W. D. Gann A Legend: by Les J. Clemens
W. D. Gann A Legend: by Les J. Clemens
W. D. Gann A Legend: by Les J. Clemens
Gann A Legend
By Les J. Clemens
W
illiam Delben Gann was born on June 6, 1878, in Lufkin, Texas, to Sam H. and Susan
R. Gann, immigrants to Texas from the British Isles. Lufkin is midway between Houston
and Texarkana. This part of Texas is cotton country and Gann’s parents lived on a
Neches River bottom cotton ranch near Lufkin. He grew up around the cotton warehouses in
Angelina County where cotton was king. W. D. Gann was raised in a very strict Methodist church
family. His mother, a very religious person, encouraged him to read the Bible at a very early
age, and in fact, wanted him to become a minister. Gann was not sure he wanted to become
a minister, but studying the Bible was certainly easier than working in the cotton elds, as
was his father’s wish. He attended church every Sunday with his parents and as he listened
to the sermons found his interpretation of the Bible scriptures to differ from the minister’s.
In the Bible he discovered time cycles, repetition of important numbers, and references
to the wise men following the stars. Also, that it was written in veiled language that made
interpreting the real meaning difcult. Since Gann had a photographic memory, by age 21
he had nearly memorized the Bible.
During his school years Gann excelled in mathematics and was generally called as a gifted
mathematician. His tremendous appetite for knowledge and his open-minded attitude led him
into many different elds of study that eventually resulted in discoveries in the markets that
would otherwise have been overlooked. He completed high school in a time when most children
were only able to attend school through the third or fourth grade.
As a teenager, Gann liked to be called W. D., and he used these initials the rest of his
life. W. D. pestered his parents until they relented and signed a minor release form that
he needed to obtain a job. His rst job was that of a News Butcher on the passenger train
between Texarkana and Tyler, Texas. This job required him to be quick-witted, aggressive,
and able to deal with all kinds of people. During his teen years, he worked in the cotton
warehouses in Lufkin and Texarkana, Texas. While working in the cotton warehouse, he was
introduced to commodity trading.
In 1902, at age 24, W. D. Gann made his rst commodity trade in cotton, the market he
knew best. The small prot from that trade marked the beginning of what was to become one of
the most remarkable and legendary careers the speculative markets have ever known. Over the
next 53 years, Gann took over $50,000,000 from the markets. It has been reported by a man
who worked for Gann the last eight years of Gann’s life, that approximately 1/3 of the money
he made was for himself and the other 2/3 was for the accounts he supervised for clients. From
that very rst trade, it is believed Gann was using principles and techniques he continued using
throughout his trading career. The notations on some of his early charts substantiated this belief.
As time progressed, his trading methods were rened.
In 1906 W. D. went to Oklahoma City. He worked as a broker for a brokerage rm, trading
for himself while handling large accounts for clients. He studied the cause of success and failure
Gann was a prolic writer. His style of writing was unique. Readers of his books considered
him to be a poor writer with a limited use of the English language. Not so! Upon a closer study
of his work, the reader will discover in time the Gann method of teaching. He will inspire the
reader to research everything from the origin of numbers to the musical scale and vibrations.
W. D. Gann, in my estimation, was a genius. He was born a Gemini with a high intellectual
capacity, and a dual personality that caused him to be both genial and obstinate. He was a
gifted mathematician, an expert chart reader, and had an extraordinary memory for gures.
Take away his science and he would beat the market on chart reading alone. One of Gann’s
most important technical tools was his charts and no one kept up as many as he did. Gann’s
charts encompassed 55 years, from 1900 to 1955. During this time thousands of daily, weekly,
monthly, quarterly, yearly, and other various charts, were made with care, each a work of art. He
believed charting was an art and if you understood everything the chart was showing, it would
aid in forecasting the next day, week, or month’s, price movements. Gann was a workaholic, at
times working 17 hours per day, 6 days per week. He was very demanding of those who worked
with and for him, and same effort from them that he himself put forth. He expected to issue
instructions only once and did not feel it should be necessary to repeat them.
Gann was deeply analytical and studied price actions of various stocks and commodities
back through the years. He spent nine months in the British Museum working day and night
researching stock and commodity prices and dates from 1820, and wheat prices and dates from
Les J. Clemens who wrote this article is a professional trader and researcher. He teaches
advanced Ut D. Gann seminars once each month. Les and his wife Sandy, operate a mail order
book business specializing in old, rare, stock and commodity astrology, mathematical, and
esoteric books. Contact them at POB 2356, Estes Park Colorado 80517.
A
re mainstream methodologies the only way to nd order in s ~a Real World Market?
The delusion that one nds knowledge only through these “proven approaches” still
persists. Thank God for Capitalism and fresh ideas! From my research, I found that
the vast majority of these “accepted approaches” are either too subjective or unreliable
to develop a consistent trading plan. That is not to say that they never work, just that the
erroneous signals can be costly. I don’t know about you, but I need denite guidelines to
determine trade selection!
Figure 1 - I developed “The Price Point System” under the assumption that price value is
constant, time is not absolute but relative to the period of data acquisition and price movement
progresses naturally. In other words, from the xed price values I created a constant and innite
mathematical model for price movements to react within. I call it the xed price values Price
Points. The Price Points can be used as a stand alone system since price reacts within the Price
Point boundaries, or they can be used as a beautiful addition or clarier to other methodologies
such as Fibonacci, Gann, Elliott Wave, Planetary, etc.
Figure 2 - Now that you understand the basic premise of its development (P.P.S.), let us
examine the price movements within this mathematical model. All price movements (energy) are
a direct reection of contrary opinion buying and selling. To help put this concept in perspective
I envisioned the price behavior, “the dispersing of motion or energy that will continue until
either the driving force decreases, ceases to exist (lack of momentum of equilibrium), or
resistance is encountered (natural, technical or fundamental). The combined inuence will
either alter price direction completely (correction), slightly impede it (congestion), or have
no effect at all (penetration).”
Let’s review the concept briey before continuing. First, price is a “unit of measurement”
that measures the value or worth of Futures, Stocks or Indices. Prices react within the Price
Point Areas. Price fluctuations around these areas confirm trade entry or exit (it doesn’t
1) Have enough equity to assume at least 1 % risk of the value of one contract.
2) Since your money is at risk unless you will pay cash in full for all contracts so that you can
withstand at least a (3%) of the value of a contract uctuation against you. You must follow
the rules of money management and use stops to keep losses at a minimum and approach
trading as a business. Be realistic that business expenses are losses, so do not expect to
use leverage and to prot on each trade. Be capitalized to be able to make 15 trades per
year in anyone commodity as a track record with the possibility of 5 to 8 trades stopped out
in a row at worst with 1/3 risk vs. gain. Do not expect a few stopped trades to be an example
of how prots can be made in commodities. Your other choice is not to trade commodities
because of leverage or capital.
A) Any given day a market will have a trading range of 1% of the value of a contract, any
given week a 3% range. This is the nature of any market. The trading ranges we give are
rarely greater than we say for the next week or month. If markets move very little, then
do not expect large gains.
B) You cannot prot in the commodity markets unless your prots exceed your losses and
losses are inevitable because of leverage. Trading too many contracts or too high a value
contract for your equity may get you in trouble.
C) Learn to think in percentages % of your equity and market values, instead of actual dollars
or money. That takes the emotion out of trading.
D) One contract of T-Bonds prices at 100 is $1000 per 1.00 pts. Times 100 is equal to
$100,000 per contract therefore $25,000 equity is (4 to 1) leverage. A 1.00 pt. loss is $1000
but only 1% of the value of one contract and a 3% loss is 3.00 pts or $3000. Average
margin required is $3000.
E) Use a 4 or 5 to 1 leverage factor. Never more than 10 to 1 leverage.
3) Never risk mover 10% of your equity. We prefer 5% on any one position.
4) Enter only 3 to I risk-reward trades. Never assume more than 1/3 risk verses your gain
possibility because of slippage and commissions you cannot prot consistently.
5) Diversify into at least 3 different industries if you only trade with $5000 to $10,000, but only
trade one commodity in each industry.
A) If you trade with $25,000 or more, for the greatest diversication, trade at the agricultures
such as foods, bers, and nancials excluding the S&P, T-Bonds and currencies with 2 to 1
risk-reward or better for your greatest odds.
Mike Riley is editor of the Gann-Elliott Cycle Report Weekly Newsletter Hotline & Fax. He
can be reached at 903-463-2110.
A
Ithough making money is important, it is only one half of the equation for a successful
career as a trader. An equally important component of this formula is how much of that
money you have left after the losses, expenses, and yes, “Read My Lips,” taxes. In my
opinion, the business plan and management of the trading business are the most signicant
aspects of a trader’s ultimate success and two of the most overlooked requirements.
Yes, a good trading system is a vital cog in this wheel. No doubt, you cannot manage your
money if you don’t make any. For this reason, it is necessary to implement a well thought out,
and balanced trading strategy. A successful trader must stick to a disciplined system with a
historical record of generating consistent prots. The drawdown should be commensurate with
this return, and tolerable by the available capital in the trader’s account. Trading a diversied
portfolio is vital to cutting this drawdown.
The system also must t the personality makeup of the trader. His or her tolerance for risk,
need to be correct (percent accuracy), and level of desired activity or time available for trading
(frequency of trades, and time frame being traded) are just as important as the system itself.
There is no such thing as a “one size ts all trading system.” The most protable system in
the world will still lose money if it is not traded the way it was designed; and a trader will not
consistently trade a system which does not suit his or her personality.
In addition, I have frequently seen traders conduct their business affairs, as would drunken
sailors on a ve day pass. As a professional who has been involved in trading from both sides
of the market (ie. as a trader, and also as a
CPA-investment tax specialist who services traders), I have observed professionals who
run their primary businesses prudently and conservatively, but seemingly throw all caution and
common sense to the wind when it comes to trading.
Trading is a business and should be treated as one. Prot margins must be calculated, as
well as cost of sales, risk/reward ratios, and return on investment net of taxes. The worst crime
a trader can make, is to have made money, but then to hand it right over to the government
because of a fundamental lack of knowledge of the tax laws and the strategies which can be
used advantageously. No area of the recent Tax Reform Act was impacted more than that of
the investor/trader, and Bill Clinton has no plan for immediate relief. Therefore it is vital for the
trader to be aware of what is available to him under current law.
One “secret” that the government has kept under wraps, is the ability of individuals to qualify
for Trader Status. Most people, even knowledgeable tax professionals, believe that unless
you are a professional market maker, operating from the oor of the exchange, you are an
investor. They are not aware that the Government will allow an intermediate classication called
Trader, which provides signicant nancial benets. This is especially true for those individuals
trading commodities for their own account.
While the market maker (broker dealer-oor trader) can deduct 100% of his expenses, and
treat his losses as ordinary, the lowly investor is limited to a deduction only after it exceeds
2% of Adjusted Gross Income. Furthermore, if AGI exceeds a certain level ($105,000 in
1993) there is a further exclusion to the tune of 3%. This means that although the investor
is taxed on 100% of income, the expenses directly incurred in earning that income, such as
Ted Tesser, MS, is a Certied Public Accountant, licensed by the State of New York. His
specialty is investment related taxation and he has recently completed a book entitled “The
Serious Investors Tax Survival guide, “ published by Traders ‘ Library He also is a full
time trader, trading systems developer, and has written a two part trading course entitled
“Systems For Success How To Create and Have a Protable Trading Business. N He can
be reached at 212-683-2950, and will send those readers who contact him a free booklet
entitled “Trading s A Business. “
I
n his book, Stock and Commodity Traders’ Handbook of Trend Determination, George Bayer
lists eleven rules for trading stocks. One of the most often mentioned and the easiest to
use involves the planet Mercury.
Carol Mull is an active trader and the editor/publisher of the seven-year-old newsletter, “The
Astro-lnvestor. “ She can be reached at Mull Publications, PO. 11133, Indianapolis, Indiana,
46201, phone 317-357-6855.
F
inancial astrology today has two biases. The rst is toward cycles. At rst, it seems
reasonable to correlate the regular, predictable rhythms of the planets with earthly
phenomena. Many astrologers today work exclusively on correlating planetary cycles
with tops and bottoms in the markets.
However, the traditional practice of astrology, often now dismissed as “event-centered,” was
oriented toward one-time occurrences, not regularly occurring cycles. We might ask ourselves
if the traditional approach has any merit.
The second bias is toward predicting direction. This likewise makes good sense, as
everyone wants to know which way the market is headed. However, astrology may be better at
predicting volatility than direction. If we can predict periods of extreme volatility, this information
is of use to options traders, and especially professionals, who tend towards the short side, and
who can be wiped out by a drastic move in prices in either direction.
It has long been apparent that retrograde motion of Mercury and Mars bears on market
volatility. Retrogradation is a phenomenon in which the planets appear to slow down, stop,
and then move in the opposite direction.
In particular, the great crashes such as 1929, 1937, and 1987 tend to be associated with a
retrograde Mercury. Prices can also move sharply to the upside, as in October, 1974.
Retrograde Mars is correlated with less dramatic but more sustained price movement. The
plunge in late 1973 occurred while Mars was retrograde, and the nal stages of the slide were
accompanied by a retrograde Mercury. The spectacular gains in April, 1933, and the totally
unexpected rally of January, 1976, were associated with a retrograde Mars.
A further point about Mercury is the curious connection of its stations (the points in
the sky where the planet appears to stop in its tracks) with national disasters in the U. S.,
when those stations occur in a certain part of the sky. That part is the “Via Combusta,”
from 15 Libra to 15 Scorpio, which, according to one branch of astrology, is endowed with
peculiar properties.
The accompanying table lists several instances of major events that occurred near a station
of Mercury in the Via Combusta: among the events are two market crashes, the attack on
Pearl Harbor, and the Cuban Missile crisis, which, we learned recently, came within a hair’s
breadth of turning into all-out nuclear war.
A more thorough examination of stock market history between 1950 and 1991 reinforces
the notion that a Mercury station in the Via Combusta raises the probability of stock market
volatility. Of the 100 most volatile days in that period (with a change of at least 2.675% in the
S&P 500), 19 occurred within 5 trading days of such a station. That is, 19% of the volatile days
occurred in 2.4% of the time. (The 253 days near the stations made up 2.4% of the days in the
overall sample.) This is over seven times chance levels.
This article was written by Carl E. Whitney. He can be contacted at PO. Box 1072 Santa
Rosa, CA 95402