Chapter 5 | 3 min read

Making Gann Charts

Introduction

Gann said charts are a record of past market movements, and since the future repeats the past, charts are the most important tool of a trader. He kept daily, weekly, monthly and even yearly high and low charts. In this lesson, you will learn which charts Gann used and how to set them up for Indian stocks.

Types of Gann Charts

1. Daily High-Low Chart

Shows the high, low and close of each day. Used for timing entries and exits and for fast-moving markets.

2. Weekly High-Low Chart

Shows the weekly range. Gann said the weekly chart is very important for detecting the first change in the main trend.

3. Monthly High-Low Chart

Shows the bigger trend. Monthly tops and bottoms are major levels that can act as support or resistance for years.

4. Yearly Chart

Used to study long-term cycles, which you will learn in the Gann Time Cycles course.

The Importance of the Closing Price

Gann stressed recording the closing price on daily, weekly and monthly charts. A weekly close above an old weekly high is stronger than a single intraday spike.

Chart Scale: A Key Gann Idea

For Gann angles (Course 2), the chart must have a fixed scale where one unit of price equals one unit of time. For example, on a daily Nifty chart, you may decide that 1 day = 10 points. On a Rs 500 stock, 1 day = Rs 1 or Rs 2. You will learn more about scaling in the angles course.

What to Record

  • Major tops and bottoms with their dates.
  • The number of days, weeks and months between tops and bottoms.
  • The range from each major low to each major high.
  • Volume near important tops and bottoms.

Example: Setting Up a Nifty Record

Suppose (illustrative figures) Nifty makes:

  • Low: 21,800 on 5 June
  • High: 24,600 on 1 August (57 calendar days later)
  • Low: 23,400 on 5 September

Record: range of first rise = 2,800 points in 57 days. Fall = 1,200 points in 35 days. Halfway of the rise = 23,200. Nifty held above halfway, which Gann would consider a sign of strength.

How Much History Do You Need?

Gann studied decades of data. For Indian traders, try to study at least 3 to 5 years of monthly and weekly charts and 1 year of daily charts for the stocks you trade.

Which Stocks to Chart

  • Nifty 50 and Bank Nifty for the overall trend.
  • A few liquid leaders from major sectors, such as banking, IT, energy and auto.
  • Gann advised trading the leading, active stocks, because they make the biggest moves.

Use GoPocket Charts

The GoPocket app offers advanced charts with daily, weekly and monthly timeframes and 100+ indicators. Open the monthly chart of Nifty first, note the major tops and bottoms, then move to the weekly and daily charts. Keep a notebook or spreadsheet with dates, prices and time counts for every major swing.

Frequently Asked Questions

Which timeframe is most important?

For swing trading, the weekly chart for trend and the daily chart for timing.

Do I need special Gann software?

No. A normal chart and a calculator are enough to learn the basics.

Key Takeaways

  • Keep daily, weekly and monthly high-low charts.
  • Record dates, ranges and time between swings.
  • The closing price is very important.

Disclaimer: Figures are illustrative, not actual market data.