SQUARE OF NINE PRINCIPLES AT WORK

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GANN ANGLES WITHOUT TRYING?

W.D. Gann used geometric angles drawn from pivot highs and lows to visualize how the market was balancing price and time. The most important angle, Gann said, was the 1x1 angle which was allegedly set at 45 degrees. Many so-called Gann analysts believe 1x1 means one point in price per one day of trading. Fast markets moved at 2x1 which allegedly meant two points of price per one day of trading. You can still buy "special" Gann charting paper (that must be woven with gold) if you believe that. What happens when you want to see a 1x1 angle on the Dow which is trading at 10,000? One point a day for 10,000 days doesn't cut it.

I suppose you could try all kinds of different price conversions or slope calculations for different grid sizes but good luck when you want to accomodate different computer screens. You can try that too, but you're looking for things only where the light is shining the brightest. W.D. Gann used geometric angles alright, but they had nothing to do with grid or paper size. Gann angles are based on the geometry of the circle. 360 degrees. When we started experimenting with our mathematical application of the Square of Nine we were not looking for a way to draw Gann Angles, 1x1 or any other kind, but that may have been the result. Even if we weren't trying.

WHY IS A ROADMAP CHART CHANNEL DIFFERENT FROM A TRENDLINE?

The Roadmap grid is drawn immediately after a suspected pivot point occurs in the time frame in which you are trading. When you draw a Roadmap grid you are not channeling a price pattern. The prices haven't happened yet! The dimensions of the grid are fixed (by you) and remain constant for the duration of the new trend. If, indeed, the suspected pivot point is a change in trend, prices will often remain entirely within the diagonal grid channels for the life of the new trend. Possibly for months or years (see Weekly SPX Roadmap below).

HOW DO YOU KNOW WHAT GRID SIZE TO USE?

How do you determine the dimensions of the grid? Every ticker has its own natural vibration, usually based on a 90 degree or 60 degree set of Square of Nine angles. We use 90 degree proportions for our SPX grid. W.D. Gann said more than sixty years ago that 90 degrees was the natural vibration of the US stock market, and despite the profound economic and social changes that have occurred since then he's still right. Some traders prefer a 60 degree set for US Bonds and some commodities. We have made it easy to experiment by including, upon request, a beta version of the Square of Nine utility program (screenshot) we use to draw these charts to all current and past buyers of our Square of Nine book.

Although we believe that the Roadmap Charts are a valuable trading tool in their own right they only tell a small part of the story. The grid is based entirely on Square of Nine principles and the horizontal grid lines do show proper aspects of the starting price, but the Roadmap Charts do not tell you where and when price and time have squared or will square in the future. That requires some uncomplicated but necessary calculations. We show you how to do that in our book.


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