Who is W.D Gann?

William Delbert Gann, also known as WD Gann, is the developer of technical analysis methods like Gann angles. The finance trader is also the creator of master charts, a compilation of various tools like the Spiral Chart, Circle of 360 degrees, and hexagon chart. His work and findings are based on geometry, astronomy, and ancient mathematics.

The man who is also known to have authored several books and courses on commodities trading and shares was born on June 6, 1878, in Lufkin, Texas. Born in a family of cotton farmers, he started trading at an early age of 24 years. Being the 33rd degree Freemason of the Scottish Rite Order, he was deeply knowledgeable about ancient Mathematics. He is also known to have studied ancient Egyptian and Greek cultures.

Why did he rise to fame?

In the present world, we all are cornered by the daily occurrences in the year 2020. We solely believe that this could never be predicted even in our wildest dreams. But WD Gann, the man who studied geometry and astronomy would make you change your mind, had he been present to observe the current state of the world.

He is known to have prophesied during World War I, stating that the abdication of Germany’s Kaiser Wilhelm II on November 9, 1918, would bring about the end of the war. In 1927 he had written a book called “Tunnel through the Air” that has its relevance with the Japanese attack on Pearl Harbour.

His financial predictions, as a trader himself, makes him immortal even after 60 years. Most of his findings are incredibly profound and are still in use by traders all over the world.

What do Gann studies consist of?

Gann was titled as one of the pioneers of technical analysis after the publication of his theory called the market time factor. After his findings were tested, he became a forever famous name on the Wall Street, and still is.

His findings on price movements are based on three factors.

• Price, time, and range the three inevitable vital facts.
• Markets are geometrical in design and function.
• They are incredibly cynical.

On dividing the markets on these three bases, he studies them according to relevance with price, time, and pattern.

• Study on price : He uses ancient mathematics and geometry, and this involves support and resistance lines, along with angles and pivot points.
• Study on Time : He structured this study based on historical dates and timelines reoccurring and obtained by natural and social means.
• Study of pattern : He believed that the market is cynical and included that fact in this study. He studied the market swings based on trendlines and reversal patterns.

Gann angles

The formation of Gann angles is the basis of his technical analysis and is constructed through empirical methods. It is essential to learn the technique of constructing a Gann angle. The process of construction is as follows.

• Determine the time units : This involves a detailed study of the stock’s chart. It would be best if you used intermediate-term charts to get the optimal number of patterns as a result.
• Determine the highs and lows that are the basis of Gann lines : You should use pivot points or other analytical methods to build this stage. Gann himself followed what he called vibrations or price swings. He created these using mathematical theories like Fibonacci.
• Determine the pattern to be used : The patterns like 1×1, 2×1, 1×2 are simple vibrations on the slope of the line.
• Draw the selected patterns : The direction of the drawing can vary from a downward and to the right from a high point or an upward and to the right from a low point.
• Look out for repeated patterns : The sole study of this method belongs to the fact that markets are incredibly cynical.

The result of this method varies from person to person and gets better with experience. Gann himself followed this method and claimed success, so you should keep trying till you hit the jackpot.

Some rules by WD Gann

The famous trading theory imparts some crucial rules. These rules are still in use and are highly spoken about when considering his technical analysis. These are the set of rules that might help you understand the results of WD Gann’s findings.

1. If the highest price for a week is scored on Friday, you can expect the costs to escalate even next week.
2. Similarly, if the lowest price is achieved on the last day, Friday, prices will fall further in the coming week.
3. When the market is working on a downward trend, the weekly highs are observed on Wednesdays.
4. In an up-trending market, the weekly low is observed on Tuesdays.
5. If the price increases more than the previous four weeks, it indicates a further rise in prices.
6. In an up-trending market when the prices break the 30 DMA and remain below it for at least two days consecutively, it tells us of a much more significant correction.
7. In a quarterly time frame, if a stock is found to be crossing either the high or low of the previous quarter. It is an early indication of an upcoming reverse of the underlying trend.
8. 50% of the previous selling price is a good choice. Any stock that is sold below this level should not be considered as a good investment.

Controversies surrounding Gann

There was a controversy in the air and still is about whether Gann himself succeeded in making profits through his speculations. Alexander Elder, who had interviewed WD Gann’s son, an analyst at the Boston Bank, had written in his book called/ Trading for a Living’, that the famous father could hardly support his family financially.

Despite all the controversies, this man remains a founding father of technical analysis, and rightly so. It is essential to have a knowledge of his findings if you are researching on technical analysis. They also prove useful if you want to excel in your trade.

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