Price and Time Trading – Fibonacci vs Gann Square of Nine
There are several methods of trading and many types of investors with different investing personalities and risk tolerance. One method that is overlooked by investors is trading price and time, a way of forecasting potential market turning points. Fibonacci and the Gann Square of Nine are two of these methods.
Fibonacci
Usually by taking the previous high and low with the dates and using ratios, the potential turning points in the market are calculated. Fibonacci ratios are.382,.50, and.618. Basically you take the difference in the prices and dates (low and high) and multiply it by the three different ratios to obtain a possible market turning point. If you are calculating price, you will take for example:
- High was 400 on June 30th
- Low was 300 on January 1st
- Calculation: 400-300=100
- Next you multiply 100 by each ratio and subtract the second number (400) which occurred after.
- 100 x .50 = 50 400 – 50 = 350 – In this example the reversal point is 350.
Repeat the same for the other two ratios:.382 and.618
You will end up with three potential turning points for price. In this case the numbers are: 350/361.80/338.20. These are the possible prices.
For time, you will do the same with the dates. Apply the same calculations of the difference of the 2 dates. You will end up with three possible dates where turning points will occur in the market. By watching the market, you will see when one of the potential price hits at one of the potential dates. When this happens, price and time have met.
Gann Square of Nine
For the Gann system, a program is necessary to do the calculation. Only one price and date are used, but it is based on the squares in the pyramid and the mathematical alignment. This method is more complex and better left to the professionals.
By: Suzanne Bender
