W. D. GANN POLARITY LINES
Have you ever seen the market run up or down into an invisible wall? You try in vain to explain the invisible anomaly with a pivot point, moving average, or price support. And once price breaks through, it explodes like a rocket. Chances are You have encountered a “polarity line,” or WD Gann’s “resistance lines,” Which are visible only to the Gann trader. The idea is this- if a market has enough energy to close above or below a polarity line on the timeframe you are trading, the polarity that once kept it on the one side of the line now ‘flips’ and propels it a predetermined distance. W. D. Gann's writings advocate trading these lines alone, because they are incredibly simple to implement. One price determines breakout/breakdown line. Once you enter, the targets and stops are the same distance each time. When price moves halfway to the fixed target, Gann’s ‘rule of halfway’ raises stops to the breakeven line. Polarity lines seem too simple. But behind the scenes there is a bit more going on to calculate these lines. The placement of each line changes according to a predetermined formula each day, week, month, or year. It is possible to draw lines are drawn YEARS in advance, even for intraday analysis. How? Past price data is unnecessary to their construction. Gann further explains how these lines are combined with other Gann techniques and conventional technical analysis. The sky is the limit on their application, because they capture a sound premise causing breakouts. Before AAPL split, back-testing showed $96 net gain on AAPL weekly polarity lines for 2020, with less than 1 trade per week. Since it split though, we have to move back down to a target of $2.10 from nearly $4.50. The split moved it back down to a different square, and previous years at this price and target test out to around $35 per year with less than 1 trade per year. Weekly polarity line back-testing on Soybean Futures for 2020 so far (8-30-20) shows 115 points net gain, with under 5 losses, far less than1 trade per week. Target is around 14 points. Annual testing usually comes in around 220 points. The weekly polarity lines on the ES futures (always lead contract) back-tests at 227 points net up on its own ( for 2020 as of 8-30-20.) Much less than 1 trade per week. Approximately 18 points of target. 4 losses so far this year. Using the Index to get the signal (and execute on options, futures, or ETF) back-tests in the annual range of 180- 220 points, with fewer trades and a smaller target of approximately 14 points per week. Besides the above, leading, active, liquid markets such as Facebook stock, wheat, and crude oil back-test as favorable. Some markets like crude oil, wheat, and Euro use a bi-weekly polarity line method. That's juts how they vibrate. Yes, you will encounter slippage trading polarity lines on their own with a 1-to-1 risk. That slippage on the entry, exit, loss, and breakeven is factored in on the above results. The bountiful nature of the high profitability percentage in testing shows up over several years going back, and we believe that more than makes up for it. So polarity lines that will work on their own like this is just the start. W. D. Gann combined them with trend direction and cycle direction in different ways to reduce risk, qualify trades, and increase targets. Those who trade them successfully with results that exceed our tests combine polarity lines with market delta, momentum, and other indicators. But if you are tired of a multiplicity of signals or indicators, you can use simply them as tested above. Later in life Gann really advocated this approach, because increasingly people grew to desire simplicity in trading.AAPL WEEKLY POLARITY LINES
SOYBEAN WEEKLY POLARITY LINES
SP 500 INDEX & ES FUTURES WEEKLY POLARITY LINES
