One of the techniques that find vast space among the so-called trend follower traders is Gann Pull Back. Simplicity and easy graphic visibility certainly make it an excellent trading tool capable of accumulating earnings in the primary trend direction.
Therefore, the purpose of this pattern is to allow the trader to enter with a specific dose of security “in the current” and exploit better price levels from the risk-return ratio.
But let’s see what the six main rules of Gann Pull Back are
- You only enter in the direction of the trend
- For a sell set up, from the pivot point of at least three bars with increasing maxima or two maxima combined with an inside day must be verified. If, on the other hand, you want to identify a buy set up, the sequence from the maximum pivot point must be three bars with decreasing minimum or two minimum and an inside day
- For a sell set up, a couple of pips are entered below the minimum of the last pullback bar. In the case of a buy set up, a couple of pips are joined above the maximum of the previous pullback bar
- If the market reaches a new high in addition to the third bar, the input level will adjust a couple of pips below the low of the previous day. The same thing goes for the buy set up
- For a sell set up, you need to place a stop loss a couple of pips above the high of the day before the bearish entry. For a buy set up, the stop must be placed a couple of pips below the minimum of the day before the bullish entry
- Exit the trade for money (เทรดให้ได้เงิน which is the term in Thai) even without the interest of the stop loss if the market on the day of the trade closes the sessions above the opening of the same day and above the closing of the previous bar (this applies to the sale operation). Exit the trade if the market on the day of the trade closes the session under the opening of the same day and closing the previous bar if we are operating in a bullish trend