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​Great Traders: What W.D. Gann Had to Say


​William Delbert Gann was born in 1878 in Texas. This stock and commodity trader utilized geometry as well as ancient math to predict market events. His idea was that past events will happen again. Basically, according to Gann, history repeats itself.

​Gann identified market cycles with the 60-year cycle being the most important one. He passed in 1955, but his ideas are still used by traders as part of technical analysis. Gann Fans, for example, assume that market acts in cyclical as well as geometric ways. Gann Fans are placed on charts to indicate resistance and support lines. 

There are also Gann Angles. These assume that there’s a proper balance between price and time if there’s a 45 degree angle. The angles are used to identify trend lines. If, for example, a trend line based on Gann Angles is broken to the upside, the next angle will identify the resistance point. Overall, there are nine Gann Angles.

Many critics claim that Gann made more money from selling his trading courses rather than by trading. Still, his techniques are part of technical analyst’s arsenal. Not every trader uses Gann’s Fans and Angles, but plenty d
 

W.D. Gann’s Law of Vibration

Gann’s predictions were based on what he called the Law of Vibration. Basically, this law says that everything one earth vibrates, including financial assets. If you take stocks and commodities, for example, these vibrate in accordance to their own energies as well energies transmitted externally through space. These vibrations are reflected in prices. Overall, financial markets are a series of impulses that lead to price movements based on specific intensity of vibrations. These vibrations can be understood mathematically and measured with Gann’s Fans and Angles. Multiple time periods can be forecasted with these methods.


W.D. Gunn’s Trading Quotes

Below we present some of the top W.D. Gunn’s quotes as well as our commentary.



“The more time you put in gaining knowledge, the more money you will make later. Knowledge is not enough. You must put into use what you learn in order to benefit. You will learn by doing.”

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“I soon began to realize that all successful men, whether Lawyers, Doctors or Scientists, devoted years of time to the study and investigation of their particular pursuit or profession before attempting to make any money out of it.”

It takes time to become a successful trader. Learning theory is important, but this knowledge must be put into practice, and practical conclusions need to be drawn from trades, especially losing trades.

 

“Mathematics is the only exact science. All power under heaven and on earth is given to the man who masters the simple science of mathematics.”

Being good with math will definitely help traders. Having a good sense of numbers as well as knowing some business math and accounting will assist in search for opportunities. Although traders mostly rely on technical analysis, knowing fundamental analysis comes useful. Look at numbers and analyze them. With time, you’ll become more comfortable.


“A successful trader studies human nature and does the opposite of what the general public does.” 

Gann was a great fan of math, but he did not forget the second part of the equation: the human nature. Psychology plays its part in trading. He also pointed out that while trends are important, the crowds should not be followed. Many rookie traders have problems understanding it. Following the trends doesn’t mean that the crowd is followed. The crowd usually jumps in too late when trends are changing.


“The difference between success and failure in trading in commodities is the difference between one man knowing and following fixed rules and the other man guessing.”

You need a trading strategy to test and then follow. Gann used his angles and fans, but there are many strategies to choose from. These depend on trading style, risk tolerance, and other factors. Many amateurs trade without a strategy and without thinking about entry and exit points. This leads to losses.


“The most money is made by swing trading, or in long pull trades, that is following a definite trend as long as the trend is up or down, but you must learn by rules to wait until the market gets out of a rut or a trading range.”

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“Wait for definite indications that it is going higher or lower, before you take a position for a long pull trade.”


Here, Gann pointed out the importance of following the trend and waiting for confirmations (indications) before entering trades. In fact, this is what successful traders often advise.
 

“Being in the brokerage business myself and handling large accounts, I had opportunities seldom afforded the ordinary man for studying the cause of success and failure in the speculations of others. I found that over ninety percent of the traders who go into the market without knowledge or study usually lose in the end.”

The same is true today: 90% of amateur traders lose money. As you progress with your trading career, you will make mistakes and likely will lose money. Successful traders learn from mistakes and continue to improve.



“When you make a trade, you must have the patience to wait for opportunities to get out right, or to make the profit.”

Amateur traders tend to be impatient. They can’t wait to jump in. But, trading opportunities don’t present themselves all the time (at least not in the realm a single trader can scan). To find suitable opportunities, you’ve got to be patient. Also, once you’re in, and holding to a position still makes sense, then be patient. Patience pays off.



Summary:

  • Learning how to trade takes time, while theoretical knowledge needs to be put into practice
  • Knowing both math and human psychology will help with trading
  • Before you trade, stay patient : look at the trend and wait for confirmation signals ​



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W.D. Gann relied on geometry to trade stocks and commodities