Gann 2 bar method - Major - Intermidiate - Short Trends
Has anyone worked with Ganns trend finding method to enter into harmonic patters? Here is the general idea ....
Here is the link to the artlical I am just about to quote.
Swing for the Fences | Online Trading Academy
You may have heard the term swing high or swing low in trading discussions and in books. But do you know what it means or how you can use them for your trading? Swing highs and lows can be a beneficial tool in identifying potential trading opportunities and even warning for trade exits and market direction shifts.
The classic definition of a swing low is a low on a candle or a bar chart that has a higher low on either side. A swing high is one that has a lower high on either side.
When we are searching out opportunities to buy, we want to buy at strong levels of demand. Those are usually the origins of a powerful thrust to the upside and are usually found to be swing lows themselves. For selling, it is similar where we look for strong supply levels that are also usually a swing high with a powerful drop following it.
Not all swing lows and highs are created equal. Followers of Gann Analysis like to mark their studies from swing lows which were preceded and followed by at least two higher lows. Their swing highs are preceded and followed by two lower highs as well. A trader trying to filter out smaller, less powerful supply and demand may want to choose this alternative method. This also fits into the Online Trading Academy’s Odds Enhancer: Time at Level. We find that the less time price spends at a level, the stronger it is in the future.
Many traders will use swings as points for setting stops. When you are in a long position, you want to trail price as it moves higher so you can lock in your profits when you have them. One way to do this is to set your stop just below the most recent swing low. Prices will move up in the trend and naturally retrace before moving higher. After such a retracement, you can move your stop to the newest swing low when prices move up to a new high in the trend. You can repeat this process until you are either stopped out or reach your target. If a swing low is broken, then the definition of an uptrend (higher highs with higher lows) has been broken and you should not be in a long position anyway.
The same technique can be used to protect against giving up profits in a short position. You would set your stop above the recent swing high. With the same methodology, you would only tighten your stop to a lower swing low once price has made new lows in the downtrend. If the swing high is violated, you have made a higher high and your trend is now over.
No matter how you trade, placing stops is crucial to protecting yourself from blowing up your account. There is no one, perfect way to set stops. But any stop is better than none at all and trading with emotion. Trade safe; use your stops to protect yourself and keep you from giving back profits. That is my favorite way to stay green!