Opinions about WD Gann's theories

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Old Jan 26, 2005, 6:13am   #1
 
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Opinions about WD Gann's theories

Hi

Being new to the share market, I have been reading books aand learning about the market.
Then I came across a gentleman call WD Gann, who did some remarkable things. I found on the internet lots of people selling his system for a price.
Then a couple of days ago I went to a seminar from a well known Australian firm selling this idea, at a price of course.

I am serious about investing in the market, can somebody tell about WD Gann and if his principles work, or is it just a scam.

Would great appreciate any feedback.
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Old Jan 26, 2005, 8:35am   #2
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Hi all, Well i'll be brave and tackle this one. Firstly a scam it certainly is not. W D Gann made tens of millions of dollars during the early part of the 20th century, and as they say is legendary. Most of what he did was kept fairly secretive over many decades, but it was by all account tied in with astrolgy etc, although this point may well be debatable. Access to his training sessions were charged by him at a staggering $5000 a pop, a heck of a lot of money back then. It is only in recent years that many of his charts,tools and formulea have come to light but as your aware at a price. What is also important to note, is that a lot of the background theory of what was inacted, was provided by Dr. Weston. So, it may well be a good starting point to investigate what weston was up to, which did include work on planetary cycles etc.etc. These were mainly referenced to the point at which any stock had initially traded blah blah. Its seems that although there is now plenty of info on the subject, no one seems to have been able to duplicate his success or even provide a reasonable working strategy. QED.

"Simple ideas lie within reach only of complex minds"
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Old Jan 26, 2005, 9:33am   #3
 
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It's difficult to make an informed opinion on Gann, because most proponents of his methods have them hidden behind multi-thousand Ģ/$ courses and won't reveal anything in public - which instantly gets my Scam-O-Meter sounding loudly.

I did go to one presentation by a Gann afficionado at an Index show about 3 years ago - and came to the conclusion there that it was utter drivel - I remember having a conversation at the end with the lady I was sitting next to, where I said it was "half TA, half voodoo" to which she replied "only half voodoo?" - which was a fair comment.

I can't remember much of it in detail, though the bit about "360" being a fundamental number in Gann-style TA because it was a fundamental number in nature, or words to that effect, stuck in my mind, because it was such manifest nonsense. His theory (the speaker's, presumably representing Gann's) was that because 360 was the number of degrees in a circle, and that this number "turned up everywhere", that it was fundamental to many things, including Gann analysis.

Now, if he had chosen pi or e or the Planck constant., or something that really is a fundamental number underlying mathematics/physics I could have swallowed that - but 360 is just a convention - it's a number chosen because it has many factors, not because there fundamentally are 360 units in a circle - which means the whole basis of the 360 thing is utterly fake.

Other parts I can vaguely remember - Gann levels sounded somewhat like Fibonacci retracements (something that I'm also pretty sceptical about). And, there was also an excellent prediction that came out of that seminar, that I suspect most of the attendees have kicked themselves for not trading - that the FTSE would (not might) hit 1800 - though, in fairness, that prediction that has, so far, not proven to be entirely accurate (I have a feeling that he predicted it for that year, but in fairness to him, I'm not sure of that)

I've seen some more of his stuff in Traders World, which you can peruse in Borders, if you fancy an idle laugh.
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Old Jan 26, 2005, 9:57am   #4
 
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I think everything you want to know about Gann can be found on the internet, either free of charge or for a small fee. I have found more than I can read within Yahoo groups. Just tap in 'Gann' in the search box here http://uk.groups.yahoo.com/ , join a few of the free groups and look in the 'files' sections. There is one group that charges a small fee, http://finance.groups.yahoo.com/group/wheelsinthesky/ but they have a lot of content.
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Old Jan 26, 2005, 10:00am   #5
 
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I've been to a Gann seminar 5 yrs ago and wasn't too convinced however I am a firm believer of fibonacci. Like all Tech Analysis it only works well when enough people are using it and I don't think Gann is one.
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Old Jan 26, 2005, 10:15am   #6
 
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What I find is that the people who do know Gann methods that work either don't want to share them or will only reveal a few clues. I have a Constance Brown book "Technical analysis for the trading professional" where she states that of all the methods she uses, the Gann wheel is the one she would least like to relinquish. She also mentions that there is one small bit of information that is missing from most books and courses but then decides not to reveal what it is. Anyone care to share that here
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Old Jan 26, 2005, 10:26am   #7
 
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Tokac,

I own all of Gannīs books and have spent a considerable time studying his principles. I hope the following helps.

Most people think of planetary cycles when Gann gets mentioned. It is therefore a bit interesting that he never mentions those in any of his trading-related books (Truth of the stock tape, Wall Street stock selector, New stock trend detector, How to make profits in commodities and 45 years in Wall Street). In fact, if you read any of those books, especially Truth of the stock tape you will find that when it comes to trading as such, Gann was a firm advocate of both money management and unemotional trend following. There is no fundamental difference between the trading methods offered by Gann and Livermore, for example, except that the latter favored top and bottom picking more than Gann. Both found pyramiding somewhat sensible, which explains the wild profits both men had occasionally (and some big losses; Gann himself admits to having been wiped out over 40 times on page 22 in Truth of the stock tape - and that was only in 1923; he died in 1954).

Curiously both gentlemen placed enormous emphasis on the importance of risk management in their writings, yet obviously could not resist the temptation of going for broke. I read it somewhere that Gann made 4000% in 1933, and (given that we accept this as true) before we start thanking his forecasting prowess for that one lets not forget that: a) it was a bounceback year from an 89% decline in 1929-1932, b) Gann loved to pyramid and c) he liked to trade options. Letīs just hope he wasnīt long in 1931 as well.

As for the bad (his forecasting ventures): he lost it when he started studying planetary alignments; those secret everlasting cycles he and many other before and since have touted do not exist; and for the love of Blair do not waste time on finding any secrets in his dreadful novel The tunnel thru the air - it plain stinks.

Overall I would definitely not treat Gannīs trading wisdom as bullocks. His contribution to technical trading is quite some and there are definitely very fine apples in between, especially his extensive use of daily, weekly and monthly timeframes. He did for example recommend that investors did not even look at intraday fluctuations in order to prevent being fooled to jump off at the wrong time. I challenge anyone who has read Truth of the stock tape to say that the advise in that book is not sound investing advice.

Last edited by halldorpb; Jan 26, 2005 at 1:16pm.
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Old Jan 26, 2005, 10:46am   #8
 
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I will quote Ken Fisher on Gann: "He had no provable public record of accomplishment in the market...ever bragging, never copping to mistakes, his writing sounds very much like the earlier version of the modern self-promoting newsletter writer. He claimed, for example, that he wrote not because he wanted the money or the glory but because folks begged him to, and because he wanted to "give to others the most valuable gift possible--knowledge.""

Draw your own conclusions...
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Old Jan 26, 2005, 11:29am   #9
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Quote:
Originally Posted by zzaxx99
It's difficult to make an informed opinion on Gann,
'Informed opinions' are oxymoronic - whereas uninformed opinion is simply moronic.

If you do choose to study his work in depth you may derive significant benefit - not just in relation to trading. I came across Gann's work from quite another direction - long before I developed any interest in financial trading.

It is important and I have a far from a humble 'opinion' on that.


Quote:
Originally Posted by zzaxx99
I can't remember much of it in detail, though the bit about "360" being a fundamental number in Gann-style TA because it was a fundamental number in nature, or words to that effect, stuck in my mind, because it was such manifest nonsense. His theory (the speaker's, presumably representing Gann's) was that because 360 was the number of degrees in a circle, and that this number "turned up everywhere", that it was fundamental to many things, including Gann analysis.

Now, if he had chosen pi or e or the Planck constant., or something that really is a fundamental number
{my emphasis}

The rationale behind the Babylonians choosing a sexagesimal system is as 'real' or not, as any other physical 'constants' we choose to treat as 'real'.

In essence, all of these models/values/constants are adopted as useful rather than a direct experience or measure of reality itself (if indeed there is such a thing).

To assume otherwise is, to paraphrase Korzybski, to confuse the map with the territory.
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Old Jan 26, 2005, 12:29pm   #10
 
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Quote:
Originally Posted by TheBramble
The rationale behind the Babylonians choosing a sexagesimal system is as 'real' or not, as any other physical 'constants' we choose to treat as 'real'.

In essence, all of these models/values/constants are adopted as useful rather than a direct experience or measure of reality itself (if indeed there is such a thing).

To assume otherwise is, to paraphrase Korzybski, to confuse the map with the territory.
That's simply not true. To take the example of pi it is a manifestly objective constant - it is the ratio of circumference of a circle to its diameter, and doesn't matter what units it is measured in or what number base or the opinion of anyone, barring fundamental change in the physics of the universe, it is.

This is not remotely like choosing 360 as the number of parts of a circle - we could equally have been using 400 gradians, and no one thinking of degrees at all. Is 360 still a profound number then? No, and it isn't now either.

Now, I'm not disputing everything Gann says - as I alluded to earlier, I don't have enough exposure to his work to be able to judge. However, the parts I have seen have been... open to dispute.
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Old Jan 26, 2005, 12:42pm   #11
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Quote:
Originally Posted by zzaxx99
That's simply not true. To take the example of pi it is a manifestly objective constant - it is the ratio of circumference of a circle to its diameter, and doesn't matter what units it is measured in or what number base or the opinion of anyone, barring fundamental change in the physics of the universe, it is.
You're rather proving my point. You are holding as manifestly true in an inherent and absolute manner, that there are such things as ratio, circle, circumference, diameter. They are useful mental constructs - nothing more. They help us build bridges and fly to the moon - very useful indeed. But they are still just intellectual constructs. Try playing with Pi in a non-Euclidean universe...and we're not talking about any 'fundamental change in the physics of the universe' - just a change in the way we choose to view it.


Quote:
Originally Posted by zzaxx99
This is not remotely like choosing 360 as the number of parts of a circle - we could equally have been using 400 gradians, and no one thinking of degrees at all. Is 360 still a profound number then? No, and it isn't now either.
Well actually, if you research why the Babylonians did work with that number system and why their rationale was sufficiently 'strong' for them to be responsible for its continued usage today, you'll find just how close your circle/diameter example (chosen at random I'm sure ) is to where they were at, then.


Quote:
Originally Posted by zzaxx99
Now, I'm not disputing everything Gann says - as I alluded to earlier, I don't have enough exposure to his work to be able to judge. However, the parts I have seen have been... open to dispute.
Absolutely. Everything is open to disputation.

I hope this is of use to tokac...
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Old Jan 26, 2005, 1:26pm   #12
 
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Excerpt from the foreword of 45 Years in Wall Street, Gannīs last book:

"Many have written requesting me to write a new book. With the desire to help others I have written "45 Years in Wall Street" giving the benefit of my experience and my new discoveries to aid others in these difficult times. I am now in my 72nd year; fame would do me no good. I have more income than I can spend for my needs, therefore, my only object in writing this new book is to give to others the most valuable gift possible - KNOWLEDGE. If a few find the way to make safer investments my object will have been accomplished and satisfied readers will be my reward. W.D. Gann, July 2, 1949."
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Old Jan 26, 2005, 2:02pm   #13
 
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Quote:
Originally Posted by halldorpb
Excerpt from the foreword of 45 Years in Wall Street, Gannīs last book:

"Many have written requesting me to write a new book. With the desire to help others I have written "45 Years in Wall Street" giving the benefit of my experience and my new discoveries to aid others in these difficult times. I am now in my 72nd year; fame would do me no good. I have more income than I can spend for my needs, therefore, my only object in writing this new book is to give to others the most valuable gift possible - KNOWLEDGE. If a few find the way to make safer investments my object will have been accomplished and satisfied readers will be my reward. W.D. Gann, July 2, 1949."
With respect, that doesn't prove anything. A cynic might rephrase it thus:

"I want to publish a book. With the desire to make money I have written "45 Years in Wall Street" expounding my theories and to sell the maximum number of copies by cloaking it in the guise of giving the benefit of my experience and my new discoveries to aid others in these difficult times. I am getting on a bit, and know that false modesty plays well with the audience. I will look more credible if I claim to have more income than I can spend for my needs; my only object in writing this new book is to give to others the most valuable gift possible - the opportunity to give me MONEY. If I can convince a few of my theories, I might be able to get them to also shell out for my courses"
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Old Jan 26, 2005, 2:34pm   #14
 
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Quote:
Originally Posted by zzaxx99
With respect, that doesn't prove anything. A cynic might rephrase it thus:

"I want to publish a book. With the desire to make money I have written "45 Years in Wall Street" expounding my theories and to sell the maximum number of copies by cloaking it in the guise of giving the benefit of my experience and my new discoveries to aid others in these difficult times. I am getting on a bit, and know that false modesty plays well with the audience. I will look more credible if I claim to have more income than I can spend for my needs; my only object in writing this new book is to give to others the most valuable gift possible - the opportunity to give me MONEY. If I can convince a few of my theories, I might be able to get them to also shell out for my courses"
I agree. I only published this for clarityīs sake, since I have so much money

Btw, this doesnīt prove heīs dishonest either...
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Old Jan 26, 2005, 2:51pm   #15
 
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You sometimes wonder why they aren't more forthright.

They would have much more credibility if they simply wrote: "I am writing this book, simply to add to my legacy as a famous techician/trader/investor. Also, although I have more money than I could possibly spend, I would like even more wealth so that, if necessary, I can spend my last days in a luxurious dwelling and leave my family a large sum upon my demise."

Respect!
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