For anyone not familiar with the work of W.D.Gann, the Square of Nine will mean absolutely nothing to you, but for those who have studied the methods of W.D.Gann for any length of time, you will know that the Square of Nine played a pivotal role in the way that W.D.Gann analysed the markets.

The Square of 9 was not invented by W.D.Gann. In fact, he found it inscribed in the pyramids of Egypt, and in temples in India during his overseas travels whilst decoding the natural phenomenon of market movement. He was the first trader to recognise its potential for market movements. In this article we will merely scratch the surface of this fabulous, mystical tool by looking at the 4 most important dates used in the Square of Nine.

As simple as this tool is, and I have seen many traders take it to incredible levels of application, we will stick to a basic explanation of the dates, to allow you to understand its foundations and use.

If we think of The Square of 9 as having its foundation in astronomy, we will see it tracks the Earth in its annual rotation around the sun.

Keeping the previous graphic in mind, now we go one step further to explore the unusual annual path the Earth takes in its rotation. In the next graphic taken from the Market Analyst 6 Astronomical edition

Ephemeris tool, we see the Earth at its 4 most important junctures:

March 21 shows the Earth and the Sun’s equators are equal. 

June 22 shows the Earth at its lowest level below the Suns equator.

September 23 shows the Earth and Sun’s equators level, this time on the other side of the Sun.

December 23 shows the Earth at its highest point above the Sun’s equator.

W.D.Gann recognised the importance of this annual path, and in particular, the dates mentioned in the graphic. These dates are important in all markets, and astute traders will watch these times for important signals of change in trend or direction.

If you look at a Square of 9 emblem, you will see these dates highlighted in bold. Obviously the designer of this tool, whoever that was, was abundantly aware of the importance of these annual dates.

So, how do we use this in trading markets?

I will take you back to one of my favourite trades, an abundant profit due to my knowledge and understanding of this fabulous tool.
 
Here on an Australian stock Aristocrat Leisure, I noticed a downtrend was in play, and it seemed as if a counter trend was struggling to break the hold of the seller’s dominant attitude. Monday September 24 shows a large spike day, and then an inside day follows, a signal of weakness in the climb higher.  Remember, Gann alerted us to watch for signals of weakness or potential change of direction around these 4 important seasonal dates, and this was very close to the September date. Going short at the break of the inside bar, with a stop above the high of September 24 would end up providing a marvellous profit windfall. For those of you with experience in Gann swings you will note it did not make a higher top higher bottom swing, and indeed October 22 was a disaster for average traders but an absolute bonanza for the Gann enthusiast.

Now of course I wouldn’t use just one tool or indicator, this would be too risky and would lead to high failure rates. For those who understand more advanced tools, the next graphic will speak volumes.

Using the Gann tools developed for us within Market Analyst 6, we can see the Fibonacci ratios between the last
major low August 22 and the next major top February 19. Now note that the high of Monday September 24 is only 1 cent away from the 61.8% Fibonacci line. This is certainly close enough for our purposes.

The Gann fan angles also dictate a reversal is due. Note the red angle coming up from the low meets the exact top of the Gann seasonal date of Monday, September 24. This red angle is the 1 x 1 line, or a measure of equal time and price. In other words, it is 399 calendar days from the low of August 22, and the highest point of Monday September 24 is 398 cents higher than the low of August 22.

The other tools acted as confirmation, but it was the date of September 24 that was the key to this trade.

As is mentioned, this is a very basic overview, there is so much more to the wonderful Square of 9 tool. The automated tool in Market Analyst 6 is certainly the best I have seen anywhere in the world. It represents a marvellous achievement in advanced software and any Gann enthusiast will delight in its simplicity of use.

Best wishes for your trading,

Alan Oliver.

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