It’s surely the question that you all ask. The theory is pretty good but you need to let place to the practice. First, you need to know how the pyramid functions. A journey is considered as validated if the closing price is above (or below) 50 pips of the line considered. To enter in position, two journeys must be validated. Some people will tell you that one day is enough. It’s your choice but note that the validation by 2 journeys allow to eliminate a high number of false signals. According to various comments that I could picked up, I advise you to adopt this last method.

Here now is how the pyramid is updated every evening: at the close of 11.00 pm, the close price of each parity is picked up. Then, we postpone this level in the pyramid of Gann on the corresponding parity. Take the example of EUR / USD which is between 139 and 142. If at the close of Monday, the price is higher than 142 (1.42), then we put an arrow up and an arrow down if the close is below 139 (1.39). Then, we choose the type of arrow and you just need to see the legend. A blue arrow means for example that the close was less than 50 pips and therefore the journey cannot be validated. Returning to our example of the EUR / USD, we assume now a close price at 1.4210. Then i put a blue arrow because between 142 and 142.10 there are only 10 pips. Thejourney is not validated. However, if the close is at 1.4260, I would put the white arrow with a 1 into it because we are in the case of a validated journey. To validate the 2nd day, it is also necessary that the close on Tuesday is + - 50 pips above 1.42. Once the two days validated, the gann’s pyramid indicates the next target of the parity. In our example this would be 1.45 because 1.45 is the upper limit between 142 and 145 in the pyramid.

The placement of stop loss and take profit:
The Gann’s pyramid must be used in a MT or LT timescale. Indeed, objectives are around several hundred of pips, it is therefore unusual that this one was reached in one day. Mostly, the trade is done in a week. Of course, there are no précised rules, movements of the market could be violent and your stop loss or your target reaches fastly. Because you don’t trade on the day, your stop loss msut be far away to avoid being executed cause of a correction movement. Mostly, your stop loss will be between 120/150 pips. Aie!! But this is only an idea. The risk is not changed if you trade in money management. After, according to your profit’s objective, it is important to adapt your stop to block your P/L ratio around 3. (in your head: 120*3=360 pips). And yes, the risk is maybe high(and controlled) but the expectation of profit is also high. Nevertheless, although lines of different colors can be considered as objectives to reach, place your objective few dozen below (or above according to the side) is judicious. Here again, this is practice who speak. This method could make you rich. The important is discipline. You must keep your objectives and do not be scared at each movement of the market. There are days where the market will go only in the wrong side for you. This is normal because there are correction movements all the times. The market do not make a straight line to your objective.

Colors are also important to determine your objective. The reds are for examples are the most important and if 121 is broken on the fall, the objective is normally at 81 (red line below). However, if we respect that, the objective is so far that it can take years to complete. The operation is the same for each color. If a color is broken on the fall or rise, then the objective will be to the next line of the same color. The green lines are less spaced lines and so the objective can be reached on the medium term. However, to trade on the short term, the objective will be simply the next line, regardless of color. For example, on NZD / USD, the objective is at 63 if 67 is broken (green line below). Although this is not a green line, 65 which is the next line is also an objective but on a short term because it is the next line. 67 is an objective but it requires more time, you should trade then on the medium term.

You will find on the Forum members who are working to find the best way to trade with the pyramid.

Last important point: you updated each evening the Gann’s pyramid table, on which we indicate broken points, validated and others. This table is post on the Forum or in the section “technical analysis”.

To perform this study, we calculated the percentage of time that a high point or low point of the range was reached when a change of range occurred. Consider an example. The EUR / USD cross on the rise the level of 130. It is therefore in the range 130-133. 133 is its objective. If it is reached at more or less 10 pips, I count 1 in the table. If not, I put 0. The target can be reached at any time of the day. It may happen that there is only one day of validation and in this case I will put the sign "-" for the second day. The percentage represents the probability that the target is reached.

It is currently impossible to perform deep analysis given the limited data we have. The study began in early 2009 until Friday 27 March 2009. The best study would be to calculate the number of times that the line of the same color as the previous one has been reached when a buy or sell signal is given.

It is important to remember that the pyramid of Gann is not very suitable for day trading. Indeed, stop loss should be placed well below the range to avoid being stopped due to volatility in the day. However, it can be use with other indicators to determine stop loss much less distant. The super Trend for example, can be a useful tool to link with the pyramid Gann. Thus, the super trend determines your stop and the pyramid of Gann your objective.

In the medium and long term, the pyramid can be used with no other indicator by placing your stop well below the range. One hundred pips below seems appropriate. Concerning the objective, it’s up to you, but the importance of lines plays a big part. Going beyond a red line, for example, is an excellent point entry point, followed by yellow, the blue and green. The target can be for example set to the next line of the same color. Beautiful performances were achieved by using this method. These people will recognize and I’m greeting them.

Here are the results of the study:

A summarization table of the performance:

As you can see, the Gann’s pyramid offer interesting results and is a very good indicator to enter or exit the market.