W D Gann

William Delbert Gann

William Delbert Gann (1878-1955)

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W D Gann is a legendary name in the world of stock and commodity trading. Gann was supposedly one
of the most successful stock and commodity traders that ever lived. Born in Lufkin, Texas on June 6,
1878, W.D. Gann began trading in the early 1900’s, and in 1908 moved to New York City to open his own
brokerage firm, Gann & Company. Using his own style of technical analysis, W.D. Gann was reported to
have taken more than 50 million dollars in profits out of the markets.

Gann based his trading methods on time and price analysis. This made it possible for Mr. Gann to
determine not only when a trend change was

imminent, but also what the best price would be to enter, or exit that market. So accurate were Mr.
Gann’s techniques that in the in the

presence of representatives of a major financial publication, he made 286 trades in a period of 25

profitable.

W.D. Gann’s use of Natural Law and geometric proportions based on the circle, square, and triangle are
as effective today in the stock and

commodities markets as they were while he was alive.

A number of files about Gann’s techniques are available for downloading. These are mostly zip files of
pdf files.

A Summary of W.D. Gann’s Techniques of Analysis and Trading

Master yourself

* Do not overtrade

* See if your trade is based on hope or logic and systems developed by you

Trading strategies

Have different strategies for the four situations:

* Bull market

* Bull market top i.e. reversal from bull to bear market phase

* Bear market

* Reversal phase from bear to bull market

Importance of number 3

Majority of moves will generally occur in time period of three – days, weeks or months. Never trade in
the direction of the trend on its third day.

Tops, bottoms and consolidations

* Tops usually take time to form. Spike tops are less common compared to spike bottoms. Tops are
marked by extreme movements in medium and small stocks. They will rise by even 20% in a day. These
are called blow offs. Because of this short-selling on extreme top is risky.

* Divergences will appear at the top but they cannot be used for timing the trade. Time cycles shall
indicate when the actual reversal will start.

* In bull market watch for a correction which is greater in both price and time than the previous
corrections in the move up. (Opposite in the downmoves).

* Highest probability of support is that the corrections in the uptrend will all be very close to equal.

* Swing objectives – add the range to move to the top of that move to find out the target for the next
upmove or reverse in the bear market.
* Square of numbers and 50% of the difference between those squares are significant support and
resistance, but cannot be traded by themselves.

Gann says that there can be nine mathematical proofs of any point of resistance

1. Angles from top and bottoms

2. Angles running horizontally i.e. the previous tops and bottoms

3. Time cycles (vertical angles) (Press a short sale if there are three or four days

of sideways movement after a high day and this is followed by a down day with

high volume where low is lower than the low of the sideways movement and

when this coincides with expiry of time cycles)

4. Crossing of important angles originating at zero

5. Crossing or coming together of angles from double or triple tops or bottoms

6. Crossing of double or triple tops or bottoms

7. Past resistance/ support

8. Volume of sales

9. Squaring of time and price.

Weak stocks will generally not rally until either a test of the first bottom or a higher bottom is made by
the market. (That is why AD line is a lagging indicator and generally moves up in the third wave)The third
move trying to break the consolidation top/bottom is the most important. If it fails, a fast move in the
other direction may be expected.

False breakouts from consolidation result in very fast moves. False breakout occurs when a move outside
the consolidation zone fails to sustain in the following week and where the price has not gone beyond
three points above the top. These false moves start with high momentum.

A breakout from a three-four day consolidation in a very narrow range results in sharp three day move.
Faster moves start from third of fourth higher bottom. It will be strong move if there is space between
the third or fourth bottom and the previous top.

Trend and trend following techniques: In fast advancing markets, in the last stage of the campaign,
reactions get smaller as stocks work to higher level, until the final run has ended. Then comes a sharp
reaction and a reversal in the trend. Same happens in the bear market. Once you are convinced that a
trend is in force, do not wait too long to go with the trade. Early in the trend buy/sell a stock which is
already strong/weak. Fast moves generally come from bear market bottoms. These moves usually run
three weeks up, then move sideways three to five more weeks, and then accelerate followed by another
sideways movement. Under fast moves the first signal to trend change is overbalance i.e. reaction gets
larger compared to the earlier ones, specially in the fifth wave. Watch the changes in momentum of
price – is the market/stock gaining less points in more time? If the market is trending up, then it should
go up more time than it goes down. And vice versa.

Any reversal pattern should be seen in conjunction with the time cycles. Do not pay attention to the
financial press.

Use simple trading filter of not entering the market on the third day of the move.

The Cycle of years : Seasonality

Watch for significant days in solar year – Dec. 22, March 21, June 22, Sep 21/23 etc. and days on
important angles from these days e.g. 15 days from Dec. 22 i.e. Jan 5-6, Feb 5, May 6, July 7, August 8
etc.

Important count of days: Significant changes in trend may take place on the following days from the
significant highs/ lows – 30, 45, 60, 90, 135, 150, 180, 210, 225, 315, 330 and 360.

These are calendar day counts: Trading day counts are 11, 22, 33, 45, 56, 67, 78, 90, 101, 112, 123, 135,
146, 157, 168 and 180. True understanding of cycles are obtained from the calendar days.
Important count of weeks: 13, 26, 39, 45, 52, 78. 7 week period is considered as death zone. Important
count of months – 6, 12, 144.

Geometric Charts, angles and price squares: 365 days is an important cycle of one year. In a circle there
are 360 degrees which very nearly correspond to this cycle. In other words, one day is equal to one
degree of the circle that the earth makes around the sun. Hence the significance of the important
divisions of the circle (into angles) on the chart. These angles are 45, 90, 120, 135, 180, 225, 240, 270,
315 and 360.

Dividing a line parallel to the 90 degree division of the circle we get a square. Divisions of this square
gives important angles on the charts.

There are two kinds of cycles: Time cycle or natural cycles and cycles derived from the significant prices.
And these cycles will have important divisions on 1/8, 1/4, 1/3, 3/8, 1/2, 5/8, 2/3, 3/4 and 7/8. Thus the
30 year time cycle will be divided into important probable turning points as follows:

1/8 – 3.75 years

1/4 – 7.5 years

1/3 – 10 years and so on.

The significant time cycle/squares are Square of 52 on weekly charts. Use it on important high/low as
well as on those points which start a 90 day cycle. Also two squares or a cycle of two years can be used.
Inner squares (squares formed within the square) and outer squares (squares of the same size placed
adjacent or diagonal to the square) should also be seen when price moves into the same.

Square of 90 is also important – in the same manner as square of 52 on weekly charts and monthly
charts.

Square of 12 is important. Multiples of 9 are also important to watch.

Square of 144 is the most important square for use on monthly charts. These cycles have influence on
price in terms of absolute numbers in addition to the time cycles they signify. It means that a movement
of 144 point in a stock is important by itself.
The further divisions of time and price are derived from this master chart as follows:

144*144 = 20.736.

The important divisions are

Div. Days Weeks Months Years

1 20.736 2.962 682 56.8

1/2 10.368 1.481 341 28.4

1/4 5.184 .740 170 14.2

1/8 2.592 .370 85 7.10

1/16 1.296 .185 43 3.55

1/32 .648 .093 21 1.77

1/64 .324 .046 11 0.89

Weekly and monthly time cycles are the most important cycles.

* In the short term, watch 3.5 day i.e. the 3rd / 4th day from the important top / bottom for change in
minor trend. It may become a beginning of a major trend.

* Reactions will often last for two or three weeks. Therefore watch 14th day and 21st day along with the
7th day from the important top/ bottom. Out of these 14th is the most significant and 21 the next. (Note
that 14 is very close to 13 and 21 is Fibonacci number itself).

* 1/16 of the year is 23 days. Watch for this too.

* Square of 7, 49 is very important for change in trend.

* Watch for a change after 42 days (2×21), but the change may not occur until 45th-46th day. (I have
noticed that on many charts of A group stocks 42 day or near about fixed time cycles are important.
These numbers, very close to each other, gives some flexibility in analysis, Fibonacci numbers plus minus
a few days).
On yearly charts, 90 year, 60 year, 30 year, 20 year, 10 year, 7 years and their multiples and 5 year cycles
are important to watch especially the simultaneous end/beginning of these cycles.

1/3 years from any top/bottom when combines with 1/2 or 1/4 years from any other top/bottom
becomes very important. 1/2 of the year is the very important – same as the half of the range/high.
Anniversaries, however are the most important. 39 weeks and 17 weeks and 35 weeks are also
important.

The cycles derived from prices are based on High, Low and Range (i.e. difference between high and low).
The most powerful is the square of the range. The absolute number at high, low or that of range is
assumed to be forming a time cycle with so many days, weeks or months. In other words, a high at 60
means a time cycle of 60 days/weeks/months. All the division as mentioned earlier will be applicable to
this

cycle.

Thus a cycle derived from prices will have two axis – Vertical price axis and horizontal time axis.
Significant changes can be expected at important divisions of price or time. But the most significant
changes should be expected at the angles made by combining the two. These angles are made on the
square of the price. Here square does not mean price raised to the power of two. This is the geometrical
square where the length of one side is equal to the price. The square is drawn down from high and up
from low.

The square of range can be made down from top or up from low. In a square of high at say 60, drawn on
daily graph will have its corners at the following four points – 1) at the price (at 60) 2) at the price (at 60)
60 days away in future i.e. 60 on price axis 60 days

to the right on the time axis from the day on which the price has reached 60. 3) at zero on price axis just
below the high and 4) at zero 60 days to the right of point 3.

If the price moves down one point each day the price will reach to the point 4, i.e. 0 on the 60th day.
This action is called squaring off of the price. The angle of fall will be 45% on the square. This is also
referred to as 1×1 angle i.e. fall of one unit in one day. In same fashion we can draw angle 2×1 i.e. fall of
two units in one day and so on. The most significant angles are 2×1, 1×1 and 1×2. These angles are
drawn from point 1, 3 and the mid-point between 1 and 3 and the mid-point on 2 and 4.

Crossing over of the angles drawn on the square are considered probable turning points. Angles from
50% mark should always be seen.

When the price breaks below 45% angle line it signifies a weak position and indicates a decline to the
next angle. If it again crosses the 45% angle it is said to have regained its strength. At the crossover of
these angles distance from the base i.e. the day of high/ low is important. Larger the distance, more
powerful the trend is likely to be.

1/2 is the most important level. This is the centre of gravity. If the price falls below this level and bounces
back to touch this level again, on the first such occasion it is good set up to shortsell. If the price comes
to 50% of high and 50% in time, it may be a high probability buy which may result in 3 months fast move
up on the weekly chart.

The third time against any support or resistance zone is the dangerous time.

The 1st, 2nd, 3rd, 4th, 7th, 9th and 12th squares are the significant squares of lows but

all should be monitored. (i.e. the price levels at 2,3,4,7,9,12 times the low).

* The first year of a decade is the year to look for a bear campaign to end and ull market to begin.

* The second year, is a year of a minor bull market or a bear market rally.

* Year three is the start of bear year, but the rally from the second year may run into March or April, or if
the second year is a decline, the decline from the second year may run down and make bottom in
February or March of the third year.

* Year four is to be a bear year, but it ends the bear cycles and lays the foundation for a bull year.

* Year five is the bull year, the year of ascension.

* Year six is a bull year in which the bull campaign which started in the fourth year usually ends in the
fall.

* Year seven is a bear year (but note that 1927 was at the end of a 60 year cycle and that there was no
decline).
* Year eight is a bull year. Prices start advancing in the seventh year and reach the 90th month of the
decade in the eighth year. This is very positive and a good advance usually takes place in this year.

* The ninth year of the decade is the strongest of all bull years for bull markets. The final bull campaign
culminates in this year after an extreme advance, and the prices start to decline. The bear market usually
starts in September to November.

* Year ten is a bear year. A rally often runs until March or April, then a severe decline takes place until
November or December, when a new cycle begins and another rally starts. (Look for such cycles in the
Indian indices).

In a strong rally the lows of the reaction end above the top of the previous rally. The duration of the
quick counter trend moves is three to four days on the indices and three to five days on the stocks. A
movement exceeding the fourth day indicates the trend may go into a consolidation or reversal whereas
reversal is higher top and higher.

bottom compared to the previous day or vice versa. Bar reversals at cycle ends are extremely important
points for reversal in the trend. A stock or commodity can correct more than four days and then continue
the trend. This next correction (countertrend) in time will likely be seven to ten days.

* Smallest complete cycle is 5 years.

* Minor cycles are 3 years and 6 years.

* Always watch for change in the 59th month.

* Bull or bear campaigns seldom run more than 3-3.5 years up or down without a move of 3-6 months of
one year in the opposite direction, except at the end of a Major cycle, like 1869 and 1929. * Many
campaigns culminate in the 23rd month.

The purpose in trading is not to make pick exact highs and lows. The purpose is to make money. Always
have a plan. The opportunities are many in the markets, and you will miss many. But do not worry or fret
about missing an opportunity, as another will be along shortly. Trade from a plan and do not react to the
markets. Knowledge, discipline, courage and hard work are the requirements of skillful trading.

Time taken by planets for revolution around the sun:

Mercury 88.97

Venus 224.70

Earth 1 365.26

Mars 1.88 686.98

Jupiter 11.86 4331.98

Saturn 29.46 10760.60

Uranus 84.01 30685.50

Neptune 167.69 61285.25

Pluto 247.69 90465.38

Overview of Sources for W D Gann’s Lessons

The main thrust of this overview is to provide information regarding the various sources of W.D. Gann’s
original lessons. It will not include second-generation “How I Cracked Gann”-type books, or courses.
That’s another story…

IMO the single best Internet resource for finding out most things (that are publicly available) relating to
W.D. Gann is the web site run by Bonnie Lee Hill. She has put together a formidable resource. Most, if
not all, of the links presented here should be readily found on her site. URL:
http://www.webspace4me.net/~blhill/pages/w.d.gann.html

Newbies should understand that, to my knowledge, Gann never published a singular Master Stock
Course, or a singular Master Commodities Course. Rather, he published a string of lessons – many in the
form of letters to students – over a period of many years (i.e. 1931-1955). This is separate to his Annual
Forecasts of the 1920s. It appears that this method of publishing (letters) was not uncommon during that
era. There is good evidence to suggest that W.D. compiled many of these lessons into courses that he
subsequently marketed at different times, prior to his death in 1955. My research to date indicates that
the notion of a singular Stock Market Course and a singular Commodities Course is something that has
evolved since the 1970s.

The purpose of this background is to provide newbies with some understanding as to why the
commercial vendors have slight differences in the original Gann material that they provide – and there
are differences. When one understands that their courses are mainly a collection of letters/lessons
created over a period of 25-odd years, then it’s easy to understand the potential for differences in their
educational material – depending on how well each vendor could source the original lessons. Okay,
enough background.

Here are the leading sources for Gann’s original lessons:

Commercial Vendors (in alphabetical order):

Cowan Publications:

Sell a Gann Stock Market Course and a Gann Commodities Course (i.e. copies

of Gann’s writings).

http://www.cycle-trader.com/gann.htm

Lambert-Gann Publishing Company:

Sell a Gann Stock Market Course and a Gann Commodities Course (i.e. copies

of Gann’s writings).

http://www.wdgann.com/

Sacred Science Institute:

Sell Gann’s original Stock lessons and Commodities lessons, spread over

several volumes.

http://www.sacredscience.com/gann/
Yahoo Groups (in alphabetical order):

gannstudygroup (GSG):

Free group run by ‘Super Romeman’ – an American living in Rome. He’s a real gentleman – affectionately
known by many as Sir Romeman. Contains an array of Gann paraphernalia, including quite a few of
Gann’s Stock lessons (scanned images). This group operates mainly as a document repository, rather
than conducting active discussion. GSG2 was created to cater for the overflow.

http://finance.groups.yahoo.com/group/gannstudygroup and

http://finance.groups.yahoo.com/group/gannstudygroup2

Time-Price-Research-II (TPR):

Free group. This site contains a wide array of Gann’s work (scanned docs).

This group was started some time after GSG. Many of the Gann lessons look

like they were sourced from GSG, although I cannot be sure. There are also

groups for TPR-I and TPR-III, TPR-IV and TPR-V.

importan web site

https://cyclesresearchinstitute.org/subjects/cycles-economy/gann/