As you enter the New York Stock Exchange, stands a life-sized picture of W D. Gann (1878 - 1955) and this is an indication of the respect he is held in by traders worldwide.
Today, half a century after his death he remains one of the most important traders of all time.
Here we will look at how he made millions from his trading methods and how they can help you seek bigger profits.
W D Gann employed a team draughts men to draw charts of all the stocks on the New York Stock Exchange and a selection of commodities.
His methods are however applicable to any market.
He then used these charts to trade for profit. In fact, his unique methods made him a fortune of over $50 million dollars.
So are his methods still applicable today?
The answer is yes and savvy traders all around the world make profits from his methods
W D Gann Philosophy of trading
W D Gann wrote extensively outlining his thoughts and trading methods in a series of books and courses.
Many of his ideas were empirical studies and others were more mystical in nature.
Why Gann’s methods are still valid
Gann’s major contention was that certain laws governed not only the markets, but nature as well, and were universal in scope.
As humans make trades and human nature was constant, he contended that this psychology would show up in repetitive price patterns.
While this is a standard view of technical analysis Gann introduced a unique slant by studying price and time and how they influenced each other
The Influence of Price and Time
Gann believed that crucial price movements and trend changes happened when price and time converged.
These points could then be traded for profits.
If price and time were not in synch, or did not converge, then time held more relevance than price.
Time, was considered by Gann as the ultimate indicator, for trading because all of nature was governed by time.
This view was unique at the time and remains so today.
Gann believed this and the fact that human nature was constant allowed trading opportunities to be seen in advance.
In the "Wall Street Stock Selector" Gann stated.
"Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law”
In trading Gann concluded that:
"It is action in one direction, and reaction in the opposite direction. In order to make profits, you must learn to follow the trend, and change when the trend changes."
We Can’t Change Our Nature
Many traders have focused on Gann’s work on price and time as well as Swing trading, Gann angles and
the Fibonacci number sequence.
Gann however was one of the first traders to focus on investor psychology and his writings on human emotions such as hope, greed, and fear are classic works.
Gann knew emotions caused the vast majority of traders to lose:
“We cannot escape it (emotion). In the future, it will cause another panic in stocks. When it comes, both traders and investors will sell stocks, as usual, after it is too late, or in the latter stages of a bear market”
So his conclusion was simple:
“Therefore, in order to make a success, the trader must act in a way to overcome the weak points that have caused the ruin of others”
Gann was much more than just a trader his unique insights into price and time and trader psychology are essential reading for all traders – Especially, as he made millions using them.
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