Gann's main trading philosophy was to trade with a close stop loss and select the most opportune trades in the direction of the main trend. To confirm a trend was in progress, he would look for lower highs and higher lows to form after a major reversal in trend. The method he used to monitor trends and filter out any random market noise was the Swing Chart. Figure 1 shows an example of a Swing chart. After July 30 1996 Gann would have said the trend in the SPI was up as it was making higher lows and higher highs. Gann would be a buyer of the SPI from 2170.

Gann placed a lot of importance on the daily price patterns. He talked at length on the different types of reversal patterns you can use to identify an imbalance between supply and demand. Figure - 2 shows some of the bar chart patterns Gann looked for to confirm turning points or to get him out of trades quickly with minimal loss.