Trader Fact Files – William Delbert Gann

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More popularly known as WD Gann for the development of technical analysis tools known as Gann Angles, William Delbert Gann created these market forecasting methods based on principles of geometry, ancient mathematics, astronomy, and astrology.

Simply put, these Gann Angles are calculated using the derivative of a particular line on a chart, with each angle dividing time and price into proportionate parts. The more complex applications of these forecasting techniques are outlined in his book called The Basis of My Forecasting Method.

Apart from that, he also wrote a number of trading manuals namely Truth of the Stock Tape, Tunnel Thru the Air, Wall Street Stock Selector, New Stock Trend Detector, How to Make Profits in Commodities, 45 Years in Wall Street, WD Gann Economic Forecaster, and How to Make Profits Trading Puts and Calls.

Career

Gann started trading in 1902 at the age of 24. Interestingly enough, he didn’t have a finance background or even graduated from high school, as his education was mostly in religion. He was born into a cotton farming family and this helped him gain a strong understanding of the commodities market.

His foray into the financial markets started with a brokerage firm in Texarkana before he eventually moved to Brand-new York City to work at a Wall Street firm. Soon after, he opened his own brokerage WD Gann & Company. Gann also published daily newsletters called The Supply and Demand Newsletter in which he covered forecasts for stocks and commodities, followed by another publication called The Busy Man’s Service which contained specific trade recommendations.

In 1931, Gann became a member of the Brand-new York Stock Exchange rubber and the Brand-new Orleans Cotton Exchange. Ten years later, he became a member of the Chicago Mercantile Exchange. Around that time, Gann also showed some fascination with planes, which some speculated was used to further his observations of astrology, numerology, and other arts. Rumor has actually it that he even visited the Aztec and Mayan pyramids which he believed to have contained encoded advanced astrological knowledge.

Although market experts are divided on the effectiveness of his Gann forecasting techniques, he was able to sell a master course for $5,000 for private mentoring. In addition to predicting market price action, his trading techniques also delved into risk management rules such as not risking more than 1% of your account on a single trade, using stop losses, trailing stops to protect profits, trading only active markets, using market orders to exit a trade, and distributing risk equally across various asset classes.

Facts

Gann’s forecasting techniques were mostly rooted in the idea that history repeats itself, even repeatedly quoting Bible verses that supported this view. To make a triumph 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,” Gann said.

In particular, Gann highlights the importance of the 60-year cycle, using this to predict great bull or bear markets. Gann also emphasized the importance of the 90-year cycle, which numerous are watching to see if it will indeed predict a financial crisis by 2019, which will be 90 years after the 1929 market crash. Incidentally, Gann was able to predict the top of the bull market in September 1929, as well as the great bear market that followed.

Apart from using these techniques in the financial markets, Gann was also able to predict the end of World War I and the abdication of the Kaiser. This prediction was picked up by major publications, including the Brand-new York Times. Gann was also said to have predicted World War II in his book called Tunnel Thru the Air, particularly in an attack on the United States by Japan.
Achievements

Followers of William Delbert Gann say that he is one of the most successful stock and commodity traders that ever lived, but there has actually been no record of how much he made from trading these assets. Some say that much of his fame and fortune was gained from selling manuals and speaking in trading seminars.

According to his son John Gann, his father earned his living mostly on book sales and selling instructional courses, dispelling rumors that he left a $50 million estate after his death in 1955. His son said that his estate was actually valued at slightly over $100,000 then, Even though it’s worth noting that the two had a bitter falling out after he parted ways with his father’s business in the 1940s.

Just a few years before his death, Gann sold all the rights to his books, charts, and other trading materials to Edward Lambert who later on formed Lambert Gann Publishing Co. This later on was renamed to WD Gann Inc when the company was purchased by Bill and Nikki Jones in 1976.

Gann Angles have been applied on other markets aside from stocks and commodities, with some saying that it has actually been particularly reliable in the forex arena. These angles are drawn based on trend lines and can be considered as support or resistance levels on breakouts. With this market analysis technique, he conceptualized back in 1908, Gann is seen as one of the pioneers of technical analysis.

Some narratives say that Gann was able to test this technique out by opening two accounts, one with $300 and another with $150. It is said that he was able to make $25,000 in profits for the first account in three months and make $15,000 on his second account in just 30 days. To this date, a number of strategies and software based on this type of Gann analysis are being sold, Even though there are still plenty of naysayers dismissing his theories as mere mysticism and purely coincidental.

Sources:

https://en.wikipedia.org/wiki/William_Delbert_Gann

http://www.investopedia.com/articles/investing/091615/mysterious-life-trading-legend-wd-gann.asp

http://www.readtheticker.com/Pages/IndLibrary.aspx?65tf=1251_william-gann-life-story

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