Mr Gann, mentions that he started out trading exactly like the rest of speculative traders. He lost thousands of dollars and experienced the usual ups and downs incidental to the novice who enters the market without preparatory knowledge of the subject... After many years of patient study in the subjects of science and nature his unconventional approach lead him to become one of the greatest trading masterminds the world has ever known.
William D Gann's Background
He was born in Lufkin, Texas. Called a gifted mathematician with an extraordinary memory for figures and expert chart reader.
1878 - 1955
D Gann has recognition as one of Wall Street's leading operators. His
life size picture hangs in the entrance of the New York Stock Exchange.
Advocate of Time Cycles
advocate of using time cycles to predict trend of commodities, stocks
and business. He believed that TIME CYCLES repeat because human nature
does not change. He gives an example of why wars occur at regular
CYCLES. Old men do not want wars, neither do they want to go into war
after they have been through one. Young men fight the wars because they
read history and want to be hero's. Leaders of nations appeal to the
young men who have no experience, and induce them to fight. The same
desire in men that urges them to risk their lives in war, caused them to
take a chance in business and in speculation. They take too many
chances and get too optimistic after a long period of success in
business and after prolonged advances in stocks and commodities.
men in business, after a prolonged period of prosperity become too
hopeful and get over extended. It is easy to borrow money after a long
period of business prosperity. People who borrow money on hope have to
liquidate when fear overtakes them and conditions are at the worst. That
is why CYCLES in business and the stock and commodity markets have
always repeated and always will. From 'Annual Graphic Market Forecasts'
April 5, 1954 WD Gann.
The Morning Telegraph, 1922
for 'The Morning Telegraph' Sunday, December 17, 1922. Article entitled
“Gann Foretold Run of Stocks”. Wall Street Scientist Forecast Top of
Bull Market Year in Advance. By Arthur Angy. Mr Angy writes that Mr Gann
is no “Wall Street tipster” sending out market letters and so-called
“inside information”. Mr Gann's results are obtained by profound study
of supply and demand, a mathematical chart of money, business and
commodities. He determines when certain cycles are due, and the order
and the time when market movements will follow.
Mr Angy goes
on the say that during the past thirty years many men have proclaimed
discoveries and theories to “beat the Wall Street game,” most of which
resulted in loss to their followers. They could always tell by the chart
just why the market did it after it happened. Mr Gann's theory differs
from the others in that he tells months in advance what stocks are going
William says the trouble with most chart makers is
that they work with only one factor – space movements or charts that
record one to two points up or down – whereas there are three or more
factors to be considered, space, volume and time. THE MOST VITAL IS
TIME, and back of that is the cause of recurrence of high or low prices
at certain intervals.
Mr Angy asked Mr Gann : "What is the cause behind the time factor?"
smiled and said : "It has taken me twenty years of exhaustive study to
learn the cause that produces effects according to time. That is my
secret and too valuable to be spread broadcast. Besides, the public is
not yet ready for it".
"Water seeks it's level," continued Mr
Gann. "You can force it higher with a pump, but when you stop pumping it
requires no force to cause it to return to its former level. Stocks are
the same. They can be forced above their natural level of values to
where lambs lose all fear, become charged with hope and buy at the top.
Then stocks are permitted to sink to a level where hope gives way to
despair and the most rampant bull becomes a bear and sells out with a
loss. My discovery of the time factor enables me to tell in advance when
these extremes must, by the law of supply and demand, occur in stocks
The Ticker and Investment Digest December, 1909
magazine The Ticker and Investment Digest ran an article on William D
Gann with the heading , An Operator Whose Science and Ability Place Him
in the Front Rank - His Remarkable Predictions and Trading Record.
A few excerpts are as follows;
magazine mentions that Mr Gann gave them in advance forecasts of exact
points at which certain stocks and commodities would sell, together with
prices close to the then prevailing figures which would not be touched.
instance. when New York Central was 131 he predicted that it would sell
at 145 before 129. So repeatedly did his figures prove to be accurate,
and so different did his work appear from that of any expert whose
methods we have examined. that we set about to investigate Mr Gann and
his way of figuring out these predictions, as well as the particular use
which he was making of them in the market.
The Ticker Digest
mentions that the results from their investigation are remarkable in
many ways. They go on to explain that it appears to be a fact that Mr
Gann has developed an entirely new idea as to the principles governing
stock market movements. He bases his operations upon certain natural
laws which though existing since the world began, have only in recent
years been subjected to the will of man, and added to the list of
so-called modern discoveries.
It is also interesting to note
that the author of the article near the beginning wrote; "We submit this
in full recognition of the fact that in Wall Street a man with a new
idea – an idea which violates the traditions and encourages a scientific
view of the proposition – is not usually welcomed by the majority, for
the reason that he stimulates thought and research. These activities
said majority abhors".
Mr Gann, mentions that he started out
trading exactly like the rest of speculative traders. He lost thousands
of dollars and experienced the usual ups and downs incidental to the
novice who enters the market without preparatory knowledge of the
William decided to devote a decade of his entire time
and attention to the speculative markets. After some time he began to
notice the periodical recurrence of the rise and fall in stocks and
commodities. This lead him to conclude that natural law was the basis of
Law of Vibration
decided to focus in on studying this natural law as applicable to the
speculative markets and devote his best energies toward making
speculation a profitable profession. After exhaustive researches and
investigations of the known sciences, he discovered the the Law of
Vibration enabled him to accurately determine the exact points to which
stocks or commodities should rise and fall within a given time.
Gann goes on to say that it is impossible here to give an adequate idea
of the Law of Vibration as he applies it to the markets, however the
layman can grasp some of the principles when he mentions that the Law of
Vibration is the fundamental law upon which wireless telegraphy,
wireless telephone and phonographs are based. Without the existence of
this law the above inventions would have been impossible.
also mentions that he obtained information from Mr Henry Hall's book
'Cycles of Prosperity and Depression' which he found recurring at
regular intervals of time. William says that the law which he applied
will not only give these long cycles or swings, but the daily and even
hourly movements of stocks. By knowing the exact vibration of each
individual stock William was able to determine at what point each would
receive support and at what point the greatest resistance would be met.
Gann viewed stocks as live electrons, atoms, and molecules which hold
persistently to their own individuality in response to the fundamental
Law of Vibration. Science teaches 'that an original impulse of any kind
finally resolves itself into periodic or rhythmical motion, also just as
the pendulum returns again in its swing, just as the moon returns in
its orbit, just as the advancing year ever brings the rose or spring, so
do the properties of the elements periodically recur as the weight of
the atoms rises'.
From William's extensive investigations,
studies and applied tests, he finds that not only do the various stocks
vibrate, but that the driving forces controlling the stocks are also in a
state of vibration. These vibratory forces can only be known by the
movements they generate on the stocks and their values in the market.
Since all great swings or movements of the market are cyclic they act in accordance with periodic law.
has laid down the principle the 'the properties of an element are a
periodic function of its atomic weight.' A famous scientist has stated
that 'we are brought to the conviction that diversity in phenomenal
nature in its different kingdoms, is most intimately associated with
numerical relationship. The numbers are not intermixed, chaotically and
accidentally, but are subject to regular periodicity. The changes and
developments are also seen to be in many cases undulatory.'
Mr Gann affirms, every class of phenomena, whether in nature or in the
stock market, must be subject to the universal law of causation and
harmony. Every effect must have an adequate cause.
If w wish
to avert failure in speculation we must deal with causes. Everything in
existence is based on exact proportion and perfect relationship. There
is no chance in nature, because mathematical principles of the highest
order lie at the foundation of all things. Faraday said : "there is
nothing in the Universe but mathematical points of force."
is fundamental : nothing is exempt from this law; it is universal,
therefore applicable to every class of phenomena on the globe.
the Law of Vibration every stock in the market moves in its own
distinctive sphere of activity, as to intensity, volume and direction;
all the essential qualities of its evolution are characterized in its
own rate of vibration.
Stocks like atoms, are really centers
of energies, therefore they are controlled, mathematically. Stocks
create their own field of action and power; power to attract and repel,
which principle explains why certain stocks at times lead the market and
'turn dead' at other times. Thus to speculate scientifically it is
absolutely necessary to follow natural law.
Mr Gann also
explains that after years of patient study he has proven to his entire
satisfaction as well as demonstrated to others that vibration explains
every possible phase and condition of the market.
W.E Gilley, an inspector of Imports, New York was the man whom
encouraged Mr Gann to study the scientific and mathematical
possibilities of the subject. Mr Gilley, mentions that he has followed
William Gann's predictions and operations closely for years. He says
that Mr Gann's calculations are based on natural law. "I know that he
has a firm grasp of the basic principles which govern stock market
movements, and I do not believe any other man on earth can duplicate the
idea or his method at the present". Mr Gilley goes on to say that he
once saw Mr Gann take $130, and in less than one month run it up to over
$12000. "He can compound money faster than any man I ever met".
the month of October, 1909, in twenty-five market days, Mr Gann made in
the presence of a representative of 'The Ticker Digest' two hundred and
eighty-six transactions in various stocks, on both the long and short
side of the market. Two hundred and sixty-four of these transactions
resulted in profits : twenty-two in losses.
The capital with
which he operated was doubled ten times, so that at the end of the month
he had one thousand percent on his original margin.
In our presence, Mr Gann sold Steel common short at 94.88, saying that it would not go to 95. It did not.
a drive which occurred during the week ending October 29, Mr Gann
bought Steel common at 86.25, saying that it would not go to 86. The
lowest it sold was 86.12.
The results for the month showed Mr Gann achieved over ninety-two per cent profitable trades.
have seen him give in one day sixteen successive orders in the same
stock, eight of which turned out to be at either the top or the bottom
eighth of that particular swing. The above we can positively verify.
Gann has refused to disclose his method at any price, but to those
scientifically inclined he has unquestionably added to the stock of Wall
Street knowledge and pointed out infinite possibilities.
his lifetime Mr Gann ran a market advisory service, wrote nine books,
produced two trading manuals (Commodity market trading course and Stock
market trading course) as well as lecturing for large investment
organizations all over the world.
It is known that William
used technical analysis with price patterns formations at tops and
bottoms to determine direction of trends. Formations such as Single “v”
or Sharp Bottom, “U” Bottom or Flat Bottom, “W” Bottom or Double Bottom,
“W V” Bottom or Triple Bottom and “W W” Bottom or 4-Bottom Formation.
Also, same opposite formations for Tops.
He also recognized
common price movements for ranges such as fifty percent and hundred
percent. ie Price movements that halved or doubled.
Also, recognized that prices move according to seasonal changes.
Natural Square Calculator
Gann also made a special tool to assist with his trading known as the
Natural Square Calculator or Square of Nine, derived from ancient
civilizations. (A number chart used by ancient Indians and Egyptians as a
special calculator). He over-laid a transparent circle of 360 degrees
on top of the number chart. He used the divisions of the circle as
support and resistance to match the support and resistance levels on the
number chart. It is believed that he was the first person to modify the
ancient chart and use it as a trading tool.
Learn more about how Gann used natural square numbers in his day trading to find support and resistance. Visit here.
Mr Gann also used mechanical swing trade methods in a number of ways.
One was to determine the general direction of a trend, using 7 day or greater periods along with 2 day swing charts. For a closer look at this method of swing trading, go here.
other swing trade method was what he called "trading the overnight
chart". Mr Gann writes "that the overnight chart and the method for
operating it is purely mechanical. You use no judgment but simply follow
rules and reverse your position when the overnight chart indicates it.
If you buy and sell and use stop loss orders according to the rules,
this method will make a large amount of profits over a long period of
time". The trading funds were always invested in the market.
in Mr Gann's writings are a wealth of knowledge, some golden nuggets
still left waiting to be discovered by the patient student.
Current Day Analysis
Take a look at some of Gann's analysis techniques, applying them to the Euro vs Usd currency pair here.
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