The Gann Trend Oscillator is a trend-following indicator use for determining the long-term direction of the price. It was introduced by Robert Krausz in his book A W.D. Gann Treasure Discovered. The Gann Trend Oscillator ranges between +1 and -1.
What is the Gann Trend Oscillator?
The Gann Trend Oscillator defines an uptrend and a downtrend. The market is uptrend when the oscillator shows a value of +1 and a downtrend when there is a value of -1.
Krausz mentioned that when the market is in an uptrend, the Gann Trend Oscillator describes two higher highs. After an uptrend, a downtrend is predictable. Conversely, when there is a downtrend, the oscillator describes two lower lows. An uptrend is expected after this.
As you can see in the chart above, the indicator shows an uptrend after a downtrend and vice versa.
Just like the Gann Swing Oscillator, the Gann Trend Oscillator displays short-term trends. For longer-terms, we can combine another oscillator or trend based technical indicator such as a moving average, with the Gann Swing Oscillator. This helps to define the market entry and exit points.
All three Gann oscillators (Gann Swing, Gann Trend, Gann Hi-lo) can be applied together. This is known as New Gann Swing Chartist Plan.
When setting the indicator on MT4, you can change the input settings according to your own forex trading system or use the defaults.
How to use the Gann Trend Oscillator?
The Gann Trend Oscillator uses a simple method to generate signals. When the oscillator displays an uptrend, it signifies a bullish pattern and generates a buy signal. When the oscillator shows a downtrend, it’s an indication of a bearish pattern, and a sell signal is generated.
As we mentioned above, for long-term trends, the Gann Trend Oscillator compliments the Gann Swing Oscillator.
An entry signal is produced with the convergence of both these oscillators. A buy signal is produced when the Gann Trend Oscillator rises from -1 to +1 and matches the Gann Swing’s +1 value. On the other hand, when the Gann Trend drops from +1 to -1 and matches the Swing’s -1 value, a sell signal is generated.
The Gann Trend Oscillator, along with Swing and Hi-lo, produces exact entry points and determines the stop-loss levels. This is what the combination of the three look like on a chart.
I personally find that oscillators such as the Gann Trend Oscillator give more reliable trading signals on higher timeframes. This is because these oscillators can be vulnerable to whipsawing on shorter timeframes. The oscillator reacts slower to market changes on higher timeframes, hence giving less false signals.
Gann Trend Oscillator trading strategy
You can use the Gann Trend Oscillator in short to medium-term strategies like forex swing trading and forex scalping. But, it will only tell you the direction of the market. You can use the Gann Trend Oscillator with other Gann oscillators for long-term trading strategies.
Also, breakout traders can benefit from the Trend Oscillator, as it helps to show clear market trends.
Gann Trend Oscillator buy strategy
- The Gann Trend Oscillator should be upwards.
- Wait for the price bar to go bullish before entry.
- Place a stop-loss near the recent swing low.
- Exit when the oscillator drops.
Gann Trend Oscillator sell strategy
- The Gann Trend Oscillator should be downwards.
- Wait for the price bar to go bearish before entry.
- Place a stop-loss near the recent high.
- Exit when the oscillator rises.
Gann Trend Oscillator Conclusion
The Gann Trend Oscillator is a useful indicator for helping to determine the direction of the market. It can work be used on higher timeframes, for long term trading signals. For a combined forex trading strategy, you can use the Trend Oscillator with the other two Gann oscillators.
The Gann Trend Oscillator indicator can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy.
I would prefer to use the majority of technical indicators such as the Gann Trend Oscillator indicator on the 1-hour charts and above. I tend to find that these charts contain less market noise than the lower time frames and thus give more reliable signals for my forex trading strategies. This also means that I spend less time staring at charts and can also set alert notifications to let me know when price has reached certain levels or a particular indicator value has been reached.
The Gann Trend Oscillator indicator is just one indicator amongst thousands. I would not build a trading system alone, but rather combine with other technical indicators such as moving averages, Parabolic SAR, Stochastic Oscillator, RSI, ADX and price action analysis.
Of course, every trading system will generate false signals which is why money management is so important. I would personally be implementing sensible money management and only take traders that give me a favorable risk to reward ratio, ideally of at least 1:3. This means that one losing trade does not wipe out consecutive winners.
The methods of implementing the Gann Trend Oscillator indicator into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.
Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.
If you would like to practice trading with the Gann Trend Oscillator indicator, you can open a trading brokers account and choose from some of the best trading platforms. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.