Gann Hilo Indicator

The Gann HiLo Activator, created by Robert Krausz, is a trend-following technical indicator used to help detect trend direction and generate with-trend entry alerts. As part of a trading method known as the “New Gann Swing Chartist Plan,” it works best when paired with the Gann Swing Indicator and the Gann Trend Indicator.

What is the Gann Hilo Indicator?

The Gann HiLo Activator is a simple moving average of the highs and lows of the previous three periods. It is a trend-following indicator that uses moving averages theory to reflect the market’s direction of movement. The Gann HiLo activator is responsible for creating entry signals in the trading strategy outlined earlier, but it also helps suggest stop-loss levels.

Setting up the Gann Hilo Indicator
Setting up the Gann Hilo Indicator

Gann Hilo Strategy

The Gann Hilo Indicator’s signals can be interpreted as follows. When the price action is above the Gann Activator, a bull trend is in effect, signaling that long entries could be taken. During an upswing, the indicator is calculated using the lows of the prior three periods. If the indicator is drawn above the price, it indicates that the market is in a bear trend, and you could limit your trading to short positions. During a downtrend, the Activators calculations are based on the highs of the previous period.

The moving averages of the high and low prices over the last several candles are calculated by the algorithm. The average is derived by default using the last three candles. The technique plots the opposing moving average if the close price falls below the average low or goes above the average high. If the price crosses above the average high, for example, the algorithm will plot the average low. If the price then falls below the average low, the algorithm will stop charting the average low and begin plotting the average high, and so on. Thus, the HiLo Activator plot is made up of parts at the top and bottom of the price plot. Those on top indicate bearish conditions, while those on the bottom indicate bullish conditions.

Buy Signal

The following could be your checklist for a buy trade:

  • When the current trend is bullish.
  • When price is above the Gann Activator.

Once these two events occur:

  • You could open a buy position once the price crosses above the Gann Activator and after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when price crosses below the Gann Activator.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Gann Hilo Indicator Buy Setup
Gann Hilo Indicator Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the current trend is bearish.
  • When price is below the Gann Activator.

Once these two events occur:

  • You could open a sell position once the price crosses below the Gann Activator and after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when price crosses above the Gann Activator.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Gann Hilo Indicator Sell Setup
Gann Hilo Indicator Sell Setup

Gann Hilo Pros & Cons

Pros

  • The Gann Hilo Indicator helps give entry and exit signals.
  • Using the theory of moving averages, this indicator may predict the direction of the market trend for the trader.

Cons

  • The Gann Hilo Indicator may not function as much as it ought to if not used alongside the Gann Swing Indicator and the Gann Trend Indicator.
  • This indicator may not meet the trader’s expectations in a narrow-ranging market on smaller timeframes.

Conclusion

The Gann Hilo Indicator is a technical tool which, though may serve well when used alone, is best combined with the Gann Swing Indicator and the Gann Trend Indicator. The indicator is useful to traders who belong to all levels of experience, and it is quite easy to understand. The Gann Hilo Indicator is a trend-following indicator which would be especially beneficial to traders who love riding trends, but they also must be aware that there is no profit guarantee.