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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