Who Was W.D. Gann?

W.D. Gann is remembered for using geometry, astrology, and ancient mathematics to predict events in the financial markets. He developed the technical analysis methods of Gann angles, indicators, and master charts.

Gann is the author of How to Make Profits in Commodities and 45 Years in Wall Street. W.D. Gann died on June 18, 1955.

Key Takeaways

• W.D. Gann created trading strategies using geometry, astrology, and ancient mathematics.
• His techniques, known as Gann indicators, are used in predicting the top, bottom, and future price moves of commodities.
• Gann developed and sold trading courses including The W. D. Gann Master Commodity Course: Original Commodity Market Trading Course.

Early Life and Education

W.D. Gann was born on June 6, 1878, in Lufkin, Texas. With limited education, Gann was a self-taught investor who began trading in the early 1900s. In 1908 he moved to New York City to open his brokerage firm, W.D. Gann & Company. 

Publications

In 1919, W.D. Gann began publishing the daily market letter, The Supply and Demand Newsletter, which reported on stocks and commodities and made yearly forecasts. Gann’s second publication in 1923, The Busy Man’s Service, provided detailed trading recommendations.

Throughout his career, W.D. Gann developed and sold trading courses including The W. D. Gann Master Commodity Course: Original Commodity Market Trading Course.

Gann Angles 

Gann angles are one of Gann’s indicators and are trading tools used to measure key elements, such as pattern, price, and time. Gann described the use of angles in The Basis of My Forecasting Method, in 1935. By superimposing nine angles over a price chart, Gann shows potential support and resistance levels where each of the nine Gann angles represents a price movement.

Based on the 45-degree angle on a price chart, known as the 1:1 angle, Gann marked trends above it as strong and trends below it as weaker, with any change in angle representing a price change.

Support and Resistance

Support is the level at which demand is strong enough to stop the stock from falling.

Resistance is the level at which supply is strong enough to stop the stock from moving higher. 

Cycles and Numbers

W.D. Gann argued that all market activity has historical reference points. By studying ancient geometry and astrology, he found that market events and specific numbers repeated across time cycles, and Gann’s indicators are based on his findings.

By counting days and trending specific calendar dates, Gann argued that the majority of trends occur in periods of three days, three weeks, or three months.

Gann also saw the calendar year of 365 days as an important cycle, one which creates a circle of 360 degrees. The circle on a price chart creates angles of 45, 90, 120, 135, 180, 225, 240, 270, 315, and 360 on which to plot and predict trends.

He also followed trends in a 60-year cycle and a 90-year cycle. He noted that the war period in 1869 created panic and was followed 60 years later by the greatest bull market and another panic in 1929. In November 1928, Gann reportedly issued an “Annual Forecast for 1929” which predicted the end of the great bull market of the 1920s on September 3, 1929.

Gann predicted a potential financial crisis occurring in 2019, 90 years after the financial crisis of 1929.

Why Is W.D. Gann Considered Controversial?

It is unclear how wealthy W.D. Gann became from his trading analysis. In his 1993 book Trading for a Living, Alexander Elder, argues that Gann and his followers sold books and investment courses to earn money and did not profit from investments in the market. Elder’s book claims that when W.D. Gann died in the 1950s his estate was valued at slightly over $100,000.

What Evidence Exists of W.D. Gann’s Success?

In 1909, Richard Wyckoff a reporter for Ticker and Investment Digest cited Gann’s activity during October 1909. Gann made 286 transactions in various stocks, on both the long and short side of the market of which 264 of these transactions resulted in profits.

What Are the Tenets of W.D. Gann’s Trading Philosophy?

Gann encouraged his students to avoid overtrading and evaluate if a trade is based on hope or logic. He also taught followers to develop a different strategy for each of the four market situations: bull market; bull to bear market phase; bear market; and bear to bull market phase.

The Bottom Line

While the scope of W.D. Gann’s trading achievements remain unclear, Gann’s legacy and trading strategies and Gann indicators, using geometry, astrology, and ancient mathematics, continue to influence investors.

Read the original article on Investopedia.