R OBERT

K RAUSZ ' S
JOURNAL Volume 1, Issue 4

THE BASIC
GANN SWING PLAN TM

FOR STOCKS

T his issue of the

Fibonacci Trader
Journal will focus
on trading stocks.
Some traders,
sults are from January 2, 1998 up to the end of Octo-
ber, shown in tables further on in this issue. The re-
sults speak for themselves. This simple plan out traded
most of Wall Street. I will report again the results for
the close of 12/31.
those who focus on just stocks, have felt some-
what neglected by our previous issues dealing QUESTIONS
with just futures. With this issue I will correct this. During this year I have had some interesting
To start, the Basic Plan for Gann Swing trading questions. I have provided some illustrations to an-
stocks, which was explained in my book, A Gann swer a few. The illustration on the next page shows
Treasure Discovered, is alive and well. The same rules how the swing direction can change. Examples 1
explained in the Fibonacci Trader Journal issue 2 for and 2 were covered and used in the book. Recently,
trading T-bonds can be used for trading stocks. In my I've been asked about the Fast Track choice on some
book, I included a set of tables and charts showing a indicators. Your program now has a new Fast Track
five year period (1991-96) for five stocks. Those par- facility as shown in illustration #3. Seldom happens,
ticular years, which were the current period at the time but it does happen.
were, in fact, up years for the market as a whole. I Also, please remember that the Basic Plan
decided to take a look at a five stock portfolio during acts on the close, so if you have the End-of-Day
this years market stumble and current rise. These re- version of the Fibonacci Trader program then you
Fibonacci Trader Journal Page 1 Volume 1, Issue 4
 1 Two
consecutive
higher
must have the HiLo Activator showing 1 day for- highs
ward, as per page 25 in the Gann book.
One particular reader had a problem under-
standing the concept that a valid close below or
above the HiLo Activator must be accompanied by
a flip, i.e. the opposite HiLo Activator must come Two
consecutive
up. This also applies to the profit protection rule 1. lower
Lastly, I have an important point for stock trad- lows

ers. Please reset the HiLo Activator to 4 ticks as the

stocks now trade in 1/16 (when I wrote the book
stocks traded in 1/8). This only applies to stocks, 2
for T-bonds use 2 ticks, as before.

BASIC PLAN RESULTS

The following tables shows the results of trad-
ing five different stocks for 1998. Does this Basic
Plan work with any stock? Of course not, espe-
cially in that this plan only trades with the trend.
Close
Obviously, it survives volatile times, like the cur- below valley point
rent situation. Please keep in mind that this plan
should be considered for very liquid stocks that
have reasonably swings. Stay away from dead
markets. W. D. Gann warned us many years ago. 3
While we do not need months of trend runs
we do want to see good volume and momentum.
I suggest that you stay away from very cheap A
stocks with low volume. And yes, by all means Fast Track
B
check out NASDAQ stocks, especially the Tech-
nology Sector. Take a good look at stocks such
as American Online, Intel, Microsoft, and even Bar B closes below the close of bar A
the amazing Amazon is worth looking at. and
bar A was the bar that formed the valley
Please check carefully, do not just dive in. A
serious review will pay good dividends.
Volume 1, Issue 4 Fibonacci Trader Journal Page 2
CLOSING NOTES like to welcome our Dutch readers who own the Fi-
The 32-bit version of the Fibonacci Trader is now bonacci Trader program. We now have users in virtu-
ready, so check out the Web site if you have not or- ally every country in Europe.
dered the upgrade yet. In the very near future the Fi- This issue will look at some intraday techniques
bonacci Trader Web site will be available in an Italian using Intel, and our next issue will look at some inter-
version due to our Italian distributors good work. More esting ideas for intraday plans, particularly the T-bonds.
details on this in a later issue. I wish you excellent trading,
And speaking of international friends, I would Robert Krausz, MH, BCHE
F F

T he five tables shown on the next two pages are each based on an initial start of capital using 50% margin
and trading 1,000 shares. Therefore, the intial account size is equal to what it would cost to trade 1,000 shares
at that time. A commission equal to 12 cents per share round turn is included. The plan handles less or more
shares but the percentages stay the same. No dividends or interest is included.
TM
NEW GANN SWING CHARTIST BASIC SWING PLAN 1998 IBM
Beginning Equity $52,593.75 Ending Equity $117,350.00
Total Net Profit $14,562.50 Gross Loss ($27,125.00)
Gross Profit $41,687.50 Total Commissions $2,400.00
Total No. Trades 20 Percentage Profitable 40%
No. Winning Trades 8 No. Losing Trades 12
Largest Winning Trade $17,875.00 Largest Losing Trade ($4,187.50)
Average Winning Trade $5,210.94 Average Losing Trade ($2,260.42)
Ratio Average Win/Loss 1.92 Average Trade $728.13
Max. Consecutive Winners 3 Max. Consecutive Losses 4
Largest Consecutive Drawdown (%) 12.82% Largest Consecutive Drawdown ($7,687.50)

Return on account 27% Profit/Drawdown ratio 1.89

TM
NEW GANN SWING CHARTIST BASIC SWING PLAN 1998 American Freight
Beginning Equity $4,750.00 Ending Equity $6,487.50
Total Net Profit $2,937.50 Gross Loss ($1,250.00)
Gross Profit $4,187.50 Total Commissions $1,200.00
Total No. Trades 10 Percentage Profitable 70%
No. Winning Trades 7 No. Losing Trades 3
Largest Winning Trade $1,500.00 Largest Losing Trade ($687.50)
Average Winning Trade $598.21 Average Losing Trade ($416.67)
Ratio Average Win/Loss 1.44 Average Trade $293.75
Max. Consecutive Winners 3 Max. Consecutive Losses 1
Largest Consecutive Drawdown (%) 11.57% Largest Consecutive Drawdown ($807.50)

Return on account 37% Profit/Drawdown ratio 3.64

Fibonacci Trader Journal Page 3 Volume 1, Issue 4

 NEW GANN SWING CHARTISTTM BASIC SWING PLAN 1998 Coca Cola Co.
Beginning Equity $32,968.75 Ending Equity $64,043.75
Total Net Profit $32,875.50 Gross Loss ($8,687.50)
Gross Profit $41,562.50 Total Commissions $1,800.00
Total No. Trades 15 Percentage Profitable 60%
No. Winning Trades 9 No. Losing Trades 6
Largest Winning Trade $23,187.50 Largest Losing Trade ($2,687.50)
Average Winning Trade $4,618.06 Average Losing Trade ($1,447.92)
Ratio Average Win/Loss 3.19 Average Trade $2,191.67
Max. Consecutive Winners 3 Max. Consecutive Losses 1
Largest Consecutive Drawdown (%) 4.20% Largest Consecutive Drawdown ($2,807.50)

Return on account 94% Profit/Drawdown ratio 11.71

TM
NEW GANN SWING CHARTIST BASIC SWING PLAN 1998 MICROSOFT
Beginning Equity $31,750.00 Ending Equity $75,892.50
Total Net Profit $46,062.50 Gross Loss ($12,812.50)
Gross Profit $58,875.00 Total Commissions $1,920.00
Total No. Trades 16 Percentage Profitable 63%
No. Winning Trades 10 No. Losing Trades 6
Largest Winning Trade $25,625.00 Largest Losing Trade ($6,062.50)
Average Winning Trade $5,887.50 Average Losing Trade ($2,135.42)
Ratio Average Win/Loss 2.76 Average Trade $2,878.91
Max. Consecutive Winners 4 Max. Consecutive Losses 1
Largest Consecutive Drawdown (%) 7.53% Largest Consecutive Drawdown ($6,182.50)

Return on account 139% Profit/Drawdown ratio 7.45

NEW GANN SWING CHARTISTTM BASIC SWING PLAN 1998 America Online
Beginning Equity $21,593.75 Ending Equity $83,948.75
Total Net Profit $64,875.50 Gross Loss ($18.500.00)
Gross Profit $83,375.00 Total Commissions $2,520.00
Total No. Trades 21 Percentage Profitable 62%
No. Winning Trades 13 No. Losing Trades 8
Largest Winning Trade $21,750.00 Largest Losing Trade ($4,937.50)
Average Winning Trade $6,413.46 Average Losing Trade ($2,312.50)
Ratio Average Win/Loss 2.77 Average Trade $3,089.29
Max. Consecutive Winners 5 Max. Consecutive Losses 3
Largest Consecutive Drawdown (%) 23.82% Largest Consecutive Drawdown ($6,297.50)

Return on account 289% Profit/Drawdown ratio 10.30

Volume 1, Issue 4 Fibonacci Trader Journal Page 4

T his month the focus is

using the Gann Basic Plan for

trading stocks with an eye to ap-

plying Multiple Time Frame tech-

niques to intraday trading. Take a Daily trend changed

to up on October 21
look at Chart 1, a daily chart of
Peak
Intel. This first example shows

the classic setups for a trade from Valley 2

Daily HiLo Activator flipped on October 9.
the Basic Plan. We are using tech- Valley 1

niques that have been discussed

Chart 1: Daily Bars Intel. Some key events occured prior to a strong trend run.
Rising Valley's 1 and 2 formed, with the daily HiLo Activator flipping prior to the
in our previous issues. peak. Surpassing the peak turned the trend to up, and for 21 days the trend
continued higher, supported by the HiLo Activator.
To begin, the market forms

two rising valleys, 1 and 2, an passed, the trend turns to up ac- trend is up, and that the slope is
early sign of a bottom in the mar- cording to the rules from the Ba- up, as well as there is support from
ket. Next the daily HiLo Activa- sic Plan. the daily HiLo Activator.
tor flips to the long side on 10/9. At this point, the daily trend Chart 2 is a 13 minute/78
This action occurs between the is up, and what a trend it is! In minute/Daily plan. We’ll still be
first valley and the peak. Notice fact, the trend continues higher for using our standard format in that
that as the second valley forms, 21 days with clear support from the dashed Gann Swing line is a
the HiLo Activator acted as sup- the HiLo Activator. So let’s now down trend, and the solid Gann
port. This is a very positive sign. take up trading the intraday time Swing line is an up trend. On
Next, on 10/21, as the peak is sur- period, knowing that the daily Chart 2, the High time frame,(the

Fibonacci Trader Journal Page 5 Volume 1, Issue 4

Daily) HiLo Activator is plotted.

Looking at Chart 2, we can see that

on 10/9, early in the day, the 13

minute Gann Swing Chart went

long, and by the close the daily

Support was indicated by
the daily HiLo Activator.
HiLo Activator flipped to an

uptrend.
The daily HiLo Activator
At this point looking to buy is flipped on October 9.

the more conservative approach, as

you are trading with the support of Chart 2: 13 Minute Bars Intel. Here's an intraday look at the activity in Intel as the
bottom was forming. This view is a 13 minute/78 minute/Daily plan. The daily HiLo
Activator flipped on October 9. During the pull back the price action was sup-
the daily HiLo Activator. Why? Be- ported by the HiLo Activator.

cause knowing support levels for

intraday trading is our advantage,

and we look to the HiLo Activator

for this. Notice how on 10/15 the

market edges down to and touches

Support
the daily HiLo Activator, and then

rebounds nicely. Next, take a look

at Chart 3, and see the same thing.

On 10/19 the market trades down

Support
to support basis the daily HiLo Ac-

tivator, then rebounds. Again, on Chart 3: 13 Minute Bars Intel. On October 19 the market trades down to saupport
and then rallies. Again, on October 28 the market tests support and rallies.

10/28 the market trades down to

Volume 1, Issue 4 Fibonacci Trader Journal Page 6

the daily HiLo activator and ral-

lies. Even on Chart 4, the market

moves into a fairly volatile $3

trading range on 11/12. Then on

Support
11/13 the market touches the daily

HiLo activator during the first 13

minute bar. This turned out to be

the low before the next trend run

began, as shown on Chart 5.

Let’s add the HiLo Activator Chart 4: 13 Minute Bars Intel. The market trends nicely and then enters into a
trading range, once again touching support basis the daily HiLo Activator.
from the Next time (Chart 6, next

page), which is the 78 minute bars.

Looking closely at the end of trad-

ing for 11/9 you can see that the 78

minute HiLo Activator flips to the

long side on the close (point XX),

which is $96. The 78 minute HiLo

Activator stays long until the clos-

ing bar on 11/12 at just under $103

(point YY).

Carrying over to Chart 7, point

Chart 5: 13 Minute Bars Intel. recall that the dashed Gann Swing Line is a down
A, is the next flip to the long side trend and the solid line is an up trend. Notice how often the 13 minute Gann
Swing Lines went long during the up trend.

Fibonacci Trader Journal Page 7 Volume 1, Issue 4

for the 78 minute HiLo Activator

with the price somewhat over $106. YY

Next, the market enters into a tight

A
trading range with the Gann Swing
78 minute
line signaling a short term HiLo Activator.

downtrend, then flipping back to

long, and meanwhile the 78 minute

HiLo Activator was solid support Daily HiLo Activator.

the entire time. Then on 11/17 the

XX
market breaks out of the two day Chart 6: 13 Minute Bars Intel. Let's add the 78 minute HiLo Activator.

trading range and rallies over $9 be-

fore the 78 minute HiLo Activator

exits near $113, at point B.

This set of examples displays B

the opportunities available using the 78 minute

HiLo
multiple time frame techniques that Activator.

are the foundation of the Fibonacci

Trader program. Combining this Daily HiLo Activator.

Support
approach with the unique indicators
A
available can be the basis for your

own trading plans. Take time to Chart 7: 13 Minute Bars Intel. Look at how well the 78 minute HiLo Activator
stayed with the intraday trend.
study the Gann Swing Chart Basic
F
Plan and develop your own plan The FIBONACCI TRADER JOURNAL is copyrighted and published by the:
FIBONACCI TRADER CORPORATION
for intraday trading stocks. More
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This journal is for educational purposes only. Futures trading is a high risk
future issues. situation. This publication is not rendering any trading advice. Please consult
the services of a professional competent person.

Fibonacci Trader Journal Page 8 Volume 1, Issue 4