Chapter 12 | 3 min read

Gann Trading Plan

Introduction

You have now learned Gann's basic rules, capital protection, psychology, charts, swing charts, formations, breakouts, volume and pyramiding. In this final lesson of the beginner course, we combine everything into a simple Gann trading plan that you can follow on the GoPocket app.

Step 1: Check the Main Trend

Open the weekly and monthly charts of Nifty on GoPocket.

  • Is Nifty making higher tops and higher bottoms? The main trend is up.
  • Is it making lower tops and lower bottoms? The main trend is down.

Gann said: always trade with the main trend.

Step 2: Select Leading Stocks

Gann advised trading active, leading stocks. In an uptrend, pick stocks that are making new highs before Nifty. In a downtrend, avoid stocks that are making new lows.

Step 3: Find a Gann Setup

  • A double or triple bottom several weeks apart.
  • A close above an old top, followed by a pullback.
  • A swing chart turning up after a higher bottom.
  • Volume confirming the move.

Step 4: Plan the Trade (Illustrative Example)

Larsen and Toubro (illustrative) makes a triple bottom at Rs 3,400 over four months. It rises and closes at Rs 3,560, above the last swing top of Rs 3,540, on higher volume.

  • Entry: Rs 3,560 (or on a pullback to Rs 3,540).
  • Stop-loss: Rs 3,470 (below the recent swing bottom).
  • Risk per share: Rs 90.
  • Capital: Rs 5,00,000. Risk 2% = Rs 10,000. Quantity = 10,000 / 90 = about 111 shares; take 110.

Step 5: Place Orders on GoPocket

  • Search the stock on the GoPocket app and tap Buy.
  • Choose Delivery and a Limit order at your planned price.
  • Enter quantity 110 and confirm. If you are planning after market hours, place it as an AMO.
  • After execution, place a Stop-Loss sell order at Rs 3,470. Re-place it daily while you hold the stock.

Step 6: Manage the Trade the Gann Way

  • Move the stop-loss up below each new swing bottom.
  • Add smaller quantities as the stock crosses new resistance levels (pyramiding).
  • Watch for heavy volume with no progress, double tops or a break of the last swing bottom as exit signals.

Step 7: Review

Write every trade in a journal: setup, entry, stop, exit and lesson. Gann insisted on proving rules through records.

Gann's Final Advice for Beginners

  • Never trade without a stop-loss.
  • Never average a loss.
  • Never trade on hope or fear.
  • Wait for a definite signal, then act.
  • Study, study, study. The more you study past charts, the more confidence you will have.

What Comes Next

In the next course, Gann Angles and Price Levels, you will learn how Gann calculated exact support and resistance levels using angles, the 1/8 divisions, the number 9 and the Square of Nine. In the third course, Gann Time Cycles, you will learn how to forecast when the trend may change.

Frequently Asked Questions

Can I use this plan for intraday trading?

The rules work on intraday charts too, but beginners should start with daily charts and swing trades.

How many trades should I take at once?

Start with one or two, and increase as you gain confidence.

Key Takeaways

  • Trade with the main trend using Gann setups.
  • Size positions using Gann's capital rule.
  • Use GoPocket's Delivery, Limit, AMO and Stop-Loss orders to execute your plan.

Disclaimer: Illustrative prices, not recommendations. Investments in the securities market are subject to market risks. Read all related documents carefully before investing.