Gann again: A great trader

Recent work of mine on Fibonacci, inspired in part by the mathematical garden at the Chelsea Flower Show (designed by silver gilt winner and head gardener at the Chelsea Physic Garden Nick Bailey), started me thinking about magical numbers.  These have been important to peoples all over the world for millennia.

As technical analysts we are used to working with Fibonacci retracements and projections, moving averages, and Elliott Wave counts.  Many of us struggle with the latter (do watch the excellent video on the subject by Thomas Anthonj on www.sta-uk.org ) and wrestle even harder with WD Gann.  Both men believed that there were ‘natural laws’ which have great influence on markets.

Texas born and self-taught William Delbert Gann moved to New York in 1902, worked at a stock broker’s and wrote for ‘The Ticker and Investment Digest’, precursor to the Wall Street Journal.  His trading success was phenomenal and much of it has been independently verified.

The Spring Equinox is the start of the year for many gardeners and the financial year according to Gann, just as the Winter Solstice marked the end of the Mayan calendar.  Like Ichimoku cloud charts, the concept that time and price are inextricably linked is key, Gann believing time the more important variable.  His law of vibration states that stocks are centres of energy and therefore controlled mathematically; his second principle is that analysis must factor in space, volume, and time.

A Gann fan draws lines from a significant high or low at an initial rate of one unit of time to one of price (45 degrees).  Others are added around this at the rates of 1X2, 1X3, 1X4 and 1X8 (7.5 degrees) around which markets rotate.  ‘Essential’ numbers include 66.66%, 50%, 33.33%, 16.66% and 8.33%.

Many years ago Fred Stafford gave an illuminating (and entertaining) lecture on Gann at an STA monthly meeting, having a dig at ‘funny mentalists’ who he believed useless.  His son Gary has now taken over as main cheer leader for team Gann and has several free videos on the subject on You Tube.  Or perhaps it might be better to go straight to the horse’s mouth, two volumes of ‘Collected Writings’ and ‘45 Years on Wall Street’ being perennial favourites.

GannFan

 

FibGarden

GannSquare

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About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at trending@sta-uk.org

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