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William Delbert Gann (June 6, 1878 – June 18, 1955) or WD Gann, was a finance trader who developed the technical analysis methods like the Gann angles and the Master Charts, where the latter is a collective name for his various tools like the Square of Nine, the Hexagon Chart, and the Circle of 360.
Gann Fans, created by W. D. Gann, are based on the premise that prices move in predictable patterns. Gann's theory is based on time/price movements with the 1 time unit by 1 price unit (i.e. 1 x 1) being the main angle (45-degrees). However, there are other angles such as the 1 x 2, 2 x 1, 1 x 4, 4 x 1, etc. Gann Fans are drawn from major price peaks and bottoms and are used to show trendlines of support and resistance.
William Delbert Gann was a trader who developed the technical analysis tools known as Gann Angles, Square of 9, Hexagon, and Circle of 360. W.D. Gann's market forecasting methods are based on geometry, astronomy and astrology, and ancient mathematics.
He was supposedly one of the most successful stock and commodity traders that ever lived. Born in Lufkin, Texas on June 6, 1878, W.D. Gann began trading in the early 1900's, and in 1908 moved to New York City to open his own brokerage firm, Gann & Company. Using his own style of technical analysis, W.D. Gann was reported to have taken more than 50 million dollars in profits out of the markets.
He based his trading methods on time and price analysis. This made it possible for Mr. Gann to determine not only when a trend change was imminent, but also what the best price would be to enter, or exit that market. So accurate were Mr. Gann's techniques that in the in the presence of representatives of a major financial publication, he made 286 trades in a period of 25 market days. Of these, 264 trades were profitable.
redicting the future is impossible, right? If he were around today, W.D. Gann would beg to differ. His first prophecy is believed to have happened during World War I, when he predicted the Nov. 9, 1918, abdication of the Germany's Kaiser Wilhelm II and the end of the war. Then, in 1927, he wrote a book called "Tunnel Through The Air" that many believe predicted the Japanese attack on Pearl Harbor.
His financial predictions were perhaps even more profound. In early 1929, he predicted that the markets would probably continue to rally on speculation and hit new highs… until early April. In his daily financial publication, The Supply and Demand Letter, he delivered financial forecasts focusing on both the stock and commodity markets. As this publication gained notoriety, Gann published several books—most notably "Truth," which was hailed by The Wall Street Journal as his best work. Finally, he began releasing the techniques that he used to make these forecasts: the Gann studies.
What Are the Gann Studies?
In 1908, Gann discovered what he called the "market time factor," which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Here's how his techniques work. Gann based predictions of price movements on three premises:
Price, time and range are the only three factors to consider.
The markets are cyclical in nature.
The markets are geometric in design and in function.
Based on these three premises, Gann's strategies revolved around three general areas of prediction:
Price study: This uses support and resistance lines, pivot points and angles.
Time study: This looks at historically reoccurring dates, derived by natural and social means.
Pattern study: This looks at market swings using trendlines and reversal patterns.
The Bottom Line
Is it possible to predict the future? W.D. Gann probably thought so, and he seemed to have proved it with his wildly successful returns. The system is relatively simple to use but difficult to master. After all, it was Gann's uncanny ability to fine-tune his techniques that led him to enormous profits—the average investor is not likely to obtain these kinds of returns. Like many technical tools, Gann angles are best used in conjunction with other tools to predict price movements and profit.
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