How to Trade Like WD Gann?

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W.D. Gann was arguably one of the greatest traders and technical analysts that ever lived. He was known to have taken millions of dollars out of the market during the Great Crash of 1929-1933 and has attained cult like status amongst Technical Analysts and Traders alike.

But how did W.D. Gann do it? What were his methods? Many people believe him to have relied solely on esoteric methods like Financial Astrology and Numerology. No doubt Gann was an expert in these areas. He often referred to planets in his courses and private letters. He also referred to number squares that he created based on the number of letters in e.g. the words “New York Stock Exchange” in order to predict key market turning points.

However W.D. Gann also made statements like “Geometrical Angles, The Basis of My Forecasting Method” and even titled certain sections of his Master Stock and Commodities Courses in this way. But what did he mean by this? Was W.D. Gann solely relying on Geometric principles in his predictions? How might one apply these methods?

W.D. Gann believed that Financial Markets, like most things in the world, were constructed on the principles of natural law. Like atoms and molecules and matter forming crystals at certain precise geometric angles, he believed that financial markets were no different. He surmised that markets made turning points in relation with precise geometrical angles.

Some go further in saying that what Gann was referring to were the astrological aspects. His charting methods were based on Geometry and scaling charts so as to balance price and time. Gann was most likely doing this so as to correlate the Geometric charts with the planetary cyclic factors that he was employing.

Regardless of your belief on what W.D. Gann was actually doing, one thing is for certain. Gann was a master forecaster and trader, and his legacy will live on in his writings.

Gann’s open method of graphing prices with time is to make one unit of time equal to one unit of price. So on a weekly chart, this means for a stock graphing the price action at $1 per 1 week of time. In this way the geometric angle that a swing is making can be calculated using trigonometry.

But what of Gann’s comments in his Cotton Course that one should use $0.15 per day and $0.30 per month? This opens a whole new door of speculation in terms of how to scale your charts. The answer here is that W.D. Gann was establishing a “vibration rate” for the Cotton market. He was effectively saying that $0.15 was the core unit of vibration for cotton.

There are methods available where one can utilise Gann’s principles in order to establish the vibration rate of a market. But that is the topic for another article, or even a video.

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Source by Matt Olsen