W D Gann Methods and Trading Performance
W D Gann employed a staff of 25 draughtsmen to draw charts of all the stocks on the New York Stock Exchange, as well as a variety of commodities. He would then use the charts to look for trading opportunities.
Gann in fact made huge trading profits from his technical analysis of the markets.
There are reports, which indicate that his trading techniques amassed him a fortune of over $50 million dollars, and many of his trades are on record.
W D Gann Trading Philosophy
W D Gann was a prolific writer, and wrote extensively outlining his thoughts and trading methods in a series of books and courses. Some of his ideas were empirical studies, while others were more mystical in nature.
Gann’s major contention was that certain laws governed not only the markets, but nature as well, and were universal in scope.
The Influence of Price and Time
One of Gann’s most important contributions was the concept of combining price and time. Gann believed that crucial price movements happened when price and time converged. These points usually indicated an important trend change was imminent.
However, if price and time were not coordinated, or did not converge, then time always held priority over price.
Therefore time, was considered by Gann as the ultimate indicator, because all of nature was governed by time.
In “Wall Street Stock Selector” Gann said.
“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 and the Importance of Trader Psychology
Many commentators focus on W D Gann’s thoughts on price and time, Swing trading methods, Gann angles, and his work with the Fibonacci number sequence.
However, you should not underestimate Gann’s analysis of trader psychology and his insights into the emotions of hope, greed, and fear.
Gann was well aware that emotions caused the bulk of traders to lose money:
“We cannot escape it (emotion). In the future, it will cause another panic in stocks. When it comes, both traders and investors will sell stocks, as usual, after it is too late, or in the latter stages of a bear market”
He was aware that human nature was constant and influenced the majority of traders:
“Therefore, in order to make a success, the trader must act in a way to overcome the weak points that have caused the ruin of others”
This is what W D Gann set out to do. It is a fitting tribute that successful traders around the world are still using his techniques and methods today. Without a doubt, many consider W.D. Gann to be one of the most influential traders of all time.
By Stephen Todd
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