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W. D. Gann Principle

Techniques from another trading legend

of the past still have things to offer

in today's volatile markets.

Anyone who has read the history of stock and commodity markets from the early part of this century is familiar with Jay Gould, Daniel Drew, the wheat corners of Joseph Leiter and, of course, the great bear of Wall Street, Jesse Livermore.

Many of these men gained their fame and fortunes through pools, corners and manipulation rather than through market knowledge. While their sagas of daring, with millions won and lost in a day, are fascinating reading, what is less known is that many of them died broke and broken men.

Discovering Gann

During the early 1900s, a much less known young stock and commodity broker by the name of William D. Gann was trading these same markets in a different manner with remarkable success. So much so that Gann's philosophy and trading record gained the attention of a magazine called The Ticker and Investment Digest. In 1909 the magazine published a four-page interview with Gann, recounting his trading record for one month as observed by the magazine's reporter.

Gann's forecasts of price movements and his ability to multiply money was mind-boggling, not only for traders of that era but by any standard of today. For example, he would predict that a stock that was trading at 165 would go to 184 7/8 but not to 185, and it would do exactly that.

To quote from the article, "During the month of October 1909 in 25 market days, Mr. Gann made, in the presence of our representative, 286 transactions in various stocks, on both the long and short side of the market. Of these transactions, 264 resulted in profits, 22 in losses.

"The capital with which he operated has doubled 10 times so that at the end of the month he had 1,000% of his original margin. We have seen him give in one day 16 successive orders in the same stock, eight of which turned out to be at either the top or bottom eighth of that particular swing."

Mathematical Key

When questioned in the article about his methods, Gann said that each stock and commodity had its own center of gravity-mathematical points of force governed by the natua al Laws of Vibration. But, in fact, he was quite unwilling at that stage to reveal any specifics about how he was able to achieve such spectacular results.

Gann published a novel in the early 1920s titled "The Tunnel Thru the Air," which was a thinly disguised autobiography and a specific forecast of World War II. The book is a paradox in that it has a strong puritanically religious and moral theme with many biblical references throughout, but Gann also cast himself as the "Supreme Commander" and savior of the world in a Buck Rogers type swashbuckling adventure!

The book was the ultimate ego-trip, but perhaps it's not too difficult to understand that Gann may have seen himself as omnipotent in that period of his life. After all, making millions in the market can certainly distort your view of yourself.

Fortunately, this attitude did not persist. A few years later Gann began to write in detail and publish the methods and techniques he had discovered. This ongoing process was to continue throughout his life. It became apparent in his writing that he developed an almost religious humility about sharing his gifts of knowledge with others. He ended one of his early courses with the homey little poem.