The Mysterious Life of Trading Legend W.D. Gann

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Dan Blystone

06 Oct, 2017

in Technical Analysis

William Delbert Gann is perhaps the most mysterious of all the famous traders in history. Known for using geometry, astrology and ancient mathematics to predict events in the financial markets and even historical events, Gann's trading strategies are still widely used today, 62 years after his death in 1955. Gann disciples claim he was one of the most successful stock and commodity traders who ever lived, while critics argue there's no concrete proof that he ever made a great fortune from speculation. Was Gann really a great trader, or was he merely a ‘guru’ who profited from selling books and running seminars?

Early Life
W.D. Gann was born in 1878 in Lufkin, Texas, the first of 11 children in an impoverished cotton farming family. He neither graduated from grammar school nor attended high school as he was needed at home to work on the farm. His education mainly came from the Bible (he was raised a Baptist), which he used to learn to read, and in the cotton warehouses, where he learned about commodities trading. Gann started his career working at a brokerage firm in Texarkana and attending business school at night.

New York
In 1903, a year after he began trading in the stock and commodity markets, Gann moved to New York City to work at a Wall Street brokerage firm. He soon opened his own brokerage firm, W.D. Gann & Company. He further developed his investment strategy as a broker, where he could observe the mistakes made by his clients and learn from them.

Newsletters, Books and Courses
In 1919 Gann began publishing a daily market letter called The Supply and Demand Newsletter, covering stocks and commodities and making yearly forecasts. In 1923, he started another publication called The Busy Man’s Service, in which he gave specific trading recommendations. He also wrote a number of books throughout his life, including The Tunnel Thru the Air (a coded science fiction novel containing some of his core ideas) and 45 Years In Wall Street. Late in his career, he sold a ‘master course’ to private students for $5,000 a piece (roughly equivalent to $50,000 today).

Cycles
Gann often quoted from the Book of Ecclesiastes, chapter 1, verse 9: “That which has been is what will be, that which is done is what will be done, and there is nothing new, under the sun.” He believed that everything that occurs in markets has historical reference points. Essentially, everything has happened before and will eventually repeat itself. He studied ancient geometry and astrology to investigate how market events and specific numbers repeated across various time cycles.

On these cycles, he stated: “To make a success you must continue to study past records, because the market in the future will be a repetition of the past. If I have the data, I can tell by the study of cycles when a certain event will occur in the future. The limit of future predictions based on exact mathematical law is only restricted by lack of knowledge of correct data on past history to work from.”

He identified a number of time cycles of importance, viewing the 60-year cycle as being of major importance. He stated: "This is the greatest and most important cycle of all, which repeats every 60 years or at the end of the third 20-Year Cycle. You will see the importance of this by referring to the war period from 1861 to 1869 and the panic following 1869: also 60 years later – 1921 to 1929 – the greatest bull market in history and the greatest panic in history followed. This proves the accuracy and value of this great time period." 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 (the crash actually occurred on October 24) and the crisis that followed.

He also placed great emphasis on the 90-year cycle, which, Gann advocates say, predicts a potential financial crisis occurring in 2019. This year will be 90 years after the financial crisis of 1929, which itself occurred roughly 90 years after the Panic of 1837. And a smaller cycle of note, 144 months, also coincides with 2019: 144 months is the span between 2007 (the most recent major financial crisis) and 2019.

Some of Gann’s less esoteric ideas are commonly used in technical analysis tools today, often integrated into charting and trading software platforms. A common example is Gann Fans, consisting of a series of diagonal lines called Gann Angles. These angles are superimposed over a price chart to show potential support and resistance levels.

Supporters
One of the strongest pieces of evidence bolstering Gann’s reputation as a master trader hails from a 1909 Ticker and Investment Digest article by Richard D. Wyckoff, a well-respected figure on Wall Street at the time. The article describes Gann’s performance recorded by an independent observer: “During the month of October, 1909, in twenty-five market days, W D Gann made, in the presence of our representative, two hundred and eighty-six transactions in various stocks, on both the long and short side of the market. Two hundred and sixty-four of these transactions resulted in profits; twenty-two in losses. The capital with which he operated was doubled ten times, so that at the end of the month he had one thousand percent of his original margin.”

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Re: The Mysterious Life of Trading Legend W.D. Gann

It is open minded whether Gann was a great trader or not.
No new insights into a murky world .

Nov 10, 2017

Member (12094 posts)

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