducted by the Gann experts. I just love his mathematical works and its application in forecasting the future price and time. Many Gann experts use the astrology with his work. Few s/w also available to predict the future price with respect to astrology using Gann method but I never knew those methods. What ever I am going to discuss in this chapter is purely a mathematical one and can be used with the help of paper and pencil. This book will start with the Gann wheel and will end at various squaring techniques. Technique for taking weekly, monthly trade decision are also included. I found that it is very much useful for taking the intraday trading decision. Hence there is nothing harm in using this. 12Gann’s Method Introduction to Gann’s Method 1.2 Though many Gann legends argue that this is the only and the only one way to predict the future price ofa stock, but I do not agree with them. It is just a method but not a full proof technique to predict the future. If you ask me is there any full proof method to predict the future stock price. My answer will be - ‘No’. Gann wheel: The Gann wheel is the numerical arrangement of numbers from | to 81 ina spiral manner. It is a table consisting of 9 rows and 9 columns. Many s/w program support 13X13 even more. The picture given in the next page is a Gann’s square of 9 wheel. The number one is placed in the centre then one circle is completed by placing 2 to its left, 3 on the top of 2, 4 on the right of 3, 5 on the right of 4, 6 below5, 7 below 6, 8 on left of 7, 9 on left of 8. One spiral is completed at this position. 13Gann’s Method Introduction to Gann’s Method Gann Square of 9 Table 57 [58 | 59 | 60 | 61 | 62 | 63 | 64 | 65 56 | 31 | 32 | 33 | 34 | 35 | 36 | 37 | 66 55 | 30 | 13 | 14 | 15 | 16 | 17 | 38 | 67 sa [29 | 12 | 3 | 4 | 5 | 18 | 39 | 68 53 | 28 | 11] 2 (1) 6 | 19 | 40 | 69 52 | 27 | 10] 9 | 8 | 7 | 20 | 41 | 70 51 | 26 | 25 | 24 | 23 | 22 | 21 | 42 | 71 50 | 49 | 48 | 47 | 46 | 45 | 44 | 43 | 72 [| 81_| 80 | 79 | 78 | 77 | 76 | 75 | 74 | 73 The second spiral starts from 10. Like this all the 81 members are arranged in the 9X9 table. The above table is the basic arrangement of numbers in a 9 X 9 table. 14Gann’s Method Introduction to Gann’s Method Now go to little complex nature of this 9X9 table. Imagine this table placed inside a circle whose centre is at 1. Then the typical Gann wheel will look like the below picture as in section 1.3. Now don’t break your head to explore the wheel because we will explain it in detail in later section. 1.3. Gann wheel analysis: Now little bit concentrate on the Gann’s 9X9 table. If you imagine a circle having centre at 1 and the squared table is inside the circle. From Gann wheel imagine a circle having element 15 in its circumference and centred at 1. If the starting is the 0 degree then the number 45 degrees from 15 will be 17, the number 19 is 90 degrees from 15, 23 is 180 degrees up from 15 like wise 34 is 360 degrees up from 15. 15Gann’s Method Introduction to Gann’s Method cee eee rene elem eo PeRE Aaa eee eee eerie etal ee ae een een ee See eae ial Ltewkeneduasewcb[ewenaen yanGann’s Method Introduction to Gann’s Method 1.4 Degree to Price relation : Degree to factor table: Degree Factor 360 degree 2 315 degree 1.75 270 degree 1.5 225 degree 1.25 180 degree 1 135 degree 0.75 90 degree 0.50 45 degree 0.25 22.5 degree 0.125 Why these factors? If you will imagine this movement as spiral then the arc length created by each one degree movement is almost 5.55 X 10° unit assuming the diameter of the spiral starting with 1. Based on this concept the factors are being derived. 17Gann’s Method Introduction to Gann’s Method Now see the number relation with the factors. Example 1: Which number (say N) is 180° down from number 15? N=( \15 -1)? = 8.25. If you will neglect the decimal part then the integer part will be 8. If you observe the Gann table then the number is exactly what we have found out through the calculation. Example 2: What number (N) is 180° up from number 34? N= (\34 +1)? =46.66. If you will neglect the decimal part then the number we will get is 46. It is exactly what we have found in Gann table. Gann specifies that 45°, 90°, 180°, 360° are the potential resistance and support for a particular stock price. 18Gann’s Method Introduction to Gann’s Method Example 3: On 30" August 2007 SBI, OHLC data are as follows (1570, 1618, 1570, and 1596). Based on Gann’s degree to price relation how to generate the most likely support and resistances for the next trading session? Before applying the Gann technique let us analyse the data for knowing the direction. Simple techniques to analyse these data points. Take the 5 days moving average MA (5), 10 days moving average MA (10) and 30 days moving average prices MA (30). For our example MA (5) = Rs 1570/-, MA (10) = Rs 1520/-, MA (30) = Rs 1571/-. My closing price is well above 5 days moving average. Hence in short term I will expect a positive move in the script. Also it is a coincident that my low is exactly equal to the MA (5), If not also no problem. 19Gann’s Method Introduction to Gann’s Method Now I will start my calculation from the day’s low of 1570. [DEGREE [uP [Bown] [43] 1589.074) 1550.25 [90] 1609.873] 1530.627| [__180 1650.246] 1491.754| L__360] 1732.493] 1415.507] Above table represents that 1589 is 45° up from 1570 and 1550 is 45°down from 1570. My closing is well above the 45° up price. Hence my next upside resistances will be 1609- 1650-1732 support 1589-1550-1530. Gann trader follows this rule as to enter a long trade once the price crosses 45° up Jrom the days low, keeping the stop loss at 45° down from the days low. The target will be above 90° -135°- 180° data points. 20Gann’s Method Introduction to Gann’s Method Ts this method useful for intraday? It is one of the best methods for intraday. You need to have 2 minutes or 5 minutes [Link] the hourly high or low point. The starting point will be 22.5° or multiple of it. We have many interesting methods which are explored in subsequent chapters. Hence read all the techniques before applying it into practice. 21Gann’s Method Introduction to Gann’s Method 1.5 Constructing Gann’s channel: Step 1: Consider the most significant low. Step2: Compute the 45 degree, 90 degree, 180 degree, 360 degree, 540 degree, 720 degree price up from the low. Step 3: Draw the horizontal lines at those prices. Step 4: Take the square root of low and adjust it to an integer value. Say it as B. Sept 5: Draw the vertical lines by counting the B number of days from the low. Continue this process for 4 to 5 steps. Step 6: Draw the channels by joining the intersections, points of the horizontal and vertical grids. 22Gann’s Method Introduction to Gann’s Method Example : Construct a Gann channel us- ing the swing low of SBI ? Do this as your 1* assignment. 23Gann’s Method Introduction to Gann’s Method 24Gann’s Method Squaring Price with Price Chapter 2 Squaring Price with Price 2.1 Introduction 2.2. Squaring price with price 2.3, Converting price to degree 2.4 Trade decision using price squaring action 25Gann’s Method Squaring Price with Price 26Gann’s Method ‘Squaring Price with Price Chapter 2 Squaring Price with Price 2.1 Introduction: Gann always stressed upon three things in order to predict the future price movement of a stock or commodity. They are 1. Price, 2. Time 3. Pattern. He establishes the geometrical relation between the price and time for predicting the future movement. If you see Elliot’s wave theory, Gann theory and Fibonacci theory, you will find one common thing that all these theories are based on the harmonic nature of price. This is a truth in the capital market. 2.2 Squaring price with price: In chapter-1 I have discussed how the price is related to each other in a Gann’s square of 27Gann’s Method Squaring Price with Price nine table. Before going deep into the subject we should understand the Gann square. Gann always specified that price, time and pattern have a strong relation with the geometrical figures like circle, triangle, rectangle and hexagon. He also proved it that the prices falling in the edge, diameter of these objects are the key resistances and supports of the current price movement. What is a Gann square? The rectangular spiral formed by placing a number at the centre of the object is called a Gann square. In chapter-1 Gann wheel picture the four dimensional body inside the circle is called a Gann square. The horizontal line and the vertical line containing the Gann squares centre number are called cardinal. 28Gann’s Method ‘Squaring Price with Price Genn Squere a 5 5 a Gl a 4 a 6H 3| 2 3 wu oH 3 0 13| 4 15 16 7| 3 G7 A a 2a 4 9 dw 2 | ace | 4 a 2 to 9 8 7 al 4 7 S| 2 | a4 zal 22] 21] ad 7 Do a 4 o 4 a a 7 a] a aa mM me A 7 7a Construction of the Gann square is quite easy. It requires three inputs that is the starting price, increments and the factor. If you see the above Gann square table the starting price is 1, increment is 1, and the computing factor is also 1. Many working model is available on line to construct Gann wheel. 29Gann’s Method Squaring Price with Price What is Gann angle? Gann has specified 11 different angle combinations as follows: 1 X 16 = 86.25 degrees 1 X 8 = 82.5 degrees 1X 4=75.0 degrees 1X 3=71.25 degrees 1 X 2 = 63.75 degrees 1X 1=45.0 degrees 2X 1= 26.25 degrees 3X 1= 18.75 degrees 4X 1=15.0 degrees 8 X 1 =7.5 degrees 16 X 1 = 3.75 degrees 1X1 angle is translated as one unit rise in price with one unit rise in [Link] Gann does not specify any scale on 30Gann’s Method ‘Squaring Price with Price how to place price and time in the X and Y axis to derive these degree but Robert W. Colbyin his book “the Encyclopedia of Technical Market Indicators” Second Edition, McGraw-Hill Publishing, 2003 mentioned that one unit of price will be taken as 1/16" of an inch and one week of time period will be taken as 1/16" of an inch to draw ganns chart. But this is a standard followed in all the s/w having the gann tools. In very simple words, ‘Gann angles are the slopes of the line made with x axis if you will place prices and time in the order of 1X1,1X2,1X8 and so on.” 2.3 Converting price to degree: Formula: - Mod ((sqrt(N)*180)-225,360) This excel formula will convert any number of your choice into degrees. Numbers having same degree line square with each other and considered as the major support and resistance area. 31Gann’s Method Squaring Price with Price Example: Below mentioned are the 4 weeks OHLC (open, high, low, and close) data of SBI. Explain price squaring relation? [Date [Open [Fgh [low [Grose [Di [O02 [Ds [Da DOrDO 15244 _16r4e| tea) THrECE| =eA_TeH 3.07200] 162 1635.6 ToAO ce] 163.85] Teal 21 a ores er rg es ot [02-08-2007] 1550] tee} 1544] T5008] 21. 100} 7.88) 119] (osce-2007] 1620] Tesa.d] toro) 7695 75] tq] 251 167] 214 fosce-2n07] ter 160 1580] 681.9] 157] A) BO. 317] [07-08-2007] eal 1725.9 1672.55] 1682 4] 52.9 317] soemof Ta Tadd et at oe [08-06-2007[ 1727] tr2el_—‘1644|_ 1650.6] 55.9] 57. 70-06-2007] 1601.55) T6149] Tore 2] TooK. ce] Tae 1 73.062007] 1620] 1620] tex5 1] ToTaCe| Teoh aco] Taal ts 74082007] 1631636] 1604] 16155] Ziq] 216) at Ei 76082007] 1550] 1667. Torr 25) 0.88 21.6] 3. Tras z007| ei 16437] [Link]] _reIa2] Zool 7.1] 175) 311 [20-08-2007] 1575] 1500) 154006) 154065] 76.5] 112] 5h 2 [zi-08-2007] 1565] 1566 1451.25 1463-5] 66.) Soa] 162) 16 ea] eee tot val Hes 2a 2.082007] 1480] _14009. 1407} 1414. 75)_220) zat e [aoe 2007] 148 1472] 1A] 1406.06] Tor] 203} 60.9 17 rzroe-znor] ier] 1663] 1406] 1558 75] 10] 51 ay 32Gann’s Method ‘Squaring Price with Price In the above table I have converted all OHLC data to degree format by using the above formula. Now consider 27" August closing price 1554.75 which is 32 degree. All closing prices having 32 degree or multiple of 32 degree will square with this price. You can grant error up to 7 degrees. Hence 23" August 07 price 1414.75, 13" August 07 price 1613 squares with the prices and act as the support and resistances of the next move. 2.4 Trade decision using price squaring action Whatever I have discussed earlier is with respect to the past event. Now see the present event. Gann traders believe that the prices 45 degree, 90 degree, 180 degrees are important for trade decision. Hence price above or below from the present price by 45 degree, 90 degree, 180 degree factors will act as a point of trade decision. Squaring angles up from the computed angle 33Gann’s Method Squaring Price with Price (i.e. in our example 32 degree) is calculated by adding 45, 90,180 to the computed angle and vice versa. Below mentioned table displays the squaring angle of 32 degree and its price conversion using square root formula (explained in chapter 1). Angles up from 32_|Angle factors |price 71 0.43 1589 122 0.68 1609 212 1.18 1649 Angles down from 32 13 0.072 1549 58 0.32 1529 148 0.82 1491 With respect to the closing price of 27" August 07 i.e. 1554.75 the next level of resistances are 1589, 1609, 1649 and support 1549, 1529, 1491. 34Gann’s Method ‘Squaring Price with Price Below mentioned data is the price data from 27" August to 3 September 07. [Date (Open [High [Low [Close 2r-08-2007| tio] 1563] 1480) 1554.75} 26-08-2007| 1575] 1575] 1541] 1550.6} 29-08-2007] 1604.1] 1585] 1504.1] 1573.85} 30-08-2007| 1584] 1604.7] 1559] 1570.85} 31-08-2007| 1570] 1616] 1570] 1600.35} 03-09-2007| tera] 1623] 1602.35] 1606.65} On 28" August if I have to initiate a trade in the opening session using this principle then I will observe the opening price which is well below the 1* level of resistance 1589. This is also the price falling below 45 degree line. it is a bearish signal. I will enter a sell order keeping my stop loss at 90 degree up price i.e. 1609. my initial target will be 45 degree down price from 32 degree price point that is 1549. If you observe the 28" day data then I am very much in the target. 35Gann’s Method Squaring Price with Price This method is not discussed by any gann expert. Based on gann principle, taking the previous day data I have innovated this static technique for day traders. This is one of the best static techniques for day traders. I never claim that it is a full proof technique but it works well in an unbiased and less volatile market. You can experiment this with 60 degree and its multiples also. 36Gann’s Method Current Price and Past Time Chapter 3 Current Price and Past Time 3.1 Introduction 3.2 Squaring current price with past time 3.3 Conclusion 37Gann’s Method Current Price and Past Time 38Gann’s Method Current Price and Past Time Chapter 3 Current Price And Past Time 3.1 Introduction: In the earlier two chapters we have discussed the price squaring action. Now from this chapter onwards we will discuss the price and time squaring actions. Price and time squares with each other in five different ways. From chapter 3 to chapter 7 we will discuss one by one. Each chapter will tell you how to use these techniques. Always the price action is not a silent activity. For example if you consider SBI, on the 2™ week of August 07 it made high of Rs1700/- plus and in the following week it touches a low of Rs1400/ - plus. In the month of September 07 when it is trading at Rs1600/- plus, what kind of decision I shall take? This decision process will be discussed in this chapter using Gann’s square of nine principles. 39Gann’s Method Current Price and Past Time 3.2 Squaring current price with past time In chapter-2, I have explained how to convert the price to degree. In this chapter I will give a relation between time and degree. Go back to your elementary mathematics, years back when you were in your upper primary standard your teacher would have taught you a relation that is 1 degree is 4 minutes. If you will convert your number of trading days into the degree format then you need to convert it to hour then minute format. Once it is converted to degree you need to divide it by 360 to find out the number of rotations you have taken from one price change to other price change. Example 1:SBI 8" August high was 1734.8, 23" August low was Rs 1407/- and current price is Rs1610/- on 4" September. What will be my decision based on 40Gann’s Method Current Price and Past Time price time relation? From high to low it has taken 11 trading days and 16 calendar days. This is, 24 X 11 X 60 = 15840 minutes. If you divide it by 4 then it will be 3960 degrees. One circle rotation is 360 degree. These 11 rotations will complete 3960 degrees. This I have explained to understand the degree and time relation. But this calculation will always result the number of days as the minutes can be represented as days. So straight way you can take the number of days. Once it is converted to the number of rotations we will treat the days as a mere number nothing other than that. Convert that number to degree using MOD function as discussed in the chapter 2. The number 11 is 12 degree. Its 0, 45, 90,180 and 270 degree offsets are 12, 57,102,192,282. Converting 16 calendar days to degrees we get 135 degrees. 41Gann’s Method Current Price and Past Time Now convert the low 1407 to degree which is 47 degree. The 0, 90,180, 270 degree of set of the price are 47,137,257, 317. From this I conclude the 16 calendar days is squaring with the low 1407 at 90 degree offset ie. 47+90=137, which is two degree more as compared to the calender days (degree conversion) . Now the Gann square prices will be 90 degree addition starting from 137 and time scale will be 16 period counts starting from 23" August. Angles up from 47 | Angle factors 137 [0.761 1465 257 [1.428 1516 317 [1.761 1542 407 [2.261 1582 497 [2.761 1622 587 [3.261 1662 42Gann’s Method Current Price and Past Time The point at which the current price squares with the time, the current trend ends there. In our case the price 1465 squares with the time 16 calendar days. This is a confirmation signal that the down trend ends once the price crosses 1465. After this cross over if the upward march is continuing the script will take next 16 trading sessions to touch its all time high to complete one cycle of harmonic motion. The price square is completed on the day following the 23" August low. On 12 days from the 24" August the script is at Rs 1610 /-. Hence the price is in between 407 and 497 (4th and Sth row in the table). Therefore buying is advisable here by keeping the stop loss at 1582 and target 1662 to 1740 in next 4 calendar days. Though many books have told about how price in current trend squares with the time in prior trend but they do not explain 43Gann’s Method Current Price and Past Time which price will be considered as a change of trend indicator. Very precisely Gann has _ specified that when price and time will square the pre-existing trend will die and new trend will start. In our example of SBI the down trend will end when the price cross above 1465. How much time it will take to cross this price? The price Rs 1465/- is almost in the 15 % retracement from the high Rs1734.8. The 15% retracement of 16 calendar days is 2.4 days, round it to 2 days. So we conclude that by using Gann price in current trend with time in prior trend if the stock moves above 1465 in next two calendar days then this should be taken as a time and price squaring action. 44Gann’s Method Current Price and Past Time This price will be considered as the strong support for the forthcoming trend. If this cycle continues then the stock will touch its high in the coming 14 days. This does not hold good always. If neither the trading days nor the calendar days in the prior trend square with the price in current trend then you need to drop this method and see for other methods discussed in other chapters. So far we have been talking about the price, time and the trend but not about volume. In many Gann studies I did not find the importance of volume. May be the reason would be Gann was a commodity trader and given more importance to price, time and trend. Through regular mind bugging exercises to establish a perfect correlation of volume with the Gann’s method, I found out when the squaring of price and time happens with 45Gann’s Method Current Price and Past Time rise in 10 days average trading volume the prediction comes true or else it is just a false signal. For better practice of this method just have a look in 10 days average trading volume before entering a trade. If price action supports the volume then go ahead with this technique, it will yield the best result. 3.3 Conclusion: To use this technique following steps are given. Step-1: Identify the high —low or low — high or high- high or low-low of a prior trend. Step-2: Convert the low or high to degrees. Step 3: Compute the +45, +90, +180, +270 and -45,-90,-180,-270 degree offsets of 46Gann’s Method Current Price and Past Time converted price degree. Step 4: Count the number of calendar days and number of trading days between this high —low or low -high or high- high or low-low of the prior trend. Step 5: Convert days to degrees. Step 6: The price offsets degree which coincides with the time degree called the ‘price time square’. Step 7: Convert that price offsets degree and its higher order degrees to price using degree factors. Step 8: Take the current market price and compare with the computed price and the elapsed days to take a trade decision. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method 47Gann’s Method Current Price and Past Time These 8 steps can be put on an excel sheet and just do the job in one click of mouse. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method. 48Gann’s Method Price Range and Time Chapter 4 Price Renge and Time 4.1 Introduction 4.2 Number to degree conversion table 4.3 Squaring price range and Time 4.4 Conclusion 49Gann’s Method Price Range and Time 50Gann’s Method Price Range and Time Chapter 4 Price Range and Time 4.1 Introduction: In the previous chapter we have discussed about current price and previous time squaring action. In this chapter we are going to discuss about how the price range in the prior trend squares with the time in the prior trend. If you happen to know the Fibonacci Retracement Technique, this is one more way of retracement technique by taking static point increment and decrement. In this chapter I will discuss few interesting intraday techniques for serious traders. Just take a print out copy of ‘the number to degree conversion table’ and keep it on your table. With the help of a pencil you can be able to take a trade decision by using this technique. 51Gann’s Met! thod Price Range and Time 4.2. Number to degree conversion table: Number Degree Conversion table Number |Deg|Number [DedNumber|Deg [Number [Deg [Number [Deg) 7] 315} 32] 73|___63] 124] 4] 80.2 125 347] 230 33[ 89] 64] 135] 95] 89.4 126| 355] ae Bal t05] 65] 146] 26] 98.6] 727 3.5] 4] 135] 35120] 66] 157 7109] 128] 11 317 36135] 67] 168] ea] 177 129] 19] e216 37] 150] 68] 179] 20] _126] 730[_27| 7 251] 38) 165] 69] 190] 700} 135] 131] _ 35] 8) 284] 39/179] To} 201] oi] 744] 122] 43] 9315 a0[193] 71] 212] 702] 153) 133] 51 70} 344] ‘if20a] 72] 229] 703] 162) 734] 59] Ti]_12| ‘a2|222[ 73] 233] 104] 171 735] _66| 72] 39] aa]235[ 74] 249] 105] 179) 136 74] 73|_64] aa}2aa[ 75] 254] 706] 188) 737] _22| 14]_88] -45|262| 76] 264] tr} 197) 738] 90] 15) 112] a6|2re| 77] 274] 108] 206) 739_97| 76] 135] “47|289] 78] 285] 709] 274] 740] 105] 17] 157] -48|302| 73] 295] 10} 223) 74a] 172] 18] 179] -49]315| 80] 305] 114231] 142| 120] 9] 200] 50328] 81] 315] 112] 240) 143] 127| 20] 220] i] 340] 82] 325] 113] 248) Taal 135] 21] 240 52) 353] 83] 335] 114] _257| 145] 142| 22| 259 53 5.4 84] 345] 115] 265) 146] 150] 23] 278 Sal 18] 85] 355] Te] 274 147] 157| 24] 297 S5[ 30] 86] 4.25] 147 282] 148] 165] 25) 315 Se 42] 87] 13.9] 119] 290] 149] 172] 28) 333 37] 54] 88] 23.5] 119| 290) 750] 180] 27] 350 5866] 80) 33.1 720] 307} 151] 187| 28] 75 Sof 7a] 90] 42.6] 121] 315] 162] 104] 29] 24 60| 89] 91] 52.1 122| 323) 153] 201 30|_41] 6i[ 101 92] 61.5] 123|_331| 154] 209] 3i|_67 eq{ri2}__ 93 70.9] 124] 330] 165] 216]Gann’s Method Price Range and Time If you happen to observe the number degree conversion table then see number 1, 9, 25, 49 squares with each other since all of them are 315 degree. 4.3 Squaring price range and Time : You can find the price range from close to close, high to low, low to high in a particular time range. Convert the price range to degree and compute its offset. Take the total trading days and calendar days in that price range. Then from the table find out its degree equivalent. The price offset which coincides with the time offset is considered as the squaring points. Trade decision will be taken at this point. This mathematical thing looks very simple but in reality these are bit difficult to take one uniform trade decision. 53Gann’s Method Price Range and Time What makes me to rely on these methods? While following the retracement techniques I have limitations for static point retracement ratio. Though this is also a static point technique but I have the freedom to make it dynamic. See the next example to know the importance of this technique. Example 1: On 5" September 07 Nifty touched intraday high of 4503 at 10 a.m. and touched low of 4464 at 11.50 a.m. Based on the price in current trend to the time in prior trend suggest what type of trade decision I should take ? Below the intraday chart is given for reference. 54Gann’s Method Price Range and Time From the above data I have understood that from high to low I have travelled 4503-4464 = 39 points and it took 1 hour and 50 minutes for me which is almost 110 minutes. Taking 5 units as one unit we get 22 units of time. The conclusion is for 39 units of price change we take 22 time [Link] the 39 and 22 to degree format we get 179 and 259 degree which never squares with each other. 55Gann’s Method Price Range and Time Now use the dynamic approach in time, by reducing the time units by one and converting into degrees or finding the numbers which squares with 39 from the number to degree conversion table given above. We found 18, 39, 68 time unit squares with price range. 18 is 4 time units less from 22 time units and it will be an ideal choice for this job rather than 39 and 68 units. Now the price range 39 squares with 18 time unit at angle 179. Round it to 180. Hence my new range will be N(R) = (\\39+1)? = 52.49 N (R) = Price range of square to end. In the next move in 18 time units if I will move 52.49 points in price line then I will complete a square. 56Gann’s Method Price Range and Time Dividing 52.49 with 18 we got 2.91. Hence in each time unit I need to move 2.91 (round it to 3) point in price to complete the square and in this journey these prices will act as a resistance for me. Resistance|Time Unit 1 resistance Unit 2 resistance_|4469.832 Unit 3 resistance _|4472.748 Unit 4 resistance Unit 5 resistance Unit 6 resistance Unit 7 resistance Unit 8 resistance Unit 9 resistance _|4490.245 Unit 10 resistance |4493.161 Unit 11 resistance |4496.077 Unit 12 resistance |4498.993 Unit 13 resistance |4501.909 Unit 14 resistance |4504.826 Unit 15 resistance |4507.742 Unit 16 resistance |4510.658 Unit 17 resistance |4513.574 Unit 18 resistance |4516.49 57 4478.581 4481.497Gann’s Method Price Range and Time This square will not complete until and unless 4516 level is not crossed. If you see the chart in the subsequent time period nifty will find resistances in those prices. White paper proof: At 11.55 a.m. from 4471 Nifty fell to 4469 At 12.05 p.m. from 4475 Nifty fell to 4471 At 12.11 p.m. from 4478 Nifty fell to 4472 Though the time and price are not matching because of the adjustments we made in time but the resistance prices are matching perfectly in 5 min chart. If you will get an exact match of time and price square, the time factor also works out precisely. What is the trade decision? The price squares with time in 180 degree and hence 180, 360,540,720 are the angles of interest. The factors will be 1,2,3,4. One should buy on 4516 cross ret which is factor 1 price.Gann’s Method Price Range and Time Target will be 4532 which is factor 2 price. Stop loss will be 4464 which is 0 degree from the 180 degree price 4516. This will be valid for that day. This is very much useful for intraday. Based on these levels and applying our own intelligence you can take any number of trade decisions. Gann specifies each price as an ‘energy packet’. If it crosses one price time square, the energy completes one circle and has the tendency to cross the next circle. In this theme ‘Elliot wave theory’ was also defined. This above technique is not been defined by any Gann expert till date. This theory only is interpreted by many Gann experts time and again. Fact is Gann experts always treat this method as a static method not a dynamic one. The way I have adjusted the time same 59Gann’s Method Price Range and Time way you can adjust the price range with the elapsed time and derive one more set of resistance and support. In wave principle, cross over of one resistance level act as a support for the next resistance. Three consecutive support breaks should be considered as an exit point. Three consecutive resistance break out should be considered as a point of entry. This principle you should follow if you want to enter the trade inside the square. Example 2: Below mentioned table contains one week data of SBI based on price in current trend with time in prior [Link] what will be the most a forecasted price ?Gann’s Method Price Range and Time In the week starting 30" July 07 to 03" august 07, the script made high Rs1652.4 and low Rs1509.8. Hence the range is Rs142.60 Round it to Rs142/-. The time is 5 trading days and 5 calendar days. Converting it to degree; number 5 is 177 degree and number 142 is 120 degree. The price squares the time in +60 degree offset. That is 120+60= 180 just 3 degree more from the time degree conversion, this is an acceptable error. Hence 177,237,297,357 are the angles where the price will square with time. But we require only one value that is 177. For mathematical simplicity take it as 180 degree. Hence the price range for squaring is (42 + 1)? =166.83. Round it to 166. If the price moves Rs166/- in 5 time units then it will complete this upward journey. 61Gann’s Method Price Range and Time But in our case two week-ends are falling from the last trading day 3" August to 6" August. Hence take the time unit as 7 instead of 5. Hence the price unit 166 will be divided by 7 to produce one unit change in price with time. That is 166/7= 23.71. In price term 1652.4+166=1818.4, is the price at which this up trend will end in coming 7 calendar days. During this period it will find resistances as given in the following table. Price squares time |Resistance Time Unit 1 resistance _[1652.4+23.71-1676.11 |" august 07. Unit 2 resistance _[1676.11+23.71-1699.82 [7 august 07 Unit 3 resistance _[1699,82+23.71-1723.53 |" auoust 07 Unit 4 resistance _[1723.53+23.71=1747.24 |o! august 07 Below mentioned is the OHLC of SBI from 6" August 07 to 10 August 07. 62Gann’s Method Price Range and Time Datel open] _ hig! low] _ close 6" aug 07] 1610] _1699|__1580]_ 1681.9] 7" aug 07] 1690| 1725.9] 1672.55] _ 1682.1 1734.8] 1698] 1706.85} 9" aug 07] 1727|__1728|__ 1641] 1650.6} 10" aug o7] 1601.55] 1614.95] 1575.2] 1606.95 The unit 2 resistance is coinciding with the 6" August high. 7" August high coincides with unit 3 resistance. Why this time is advanced by 1 day? The exact cause of this is still beyond my understanding. But I see all months having 31 days exhibit such action. What will be my trade decision? The squaring of current price with time in prior trend is far from the current market price. 63Gann’s Method Price Range and Time It is advisable to do the trade inside the square. Cross over of one resistance level should be taken as entry point, bearing target at the next resistance level and stop loss at one step below the entry level. In many cases the price range will not square with the time in the prior trend. But nothing to worry because we have other 3 methods to trap the price time action. 4.4 Conclusion: To use this technique Step-1: Identify the high to low or low to high of a prior trend. Step-2: Find out the price range. Step-3: Convert the price range to degree. 64Gann’s Method Price Range and Time Step-4: Compute the +45, +90, +180, +270 and -45,-90,-180,-270 or 60 degree and its multiples or 90 degree and its multiples offsets degrees. Step 5: Count the number of calendar days and number of trading days between this high to low or low to high of the prior trend. Step 6: Convert days to degree. Step 7: The price offsets degree which coincides with the time degree is called the price time square. Step 8: Convert that price time square and its higher order degrees to price using degree factors. Step 9: Take the current market price and compare it with the computed price and the elapsed days to take a trade decision. 65Gann’s Method Price Range and Time These 9 steps can be put on an excel sheet and you can do the job in one click of mouse. It will not even take more than 2 to 3 minutes to decide upon a trade by using this method. 66Gann’s Method Price Range and Time in Current Trend Chapter 5 Price Benge and Time in Current Trend 5.1 Introduction 5.2 Squaring the price range of prior trend with time in present trend 5.3 Extreme price and time in current trend 5.4 Squaring price and time in current trend 67Gann’s Method Price Range and Time in Current Trend 68Gann’s Method Price Range and Time in Current Trend Chapter 5 Price Range And Time In Current Trend 5.1 Introduction: In chapter-4 we have discussed how the price range in prior trend squares with the time in prior trend. In this section we are going to discuss how the price range in prior trend squares with the time in the current trend. In earlier chapter we used to compute the price range, the time elapsed in that price range and based on this we used to compute the future price resistance and support. Thing will be more realistic and live if we will be able to time the trend in advance. This chapter will teach you this wonderful technique of Gann to predict the time in advance. 69Gann’s Method Price Range and Time in Current Trend If someone asks you SBI has fallen from its high 1734 to 1407 in 15 trading days, Advise me how many days from this low of 1407 it will take to touch 1650, then you may not be in a position to answer this . This is a question Gann faced time and again and he has solved it in a more precise way. It is not a miracle. It is not astrology. It is the power of number. Each number is hiding the mystery of his future number. Many Gann experts understood his formula in a right way, but failed to apply in real life example. This Chapter is having all the essence to answer the above puzzle in scientific manner. 5.2 Squaring the price range of prior trend with time in present trend. In previous chapter we have learnt the conversion technique to convert theGann’s Method Price Range and Time in Current Trend numbers to degree. We also learnt the square root theory to convert the degree to number by using the degree [Link] this chapter we will learn a new formula to convert degree to number which squares with the original number. | feel after learning this formula all your purpose is solved. Numbers falling on particular angle: ((2 XN) + (2 X A360) +1.25) ? N is the number of rotations you want in a spiral. It starts with 1. A is the angle of your choice. 1.25 is a standard constant for square. The proof of this formula lies in your 7" standard mathematics. 71Gann’s Method Price Range and Time in Current Trend Example 1: You are being provided with Tata Steel past 2 weeks open-high-low- close data. Considering the one week data as prior trend and 2™ week time as current trend predict what will happen in the following days? [Date___[Open [igh [Low [Close 25-Jun-07] 699.75] 603.75] 693.2] 600.15] 26-Jun-07] 599] 610.85] 597-7] 604.15] 2r-jun-O7| 602] 603.45] 688.8] 592.65] ‘2Bjun-O7| 592] 508.45] —688.1| 593.5] 29-Jun-07] 692] 607.8] 591.95] 607.4 02-Jul-07] 597.4] —608.7| 592.2] 693.45] O3-Juco7| 594] 605.8] 591] 600.75] ‘04-Jui07| 603] 618.8] 699] 616.35) ‘OS Juco7] 620.55] 630] 614.5] 628.1 06-Ju-07] 628.65] 635.5| 621] 623.3 The high to low price range in the previous two weeks is 635.5-591= 44.5 .Round it to 44. In degree terms it is 249 degree. In the first week the script moves from low to high. Time elapsed from 1* week high to end of 2" week is 5 trading days and 7 calendar days. The degree equivalent of 5 and 7 are 177 and 251. The price range squares with ud time in calendar days in 3Gann’s Method Price Range and Time in Current Trend degree off set. This is an acceptable error. Now our job is to predict the time and price action for the future week. The number of calendar days which squares with the time in this up trend based on the formula (given in page 71) is 21, 44, and 74. In the coming 21 calendar days from 6" July 07 the price trend is going to change. If it does not change then the same trend will continue for another 23 days (i.e. 44-21) from there. What will be the price for this termination points? Converting 21 days to degree we get 240 degrees. The 240 degree is 1.33 in factor terms. Using the square root theory taking the highest value 635.5 as the initial point we have: (\(635.5+1.33)? = 723.5 73Gann’s Method Price Range and Time in Current Trend 723.5 is the 1* termination point for this uptrend. During this journey of 21 calendar days the price range will be 723.5 — 635.5 = 87.5 It will find the resistance at various points given in the following table. In one time unit the range is 4.16 i.e. 87.5/[Link] this price to the Rs 635.5 the consecutive 21 resistance points are as follows. RST [eso iRS2_|6aa iRS3_[648 RS4_[652 RSS [656 RS6_|661 RST [665 iRso_|669) iRS9_|673 [RS10 [677] RS [eat iRSi2 [685 RS13 [690] iRSt4 [694 RSA [698 R516 |702| IRSA [706 R518 [770] iRSi9 [716 iRS20 [778 IRS21 [723 74Gann’s Method Price Range and Time in Current Trend Below mentioned is the 21 days price data of Tata Steel from 9" July to 31* July 07. Date___[Open_[Figh_[Low [Close [os-or-moor|ear [es _|6z2.1 [6265 10-07-2007 |62 [638 _ [6242 [634.1 If you observe this price data the termination of this uptrend happens 3 days in advance from the price range of 723 after the script made 4 consecutive attempts to close above 75Gann’s Method Price Range and Time in Current Trend this level. Out of these 21 resistance levels 8, 10", 13", 16 and 18" resistances are very important. That is the 0.382, 0.5, 0.618, 0.786, 0.888 level retracement of 21 days. From price data if we will observe the high then these prices has proved themselves as potential resistances. How to enter a trade? If the price range and time is very wide then it is better to enter a trade inside the square. To my idea entering a long trade above 38.2% resistance for target as the termination point will be the best choice. Same way if the trend changes signal and stock falls below 78.6% support zone after touching the termination price then it is advisable to initiate a short trade. 76Gann’s Method Price Range and Time in Current Trend 5.3 Extreme price and time in current trend In this section we are going to discuss one more combination of price time squaring action. Gann’s method has not only the price time squaring but also geometrical angle transformations. We will discuss few more interesting things in the subsequent chapters. This method of Gann’s square exhibits how the ending price of one of the prior trend squares with the time in current trend. Example : On 4" January 07 Tata motor hit the high 988.4 and then fell to low of 712 on 07" March 07 . Using price in prior trend with time in current trend advice what kind of trade decision is advisable? Below mentioned is the price and time chart of Tata motor, given for reference. 77Price Range and Time in Current Trend Gann’s Method (rua 19 eran ona Ts a 1 soir 78Gann’s Method Price Range and Time in Current Trend Total number of calendar days is 63 and the number of trading days is 41. Now the highest price from where the trend change happens in the prior trend is 988.4. Convert these three things to degrees using the formula discussed in the chapter 1, we get 988.4 is 34 degree, 63 calendar days are 124 degree, 41 trading days are 208 degree. Hence the price in prior trend squares with the calendar days’ time in 90 degree offset, since 34+90=124. Now using the degree to number conversion formula as discussed in this chapter For N = 1, number of days which will square with the 63 calendar days is 15. For N = 2, number of days which will square with the 63 calendar days is 35. For N = 3, number of days which will square with the 63 calendar days is 63. For N= 4, number of days which will square with the 63 calendar days is 98. 79Gann’s Method Price Range and Time in Current Trend Your count will start from 7" March. From 7* March 07, the 15", 35%, 63" and 98" calendar days we will see major trend change in this counter. As per the calculation 21* March, 10" April, 8" May and 12" June are the days of major trend change in this counter. Price action 124 degree is equivalent to 0.69 in factor terms. Hence price from 712 in this factor will act as the resistances from this price. But in this case the calculation will differ a bit. Using the square root theory The 1* level of resistance will be (\712 + 0.69) =749. 1“ level of support corresponding to 1 level of resistance is (\{712 - 0.69)? = 675 2™ level of support corresponding to 1* level of resistance is (\675 - 0.69? = 639 80Gann’s Method Price Range and Time in Current Trend 3" level of support corresponding to 1* level of resistance is (\\639 - 0.69)? = 605 4" level of support corresponding to 1* level of resistance is (\605 - 0.69? = 572 2 Jevel of resistance will be (\{749 + 0.69? =787. 1 level of support corresponding to 2™ level of resistance is (\(749 - 0.69" = 711 3" level of resistance will be ( [787 + 0.69) =826. 1“ level of support corresponding to 3" level of resistance is (|787 - 0.69)’ = 749. If you will relate this price data with the squaring time the 4" period time data perfectly coincides with the 4" period support. Exactly on 12" June 07 the script falls to 575 and close at 641. The question is 81Gann’s Method Price Range and Time in Current Trend why this 4" period time 98 days give the accurate result but not other forecasted times. To explore this I have gone into the original writings of Gann. That I have given in this book as a separate chapter in chapter 6. Gann specified 3,5,7,9 and 12 are the master numbers. Out of which 7 is the most important, its square 49 also important, its second square 98 also important, and its third square 147 also important. Number 5 he considered as balancing number. Number 3 is in the list next to 7. From the computed days 15, 35, 63 and 98; 98 is the most important day since it is the 2" square of 7. Hence we see a greater price action on that day. The number 15 and 35 is containing the balancing number 5 in its factor hence less price action 82Gann’s Method Price Range and Time in Current Trend we have seen in these days. Number 63 also contains number 3 as a factor in its multiple 9x7. Hence we see less activity on that day. I made a small change in Gann’s method in this junction. Since the calendar days 63 squares with the price. I have factored it as 3x3x7 and taken the most powerful master number in that factor which is 7. Then 7 calendar days and its multiple 7,14,21 days act as my point of observation. I have taken those days from 7" March to observe the price change . I found 14" March, 21% March, 28" March 07 also act as the days when major price change happened. No need to break your head in this number game. Simplest way to apply this technique is; in price line on the specified day count if you are above the support point of its price then go long. If you are below the support point go short. 83Gann’s Method Price Range and Time in Current Trend In our example on 21 March Tata motor opened at 772, touched high 778, low 760. This price is much above the 1* level of resistance and support. In this point going long in this counter is advisable with stop loss of 749 for target 787. This target is achieved in the next trading session. Same way taking a short call on 3" level of resistance is advisable for target of 2 level of support. Once one resistance is crossed convincingly itused to become a potential support point. Second most important thing is Gann has always specified that 3 consecutive rise or fall should be taken for identifying a trend. These two things we need to follow in all Gann ’s techniques. 5.4 Squaring price and time in current trend: This is the technique for which you have been waiting for long time. We all the capi- tal market players do not believe on past rather than present. 84Gann’s Method Price Range and Time in Current Trend Gann’s method and tool is the only method which value only to present but not to the past. For example if some one asks you, SBI has fallen from 1734 to 1507 ina time frame of two weeks then what will be the next move in the SBI in coming days considering these two points are swing high and swing low. In what time frame it will hit what price in future? The answer of this amazing technique lies in this chapter. Example: SBI from its 4" December 06 high 1379 fell to 898.10 on 16 March, 2007. After touching this low it gave a swing reversal. What will be its next move in price in future time period? In terms of calendar days it is 103 calendar days (from 4" December to 16" March) and 69 trading days. The price range in that duration is 1379-898.10= 480.9. Round it to 480. 85Gann’s Method Price Range and Time in Current Trend Converting this 480 to angle is 119 degree, 103 is 162 degree, and 69 is 190 degree. The 45 degree price offset is 119+45=164. This squares with 103 calendar days by 2 degree difference hence it is an acceptable error. Hence the days of my interest will be the days falling in the 162 degree angle. Using the formula ((2 X N) + ((2 X A)/ 360) +1.25)? Iteration 1: Considering N=1, angle 162 we get number of days 17. That is 1“ April 07 (non trading day) Iteration 2: Considering N=2, angle 162 we get number of days 37. That is 21" April 07(non trading day) Iteration 3: Considering N=3, angle 162 we get number 86Gann’s Method Price Range and Time in Current Trend of days 66. That is 20" May 07 (non trading day) Iteration 4: Considering N=4, angle 162 we get number of days 103. 26" June 07 (non trading day) Iteration 5: Considering N=5, angle 162 we get number of days147. 9" August 07 touches high 1728. Hence we conclude that the stock will take the 147 calendar days from the low 898 to touch the new high of the current swing. What will be the price at that time? The price will be the summation of the mid point of swing low and swing high and the new price range will be based on 162 degree factor. (1379+898)/2 =Rs1139/-. 87Gann’s Method Price Range and Time in Current Trend The factor equivalent to 162 degree is 0.90. Applying the square root theory the price range is (/480 +0.90)? = 520. Target price of the current swing will be 1139+520= Rs1659/- Some amount of ambiguity lies in this method. Since the swing we have taken for computation is a static one and long enough for the stock analysis we will discuss one more example based on this to clarify the action. Example 2: Take the case of nifty intraday on 7" September it made swing high of 4544 at 13:02 p.m. and swing low 4518 at 13:43 p.m. Explain how the price and time in current trend affect the future movement. The price change is 26 points in 41 minutes. Taking 5 minute as one trading session and 1 min as | calendar session we have 41 88Gann’s Method Price Range and Time in Current Trend calendar sessions and 8 trading sessions. Number 8 is 284 degree, number 26 is 333 degree, and number 41 is 208 degrees. Hence the price squares the trading time in 45 degree offset. That is 333-45=288 just 4 degrees more from the 284. Hence the trend change time is 23 time unit from 13:43 p.m. This is roughly at 15:34p.m. Since we have closing at 15:30 p.m, we will see the price change towards the end of the session. What will be the price action? (4544+4518)/2 = 4531 is the initial level of resistance. 4531+44= 4575 is the next level of resistance. 453 1-44=4487 is the support for 1“ level of resistance. For 2™ level of resistance 4531 is the support. 89Gann’s Method Price Range and Time in Current Trend This support or resistance of 4531 is supposed to hit in the mid way of 23 time units that is by 14:35 p.m. time (23 time unit is divided by 2 followed by multiplication with 5 to give the time in minute .That many minute from 13:43 p.m is 14:35 p.m.). How to initiate a trade? Always initiate a trade in the cross over of the initial level of resistance for the target of second level of resistance. Keep the stop loss below the 1* level of support. More realistic view of Gann’s method we will explore in the chapter 7. 90Gann’s Method Gann Angle and gann dynamic principles Chapter 6 Gana Angle and gann dynamic principles 91Gann’s Method Gann Angle and gann dynamic principles 92Gann’s Method Gann Angle and gann dynamic principles Chapter 6 Gann’s Angle I have explained gann angle concept in chapter-2. However now in this chapter you are going to learn how this concept will be used for making intraday trade decision. Say I wish to draw a trend line at 1X1 (read it “one by one”) gann angle. This means my trend line is a straight line drawn in the price time chart which makes an angle 45 degree with the X-axis. You must ask me that how I have derived the 45 degree. Quite simple! This is a trend line drawn assuming | unit of price change happens with 1 unit of time change. If I will plot 1 unit of price change with respect to 1 unit of time change in a semi log scale and measure the angle with the help of a protractor I will get the angular measurement as 45 degrees. 93Gann’s Method Gann Angle and gann dynamic principles For making an intraday trade decision we need a point to make buy or sell entry. We need a stop loss point and couple of target points. Though this job can be done with any guess work but we need perfection. The perfection will be achieved only through the mathematical calculation which is accepted by the market. [Link] has given us 11 different trend lines which will guide us in making a trade decision. These trend lines are drawn based on the geometrical angle proportion in X and Y axis. For example the 2X1 (2 by 1) trend line is drawn assuming the 2 unit of price rise or fall happens in 1 unit of time. This trend line makes geometrical angle of 63.75 degrees with X-axis when drawn from a lower price point and projected towards the higher price points. Similarly this trend line will make 26.25 degrees with respect to x axis when it will be drawn from 94Gann’s Method Gann Angle and gann dynamic principles a higher price point and project towards the lower price point. This is the mathematical logic available in origin shifting, parallel line algorithm. Now the 11 sets of trend lines from a lower price point towards the higher price point are as follows 1X1, 1X2, 2X1, 1X3, 3X1, 1X4, 4X1, 1X8, 8X1, 1X16 and 16X1. The geometrical angle made by these trend lines with the X axis in an up move correspond to 2X1= 63.75 degrees, 1X2= 26.25 degrees, 1X1=45 degrees, 1X3= 18.75 degrees, 3X1= 71.25 degrees, 4X1= 75 degrees, 1X4= 15 degrees, 8X1= 82.5 degrees, 1X8= 7.5 degrees, 1X16= 3.75 degrees, 16X1= 86.25 [Link] geometrical angle made by these trend lines with the X axis in a down move correspond to 1X2= 63.75 degrees, 2X1= 26.25 degrees, 1X1= 45 degrees, 95Gann’s Method Gann Angle and gann dynamic principles 3X1= 18.75 degrees,1X3= 71.25 degrees, 1X4= 75 degrees,4X1= 15 degrees, 1X8= 82.5 degrees,8X1= 7.5 degrees, 16X1=3.75 degrees, 1X16= 86.25 degrees. Gann Formula for calculating the support and resistance: In gann study the 180 degree is considered as factor 1. This is because between the sun rise and sun set the solar motion happens approximately 180 degrees and it is considered as 1 day time. The 2™ universal concept accepted by the financial analysts is that the supports are always calculated in a falling trend and it used to be calculated from the high. The 3 universal concept accepted by the financial analysts is that the resistances are always calculated in a rising trend and it used to be calculated from the low. 96Gann’s Method Gann Angle and gann dynamic principles Gann formula for calculating the support and resistance is as follows: a. Support = (square root of (high)- Degree factor)*2 b. Resistance = (square root of (low) + Degree factor)\2 Trading Rules as per gann and as modified by me (Soumya Ranjan Panda Author of this book). a. The 3rd support or resistance of any price move is important (as per [Link]). b. Inintraday trade 45 degree support break (1X1 support) will favor sellers and 45 degree resistance (1X1 resistance) break will support the buyers. Provided the annual volatility of the trading instrument must be higher than 50% (as per my own research ) c. In low volatile or medium volatile market (i.e. the annual volatility of the trading instrument is less than 50 %) 97Gann’s Method Gann Angle and gann dynamic principles the (1X4= 15 degree) resistance and (4X1=15 degree) support must be utilized for long and short entry provided no congestion or entry error should be present in the calculated price. (as per my own research ) d. If sell entry price at 15 degree or at 45 degree greater than buy entry price at 15 degree or 45 degree price point then it is considered as error and rectified by changing calculation procedure from the high and low to mid point of high and low. This says that instead of calculating the supports down from high and up from low you can calculate the same from the mid point of high and low (as per my own research ) If the price unit of the trading instrument is a4 digit number then between the buy entry and sell entry price at least 5 unit difference is required to take unbiased decision as per this principle or else 98 2Gann’s Method Gann Angle and gann dynamic principles it is considered as congestion and it is rectified by changing the high and low to mid point. (as per my own research ) f. Ifthe price unit of the trading instrument is a3 digit number then between the buy entry and sell entry price at least 3.5 unit difference is required to take unbiased decision as per this principle or else it is considered as congestion and it is rectified by changing the high and low to mid point. (as per my own research ) g. Ifthe price unit of the trading instrument is a2 digit or single digit number then it must be converted to 4 digit number by the way of multiplying it with 10 or 100 or even with 1000 and the resistances and supports will be derived from the 4 digit number. And the results need to be divided by the multiplier to reconvert it back to its original form. (as per my own research ) 99Gann’s Method Gann Angle and gann dynamic principles h. The smallest time interval in which you can identify the high and low is 5 minuets after the opening bell or the highest time interval you can consider is the 1* 15 minute after the opening bell. Any auction period must be ignored. Like now in Indian market 9 a.m. to 9 :15a.m is considered as call auction period. Hence the data from 9 a.m. to 9:15 a.m. must be ignored (as per my own research ) i. Ifany of your trade triggers the stop loss or trailing stop loss then do not re-enter the trade in the same direction again. As a day trader, speculation is my profession and I will follow these calculations like religious testimony. Example: on 11 November 2010 SBI between 9:15 to 9:30 a.m. made high 3238.35 at 9:16 a.m. low 3214.10 at 9:27 a.m. 100Gann’s Method Gann Angle and gann dynamic principles Below given are the calculation of resistances and supports for reference. Low ise sara | 3239 Degree) Degree Factor Resistance Degree Factor oxi] 8625] 0.479166667] 3268004) 1x16] 8625] 0.479166667] s184o4e0 faxt_ | a2} 0.458385333) 266.2787] 1x8 | 925] 0458533333] 31863958] laxt | 75) or6ccs66r] s2eisi7alixa | 75) 0.416650667] 191.1015] fsx | 7125) 0395833333] 3259.1387]133 | 71.25) 0395033333] 3193.4557 Bx 3254383) 12 0354166667] 3198.1667] axa | 2629] 0.148833333] 3230.656 2625} 0.145833333] 3221.7735) xs [1879] 0.104166667] 3225921 1873] 0104166667] 326.5053] x4 [1 0.083333333] 3223-5558] 1 0.083333333] 32288725 004i 32188202] 3 10833333] 32164626) As per the above discussion and calculation procedure we have made the calculation of resistances and supports. As per the current volatility condition we are being advised to buy the stock at 3223.5558 or sell at 3228.8725. This is violating the point D trade principle and considered as an entry error. Henceforth we will change the high and low to its mid point and do the fresh calculation 101Gann’s Method Gann Angle and gann dynamic principles from the mid point. The mid point of 3238.35 and 3214.10 is 3226.225 . The modified calculation table is as follows. tow r send | mans) Degre| Degree Factr| Resistance Degree Facer rexa|_9629) osroroccer| somnsra xi6 0479166667] 3172021 lax S27aS01 18 4se333559] 3174 lax 75} 0A16666667] 3273-7318] 1X 3] 016665667] 31790654 | 03958 | | 0395833333) 31814151) 31861179 [ax Pax | ue one] sand i] if amass) condor | 1 oma) sien] fix | 75} cxottse67] 32309601] 8x1 Taster] 3221.4934) lino] saasoioxi] 1 32m As per the modified calculation we are advised to buy at 3235.6986 for final target 3280,8878 and sell at 3216.7653 for final target of 3172.0214 Trade outcome: 1. At 9:34 a.m. We got a chance to sell at 3217 and kept out stop loss at 3235.70 as per our calculation. Upon achieving the 1* target 3214.4we trail to stop loss 102Gann’s Method Gann Angle and gann dynamic principles to 3216.80, then upon crossing the 2™ target we trail the stop loss to 3214.40. Unfortunately after touching the low 3211 at 9:39 a.m. the trailing stop loss triggered at 3214.40 and we just bagged less then +3 points. 2. Considering our short trade adventure is wrong and as per the last protocol set in the trade rule we waited for the 3235.70 to come which we have got a chance at 10:07 a.m. and achieved till 3254 till 11:27 a.m. which is close near to our 45 degree target point. Tf you are not quick in changing the stop loss also it will not dampen your trade performance. In this case if my sell stop loss triggered at 3235.7 I will accept close near to 18.9 point loss and be a buyer at this point keeping the stop at 3235.7 and aim for the last target 3281 with some logical trailing stop loss. 103Gann’s Method Gann Angle and gann dynamic principles Day trading using Gann Angle dynamic approach: If we will make use of the volatility along with the gann angle then this concept will become dynamic and it will produce great result. All the above process that I have explained in the earlier section will remain same only additional parameter daily volatility will be used with the gann angle. In this method, we will calculate the daily volatility based on the past 10 days’ last trade price of any instrument. 1. Daily volatility calculation: a. Take past 10 days’ last trade price of any stock or index. [Link] the absolute return by using the natural logarithm function LN(). You will get 9 data points. Formula: Absolute return = LN (Current price/ Previous price) [Link] the square absolute return for all 9 data points. 104Gann’s Method Gann Angle and gann dynamic principles [Link] the average of absolute return and square absolute return. e. Calculate variance. Formula: Variance = square absolute return — (absolute return)? f. Calculate daily volatility percentage. Formula: Daily Volatility percentage = square root of (variance) X 100. From the daily volatility percentage, we understood in the coming day the stock or index whose daily volatility percentage was calculated as per the above process would fluctuate to the extent of daily volatility percentage. Thave taken the state bank of India 12 October to 25 October 2011 to predict the intraday level for next trading session using the gann angle and the volatility. 105Gann’s Method Gann Angle and gann dynamic principles I have calculated the daily volatility as explained above for sbi. Date [-TP-SBI [Absolute retum [Square absolute retum oan] 4 Sean Taal cased wa ‘4ootf] 1685] o.004a70944 7.6860 a ina] aa el oom teal 19:0ct411] 1900.25] _o.0ra7e267 000169097] mooi] 19959] o.0r2e2et 0.0001 zioett| 1949] 0007777734 60560: 2eoatt]| tori] —o.0r96897 000287689] 25-0ct-11] 1642.25) 0.036600": 0,001342417] Taverage | 0.0002 0,00023612 Variance] 0.000 Daly Voratiy% 152 Above calculation says the daily volatility is 1.5266%. Hence, the stock has the probability to fluctuate by 1.5266% in the coming day. Based on the above conclusion I will see a price fluctuation of 28.1233 (i.e. 1842.25 x 1.5266/100) rupee in the sbi counter in future trading [Link] my expected high is 1842.25+28.1233 =1870.3732 106Gann’s Method Gann Angle and gann dynamic principles my expected low is 1842.25- 28.1233=[Link] in order to get the buy sell level in the gap up opening with uptrend I will use the 1842.25 as low and 1870.3732 as high in the gann angle tool and follow all its rules to derive the targets. Using the above price points I observe that the trading rule—d is being violated, hence I have done the changes in the data point to 1856.32 (i.e. midpoint of the above data points) and derive the following levels for the future trading session. In the future trading session which follows the 25" october 2011 any gap up opening above 1849.14 and below 1863.50, if the price cross over 1863.50 then I will buy sbi for optimum target of 1898 and any gap up opening and price below 1849 I will sell for target 1815.25. Refer the table in next page to view the calculations. 107Gann’s Met! thod Gann Angle and gann dynamic principles (0.458333533) 1817-0355] (0.416666667| 1820.5804| ‘axa | 7425) (0.396833333] 1822.3677| faxt | 6a (0.354166667] 18259269] rixz | 2625] 0145839333] 1068908]2x1 | 2626] 0.145833333] 10437749 axa | 1879] oaoatesse7| 1965s07|ax1 | 1875) oaoatesee7| 1047.3549 rixa | _19] 01089359933] 1065 508) 4x1 75} 0.083535333) 1649.1467] xe I 7a oosresceer| tessorafext | 73] oosressee7| 1952.70 raf [Link]| 1058.16 text] 375] o.oz0es3330) 10545282 Similarly, to get the buy sell levels in the gap down opening and downtrend I will use the 1842.25 as high and 1814.1268 as low in gann angle tool and derive the targets. Using the above price points I observe that the trading rule—d is being violated, hence I have done the changes in the data point to 1828.19 (i.e. midpoint of the above data points) and derive the following levels for the future trading session. 108Gann’s Method Gann Angle and gann dynamic principles Tez1.0707| ‘axe | _ 75] 0061666667] faxie] 375) 0. 7851,7648| 8x4 “E24.6266| "1826.4089| In the future trading session which follows the 25" october 2011 any gap down opening above 1821.07 and below 1835.32, if the price cross over 1835.32 then I will buy sbi for optimum target of 1869.39 and any gap down opening and price below 1821.07 I will sell for target 1787.44. 109Gann’s Method Gann Angle and gann dynamic principles If the price in future day may have a gap up opening above 1863.5078 or below 1849.1461 or gap down opening below 1821.0707 or above 1835.3232 then the above calculation will not solve our [Link] this case we need to take the opening price of that day into account for calculation of volatility. We will use the opening price with projected high and opening price with projected low in gann angle tool to derive the entry levels. Say SBI open at 1870 on the future trading day which follows the 25" october 2011 then in the volatility calculation replace the 1842.25 with 1870 and calculated the new volatility and expected high and low. The new data points will be as follows 110Gann’s Method Gann Angle and gann dynamic principles Date [TPS [Abeoute ret [Square absolut return 12-Oct-11} 188¢ ol 9 ‘eociti| 1075.96] 0 o0zeToee era roc] 1009] o.co4a7054 ee 7ees.s| —o.0013267e 7660 feces] 1006] —-c.oo0266217 7.03609 18x11] 1909.26] — o.orz782674 a00163367 zooersi] _ 1993] _o.012826185 1.000165 zroersi] 1949] _ 000777773 05-0 24oci11| 191] _-0.0r9685765 a0038768 2socr1i| 7] _-0.071688234 .00047034 average | 0000502504 ooor4t224 Variance] 0000140877 Daly Vout 1-786916657 Expoctod high 1992. 195042 Expected iow 1047. 20065 New trading levels calculation in uptrend is given in the next page . Since the opening is gap up, the uptrend calculation will be fol- lowed for trade decision. In this case, the downtrend level calculation is not required 111Gann’s Method Gann Angle and gann dynamic principles eat] [188%] frexa] 2625] 0479165667] 19228081] x16] 8625) 0479166667] 1830765) 82.5] 0458333333] 1921.0674]1x8 | 825] 0.458393333| 1841.5527] 75|_0ate666667| 1917AT67| m4 | __79| OAT6666667] 1645:1306) 7425] 0396839333] 19155926] NG | _71.25| 0396893599] 16469209] 6875] os6st66667| 911947] 1x2 | 6375] 0354166667] 1850.03 ox fox Ey pe [oe | asl oars rearr [rs | ma | a a coo oe | nee ve| ara] una] taame se] 73 7 Trend termination point: Gann angle also helps us in identifying the trend and the trend termination. 1 X 4 or the 4 X | angle price point cross over is known as the preliminary trend confirmation points for uptrend or downtrend. However, the 1 X 1 angle price resistance crossover signals the strong up trend break out and the 1 X 1 angle price support break considered as strong down trend break out. In gann angle concept we assume all the trend action will terminate at 1 X 16 or 16 X 1 angle price point. 112Gann’s Method Gann Angle and gann dynamic principles Dynamic gann square of nine principles: Using the volatility we can make any gann method dynamic. In gann square of nine prin- ciple, we need to derive the uptrend price points in the wheel by adding the step to the lowest number and each higher number in the wheel will be its preceding number added with the step. Similarly the downtrend price points will be calculated by subtracting the step from the highest number. Step is noth- ing but the high to low price difference di- vided by 81 for square of nine wheel. While using the gann square of nine for deriving the short-term investment decision I found the principle yields good result. However when applying the same concept in the intraday trade I did not get the desired result which I was expecting from the method. This is the reason why I have thought of to intro- duce the volatility in this method. 113Gann’s Method Gann Angle and gann dynamic principles Now the key question is how the volatility will find a place in this method. As I have explained before the daily volatility, percentage is the expected price fluctuation. Hence, now we will take the expected price fluctuation to derive the steps. Consider the same example of SBI given in page 105. The daily volatility percentage is 1.5266, expected price range is Rs 28.12, and the last trade price is 1842.25. Step will be 28.12/81=0.347160 Seed number will be 1842.25+0.347160 this will be the 1* number in the square of nine wheel. Second number will be 1* number added with 0.347160. Likewise the 81" number will be 80" number added with the 0.347160 and this must be equal to 1842.25+28.12=1870.3732 114Gann’s Method Gann Angle and gann dynamic principles Dynamic gann square of twelve principles: The way i have done the square of nine dynamic in the same way I will make the square of 12 dynamic. I will use the daily volatility percentage to find the price range for the day followed with I will calculate the steps by dividing the price range with 144. The seed number in the uptrend will be the last trade price added with the step and the 144" number will be 143" number added with the step. However do remember the square of 12 wheel is a different from the square of nine wheel in many aspects the arrangement of numbers are also different. The downtrend price points will be calculated by the way of subtracting the step from the last trade price. While using Dynamic Square of nine or dynamic square of twelve wheels keep a close eye on the annual volatility percentage. Annual volatility is nothing but the daily 115Gann’s Method Gann Angle and gann dynamic principles volatility multiplied with square root of 365. If the annual volatility is above 40% use the square of twelve wheel else use the dynamic square of 9 for making the intraday trade decision. 116Gann’s Method Gann Tools & Techniques Chapter-7 Gann Tools & Techniques 7.1 Introduction 7.2 Gann line 7.3 Gann fan line 7.4 Gann’s technique in a scratch 117Gann’s Method Gann Tools & Techniques 118Gann’s Method Gann Tools & Techniques Chapter- 7 Gann Tools & Technique 7.1 Introduction: In this chapter we will discuss few Gann tools and its use. Also we will discuss some of his rules for estimating the support and resistances with example. We will relate his idea with real life example. Many s/w programmes support many different tools on Gann. The commonly available ones are Gann fan line, Gann line. 119Gann’s Method Gann Tools & Techniques 7.2 Gann line: “Gann line is a trend line drawn from any extreme price point having 45° slope, with the y axis (time axis)”. It is a very simple tool based on the Gann’s theory. 45 degree is 1/8 of a circle, the sum of all the numbers in our decimal number systems of 0, 1, 2, 3, 4, 5, 6, 7, 8, and 9 is 45. Since 45° slope play an important role to identify the price movement but as per your requirement you can change the degrees to 60, 75 or even to 22.5 degrees. Below mentioned is a chart of SBI. I have drawn a Gann line on the 3 April 07 low 915. That is represented at point A. 120Gann’s Method Gann Tools & Techniques 121Gann’s Method Gann Tools & Techniques All the points in the Gann line present the resistance points that are represented as point B and C. If you are using the intraday chart place your Gann line in the swing low or swing high point of the 5 minutes chart. 2 minutes chart is also a better option. How to take a trade decision using this tool? Gann has specified that in a normal market 45 degree plays an important point of resistance. He says that buying is always advisable after the 45 degree angle line resistance cross over and selling below the 45 degree line. During his time sophisticated computer program was not available to use this but now all most all the s/w support this tool. What you need to do is just select the tool and place in any of the swing high or low point. In a less volatile market change the 122Gann’s Method Gann Tools & Techniques angle to 22-1/2 degree instead of 45 degree. Now take your vertical pointer to any future time. It will display the future resistance point for you. Buy if the price crosses this resistance. Sell if it maintains below this resistance level. Better practice will be placing three Gann lines having angles 45° as centre line, 60° as. upper line and 22-1/2 degree as lower line . Initiate a trade on 45° prices cross over for target 60° and stop loss will be at 22-1/2 degree point. This technique works well in intraday chart also. In the below mentioned picture A represents 60 degree line , B represents 45 degree line and C represents 22-1/2 degree line. One thing you need to remember is as per the gann’s principle the shorter time period for which the swing will be valid is 3 days 123Gann’s Method Gann Tools & Techniques for daily price chart, 3 weeks for weekly chart, and 3 months for monthly chart. While using this technique, I found in a daily chart that if I am using it for weekly swing low or high point then for the future week it is very much valid but not for the longer time duration. The reason is in the future week it will make new swing high and low. If you happen to be a user of ‘Elliot's wave’ then apply it in wave TWO swing low. It will be valid till wave FIVE swing high. You will find more about Elliot’s wave on my book on technical analysis volume 1. 124Gann’s Method Gann Tools & Techniques Se ( SAWHS —|* TinexgeoQn7Open78.400High78.400 ow222350 Cloe90500 Vat 1330010 a 125Gann’s Method Gann Tools & Techniques 7.3 Gann fan line: “Gann fan are the 9 trend lines converging from one swing point either high or low”. These nine lines are 1X8, 1X4, 1X3, 1X2, 1X1, 2X1, 3X1, 4X1, 8X1 of gann angle. I have already explained about Gann angle in chapter-1.Gann’s Method Gann Tools & Techniques Above picture represents the Gann fan line. Each angle is given in retracement term. For using this tool you need to place it in any extreme swing points. Then place the vertical price ruler in any future date or time. It will display 9 resistance and support points. 1X1 is represented as 45 degree. Buying is advisable if price moves above the 1X1 trend line for target 1X2 and its higher order. Stop loss will be 2X1 or its lower order. Caution: - Don’t use this tool for longer time period swing low or high. If the price expands to a wide range for longer period it may yield wrong result. In daily chart up to 2 months data, it will produce accurate result. Use this tool in 5 minute and 2 minute data for intraday. It produces wonderful result. 127Gann’s Method Gann Tools & Techniques 7.4 Gann’s technique in a scratch: 1. W.D. Gann devises the market into 4 Parts. They are Bull Market, Bear market, Bull market reversal, Bear market reversal. [Link] least three consecutive period of rise or fall should be taken for trend confirmation whether it is a bull, bear or reversal. 3. Gann has specified not to trade in the 3" time period of the trend since bigger swing in price is expected in that time period. 4. Square of numbers and 50% of the difference between those squares are significant supports and resistances, but cannot be traded by themselves. 128Gann’s Method Gann Tools & Techniques 5. There are 6 mathematical proofs for a support and resistance. a. Angles from top and bottoms: If the previous swing high / low price and the current high and low placed in the same angle then the current price act as a resistance or support . Based on this rule gann line is defined. b. Angles running horizontally i.e. the previous tops and bottoms: These are the price points where the previous swing high or low price touched in any future time. c. Time cycles (vertical angles) : If there are three or four days of sideways movement after a high day and this is followed by a down day with high 129Gann’s Method Gann Tools & Techniques volume where low is lower than the low of the sideways movement then the low of the sideway movement act as a point of Tesistance. d. Crossing of important angles originating at zero. These are the 0,360,720 etc considering the 1 at the centre of the gann wheel. For any price its 360,720, offset angles as discussed in earlier chapter are considered as the major supports and resistances. e. Crossing or coming together of angles from double or triple tops or bottoms. Any price squares with the price of double top high, triple top high, double bottom low and triple bottom low are potential resistances and supports. f. Squaring of time and price. Under this more than 5 techniques we have discussed in the earlier [Link] can refer the respective chapter. 130Gann’s Method 34 intraday trading techniques Chapter 8 131Gann’s Method 34 intraday trading techniques 132Gann’s Method 34 intraday trading techniques 1. Intraday Beta Decoupling strategy Introduction: This is the method to which I trust a lot. I do not say this is a full proof method. However the accuracy or probability of success of this method is 60 to 70 %. This is my self-innovated trading technique. No one ever before has presented this technique. If you are one of the readers of this book then you can assume that only through you like people this technique will spread to others. ‘Beta’ of a security is known as the sensitivity of the security towards the index movement. For example - a security is having beta as 1 means each one rupee change in index will impact Rs 1 /- in the security. When I looked into the formula of beta I found that it has used two functions from statistics named as covariance and variance. I have expanded my thought to establish the beta relation between two different scripts, between two different indices, between more than two securities from one index and so on. Why it is a valid 133Gann’s Method 34 intraday trading techniques mathematical technique? My first argument is that Thave not changed the very definition of beta. Secondly as a student of mathematics I knew in statistics all the methods which never corrupt the original data is considered as a valid technique. In this chapter I am going to demonstrate that how mathematically you will compute the beta and how to take the trade decision when beta starts decoupling. What is decoupling? In my words it is the simple deviation from the historic occurrence. For example: If I will say “in Chennai city every year in the month of August 15 days used to be rainy days”. In any particular year if the above statement is proved wrong then you can say it is decoupled. In the context of capital market the decoupling phenomenon is quite similar to the above example. However decoupling is also a true phenomenon in capital market. Example : If] will say that the ICICI bank and HDFC bank pair beta is 1.25 that 134Gann’s Method 34 intraday trading techniques means each Rs1.25 change in ICICI bank will bring Rs1/- change in HDFC bank. This is not true always. Some times it will deviate or decouple and hold for the future days also. While implementing this concept into action I will follow a different approach. In the subsequent section I will demonstrate examples to explain this concept. Beta Interpretation: The mathematical definition of beta is “Beta is defined as the change in the portfolio value with respect to the index value”. You can interpret it in many different ways. a. The sensitivity of the securities in your portfolio with respect to the index movement. b. High beta securities yield more as compared to the low beta securities available in the same index segment. But I will think in a different way to interpret it. 1. Ineed to devise a system of trading which will be applicable for intraday 135