Indicator Factory
The Gan Hilo activator is a trend indicator that uses moving averages to show the direction of the trend. It is easy to understand and can be used in various markets, including Forex. Traders can use the indicator to determine when to buy or sell, and it helps to identify and follow trends across different time frames. However, it may not be effective in ranging markets. The indicator was originally developed by Robert Crausch for stocks and commodities.
The Development of the Gan High Low Activator
The Gan High Low Activator is a trend indicator that was developed by Robert Crausch and published in the book “WD Gan Treasure Discovered: Simple Trading Plans for Stocks and Commodities.” This indicator aims to create a trailing stop that shows the direction of the trend. The calculation for this indicator is fairly easy to understand and doesn’t require advanced trading skills.
Calculation Method:
First, we calculate the simple moving average (SMA) of both the price high and price low. If the close price is higher than the moving average of the price high, the indicator returns the moving average of the price low. On the other hand, if the close price is lower than the moving average of the price low, the indicator returns the moving average of the price high. This method is used to avoid whipsaw trades and add significance to the moving average length.
Median Method:
To enhance the robustness of the indicator, a median method was added. This method acts as a calculation filter in order to avoid whipsaw trades and improve the overall performance of the indicator. By incorporating the median method, the indicator becomes more reliable in determining the direction of the trend.
Different Sources:
Instead of using the price high and low for its calculation, the Gan High Low Activator indicator incorporates a different source. One of the methods used is the SMA method, which is similar to the classic Hilo indicator. By using a simple moving average, the indicator produces a less curved shape and reduces the occurrence of whipsaw trades. Additionally, by adjusting the length parameter, traders can have more flexibility in setting the distance between the indicator and the price.
How to Trade with the Gan High Low Activator Indicator:
The indicator consists of a single line that flows either above the price or below it, depending on its position. Traders can determine whether it is time to buy or sell based on the position of the indicator line. If the indicator line is below the price, it indicates an uptrend and suggests that it is time to buy. Conversely, if the indicator line is above the price, it indicates a downtrend and signals that it is time to sell. It is important to note that these signals are confirmed only when price candles are closed. Traders should wait for an hourly candle to close before taking any action.
Benefits and Limitations of the Gan High Low Activator Indicator:
The Gan High Low Activator indicator is beneficial as it helps identify and follow trends across all time frames. It allows traders to stay in a trade for a longer duration and avoid panicking during market fluctuations. Moreover, it is quick to react to trend changes, providing timely information for traders. However, like any trend indicator, it is prone to sideways market drifts and may not be effective during ranging market conditions.
The Gan High Low Activator in the Forex Market:
Originally developed for stocks and commodities, the Gan High Low Activator indicator is now widely used in the forex market as well. Traders can apply this indicator to their forex charts and benefit from its trend-following capabilities. By following the original trading rules, traders can buy when the price is above the Gan High Low Activator indicator, indicating a bullish trend, and sell when the price is below the indicator, indicating a bearish trend.
Different Variations of the Gan High Low Activator:
There are many different variations of the Gan High Low Activator indicator that have been designed to work on the basic principle of using moving averages to determine trend direction. The most commonly found variation is a line plotted on the chart, where buy or sell signals are taken accordingly. Another variation includes plotting highs and lows as bars on the chart, providing a visual representation of the indicator. Traders can choose the variation that best suits their trading style and preferences.
Conclusion:
The Gan High Low Activator indicator is a powerful tool that can help traders identify and follow trends in the markets. Whether used in stocks, commodities, or forex, this indicator provides valuable insights into market direction. By understanding its calculation method and trading rules, traders can effectively incorporate the Gan High Low Activator into their trading strategies. However, it is important to remember that no indicator is foolproof, and it is always recommended to use multiple indicators and analysis tools for a comprehensive approach to trading.
