Gann Box indicator - description and types of the instrument
An important role in Forex trading is played by price resistance and support levels. They can be applied both manually and using special indicators. For example, the Gann Box tool is a set of intersecting lines that make up a single symmetrical shape. They are drawn independently or using the indicator of the same name.
How the Gann Box indicator works?
This tool includes several indicators combined into a single whole. Graphically, it represents many lines crossing the candles on the chart at different angles.
If you look closely, you can see that some of the lines reflect the price levels of support and resistance. Others go at angles to form supply and demand zones. Focusing on the levels, you can not only open orders, but also set stop losses, as well as close deals manually or by take profit.
The indicator is based on the well-known Gann Angles algorithm. On their basis, a "box" is built in the form of an intersection of a number of lines. It has a rather complex structure - in fact, it is a cube that is inside an even larger square. Moreover, the square forms a scale by which you can determine the price volatility, the duration of the trend development, and also measure the strength of price impulses (sharp movements).
How to build a Gann box: step by step instructions:
You can build all the lines that make up the box yourself. the sequence of actions is as follows:
First, you need to put the point at which the price was at the beginning of the trading day.
Then 2 points are set - the minimum and maximum price values for the same day.
Vertical and horizontal lines are drawn through these extrema, intersecting at right angles.
Further on the chart, points are found that are close to the price maximum of the current day.
Similarly, the points are determined slightly above the minimum level.
Lines are drawn through them - vertically and horizontally.
The result is a square, which is called the Ghana box. The area it covers is sometimes called the squared work chart or simply the work area.
At the final stage, you need to build the corners and draw the box itself. Divide the square in half along opposite axes. It turns out 2 halves:
• The first is time.
• The second is the price.
Then diagonals are built, which will show the direction of the trend movement. To do this, connect the corners of the square - the top with the bottom. You will get something like this.
Building a box in the corners
Another way to build a box is to use an angular scale with different ratios of angles. Moreover, the size of this ratio is in direct proportion to the aspect ratio (axes) of the box. For example, box 144 has equal horizontal and vertical axes. Based on this figure, you can build another box with an aspect ratio of 2 to1. Then it will no longer be a square, but a rectangular box.
4 types of Gann boxes
In practice, different types of Gann boxes are used - they differ depending on the side of the figure:
Box No. 52 (box side 52 points).
Box No. 90 (respectively 90 points).
Box No. 144 (144 points).
Box No. 360 (360 items).
Moreover, these boxes are used as basic ones. Derivative figures are also used, the sides of which are many times larger. For example, based on 52, you can build a box of 52 * 2 = 104 points, based on 90 * 2 = 180 points, etc.
An example of building a Gann 144 box
The Gann 144 box has 2 identical sides:
144 points (vertical);
144 time units (horizontal).
The units of time depend on the selected timeframe - for example, minutes, hours, days, etc. To understand how to plot it, consider a specific example on the EUR / USD chart. The instruction is as follows:
Measure 144 units vertically and horizontally, starting from the highest value of the High price.
Extend the horizontal line by 144 candles forward.
Now we need to take a scale of 193.15 - this is one unit of price. To determine the height, 144 is multiplied by 193.15 and you get 27813. This is the number of points that make up the height of the box for the Mn timeframe (month).
However, this height will not be enough, because price impulses will go beyond it. Therefore, you have to take the derivative figure by multiplying 27813 by 2. That is, the total height will be 55627, not 27813 points.
Now you need to zoom in a little so that the box stretches and takes a square shape. It should be divided in half by drawing 2 lines - vertically and horizontally. Also draw 2 diagonals, connecting the corners of the square.
Then you need to apply additional sides. To do this, connect all opposite corners. The result is a Gann box.
Gann Box indicator
It takes quite a long time to constantly build a Gann box on different charts. Therefore, in practice, it is easiest to use the Gann Box indicator. This is a custom tool that is downloaded separately and added to the MT4 terminal. To apply a pattern, you need to enter the initial parameters:
Price high and low of the current timeframe;
A period of time (for example, the last 90 days);
Shape type - for example, box 144.
After that, a pattern with all lines will appear on the chart, and they no longer have to be drawn manually, which takes a lot of time.
The box shows:
• Points at which the trend has changed;
• Points at which the current trend began to develop more strongly;
• General market trend;
• The points at which the price has made or will roll back.
Based on this, it is possible to determine the moments for entering the market, the levels at which the stop loss and take profit should be set. Therefore, the Gann box can be classified as a universal indicator. It can be used on any timeframe and on almost all assets - currency pairs, stocks, precious metals, and others.
Gann Box indicator, methods of drawing boxes on the chart
Indicators used by traders for technical analysis of the market help to find the optimal points for opening orders, and also reduce the time that needs to be spent on assessing the current market situation. The more accurate the signals of such instruments are, the more likely the trader will make a good profit. The tool in question is also designed for technical analysis. It is based on the theory of Gann and has long been the most profitable among technical tools.
Gann Box indicator for forex
This indicator is an integral part of the combined Gann system. It is a combination that consists of several simple indicators, the work of which has been refined and combined into a single whole.
So, the main idea of the instrument in question is that it plots key support and resistance levels, as well as the boundaries of extreme zones on the chart. These levels are incredibly important because they are used by traders to open positions, place protective orders and calculate potential profits.
At the moment, a fairly large number of varieties of this indicator have been created, but all of them are created on the classic instrument - "Gann Angles". It is the indicators of the last indicator that underlie the construction of the box, as well as in the construction of price levels on the working chart.
The Gann box is quite complex in structure. On the working graph, this tool looks like a cube that is in a square. This square acts as a kind of indicative scale that is used to determine the strength of the chart volatility, as well as to determine the strength of the trend. You can also use it to determine the potential of emerging price impulses.
How the indicator is built?
If a trader wants to build the "Gann Box" on his own, then he will need to perform the following algorithm:
To begin with, the trader needs to find three points on the chart: the first point is the price level at which the price was at the beginning of the trading day, the second point is the price maximum for the current day, the third point is the price minimum for the current day.
Further, through one of the price lows or highs, the user needs to draw two lines - horizontal and vertical.
Next, the trader must find the point of the price maximum, which is just below the second point (look at the first point).
Then the trader needs to find a point that is several points higher than the third point (see the first point).
Next, you need to draw lines through these intermediate points. It is necessary to draw a vertical along the point that was found in the third paragraph, and a horizontal line must be drawn along the point that was found in the fourth paragraph.
After completing all the actions, a kind of square will appear on your working screen, the sides of which will inform the user about the degree of chart volatility within the current trading session. This phase of tuning the Gann Box is called squaring.
After that, the final stage of setting up the indicator comes - this is the construction of the corners of the square, as well as the drawing of the instrument itself. In order to perform these necessary actions, you need to divide this square into two equal parts along the opposite borders of the graph.
You can also draw diagonals at the bottom of the pattern, which will inform you about the current trends in the market. To do this, you need to draw a line between the upper and lower corners of the formed square. If you look at the further movement of the chart, you will be able to notice that it will move at an angle that corresponds to these lines.
Gann Box tool classification
You can create tools in different sizes. It is in the different dimensions that different versions of this indicator differ from each other. You can determine which type of indicator is in front of you immediately after you see it.
Classification of boxes
Let's take a look at the classic version of the Gann Box tool.
The box is fifty-two, that is, the side is fifty-two points.
The box is ninety, that is, the side is ninety points.
It is important to understand that not only such formations are considered effective, but also other derivatives from them, that is, such shaped configurations, the sides of which differ from those described above by a specific number of points. A simple example - a box with a side of one hundred and four will be derived from an object with a side of fifty-two points.
Let's take a look at some of the options for curly configurations. A box with a side of fifty-two is taken as a basis. Based on such a box, you can build patterns that will also perform well.
At the same time, it is very important to ensure that the sides of the constructed figures correctly correspond to the sides of the original pattern. The correct ratios are two to one, four to one, eight to one, three to two, or two to four. That is, if you choose a ratio of four to one, then the side of the new box should be equal to two hundred and eight points. Performing such simple manipulations with the original figure, you will get several tools at once, the effectiveness of which will be the same.
Differences in configurations
First, you need to understand in what cases you need to use this or that formation. This will facilitate the subsequent analysis of the graph.
We recommend that you use this when working with a weekly time interval. This is due to the fact that thanks to such a formation, you can clearly see the annual market trends, and since there are fifty-two weeks in a year, this is the configuration that will suit you. One box will correspond to a time frame of one year.
The lines that are plotted on the chart represent fifty-two value points and fifty-two time units.
Most traders believe that the sizes of the constructed indicator are calculated only in points. This is fundamentally wrong. The unit in the figure depends on the specific coordinate axis. If it is a horizontal, then this line shows the unit of time, and if it is a vertical, then this line is calculated in points of price.
Box with a side of ninety
This configuration is best used on a daily time frame. Such a box marks out a period of ninety days on the chart.
Thanks to this type of instrument, the user can analyze the movement of the chart during a quarter of a year and draw a conclusion about where the price will go next. That is, if the chart is steadily moving up during the quarter, then there is a high probability that the chart will continue to grow.
Box with a side of one hundred and forty four
This configuration is the most commonly used one. It is with this type of instrument that professional traders and large market players work. Thanks to this box, you will be able to conduct a thorough analysis of the chart. The secret lies in a special technique.
One hundred and forty-four box is based on a monthly time frame. As you know from the course of school mathematics, the number one hundred and forty-four is the square of the number twelve, which is equal to the number of months in a year.
Thanks to this version of the indicator, you will be able to predict further price movements throughout the year, since after building the box, all key support and resistance levels will be visible on the chart.
Box with sides three hundred and sixty
The main feature of this type of indicator is that it can be used when working with absolutely any time interval.
In this version, the number three hundred and sixty was not chosen by chance. It is a degree measure showing the deviation of the current indicators from the initial ones. Indicators can be calculated both in price points and in time.
The construction is based solely on the current price of a particular currency pair. When drawing such a box, one unit should be a multiple of ten. Therefore, such a configuration can be attributed to the group of progressive figures, because each subsequent element is increased tenfold. You can work with this indicator at any time interval.
The above configurations are considered classic. There is also another way to build a Gann box - using an angular scale. It is much more accurate, but the construction process is quite complicated.
How to build a box using an angular scale?
In order to build a shape, it is necessary to use an angular scale with a different ratio of angles.
If the desired box with a side of one hundred and forty-four has equal axes, then it must be multiplied by a scale with an angle ratio equal to one to one. If some axis is less than the second, then it is necessary to use a scale with a ratio of two to one.
Gann Box indicator for the MetaTrader4 trading platform
In order to independently build a tool on your work schedule with an acceptable aspect ratio and angles, you need to carry out a fairly large number of calculations and calculations. It also takes a lot of time to build the necessary lines, which significantly slows down the process of working with the market.
To facilitate this process, tools have been created that perform all the necessary actions for you and plot all the necessary lines on the chart. Ultimately, the user will receive a transformed screen. The Gann Box tool can help a trader with this. Let's take a look at how it works.
This indicator works with the Meta Trader 4 terminal. For the tool to start working, you only need to specify the initial indicators - price highs and lows of the chart, timeframe and the desired type of configuration. Immediately after that, your home screen will be transformed and will show the information you need.
The Gann Box indicator allows the user to carry out a full analysis of the chart and get such indicators as:
• Pivot points on the chart.
• Strengthening points of market trends.
• Correction points.
• The direction of movement of the chart.