Extacy
09-01-2008, 19:40
Who Is W.D. Gann
As you walk into the entrance to the New York Stock Exchange, you will see a life-sized picture of William D. Gann (1878 - 1955).
Asoka Selvarajah, a nuclear physicist now working with a major European Bank, says ... ".....W.D Gann is the greatest genius that the financial markets have ever seen. His achievements in this arena in every way match those of the greatest scientists of our century or any other."
Mr Gann was a legendary trader. He employed a staff of approximately 25 draughtsmen to draw charts of all the stocks on the New York Stock Exchange. (He also followed all the actively traded commodites on the commodity exchanges as well). He would then review the charts for trading opportunities. Even though Gann is famous for his forecasting ability, he is reported as saying that he actually made the bulk of his wealth through mechanical trading methods, that is, trading using Swing Charts, which are a trend following method which he developed.
Gann had all the trappings of a successful business man - real estate holdings, a cruiser, and he was the first person in the United States to own his own private aeroplane. It was the latest type, having the then new, aluminium body. He employed a private pilot.
He wrote extensively, putting his knowledge into a series of books and courses. Towards the end of his life he said that he had more money than he could spend and is reputed to have made $50 million during his trading lifetime. If you think about the buying power of $50 million during the 1940's and 50's, that would equate to around $500 million, perhaps more, in todays money.
Mr Gann's books and courses are not easy to come to grips with. He deliberately made them difficult to understand so that his students would have to study hard for their market success.
The main book that we will be quoting from is "How to Make Profits in Commodites". by W.D.Gann This is probably his most easily understood book; many believe it to be his best. While, in this book, Mr Gann illustrates his principles using examples from the commodity markets. Mr Gann's observations are just as relevent to markets of today as they were when he traded. This is because investor behavior is primarily driven by emotion, and people will behave in a similar manner under similar circumstances.
In "How to Make Profits in Commodities", concerning this subject, Mr Gann says ... "Just as sure as young generations come along from time to time, we will continue to have BOOMS in business, BOOMS in the STOCK MARKETS and COMMODITES, LAND BOOMS, and other wild WAVES of speculation. Youth has to be served and young nature has to have its fling. That is why HISTORY REPEATS, because HUMAN NATURE DOES NOT CHANGE and each coming generation has to go through the same EXPERIENCE as the former GENERATION did."
In "Wall Street Stock Selector" Mr Gann says ... "Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law ....." "It is action in one direction and reaction in the opposite direction. In order to make profits, you must learn to follow the trend and change when the trend changes."
Gann's basic rules for trading swing charts are ...
The trend is down when there are lower swing tops after a swing bottom has been broken. The trend is up when there are higher swing bottoms after a swing top has been broken.
Further, Gann defined a pyramiding technique, which is adding more positions in the direction of the trend, as the market continues in the direction of the trend. The method states that, if the trend is going up, you would buy your first position at the break of a swing high, putting your stop under the most recent swing low, then add another position at the break of the next swing high, with your stop on the whole position under the next most recent swing low, and continue doing this as the market advanced. Finally, the whole position would be stopped out at the major trend change.
Gann was the first analyst to study and discover the relationship between time and price. In fact, he often wrote "when time and price coincide, change is imminent".
He discovered what is today known as the 'squaring of time and price' and his 'squares' of 52, 90 and 144.
Gann is often given the credit for inventing swing charts. He did not invent them, however he did popularize them and use them as the basis of his mechanical trading system - a very effective system for trading strongly trending markets.
W.D. Gann made other discoveries - some rather esoteric. These include the Square of Nine and his other spiral calculators such as the Square of Four, the 360 Degree Circle Chart and the Hexagon Chart. These calculators can sometimes be used to forecast sequences of tops and bottoms in an impressive manner - but they are no holy graille!
As you walk into the entrance to the New York Stock Exchange, you will see a life-sized picture of William D. Gann (1878 - 1955).
Asoka Selvarajah, a nuclear physicist now working with a major European Bank, says ... ".....W.D Gann is the greatest genius that the financial markets have ever seen. His achievements in this arena in every way match those of the greatest scientists of our century or any other."
Mr Gann was a legendary trader. He employed a staff of approximately 25 draughtsmen to draw charts of all the stocks on the New York Stock Exchange. (He also followed all the actively traded commodites on the commodity exchanges as well). He would then review the charts for trading opportunities. Even though Gann is famous for his forecasting ability, he is reported as saying that he actually made the bulk of his wealth through mechanical trading methods, that is, trading using Swing Charts, which are a trend following method which he developed.
Gann had all the trappings of a successful business man - real estate holdings, a cruiser, and he was the first person in the United States to own his own private aeroplane. It was the latest type, having the then new, aluminium body. He employed a private pilot.
He wrote extensively, putting his knowledge into a series of books and courses. Towards the end of his life he said that he had more money than he could spend and is reputed to have made $50 million during his trading lifetime. If you think about the buying power of $50 million during the 1940's and 50's, that would equate to around $500 million, perhaps more, in todays money.
Mr Gann's books and courses are not easy to come to grips with. He deliberately made them difficult to understand so that his students would have to study hard for their market success.
The main book that we will be quoting from is "How to Make Profits in Commodites". by W.D.Gann This is probably his most easily understood book; many believe it to be his best. While, in this book, Mr Gann illustrates his principles using examples from the commodity markets. Mr Gann's observations are just as relevent to markets of today as they were when he traded. This is because investor behavior is primarily driven by emotion, and people will behave in a similar manner under similar circumstances.
In "How to Make Profits in Commodities", concerning this subject, Mr Gann says ... "Just as sure as young generations come along from time to time, we will continue to have BOOMS in business, BOOMS in the STOCK MARKETS and COMMODITES, LAND BOOMS, and other wild WAVES of speculation. Youth has to be served and young nature has to have its fling. That is why HISTORY REPEATS, because HUMAN NATURE DOES NOT CHANGE and each coming generation has to go through the same EXPERIENCE as the former GENERATION did."
In "Wall Street Stock Selector" Mr Gann says ... "Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law ....." "It is action in one direction and reaction in the opposite direction. In order to make profits, you must learn to follow the trend and change when the trend changes."
Gann's basic rules for trading swing charts are ...
The trend is down when there are lower swing tops after a swing bottom has been broken. The trend is up when there are higher swing bottoms after a swing top has been broken.
Further, Gann defined a pyramiding technique, which is adding more positions in the direction of the trend, as the market continues in the direction of the trend. The method states that, if the trend is going up, you would buy your first position at the break of a swing high, putting your stop under the most recent swing low, then add another position at the break of the next swing high, with your stop on the whole position under the next most recent swing low, and continue doing this as the market advanced. Finally, the whole position would be stopped out at the major trend change.
Gann was the first analyst to study and discover the relationship between time and price. In fact, he often wrote "when time and price coincide, change is imminent".
He discovered what is today known as the 'squaring of time and price' and his 'squares' of 52, 90 and 144.
Gann is often given the credit for inventing swing charts. He did not invent them, however he did popularize them and use them as the basis of his mechanical trading system - a very effective system for trading strongly trending markets.
W.D. Gann made other discoveries - some rather esoteric. These include the Square of Nine and his other spiral calculators such as the Square of Four, the 360 Degree Circle Chart and the Hexagon Chart. These calculators can sometimes be used to forecast sequences of tops and bottoms in an impressive manner - but they are no holy graille!