Opinions about WD Gann's theories

This is a discussion on Opinions about WD Gann's theories within the Discretionary Trading forums, part of the Methods category; Stumbled across this thread, and appears there is a lot of cynicism regarding Ganns work, however there are reputable companies ...

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Old May 18, 2006, 1:36pm   #17
 
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Stumbled across this thread, and appears there is a lot of cynicism regarding Ganns work, however there are reputable companies practicing his work with a terrific track record of performance, not just in a Bull market either.
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Old May 18, 2006, 2:01pm   #18
 
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Originally Posted by sazza100
Stumbled across this thread, and appears there is a lot of cynicism regarding Ganns work, however there are reputable companies practicing his work with a terrific track record of performance, not just in a Bull market either.
sazza100,

could you name any ? I am only aware of Gann Management, run by Fred Stafford.
( been on his free 2-day seminar. good guy. good stuff, but for me, not useable. )
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Old May 18, 2006, 6:59pm   #19
 
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Originally Posted by trendie
sazza100,

could you name any ? I am only aware of Gann Management, run by Fred Stafford.
( been on his free 2-day seminar. good guy. good stuff, but for me, not useable. )
Check this out.
http://www.aeroinvest.com/
It's Ganntastic!
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Old Jun 23, 2006, 9:40am   #21
 
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Originally Posted by tokac
. .
can somebody tell about WD Gann and if his principles work, or is it just a scam.
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Old Jul 23, 2006, 4:09pm   #22
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Only Gann himself new how is methods worked. methodologies are not always easy to define or to analyse.He believed the markets are geometric in design and in function and follow geometric laws. Gann's techniques require that equal time and price intervals be used on the charts. a rise of one price unit over one period of time (1 x 1) will always equal a 45-degree angle. and an ideal balance between time and price exists when prices rise or fall at a 45-degree angle relative to the time axis.

This is called a 1 x 1 angle. each angles provide support and resistance depending on the trend. For example, during an uptrend the 1 x 1 angle tends to provide major support over other angles.Gann spent 10 years researching ancient and contemporary knowledge about how things work before he made his first trades. One component of the simple mathematical principles underlying the Square of Nine can be employed to identify, in advance, potential price and time turning points, which I myself never found.

I studied Gann for 3 years, and found it hard to take in, It looks good when you look back on the chart. but in real time, its vague to say the least. I now use simple price action. I thought years back the more complicated things was the better it would work, But through experience, this is not the case. I now trade full time and trade very simple trading patterns. with correct money management and it seems to work for me,I am not saying Gann don't work,I'm saying I could not master the subject,I no doubt others will make it work.even if they only take 10% of his methods, It could improve your trading.
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Old Aug 5, 2006, 5:40pm   #23
 
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I've read the thread and have studied Gann'ish investing for about a year. I've read a number of this original works in PDF form from the internet. I've read on the internet what a number of people have said who use Gann's ideas. I bought Bill McLaren's course and read that. Here is what I've determined to this point.
  • Gann's Square of the Range works great.
    The 0/50/100% price and volume levels on short to intermediate term chart are amazing. They don't always work which is why Gann preached money management. They do work quite often and provide more than enough opportunities to make money.
  • Gann's cycle ideas work but are not perfect
    The short term cycles usually trump the longer term cycles. The best time to look for buys/sells is when multiple cycles from multiple timeframes end/begin at the same time.
  • The number 360 works in markets because it is 4 times 90. Earnings reports for stocks and weather cycles (spring/summer/fall/winter) for commodities run 90 days. His main concept was that a commodity or company (based on the business type) had a cycle. Look back at what it did during the previous cycles and you will have a good idea what it will do in the current cycle.
  • Gann didn't think much of the average trader or investor and enjoyed a good practical joke.
    My guess is Gann tried to tell people his simple theories early in his life and was ignored. People wanted the "holy grail" and it obviously could not be simple. So Gann started seminars about crazy angles and the planets (later in life). This was just a joke. If people would rather pay money for magic than the simple logic, he would give them what they wanted. And laugh all the way to the bank. Not that the truth wasn't in his courses, but he wrapped it in mysticism.
  • Gann angles do work, BUT...
    People draw too many of them. Gann never drew that many lines on his charts - except the ones for courses he taught. I think the big disconnect is people who study Gann can't understand his work because many of his personal charts contain less info than his courses. My theory is that is because he never used most of what he taught... because it was just a practical joke.

Just my opinion. I use parallel lines more than the traditional Gann angles. Gann metioned these in his writings but didn't stress them. I believe these are the most important idea he found. He told people about it but stressed other less useful concepts so others could not copy him.

If you draw a trendline of a move and then slide that line to a previous move you will find that it matches almost identically. Also, you will see the the duration of moves are always about the same length or a multiple of that length. You will see the major trends often start when the major trendline from the previous move intersects that line. This is where the concept of price and time squaring out comes from. And it is amazing how often it occurs in markets - and how easy it is to track.
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Old Aug 6, 2006, 1:53am   #24
 
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With regards to Gannism;
Gannism is esoteric, not easily understood, possibly highly discretionary, and thus always viewed with suspicion.

As to the origins of the time theory element to Gannism the following caught my attention.

In 1913, a PhD was published by Bachelier in France, and demonstrated via rather complex mathematical equations that, price fluctuations grow in range and will be proportional to the square root of time

Stock prices in the United States over the last 100 years have 66% of the time fluctuated within a range of 5.9% on either side of their average.
The range in a course of a year has not been 72% or a multiple of 12 [year] rather, it has averaged around 20%

This is 3.5 times the monthly range.
The square root of 12 = 3.46

Quote:
quote:
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But exactly just what did Mr Gann write about angles? For anyone with an original Gann course, if they will turn to the first page of the section titled The Basis of My Forecasting Method, looking at line 10 from the bottom; they will read the following quote. "There are three kinds of angles-the vertical, the horizontal, and the diagonal, which we use for measuring time and price movements." Today every usage called "Gann angles" uses "diagonal angles" only. Yet the Master says we must use all three angles-the vertical angle, the horizontal angle, the diagonal Angle. Definitely not the last and least important, the diagonal angle alone.
--------------------------------------------------------------------------------

The above caught my eye;
Intrestingly, this is another application of higher mathematics, referring to chaos

This is chaos in the mathematical definition, not your standard day-to-day useage.

In it's simplest form chaos can be written;
4x{1 - x}
Computing the value of *x* of that expression for some initial value of *x* then substituting this answer back into the original expression starts a feedback loop.

Repeating this simple iterative process repetitively produces surprisingly complex, unpredictable mathematical behaviour.

The mathematical behaviour expresses the same kind of disorder produced by non-linear equations

The simplest non-linear equation;
Xn+1 = KXn - KXn(1 - Xn)

This equation determines the future value of the variable x at the time step n + 1 from the past value of x at time step n

This is known as the logistic equation
All well and good, but, what the hell is this to do with the Gannies?

Logistic equations are used in Medicine to predict population expansion, via Birth rates, Death rates, due in part to availability of food, water, arable land, disease etc.

It can also be used in ecology, for populations of insects, crops, etc.
Gann was interested in commodities.
Wait, there's more.

The logistic equation is a quadratic equation with a linear first term, and, a non-linear second term

It is the non-linear, or feedback component that is important.

For a given value of K once a starting point Xo is specified, the evolution of the system is fully determined. One step, inexorably leads to the next.
The whole process can be pictured on a graph.

It forms a parabola, that opens downwards.
There is a short-cut provided via the graphical representation, that avoids endless computations.

Re-read the quote at the start of this post;

The addition of a 45 degree line up from the horizontal axis [representing the line Xn+1 = Xn]
The best course is to steer is from Xo vertically to the parabola to reach X1 then horizontally to the 45 degree line, and vertically back to the parabola.

These paths or Orbits give the first indication of which routes lead to the erratic behaviour of chaos

Whereas some orbits converge, on one particular value, others jump back and forth among a few possible values, and many roam, never settling anywhere.

When K is between 1 & 3, just about every route no matter where it starts, is eventually attracted to a specific value called a fixed point which occurs where the parabola intersects the 45 degree line at x = [k - 1]/k This corresponds to to a steady state or equilibrium

Therefore, taking the previous mathematical work performed by Bachelier, combined with a logistic equation, and you can reproduce seemingly Gann.

The question is, historically, who, and at what date, was the initial work completed in logistic equations?

How did Astrology get involved?
Mathematicians have always historically been associated with planetary movements orbits etc.
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