William D. Gann (1878-1955) Was a legendary trader who has developed several unique methods for the analysis of price charts. He developed a unique combination of precise mathematical and geometric principles that are not easy to understand. Analysts methods Hanna spent years studying old charts and records to find the secrets Hanna, and countless numbers of people continue to argue that discovered the new technology nuanced Hanna, who escaped from the other. Perhaps someone has discovered. I can not evaluate all the statements, because I am not an expert, Hanna, and did not read his notes.
Don Hall has published a book and developed a system called a pyramid (Pyrapoint), which seems based on the principles of Hanna. The purpose of this article is to take one of the ideas used in the work of Don, and present it from different points of view and do on the basis of this conclusion.
Geometric angles Hanna trend lines are drawn from the apparent peaks or grounds under certain angles. The most important angle is 45o, which means that the slope of the line is a unit price per unit of time. (Note: Depending on the scope of the schedule, the line might look like, and may not held at an angle of 45o). Many analysts Hanna used the phrase "box of time and price" in the method of Don, it is expressed as follows:
Price = Time squared ilm P = t 2
This relationship between price and time can be shown graphically, as shown in the diagram below. The values of the time 10, 20 and 30 are marked by arrows.
To understand better, let's take the top or the apparent authority arising from the price of 400. According to the theory, the essential point is a mathematical link. Start a new curve of time in this temporary location, and this will give us the anticipation of future peaks or grounds, which should appear on the curve. This principle can be expressed as, "When the price meets the time bound to change." This attitude of "price meets time" shown in the following diagram.
With the apparent apex or base of P, if the price meets the curve at point (A), it will do so at 18 bar. Time periods (A) equals the square root of the price at the point (A). The price at the point (A) equals 324. The square root of 324 equals 18.
If the price meets the curve at point (B), then it will do so at 20 bar. Time for a point (B) equals the square root of the price at the point (B). The price at the point (B) = 400, so the time for B = 20 bars.
If the price meets the curve at point (C), then it will do so at 22 bar. This is a very interesting concept!
Keep in mind that the price and time bound formula: P = t2 or t = square. root (P)
Slope of trend line
Now we will go further and define the slope of trend lines obtained using the relationship of price and time. Let's look at the following model:
As shown in the previous paragraph, the next time the curve would need to go t bars to achieve a price P. At time t +1 price meets the curve at the price of P1. Now, let's find the slope of trend line that connects the P and P1 (shown in blue).P = t2
P1 = (t + 1) 2 = t2 + 2 t + 1 = P + 2 t + 1
Slope = (change in price) / (Change in time)
Changes in the price = P1-P = P +2 t +1- P = 2t +1 = 2 t +2-1 = 2 [t +1] -1
Changing the time = t + 1
Therefore, the slope of P to P1 = (2 [t +1] -1) / (t +1) = 2-1 / (t +1) = 2-1 / sq. root (P1)
If we provide prices for all three numbers, they will be in the range [100 ... 1000]. Using the pricing formula for the boundary slope, we can get a tilt range as follows:
For P1 the price equal to 100, the tilt upward trend line to 100 = 2 - 1 / 10 = 1.9
For P1 equal 1000, the tilt of the ascending trend line to 1000 = 2 - 1 / 100 = 1.99
Tilt upward trend line in the middle of this price range is 2 - 1 / sq. root (500) = 1.96
Let us call this trend line in the 45o line, because we calculated the slope using a single price change from P to P1 with a unit of time t. For this line of 45o, the tilt is mainly 2. I think this explains why Gann used the 2 cents as the price interval of the grid in their daily schedules. Such a position naturally gave scale Gannu at 45o angle with an inclination of 2 cents per bar. I have shown that 2 is the inclination of the ascending trend line of 45o, which is derived from the relationship of price and time, appearing in the formula: P = t2.
You can obtain this result for the slope downward trend line from P1 to P:
Tilt P1 to P = (- 2 t - 1) / (t - 1) = (- 2 [t - 1] - 3) / (t - 1) = -2 - 3 / (t - 1) = - 2 - 3 / (square root of (P) - 1)
For the price of P equal to 100, the tilt downward trend line to 100 = -2 - 3 / 9 = - 2.33
For P equal to 1000, slope downward trend line to 1000 = - 2 - 3 / 99 = - 2.03
Again, the slope of descending trend line is close to the value - 2. Thus, - 2 is a good approximation to the slope of 45o downward trend line.
The use of pyramid points
Now let's see how the above calculations can be applied to the price schedule. I have used these calculations to develop a tool for analysis in the ESPL, which holds the horizontal line at the settlement price levels, and nearly vertical curves over time the estimated time intervals. This creates trapetsividnuyu a grid similar to the previous illustration. (Don Hall calls them a "square"). Diagonal lines connecting the corners of a trapeze for the trend lines of support and resistance.
Below is a daily schedule with the start of construction JNPR trapetsividnoy grid at the highest maximum. All price levels, time intervals, and trend lines are mathematically based on two data points: the price - $ 244.50 and the date - 16.10.2000g.
The graph is represented much more than an opportunity to explain in this article. But mention the main characteristics. Horizontal lines are marking the price on the left, which is the degrees of rotation around the Square 9. This is described in a book on pyramid points, but there is no opportunity to explain in this article. Please note that in this example, the time line is almost vertical. This is some kind of method of construction described in the book, using vertical lines. The curve of time forms the left and right sides trapeze, and price levels form part of the base and top.Time: Time measured time curve, which relates to cost. Remember: When the price meets time, change is inevitable. Please note, for the first time a line is designated 12 in the base and 16 at the top. If the price meets time on 720 lines, then the time for change would be the 12th bar from the top. If the price meets time on 540 lines, then the time for change would be the 13th bar from the top. For the 360 lines of time, it would be a change in the 14th bar. For 180 lines, and change the time it would be in the 15th bar. At the 0 line, it would be at 16 bar. That is why the peak of the line of time is marked 16 and the base line is marked 12. Starting from 16, for each 180o reduction by decreasing the time for one bar, or 180o for every increase by increasing the time at a bar. Please note that the market is actually experiencing the change, when the price met the curve of the time display from 12 to 16!
Price at 12 - 16 temporary lines used to obtain predicted values for the following temporary lines, which is marked 25 - 31. As the price meets the curve of each time a new time line is based on the price. Each of the curves of time demonstrates the excellent correlation with changes in the market when the price meets the time line.
Price: visible maximum - $ 244.50 is the basis for the calculation of horizontal price levels that are shown. Remember: the market is looking for these price levels, and you can calculate these prices in advance. Please note, as the market fell to 540 lines, and went up to 180 lines, and fell to the 900 level has risen to 540 levels fell to 1080 levels, and rose to the 720 level.
Trend lines: descending trend lines in 45o shown in red create a price channel, or as Don calls him - "price road. Rising trend line at 45o, shown in green a "price road, going in another direction. The red line - this line of resistance above which should close the market to change direction with the Bear on byche. Green Line - this line of support, below which should close the market to change direction with bovine at Medvezhye. All we used ascending trend line delineated below minimums during an upward trend, showing support, and the descending trend line, the above maximums, with an upward trend to indicate resistance. The advantage of the above tool is that the diagonal trend lines are computed in advance, and the market seems to agree to move with them. The price should be up and down the channels. The more you look at an example, so I think the more you will enjoy this tool.
Within-day schedules
Tech pyramid points can also be successfully applied to the intra-day charts. The size of the price interval used in the afternoon schedule, will be too large for use in intra-day schedule. No problem. Don said that there were squares within squares. All that needs to be done - is to divide the price range for the half, quarter, or eight parts. The time interval is calculated from the price and will not change.
One point that needs to be clear: If the calculated time interval is equal to 11 bars, as well as the price is 121, what is the intra-day temporary format should I use? If you use 1-minute bars, we have the curves of time over 11 minutes. If you are using 2-minute bars, the curves of time would take place in 22 minutes. At 5-minute bars, the curves of time held at 55 minutes. From the selection of intra-day format of the bars is strongly related time interval, calculated curve for the next time.
To solve this problem, I display the 1-minute schedule and cyclical instrument used to measure the rhythm of the cycle from the base to the ground, from the top to the top and on the ground to the top. When I found the width of the cycle, which seems appropriate to catch the multiple turning points, I found the number of minutes in the cycle. I use this formula to assess the use of intra-day temporary format.
Within-day temporary format bar width = cycles per minute / sq. root (P)
Example: At 1-minute schedule JNPR I found the cycle in 65 minutes, when the price was about $ 133. Therefore, an interim format bar = 65 / sq. root (133) = 5.6 minutes in a bar. Thus, the 6-minute schedule, or perhaps a 5-minute schedule should show good results using the tool pyramid points. In the study of 5-minute schedule, we actually found an excellent correlation. In this example, I used a smaller price intervals for the separation of 180o-s intervals in eight parts.
Look at the schedule and you will see how the price moves up and down trend channel. Notice how the trend changes occur at or near vertical curves of the time, and how the market is looking for a horizontal price levels. This is a detailed diagram of the price movement is calculated in advance of visible peaks, reached on 12 January at 9:35 am.ensignsoftware.com
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