Gann Treatise

52 

Full text

(1)

Gann Made Easy

The Treatise

‘A Man Who Never Changes His Mind

Will Have No Change To Mind’

William. D. Gann

© 2006 Gann Managament Ltd. All Rights Reserved. Gann Management Limited is authorised and Regulated by the Financial Services Authority

(2)

William. D Gann.

He was one of the most successful traders that ever lived.

Born in Lufkin, Texas on June 6, 1878, William D Gann started commodity

trading and stock market trading in 1902, and moved to New York City in

1908, opening his own brokerage firm, W.D. Gann & Co., at 18th and

Broadway.

William D Gann took more than 50 million dollars in profits out of the

markets! In today’s markets that would be closer to 500 million dollars!

After many decades of incredible trading success, W D Gann moved to

Miami, Florida where he continued his writings and studies up until his

death on June 14, 1955.

So accurate were W.D. 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 market days, on both the long and short sides of the market.

Of these, 264 trades were profitable! Read articles on W.D. Gann in our

Trading Resources Articles. In 1933 Mr. Gann made 479 trades during the

year. 422 were winners and 57 were losers. The return on his capital was a

staggering 4000%.

Mr. Gann consistently repeated these incredible trading feats, issuing

amazing forecasts in a number of markets one year in advance.

His use of Natural Law and geometric proportions based on the circle,

square, and triangle are as effective today in the Stock Market and

Commodities Markets as they were 50 years ago. His techniques work in

any market. His methods seem a bit unusual and even mystical to many

traders, but they have proven themselves time and again over the past

century.

Since his death, W.D. Gann has become something of a legend in

financial circles. His capacity to make big financial gains (both on the

market, the Cuban lottery and horse racing) gave him a reputation for

uncanny knowledge of market trends.

(3)

THE PROGRAMME

INTRODUCTION

2

Preplanning 6

1:

FINDING THE DECISION LEVELS

7

A: The 1st Check -The Major Gann Levels 10

i) The G1 Level 11

ii) The G2 Level 12

iii) The G3 Level 13

iv) The G4 Level 14

Rules To Apply 15

B: The 2nd Check - Percentages 18

C: The 3rd Check - 50% Retracements 20

D: The 4th Check - The Lesser Levels 22

E: The 5th Check - Past Tops and Bottoms 24

F: The 6th Check - Triple Tops and Fourth Attempts 26

G: The 7th Check - Natural Number Levels 27

2:

TRIGGERING THE SIGNAL

29

A: The Trend Indicator Line 30

A New High & Low on the Same Day 30

A 'Within' Day 30

The Application of a Trend Indicator Line 31

B: The Trigger To Buy 32

i) The Action on Prices Rising to a Decision Level 33 ii) The Action on Prices Falling to A Decision Level 34

C: The Trigger To Short 35

i) The Action on Prices Rising to a Decision Level 36 ii) The Action on Prices Falling to A Decision Level 37

3:

TAKING PROFITS

39

A: Taking Profits After Buying 40

i) Taking Profits After a Fast Rise 41

B: Taking Profits After Shorting 42

ii) Taking Profits After a Fast Fall 43

4:

LIMITING LOSSES

45

A: Cutting Losses After Buying 46

B: Cutting Losses After Shorting 47

IN CONCLUSION

50

THE CASE STUDY

(4)

INTRODUCTION

I

t was on a hot, sunny, Spanish day in August 1972 that I found myself

wandering my weary way down a back street of the historic Majorcan

city of Palma. Normally I would have found the weather and the

environment exhilarating. However, on this occasion I was walking with a

heavy heart for I was returning from the local hospital where my three year

old son was suffering from a very badly crushed foot after an accident in

the hotel in which we were staying. In order to while away some time and

relieve my anxiety, I decided to call into a small bookshop which I had

noticed on the far side of the narrow street in which I was walking. I entered.

The step I was about to take would change the rest of my life.

Eight years previously I had set up an Insurance Brokerage which had developed from a generalised insurance service to become a specialised pensions adviser for small to medium sized companies. The unitised pension contracts we sold gave companies the option to direct their capital into general areas of investments such as the stock market, the bond markets, cash and the property markets. As there were considerable amounts of money involved it was obvious that a sound advisory service to assist in the switching of funds would be of great value to our clients. The UK stock market prior to the Spring of 1972 had had a good rise and it seemed fairly easy to make money, especially to a young naive investor from the industrial North of England. I decided to give the opportunity of investing my capital of £100,000 to my local Broker, with the promise that if his recommendations were satisfactory then the opportunity to manage the pension monies under our control would be granted to him.

My nightmare soon began. As soon as I entered the stock market it topped out and my capital dived in value. I was confidently assured at regular intervals that all would be well, we were just experiencing a short term correction. (Things never change, do they?) However, matters went from bad to worse. I could not sleep and suffered from

was badly affecting my ability to run my business. When my capital was halved I took a deep breath and sold all my holdings. The relief was incredible.

My excursion into an area in which I had no knowledge had ended in disaster, as indeed it should have done. Ignorance is bliss perhaps, but ignorance of the financial markets is almost always disastrous for your financial health. I was on my way to the realisation that there are very few who have the right to call themselves specialists or professionals. Most are totally unaware as to how the markets truly work. They guess, and they guess, and they guess again ~ until their ignorance is exposed. Idiots can sure play bull markets but bear markets sure destroy them.

I entered the market in the third guess stage with the onslaught of the worst bear market in Britain ever just ready to happen. The market collapsed by 80% in less than three years.

After my ignominious exit from the market there were decisions to be taken: Should I run away and leave my clients to their own devices? Should I attempt to find a more competent adviser? But where would this saviour be found, and how would I recognise his ability? Or perhaps I should teach myself to do the job, despite my total ignorance. Yet where would I find the

(5)

I

t was to recover emotionally from my ill-fated market experience and to consider my dilemma that I found myself in Palma walking into a minute second-hand bookshop down a tiny back alley with not a person in sight. Hardly a scene to trigger a set of circumstances that would eventually give me a knowledge which would change my life so completely and pave the way for an experience full of satisfaction and contentment. My life as a technical analyst and investment adviser was almost on its way!

A little sun streamed in through the tiny shuttered windows of the bookshop, just allowing me, after a brief adjustment, to note that the books were written in Spanish. Being English, and therefore devoid of any talent in foreign languages, my interest rapidly diminished. I was about to leave when I noticed the back of a book, the faded drawing of the Wall Street Stock Exchange just peeking out from under a large book on the life of the Spanish painter Goya.

The cover was a bleached orange with appallingly small white print, almost impossible to read in the half-light. If I were to duplicate the circumstances with my present flawed eyesight, I would probably have left and my life would have taken a much less rewarding path. The author was a severe looking man named William D. Gann. Despite the poor print I was able to read the following :

‘Oneofthemostastonishingpredictionsmadeby Mr. Gann was during last summer [1909] when hepredictedthatSeptemberwheatwouldsellat$1.20. Thismeantthatitmusttouchthatfigurebeforethe endofSeptember.Attwelveo’clockChicagotime,on September30th(thelastday),theoptionwasselling below$1.08anditlookedasthoughtheprediction wouldnotbefulfilled.Mr.Gannsaid."Ifitdoesnot touch$1.20bythecloseofthemarket,itwillprove thatthereissomethingwrongwithmywholemethod ofcalculation.Idonotcarewhatthepriceisnow,it mustgothere."ItiscommonhistorythatSeptember wheatsurprisedthewholecountrybysellingat$1.20 andnohigherintheverylasthouroftrading,closing at that figure.’

After my experience of the sheer ignorance of some market operators and my own nightmare, this was a bolt from the blue.: "Ifitdoesnottouch$1.20bythecloseofthemarket,

whole method of calculation". What a remarkable statement to make. How was it possible to so accurately determine tops of markets? The proof of a lifetime's work apparently depended upon the price of wheat before the close of trading on that day being at the 120 level. This statement I found astonishing, and still do.

I opened the book and was confronted with figures, comments, statistics, charts and prices in what could only be described as an assortment of ideas in no apparently logical order. The writing style was confused and showed no fluency but my interest was still, surprisingly, aroused. Excited, I bought the book immediately. I couldn’t wait to get back to the hotel pool where I read, and read, and read. Yet in spite of my original excitement, I couldn’t come to terms with the proposition put forward by Gann that market movements are mathematically based and that the en masse judgements of the world's investors can be assessed by simple mathematical principles. A mistake that took me over 5 years to correct!

M y i n t e r e s t i n t e c h n i c a l a n a l y s i s stimulated, I got down to work to accumulate data, and I commenced my onslaught by reading every book I could lay my hands on on this fascinating study. I read 135 different books over the next few years and came to the conclusion that most were written by intellectuals in order t o s a t i s f y t h e i r e g o s o r w e r e t h e meanderings of amateurs. I decided that the fundamental approach was not for me. There was far too much guesswork and I found it difficult to believe in the accounts as presented by the auditors.There were far too many accountants' deceptions to

(6)

I

resolved to leave the guessing game to others and I am delighted to have done so as I know of only a few using this approach who have been successful. The performance of funds managed on fundamentalist principles, this being the vast majority, fail in the main to keep ahead of the averages.

At the end of a 5 year period I had consumed much and thrown most away. I was left with an interest in Joe Granville's moving averages; the pattern principles of R. N. Elliott; and the mathematical assessments of W. D. Gann. During that time I had found the bottom of the 1972/1975 bear market and had delighted my pension clients by keeping them liquid in the frightful fall of 1974 and then entering the market in the last week in December 1974. (SEECHART1)

Mon 3 Jan 1972 to Fri 30 Dec 1977 Monthly Buy Signal

FINANCIAL TIMES (1972 - 1977)

CHART 1

I entered the market just before the top.

Nevertheless, all was not well. Overall, the practice of combining a number of differing principles had, like mixing the primary colours together, produced a murky grey mixture of success and failure.

Granville's moving average techniques had a detrimental psychological effect, being by nature late in triggering buy and sell signals. More importantly, the technique is doomed to failure when floundering in trading ranges, where a series of damaging losses are inevitable.

The Elliott wave principle was an interesting intellectual exercise but with, for me, severe inherent problems. In the corrective stages there are a myriad of alternatives to come to terms with and there is always doubt as to where the waves commence, thus leaving many questions unanswered. Doubt is one of the trading curses, and a luxury the investor can do without.

My breakthrough occurred when I realised that I had had the answer back in 1972 when my son's misadventure directed me to that small second-hand bookshop where, by chance, fate had placed ‘45 Years in Wall Street’ by W. D. Gann, with just a little of the book peeping out from under a testament to that great painter Goya.

The purpose of this treatise is to introduce the basic principles of one of the world’s great traders, W. D. Gann, and so supplement the Gann books that have just been translated into

(7)

P

erhaps the predominant reason for Gann’s methods not being used more widely is that practitioners in the early stages of development generally concentrate on the sophisticated aspects of the techniques which, whilst having a magical fascination, require long and concentrated study. This can be a very rewarding intellectual exercise but it complicates the issue and does not provide early practical assistance in making profits on the markets.

Above all, it should be realised that Gann made most of his fortune in the early part of his life before he discovered the sophisticated aspects of his analysis. A further constraint on appreciating the genius of Gann is that his most rewarding techniques were not disclosed to the general public in his books, reserved as they were for those who paid for his exclusive courses. It is therefore difficult for the student to both fully absorb and then practice the method without an extensive period of study.

In my case it took me several years to first absorb the information and then place it into its historical context. It was then necessary to analyse it before coming eventually to the realisation that, by simplification, the discoveries could provide a discipline to open up a comparatively easy route to profitable investment. In fact, the less sophisticated the investor, the better the chance of success. Consequently, the following method has been developed to eliminate the need, at least in the early stages, to delve into the more academic aspects. New students, even without any previous knowledge of technical analysis, can commence trading profitably within a few months of study.

My 15 years' experience of teaching thousands of Gann students has taught me that the simpler the chart the more profitable the results. My endeavour will be to be as clear and as precise as possible with the help of simple but helpful charts.

In this essay I will submit the step-by-step procedure I teach which I have discovered over the past few years has the maximum impact on new Gann students without assaulting their intellectual capabilities. Perhaps a more comprehensive book will follow, but I am certain that an understanding of the basics and their application will be much more helpful than diving in the deep end at the outset.

(8)

300% 200% 66.66% 25%

-50%

Mon 1 Mar 1982 to Mon 25 Oct 1993 Monthly

MITSUBISHI HEAVY IND.

CHART 2

The lows of 1990 & 1991 were calculated from information dating as far back as 1982 and finally confirmed from the 1989 top (also the absolute high).

PRE-PLANNING

The biggest advantage Gann's rules bestow upon his students is that the system is the only one I know which allows ‘advance’ planning of trades and is not laggard in nature. It allows the investor to isolate ‘decision’ areas both above and below the current value of the analysed investment. The levels can be identified weeks, months or even years in advance! (SEECHART2). If and when these pre-determined areas are reached, a buy, sell

or hold decision process based upon the daily moves is followed.

However, there is no certainty that the levels will be reached :

Ö

Never anticipate that the signal will be a buy or a sell.

Ö

A pragmatic approach at this point is vital.

(9)

1:

F I N D I N G

(10)

33.33% 25%

Thu 1 May 1986 to Thu 21 Oct 1993 Monthly

POUND/US DOLLAR SPREAD (X 100)

CHART 3

O

ne of the most important discoveries Gann made was that there is a relationship between every low price and every future high price. Also, for every high price there is a relationship to every future low price.

If this claim is true, then by studying historical data the investor can establish all important future highs and lows. That this is possible is clearly demonstrated by CHART3, the weekly

variant of which was published in the Euromoney training manuals early in 1992 and which isolated nine months in advance the exact top of the British Pound’s rally against the US Dollar.

200% 75%

-66.66%

MITSUBISHI BANK LTD

The lows of '90 & '92 were foreseen from data as far back as 1983. CHART 4

Mon 3 Jan 1983 to Fri 22 Oct 1993 Monthly

This is an exciting prospect which, as a Gann student of 20 years, I now take for granted but which most find difficult to accept. It is now my challenge to put before you the rules which will enable you to establish these turning points for yourself, perhaps even decades in advance as evidenced by CHART4.

(11)

T

h e following approach introduces a procedure which leads the investor through a series of tests and then ultimately provides the levels at which to consider buying, selling or shorting. It would be beneficial if you were to take each step at a time in a logical fashion rather than skip from one step to another in a haphazard way.

A word of warning :

Due to the nature of Gann’s techniques it is vital that you use accurate and regularly

corrected data.

Ö

Traded prices must be used, not quoted prices.

Ö

As much back data as possible should be to hand with an absolute minimum

of five years.

Ö

Do not assume that data from the providers is necessarily accurate. Check it

out for Gann will not work on inaccurate data.

The chief reason why I did not realise the real significance of Gann in my early years was that I was using inaccurate quoted prices. A mistake that wasted several years of profitable trading & resulted in the unnecessary checking out of other, inferior methods of analysis.

(12)

A: THE 1ST CHECK - THE MAJOR GANN LEVELS

Gann considered one of his greatest discoveries to be the calculable relationship between historic highs and lows and future levels of intermediate highs and lows. I call these the MAJOR Gann levels, being the first levels to place on the chart.

(The levels are established by referring to the historical highs and lows, after adjustments for rights and scrip issues.)

For ease of reference the levels are coded as follows :

(13)

I)

THE ‘G1’ LEVEL

This ‘G1’ level is the most important of all Gann levels and is found by simply taking the extreme high price and dividing it by two. It is therefore 50% down from the extreme high price.

Example

-If the historical high price is 2,200,

then dividing 2,200 by 2

results in the G1 level being put at 1,100.

(This G1 level of 1,100 would then be placed on the chart, provided it is in reasonable proximity to the current price. If it is not, then it should not be placed on the chart as it would detract from the clear picture we are attempting to create.)

The power of this level can be judged by CHARTS5 & 6.

Mon 2 Dec 1985 to Thu 21 Oct 1993 Monthly

HONG KONG HANG SENG INDEX

The G1 Level CHART 5

Historical High

Mon 1 Nov 1983 to Thu 21 Oct 1993 Monthly The 'G1’ level here is

based on the 'All Time High' of Jan 1972

The G1 Level

DOLLAR YEN SPREAD

(14)

I I )

THE ‘G2’ LEVEL

This is the second most important level and is found by adding the historical high and low together and then calculating the mid point by dividing the result by 2.

Example

-If the historical high is 2,200

and the historical low is 1,100,

then the total is 3300

which, if divided by 2,

results in the G2 level being placed at 1,650.

(Only place the G2 level on the chart if it is in reasonable proximity to the current price.)

Note the power of this level on CHARTS 7 & 8.

Mon 3 Sep 1979 to Thu 21 Oct 1993 Monthly

SPAIN MADRID SE

The G2 Level

CHART 7 Historical High

Historical Low

Mon 1 Jul 1985 to Fri 22 Oct 1993 Monthly

AUSTRALIA METALS & MINERALS

Note that the levels are as effective as selling levels as they are as buying levels. The G2 Level Absolute low: Jan 1975 CHART 8 G1 G4

(15)

I I I )

THE ‘G3’ LEVEL

The third most important level is found by dividing the historical high price by 4.

Example

-If the historical high is 2,200

then, having divided by 4,

the G3 level is placed at 550.

(This level should be placed on the chart only if it is in reasonable proximity to the current price.)

Note the power of the level on CHARTS9 & 10.

Mon 1 Jul 1985 to Fri 22 Oct 1993 Monthly The G3 Level

FUJI BANK

CHART 10 Historical High

Historical High

Mon 3 Sep 1979 to Thu 21 Oct 1993 Monthly

YEN INTEREST RATES (3 MTHS)

The G3 Level

CHART 9

G2 G1 G4

(16)

IV)

THE 'G4' LEVEL

This level is 25% of the difference between the historical high and low added to the historical low, and is calculated as follows :

Example

-Historical High

2,200

Less Historical Low

1,100

Difference

1,100

Divide by 4

275

Add to the Historical Low

275 + 1100 = 1375 = the G4 Level

Note the power of this level on CHARTS 11 & 12.

The G4 Level

The G4 level supplied support in 1990 and resistance in 1992.

Tue 1 Jan 1980 to Fri 22 Oct 1993 Monthly

MITSUBISHI CHEMICAL IND.

CHART 12

Historical Low

Historical High

Mon 1 Jan 1979 to Fri 22 Oct 1993 Monthly

MITSUBISHI BANK LTD

The G4 Level

CHART 11 Historical High

(17)

T

hese then are the most important levels to influence future prices and are the first calculations to make when anticipating future highs and lows. They should not be used in isolation but should become the first and most important of the series of checks which will direct your attention to an important turning point in the future.

The first step has been taken. Now it is important to adhere to the following rules in order to interpret the current price in the context of these levels. Very often the rules will have a profound effect on your assessment of the current position and of possible future developments.

RULES TO APPLY

TO THE ‘MAJOR' GANN LEVELS

RULE 1

The first time the level is hit is always the strongest and safest point to buy against the trend. Each subsequent test is less safe but still a strong point for a change in trend. (SEECHART5).

RULE 2

The levels are both support and resistance points and are equally effective in reversing both falls and rises to the levels. (SEECHARTS 8 & 9).

RULE 3

If the G1 & G2 levels are far apart there will often be a trading range within the levels. (SEECHART9).

RULE 4

If the G1 level is broken on the down side, in the vast majority of cases the fall will only be reversed when it hits the G3 level. (SEECHART9).

RULE 5

If the G1 level is broken and the G4 is between the G1 & G3 levels there will often be a rally from the G4, but this will be only temporary in nature as the likelihood is that the rally will reverse & finally fall to the G3 level. (SEECHART8).

RULE 6

If the G1 & G2 levels are wide apart the midpoint between the two levels often proves to be a support and resistance level.

TO SUMMARISE

The G1 Level = 50% of the extreme high & zero.

The G2 Level = 50% of the total of the extreme high & extreme low.

The G3 Level = 25% of the extreme high & zero.

The G4 Level = 25% of the extreme high & extreme low added to the extreme low.

These then are the first calculations to place on your chart, from which the major

turning points of the future can be determined . Rules 1 to 6 will give you an

insight as to where you stand when you first make your analysis & will allow you

to reassess your position as time passes. If, for instance, you are below the G1

level, you will probably see a fall, firstly to the G4 level & then to the G3 level.

(18)

THECASESTUDY-TheJapaneseNikkeiIndex

The Japan Nikkei has been chosen as our case study in which we will follow each

check to the final conclusion. The study should anticipate all the major turning points

of the index. Each step will be taken after the relevant section has been explained.

Using this procedure will help to develop the analysis in a logical manner. The analysis

should be looked at as a jigsaw puzzle and the aim is ultimately to place all the pieces

correctly to construct a complete and clear picture.

I have every confidence that the techniques will achieve this purpose to your total

satisfaction. The same exercise can be applied to all financial indices and instruments

anywhere in the world, whether they be individual shares, commodities, currencies,

interest rates, bonds etc.

In the dozens of seminars and workshops I run each year I challenge the delegates to

pick any investment to test whether or not it is ruled by the Gann principles laid down

in this treatise. Over the last decade the Gann analysis has never let me down.

Despite the lack of preparation I know of no other technique in which proponents are

prepared to take on this task. Gann techniques once mastered are magical in their

application to the whole of the speculative markets. I hope the following case study

will go some way to proving the point.

Mon 3 Mar 1975 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

The object of this case study will be to prove that the path of the Nikkei is not random but follows the rules laid down by W.D. Gann.

(19)

CASESTUDYNO1

JapanNikkeiIndex-THEMAJORGANNLEVELS

ThemajorGannlevelscomputeasfollows:theG2(21,375);theG1(19,475);theG4(12,588)

&theG3(9,738).

The January ’90/ October ’90 fall was arrested by the G1 level. The March ’91/August ’91 fall was arrested by the G2 level.

The break of the G1 level in April ’92 suggests that the index will fall to the G4 level, where a rally can be expected, but that eventually the index is likely to fall to the 9738 level.

The rally under the G1 level was thwarted by the upside resistance caused by the G1 level.

Up to the time of writing the index has acted strictly in accordance with the major

Gannrulesandlevels.

Mon 3 Mar 1975 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEI

SPREAD (

X

10)

January 1990 : All Time High

July 1975 : All Time Low

Mon 1 Jul 1985 to Tue 26 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

CHART 14

The break through the 'G1' level suggests an eventual fall to the 'G3' level.

G2 G1 G4 G3

(20)

25%**

25%**

33.33%**

33.33%**

50%*****

12.5%

66.66%*

16.66%

75%

6.25%

100*

8.33%

100%*

3.125%

133.33%

4.165

125%

etc

166.66%

etc

150%

200%*

etc

etc

Note - * indicates degree of strength ie. importance.

The most important percentage is the 50% level from past important highs and

lows.

The next in order of importance are the 100/200/300% etc.

If the 25% and 33.33% levels occur at the same level, this is as important as the

50% level.

The 25% & 33.33% in isolation are next in importance.

The rest follow.

First identify the significant highs and lows, then apply the 25% percentages followed by the other percentages calculable from these levels. Next find the levels which fall into groups above and below the current price. The objective is to find a series of percentages which group around the other checks especially the Major Gann levels and the 50% retracements. (SEE NEXT CHECK).

When the bands of upper resistance and down side support have been established, take off all the other levels to leave an uncluttered chart with which to assess your future

B: THE 2ND CHECK - PERCENTAGES

This is the second most important check and the one on which I place most emphasis when determining the decision levels.

Certain predetermined percentages calculated from past significant tops and bottoms (or highs and lows) are placed on the chart and will help to identify future tops and bottoms. Decision levels will be established when the calculations fall within a series of close bands. The rules assert that all future tops and bottoms have a mathematical relationship with past tops and bottoms. Here this means that future rises and falls will be controlled by the following percentages calculated from important past tops and bottoms:

The base percentages are 25% and 33.33%. To this base the following multiples and divisions from tops and bottoms are added :

(21)

CASESTUDYNO2

JapanNikkeiIndex-PERCENTAGEMOVES

Nowweturntolookathowthetopofeachrallycouldhavebeenanticipatedbyapplying

the set percentages as provided by the 2nd check.

The January 1990 extreme high at 38,950 : a) 16.66% from the June ’89 low was 38,393; b) 12.5% from the September ’89 low was 38,378; c) 12.5% from the October ’89 low was 38,779. The July 1990 high at 33,190 :

a) 16.66% from the April ’90 low was 32,291. The March 1991 high at 27,270 :

a) 33.33% from the October ’90 low was 26,373; b) 25% from the December ’90 low was 27,037. The September 1992 high at 19,280 :

a) -25% from the November ’91 high at 18,876; b) 33.33% from the August ’92 low at 18,920.

16.66%

16.66% 33.33%

25%

-25% 33.33%

Mon 1 Jan 1988 to Tue 26 Oct 1993 Monthly

12.5%

JAPAN NIKKEI SPREAD (

X

10)

CHART 15

(22)

C: THE 3RD CHECK - 50% RETRACEMENTS

The half way point, or 50% point, of any move is always a good level at which to expect a reversal.

The longer in time and the wider the rise or fall, the more significant the level. For instance, the G2 level is the 50% retracement of the historical high and low and is therefore the most important, especially if the period between these two levels is a long one.

However, the 50% level of a move only lasting a few weeks can be significant, especially when it falls in line with the other checks. If you are a short term trader then the 50% level of daily or hourly moves becomes significant.

Leave the 50% levels on the chart where and when they support the levels formed by the first two checks. Remove all the others.

(23)

CASESTUDYNO3

JapanNikkeiIndex-50%RETRACEMENTS

TheJuly1990highwasat32,840:

the 50% retracement of the January ’90 top (38,710) and the April ’90 low (27,680) is 33,195.

TheMarch1991highwasat27,270:

the 50% retracement of the July ’90 high (32,420) and October ’90 low (19,780) is 26,100.

TheSeptember1992highwasat19,260:

the 50% retracement of

the January ’92 high (22,200) and the Aug ’92 low (14,190) is 18,195.

r.5 r.5

r.5

Mon 1 Jul 1985 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

CHART 16

(24)

D: THE 4TH CHECK - THE LESSER LEVELS

(Note only - Do not place them on the chart) :

In our first check we looked at the G1, G2, G3 & G4 levels, which we calculated by reference to the extreme highs and lows. Gann also divided the extreme high and zero and the extreme high and the extreme low by eighths and thirds. The results are then used as levels of lesser importance, in support of the main levels of the 1st Check.

The

3

/

4

level, however, should be considered as being of equal value to

the G4 level.

These remaining calculations should be looked at to see if they support the previous checks, then noted but not placed on the chart.

Example : where the extreme high is 100 and the extreme low is 20.

EXTREME HIGH 100

EXTREME HIGH

100

7/8

87.5

7/8

90

3/4

75 *

3/4

80 *

5/8

62.5

5/8

70

1/2 (G1)

50 ****

1/2 (G2)

60 ***

3/8

37.5

3/8

50

1/4 (G3)

25 **

1/4 (G4)

40 *

1/8

12.5

1/8

30

0

EXTREME LOW

20

Note - * signifies degree of strength

(25)

CASESTUDYNO4

JapanNikkeiIndex-THELESSERLEVELS

The levels found by using Checks 2 & 3 (Percentages and 50 % Retracements) should

then be inspected to see if the lesser levels provide support but make a mental note

only of their presence. Do not leave them on the chart.

Fri 1 Sep 1989 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

CHART 17

G2 G1

G4 G3

(26)

E: THE 5TH CHECK - PAST TOPS AND BOTTOMS

(Note only - Do not place them on the chart)

Look to see whether there have been significant tops and bottoms in the past to support the levels that have emerged from Checks 1 to 3.

Buy when prices advance above these old tops and sell when prices fall below

these levels.

An important level at which to buy is on a break into new high ground, while the significant level at which to sell is when the price falls below an historic low.

(27)

CASESTUDYNO5

JapanNikkeiIndex-PASTTOPSANDBOTTOMS

Make a note of the previous important tops and bottoms which support your calculated

levels as per Checks 1,2,3 & 4. If there is no support from past highs and lows treat

your progress to date with some suspicion. It would be prudent to start again as your

decision levels should normally reflect past tops and bottoms.

Mon 1 Aug 1986 to Thu 21 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

CHART 18

October 1986 low supported 1992 lows

Oct '87 top supported the lows of Sept '88 & April '90 & the March '91 top

November 1987 lows supported 1990 and 1992 lows

(28)

F: THE 6TH CHECK - TRIPLE TOPS & 4TH ATTEMPTS

(Note only - Do not place them on the chart)

Special note should be taken of any triple bottom or top formations which develop at support or resistance levels.

A TRIPLE BOTTOM will normally advance faster and further than the previous two moves. Should the move not rise rapidly from the triple early in its rise but climb slowly, the advance will be usually reversed at the 50% retracement of the previous fall and then attack the lows again. This 4th attempt usually goes through.

A TRIPLE TOP has the reverse effect, with the fall faster and heavier than the previous two falls. Again, if the move from the triple top is slow and sluggish, expect a fourth attempt at the triple top level with a break into new high ground.

Most large moves emanate from triple tops and bottoms.

1 2 3

Weekly High/Low

(29)

G: THE 7TH CHECK - NATURAL NUMBER LEVELS

(Note only - Do not place them on the chart)

This is a further check to establish that an important decision level has indeed been located and to establish whether the price is on a natural Gann number. These numbers, multiples and divisions of 360, are calculated as follows :

45 (

1

/

8

)

90 (

1

/

4

)

120 (

1

/

3

)

360

180 (

1

/

2

)

135 (

3

/

8

)

225 (

5

/

8

)

240 (

2

/

3

)

270 (

3

/

4

)

315 (

7

/

8

)

Some interesting features are:

If a half or full circle (180/360/540/720 etc) is broken on the upside,

the rally will usually rise at least to the fifth circle or half circle (216/432/648/864).

If a half or full circle (180/360/540/720 etc) is broken on the downside,

the fall can be expected to drop to at least fifth under the circle or half circle

(144/288/432/572 - these are also multiples of 144 i.e. the square of 12).

The full circles are always important levels to look for a change in trend.

You will also find that many moves coincide with these natural numbers. For

instance, on a rise of 360 or its multiples, look for a change in trend if the level

falls in line with the other checks.

CHART 19 shows that the Nikkei has been dominated by trend changes on full, half &

quarter circle moves. As the price lowers, smaller divisions of 360 will become more important. This could be observed when the quarter divisions became dominant during 1992. The reason is that percentage moves increase at lower levels, therefore, on occasions, terminating on the quarter divisions. On a fall to very low numbers, eighths &

(30)

CASESTUDYNO6

JapanNikkeiIndex-THENATURALLEVELS

The Nikkei index has stuck remarkably rigidly to movements associated with full and

partial circles as follows :

1- The January '90 to April '90 move equals a FALL of 3 circles (1080 points).

2- The April ’90 to June ’90 move equals a RISE of 11/2 circles (540 points).

3- The July ’90 to October ’90 move equals a FALL of 4 circles (1260 points).

4- The October ’90 to March ’91 move equals a RISE of 1 circle (360 points).

5- The March ’91 to August ’91 move equals a FALL of 11/2 circles (540 points).

6- The August ’91 to October ’91 move equals a RISE of 1 circle (360).

7- The October ’91 to August ’92 move equals a FALL of 3 circles (1080).

8- The January ’92 to April ’92 move equals a FALL of 1 circle (360).

9- The May ’92 to August ’92 move equals a FALL of 11/4 circles (450).

10- The August ’92 to September ’92 move equals a RISE of 11/4 circles (450), etc.

Fri 1 Sept 1989 to Thu 21 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (

X

10)

CHART 19 1 2 3 4 5 6 7 9 8 10

(31)

2:

T R I G G E R I N G

THE SIGNAL

Now that the decision levels have been established, only patience is required as you wait for your investment to approach the upper or lower decision level.

(32)

A: THE TREND INDICATOR LINE

The Trend Indicator Line, commonly referred to as TIL, is obtained by referring to the daily chart of highs and lows.

Provided the chart shows higher tops and bottoms, the trend indicator line moves up each day to the highest price, continuing to do so as long as the market makes higher tops and bottoms.

Ö

As soon as the chart shows a lower bottom, move the trend indicator line to the

lower bottom.

Ö

Continue to move it down as long as lower bottoms are made.

Ö

Move the line back up to the top when a higher bottom and higher top is recorded.

A new high and low on the same day

IF a higher top is formed in the early part of the day but the price then goes down and makes a bottom lower than that formed on the previous day,

Ö

move the trend indicator line to the higher top and then move it down to

the bottom of the day.

CONVERSELY, IF a lower bottom is formed in the early part of the day but the price later goes up to a new high, then

(33)

A ‘within day’

A WITHIN DAY occurs when a share makes a higher or identical low and a lower or identical high to those of the previous day.

In other words, the spread for the day has remained within the previous day's parameters.

IN THESE CIRCUMSTANCES,

Ö

keep the trend line at the low for the day if the previous moves show the

trend line on the lows.

SIMILARLY,

Ö

keep the trend line at the high for the day if the previous moves show the

line to have been on the highs.

THE APPLICATION OF A TREND INDICATOR LINE

If the trend indicator line is forming higher tops and bottoms, the short term trend is up. If the trend indicator line is forming lower bottoms, only the short term trend is down.

Top

Bottom Bottom

Top

Top

A BOTTOM on the trend indicator line is when the TIL has gone from a high price on a price spread to a low price and then back up to a high again. (There may be more than 3 days making up this formation.)

A TOP on the trend indicator line is when the TIL has gone from a low price on a price spread to a high, then back down to a low again. (There may be more that 3 days making up this formation.)

(34)

B: THE TRIGGER TO BUY

When the price rises or falls to decision bands, watch the trend indicator line at these levels and, when the trend is established at the decision area, go with the trend.

The decision levels can be predetermined well in advance of any action you might wish to take. This grants you sufficient time to prepare yourself emotionally and financially to take action at the appropriate time. It also means that arrangements with your broker, banker or financial advisor need not be rushed.

You will find with experience that the majority of major turning points in price will start from the selected levels. However, they are not infallible. You must at all times protect yourself with an exit or stop loss level. (SEESECTION4 - LIMITINGLOSSES).

Ö All investors, including the greatest of traders, experience losses on a fairly regular basis.

Ö Keep losses small and you will survive even after a losing spell. Ö Allow your losses to grow and you will almost certainly fail. Your chart should show :

i) The decision level below the current price and/or

ii) the decision level above the current price.

A fall to a decision level would be a level at which to consider a purchase. However, some of the best upward moves will emanate from a break upwards over the decision level shown above the current price.

You should not be deterred by the view that the price is too high. The price is never too high to buy provided that the trend is ‘up’. It will probably be helpful in these circumstances to remember the old

(35)

I )

THE ACTION ON PRICES

rising

TO A DECISION LEVEL

When the current price reaches the upper decision level,

Ö

a purchase could be considered on strength higher than the decision level

band.

To verify strength you may find the following hints useful in deciding the day of your purchase once the price has risen to a decision level. When you see a higher trend line bottom form on or over the top level of the band of resistance this should alert you to strength above the level of resistance, which implies higher prices.

Notes

-A higher trend line bottom means one which is higher than the previous bottom. 'Band' means the area created by close percentage calculations.

When the chart shows that a higher trend line bottom has formed on or over the previous bottom, higher prices are indicated. In this event, after the first hour of trading ask your broker for the current price, & EITHER :

Ö

If the price is above the high of the previous day, then higher prices are indicated

and a buy will be triggered; or

Ö

If the price is below the previous day's high, do not buy; or

Ö

If the chart continues to show a higher trend line bottom,

(i)

Give the Broker instructions to buy over the high of the previous day

or

(ii)

Keep a check on the prices during the day and only buy if you see the

price strengthen above the high of the previous day.

REPEAT this process for every day that the higher trend line bottom persists, and has not produced a price lower than the previous day's low.

BUY SIGNAL Highest level of the band Lowest level of the band Buy on strength over this high. This is a higher

trend line bottom than the previous one

(36)

I I ) THE ACTION ON PRICES

falling

TO A DECISION LEVEL.

After the price has fallen to the decision area,

Ö

wait for a higher trend line bottom to form on or over the highest decision level

before considering a purchase.

To verify strength follow the procedure is as described above for buying but this time the signal will be provided by a fall to the level of support followed by a higher trend line bottom forming.

Notes

-A higher trend line bottom means one which is higher than the previous bottom. 'Band' means the area created by close percentage calculations.

When the chart shows that a higher trend line bottom has formed on or over the previous bottom, higher prices are indicated. In this event, after the first hour of trading ask your broker for the current price, & EITHER :

Ö

If the price is above the high of the previous day, then higher prices are indicated

and a buy will be triggered; or

Ö

If the price is below the previous day's high, do not buy; or

Ö

If the chart continues to show a higher trend line bottom,

(i)

Give the Broker instructions to buy over the high of the previous day

or

(ii)

Keep a check on the prices during the day and only buy if you see the

price strengthen above the high of the previous day.

REPEAT this process for every day that the higher trend line bottom persists, and has not produced a price lower than the previous day's low.

Lowest level of the band Highest level of

the band This is a highertrend line bottom

than the previous one.

Buy on strength over this high BUY SIGNAL

(37)

C: THE TRIGGER TO SHORT

You should be just as willing to sell short as you are to buy. Your chart should show :

i) The decision level below the current price and/or

(38)

I )

THE ACTION ON PRICES

rising

TO A DECISION LEVEL

If the price rises to the upper decision area,

Ö

wait for a lower trend line top to form on or under the lowest level of the decision

band before considering a short.

To verify weakness, you may find the following hints useful in deciding the day of your short when the price has risen to a decision level. When you see a lower trend line top form on or under the band of resistance this should alert you to weakness below the level, implying lower prices.

SHORT SIGNAL DECISION LEVEL Short on weakness Lowest level of the band Highest level of the band Note

-A lower trend line top means one which is lower than the previous top.

When the chart shows that a lower trend line top has formed on or under the lowest level of the decision level band, this implies that lower prices are indicated. In this event, after the first hour of trading ask your broker for the price, & EITHER :

Ö

If the price is below the lowest price of the previous day, then lower prices are

indicated and a short should be considered; or

Ö

If the price is above the low of the previous day, do not short; or

Ö

If the chart continues to show a lower trend line top

(i)

Give the broker instructions to short under the low of the previous day

or

(ii)

Keep a personal check on the prices during the day and short if the price

weakens below the low of the previous day.

REPEAT this process for every day that the lower trend line top persists, and has not produced a price higher than the high of the previous day.

This is a lower trend line top than the previous one.

(39)

I I ) THE ACTION ON PRICES

falling

TO A DECISION LEVEL

When the current price reaches the lower level,

Ö

a short could be considered on weakness below the bottom level of the decision

level band.

To verify weakness after a fall to a decision level, you may find the following hints useful in deciding the day of your short. When you see a lower trend line top form on or under the lower level of the band this should alert you to weakness below the level of support, which implies lower prices.

Note

-A lower trend line top means one which is lower than the previous top.

When the chart shows that a lower trend line top has formed on or under the lowest level of the decision band, this indicates lower prices. In this event, after the first hour of trading, ask your broker for the price, & EITHER :

Ö

If the price is below the bottom price of the previous day, then lower prices are

indicated and a ‘short’ should be considered; or

Ö

If the price is above the previous day's low, do not 'short'; or

Ö

If the chart continues to show a lower trend line top,

(i)

Give the broker instructions to short under the low of the previous day

or

(ii)

Keep a check on the prices during the day and short if you see the price

weaken under the low of the previous day.

REPEAT this process for every day that the lower trend line top persists, and has not produced a price higher than the previous day's high.

SHORT SIGNAL Highest level of the band Lowest level of

the band Short on

weakness This is a lower

trend line top than the previous one.

(40)
(41)

3:

TAKING PROFITS

It is generally acknowledged that most investors have great difficulty in determining the time to take profits. However, if strict rules are followed, taking profits can become one of the easier aspects of successful trading.

(42)

A: TAKING PROFITS AFTER BUYING

Your daily chart should show the trend line. This trend line will enable you to see clearly when the short term trend has turned down. The trend turns down when the last trend line bottom is broken by one percentage point.

A TREND LINE BOTTOM occurs when the trend line which joins up the daily prices goes from the top of a daily spread to the bottom of a daily spread, and then to the top of a daily spread. (There may be 2, 3 or more days making up this formation.)

TO PLACE A ‘STOP LOSS’ subtract 1% from the lowest point of the last trend line bottom.

Daily High/Low

TREND LINE STOP LOSS after buying

24.1 is the price of the last trend line bottom. The Stop Loss is 23.8 (ie. 1% below). Daily High/Low

THEN, if the chart shows that the spread for the previous day was on or below the stop loss level,

Ö

note the lowest price of the spread for that day.

After the first hour of trading, ask your broker for the current price, & EITHER :

Ö

If the price is below the low of the previous day, then lower prices are indicated

and profits should be taken; or

Ö

If the price is above the low of the previous day and the stop loss, do not sell; or

Ö

If the price is still on the stop loss but above the low of the previous day,

(i)

Give your broker instructions to sell under the low of the previous day

or

(ii)

Keep a check on the prices during the day and close the position if the

price weakens below the low of the previous day.

(43)

100

Take profits on Signal Day (below the mean) or Day After Rule (below the Signal Day close) DECISION LEVEL Lowest level of the band Highest level of the band

SIGNAL DAY & DAY AFTER RULE (SELL)

95 90

I )

TAKING PROFITS AFTER A FAST RISE

If the price is rising FAST to a decision level then consider the use of the ‘Signal Day’ or ‘Day After’ Rule when the price hits the decision level area.

These rules are formulated to take into account that a sharp rise is often followed by a sharp fall. The reason for applying them is that prices tend to fall far faster than they rise. This could result in your profits being quickly eroded before the trend line triggers the sell signal.

THE ‘SIGNAL DAY' (SELL)

On the day that the price hits the decision level area, telephone your broker an hour before the close of the market to ascertain the highest and lowest traded prices for the day so far. From this information calculate the mean (middle or halfway) price. If the price at the time of enquiry is below this level, this suggests lower prices and profits should be taken.

THE ‘DAY AFTER’ RULE (SELL)

If the ‘Signal Day’ was not triggered, then the ‘Day After Rule’ should be operated. After the first hour of trading (on the day after the ‘Signal Day’), ask your broker for the last traded price. If this is below the closing price of the previous day, then this indicates lower prices and profits should be taken.

Notes

-It is only when you use the ‘Signal Day’ or ‘Day After’ Rule that we would recommend that you know about the price movements during the same day. Normally, you should make your decisions from your charts theFOLLOWINGday. This will help you to avoid

making emotional decisions and will save you from unnecessary traumas caused by wide daily fluctuations.

(44)

B: TAKING PROFITS AFTER SHORTING

When looking to close a ‘short’ position, your daily charts should show the trend line. The trend line on the DAILY chart will enable you to see clearly when the short term trend has turned bullish. This occurs when the price breaks above the last trend line top by 1 percentage point or more on the chart.

A TREND LINE TOP occurs when the line which joins up the daily prices goes from the bottom of a daily spread to the top of a later daily spread, and then down to the bottom of a later daily spread. (There may be more than three days making up this formation.) TO PLACE A ‘STOP LOSS’, add 1% to the highest point of the the last trend indicator line top on your chart.

TREND LINE STOP LOSS after shorting Place stop loss 1% above

the last trend line bottom.

THEN, if the chart shows that the spread for the previous day was on or above the stop loss level,

Ö

note the highest price of the spread for that day.

After the first hour of trading ask your broker for the current price, & EITHER :

Ö

If the price is above the high of the previous day, then higher prices are indicated

and profits should be taken; or

Ö

If the price is below the high of the previous day and the stop loss, do not sell; or

Ö

If the price is still on the stop loss but below the high of the previous day,

(i)

Give your broker instructions to cover above the high of the previous day

or

(ii)

Keep a personal check on the prices during the day and close the position

if the price strengthens above the high of the previous day.

(45)

I )

TAKING PROFITS AFTER A FAST FALL

If the price is falling FAST to a decision level then consider the use of a ‘Signal Day’ or ‘Day After’ Rule when the price hits the decision level area.

These rules are formulated to take into account that a sharp fall is often followed by a sharp rise. This could result in your profits being quickly eroded before the trend line triggers the signal to close your position.

THE ‘SIGNAL DAY’ SHORT POSITION CLOSE

On the day that the price hits the decision level area, telephone your broker an hour before the close of the market to ascertain the highest and lowest traded prices for the day so far. From this information calculate the mean (middle or halfway) price. If the last traded price is above this level, this indicates higher levels and profits should be taken.

THE ‘DAY AFTER’ RULE SHORT POSITION CLOSE

If the signal day was not triggered, then the ‘Day After’ Rule should be used. After the first hour of trading on the day after the Signal Day ask your broker for the last traded price. If this is above the closing price of the previous day, then this indicates higher prices and profits should be taken.

100 95 Take profits on Signal Day Lowest level of the band Highest level of the band

SIGNAL DAY & DAY AFTER RULE CLOSE OF 'SHORT'

DECISION LEVEL

or Day After Rule

Notes

-It is only when you use the ‘Signal Day’ or ‘Day After’ Rule that we would recommend that you know about the price movements during the same day. Normally, you should make your decisions from your charts the following day. This will help you to avoid making emotional decisions and will save you from unnecessary traumas caused by wide daily fluctuations.

(46)
(47)

4:

(48)

A: CUTTING LOSSES AFTER BUYING

Losses must be strictly limited and quantified before buying. Once a limit has been set it must NEVER be overruled or adjusted. This is perhaps the most important of all rules as failure to follow the rule WILL result in large losses.

Ö

Place the trend line on the daily chart. When you buy, your stop loss should be

placed 1% below the lowest point of the last trend line bottom.

THEN, if the chart shows that the spread for yesterday was on or below the stop loss,

Ö

note the lowest price of the spread for that day.

After the first hour of trading ask your broker for the price, & EITHER :

Ö

If the price is below the low of yesterday, then lower prices are indicated and

losses should be taken; or

Ö

If the price is above the low of the previous day & the stop loss, do not sell; or

Ö

If the price is still on the stop loss but above the low of the previous day,

i)

Give your broker instructions to sell (close the position) under the low of

the previous day

or

ii)

Keep a check on the prices during the day and close the position if the

price weakens below the low of the previous day.

REPEAT this process for every day that the price is on the stop loss. CUTTING LOSSES WHEN BUYING

Place stop loss 1% below the low Lowest level of the band Highest level of the band Buy signalled

(49)

B: CUTTING LOSSES AFTER SHORTING

Losses must be strictly limited and quantified before ‘shorting’. Once a limit has been set it must NEVER be overruled or adjusted. This is especially true when ‘shorting’, as your losses can be unlimited.

Ö

Place the trend line on the daily chart. When you ‘short’, your ‘stop loss’ should

be placed 1% above the last high of the ’trend line top’.

THEN, if the chart shows that the spread for the day was on the stop loss level,

Ö

note the highest price of the spread for that day.

After the first hour of trading ask the broker for the price, & EITHER :

Ö

If the price is above the high of the previous day, then higher prices are indicated

and losses should be taken; or

Ö

If the price is below the high of the previous day and the stop loss, do not sell; or

Ö

If the price is still on the stop loss but below the high of the previous day,

i)

Give your broker instructions to close the position above the high of the

previous day

or

ii)

Keep a check on the prices during the day and close the position if the

price strengthens above the high of the previous day.

REPEAT this process for every day that the last price on the chart is on the stop loss. Short

signalled CUTTING LOSSES WHEN SHORTING

Place stop loss 1% above the top Lowest level

of the band Highest level of the band

(50)

THECASESTUDY-THEJAPANESENIKKEIINDEX

THEFINALPICTURE

C

HARTS

20

AND

21 bring the various features discussed in the previous case studies

together to provide an analysis of the September 1992 decision level.

The features which created the decision level at 1900 were

the 'G1' level;

a50%retracement;

the33.33%levelfromthe1992low;

25%downfromtheNov1991high;

a rise of 1

1

/

4

circles;

the low of 1990;

a double top.

The 2 charts show the Index before and after the price hit the decision level.

The final chart is a daily chart showing the exact day to sell or go 'short' of the market

by using the trend line rules.

(51)

The G1 Level

The 1990 Low

Mon 30 Oct 1989 to Week beginning 24 Aug 1992 Weekly

JAPAN NIKKEI (

X

10)

-25% r.5 33.33% CHART 20 The 1990 Low -25% r.5 33.33%

Mon 30 Sept 91 to Week beginning 5 Oct 92 Weekly

JAPAN NIKKEI (

X

10)

The G1 level

CHART 21

Sell triggered on lower trend line top if the signal day was not used at 1900.

JAPAN NIKKEI (

X

10)

CHART 22

(52)

IN CONCLUSION

I

n this short introduction to the works of W. D. Gann I have attempted to do no more than take the first step to enable you to appreciate the methods of the greatest of Wall Street traders. It has not been possible to cover all the discoveries made during Gann's lifetime. My challenge has been to present a clear and explicit method to isolate, in advance, future price turning points.

The study of the TIME factor in anticipating major moves is one of the more perplexing of Gann's discoveries, as is his method of predicting future events. In my view, such studies should come after that of price levels. Other important future studies are those on Gann's money management and trading rules whilst investors' psychology is an area which has been receiving my special attention of late.

You now have the basic rules with which to calculate where you can expect changes in trend. It will be time to take the next step when these rules have been fully tested, proven and then appreciated.

I leave you with the comments of W. D. Gann.

"IwanttoimpressuponyoustronglythatifyouexpecttomakesuccessintheStock

Marketyoumustputinplentyoftimestudying,becausethemoretimeyouputin,

themoreknowledgeyougain,themoreprofitsyouwilltakeoutlater.Ihavegiventhe

ruleswhichwillwork;youmustdoyourpart:youmustlearntherules,actonthem

attherighttimeandputthemintoexecution."

Good hunting.

Figure

Updating...

References

Updating...

Related subjects :