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WD Gann was arguably one of the best traders and technical analysts to ever exist. It was known to have pulled millions of dollars out of the market during the Great Crash of 1929-1933 and has achieved cult status among technical analysts and traders alike.
But how did WD Gann do it? What were your methods? Many people believe that he relied solely on esoteric methods such as financial astrology and numerology. Gann was undoubtedly an expert in these areas. He often referred to the planets in his courses and private letters. He also referred to the number squares he created based on the number of letters in, for example, the words “New York Stock Exchange” to predict key market points.
However, WD Gann also made statements like “Geometric angles, the basis of my forecasting method” and even titled certain sections of his master courses on stocks and commodities this way. But what did he mean by this? Was WD Gann based solely on geometric principles in his predictions? How can these methods be applied?
WD Gann believed that financial markets, like most things in the world, were built on the principles of natural law. Like atoms, molecules, and matter forming crystals at certain precise geometric angles, he believed that financial markets were no different. He assumed that markets marked inflection points relative to precise geometric angles.
Some go further by saying that what Gann was referring to were the astrological aspects. Their charting methods relied on geometry and scale charts to balance price and time. Gann was most likely doing this to correlate the geometric charts with the planetary cyclical factors he was using.
Regardless of your belief as to what WD Gann was actually doing, one thing is for sure. Gann was a skilled forecaster and trader, and his legacy will endure in his writings.
Gann’s open method for plotting prices over time is to make a unit of time equal to a unit of price. So on a weekly chart, this means that a stock charts the price action at $ 1 for 1 week of time. In this way, the geometric angle that a swing forms can be calculated using trigonometry.
But what about Gann’s comments in his cotton course that one should use $ 0.15 per day and $ 0.30 per month? This opens a whole new door to speculation in terms of how to scale your charts. The answer here is that WD Gann was setting a “vibration rate” for the cotton market. In fact, he was saying that $ 0.15 was the central unit of vibration for cotton.
There are methods available in which Gann principles can be used to establish the vibration rate of a market. But that’s the subject of another article, or even a video.