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TOOLS OF THE TRADE

INTRODUCTION TO W.D. GANN














Home | REDISCOVERING GANNS LAW OF VIBRATION | THE "DOW THEORY" CON! PART 3 | THE "DOW THEORY" CON! PART 2 | PITAGORAS INTERNACIONAL SA. SITES MAP! | THE "DOW THEORY" CON PART 1 | BUT LONG JOHN, IT BE A BOTTOM! YES, INDEED, YOUNG JIM, BUT THERE BE BOTTOMS,AND THERE BE BOTTOMS! | The "Chicago School" really began in the 1920s with the diumvurate of Frank H. Knight and Jacob Vine | A TALE OF TWO STRATEGIES, OR HOW THE US AIRLINE INDUSTRY BLEW IT! | GANN FORETOLD RUN OF STOCKS | ANOTHER TRADING TOOL BITES THE DUST, COMPLIMENTS OF THE LONG ONLY COMMODITY FUNDS! | How To Trade With The Trend | Recent Interview with Sir John Templeton | Speculation As A Fine Art: An Early Trend Follower! | Frank H. Knight, 1885-1972. THE GREAT AMERICAN ECONOMIST FROM THE REAL CHICAGO SCHOOL OF ECONOMICS. | FIND OUT ABOUT OUR NEW SERVICE, THE TRENDTRACKER copyright 2005! | OUR LATEST SPECIAL REPORT IS NOW AVAILABLE! THIS IS A MUST READ FOR THOSE WITH 401(k)S, OR IRAS. | William D. Gann | William. D. Gann & Pythagoras | How Important is the Trend? | Sir John Templeton | Recent Interview with Sir John Templeton | The Theory of Reflexivity by George Soros | THE "GREAT " AUSTRIAN ECONOMIST! Joseph Alois Schumpeter | Raymond H Wheeler CYCLES | Alexander L. Chizhevsky CYCLES | Nikolai Kondratieff CYCLES | Rhythms of the Universe CYCLES | GREAT RULES FOR TRADING | W. D. GANN- MARKET MASTER | W. D. GANN 'S RULES FOR TRADING | HOW YOU MUST APPROACH TRADING | W. D. GANN | INTRODUCTION TO W. D. GANN | W. D. GANN'S APPROACH DEFINED | SUPERIORITY OF W. D. GANN'S TECHNIQUES | COMMITMENTS OF TRADERS REPORT





INTRODUCTION TO W.D. GANN
















Overview

The Beginner

Reading all you can on trading, one eventually learns that the trading arena is not exempt from standard business practices in the sense that it rewards the entrepreneur. This plays out in the trading business very much like the discovery of new inventions or scientific breakthroughs. And in that same fashion, discoveries are usually not beginners luck or luck, but are rewards for much diligence. The best direction to take is not known in the beginning, or if it is, it is not known that that is what it is. Also, the beginner is usually enthusiastic and energetic and full of hope; and that makes the beginner a prime target for the more seasoned and salty to take advantage of him.

The Conservative

After the trader has progressed past the beginner stage, he may become more wary of getting taken by the wolves, but he still has a far greater problem. He thinks that he knows something now. He can't get his reckoning right because his ego is in the way. He basically thinks that he has laid the groundwork by knowing "something", although he admittedly doesn't know much. The problem is that he didn't lay the groundwork---but he thinks that he did. He thinks that he can use his newfound business sense called "caution" or "being conservative" to wield his way into place, bypassing trouble. It doesn't occur to him that these facets of the business don't take the place of building the business from the ground up on intuition, ingenuity, cleverness, and common sense. This hits the person especially hard that has bought the business or has a formal education, because he can't seem to stoop to start from the bottom. The main reason for this stumbling block so easily falling into place is the failure to be willing to turn loose of an investment of time and money that have come to bear to that point. It's very difficult to admit a wrong direction was taken that hurts finances and time allotment, but even more so if it was something where enthusiasm for that wrong direction was high.

The Turnaround

Two paragraphs of talk like that is enough, even if it is reality. Let's look now in the other direction. Let's suppose that a person comes to his senses and actually effects a turnaround, however it happens. He could be driven there, or he could eventually tire of the results, or he could psychoanalyze himself and what has happened, with or without the aid of another's help. Or he could be wanting to excel instead of just be average. Put yourself in that man's shoes right now. The sense is of sitting dead in the water again. The sense is starting over. Therefore, the sense is somewhat more optimistic, but more than that, some of the beginner's traits come into play again---a little more excitement, the possibilities.

The Repeat

Let's put the brakes on right here. We all know that the above scenario can be repeated again at this point. We also know that it can be repeated over again more times than one. We also know that it could be repeated a large number of times. And we know that there is another ingredient that comes into play with several repeats. That ingredient is the elimination of what don't work by this trial and error process. I'm sure you have heard that trial and error is a valid form of problem solution, and sometimes the only method available that will give a solution. So it should be evident now that this process can be played out in many different ways.

The Expert

My contention is that what makes up an individual and sets him apart from others comes to bear at this juncture. You may say that I have been wordy to say what could have been simply said as some people make more errors than others. But I don't think so. I believe that it must be said that some individuals bubble up to the top in the fray as having had the ability to not only determine better than their fellowman the proper direction, the most error free direction, but also to depart from the crowd, admit their mistakes, and have the guts to make the change. These are the ones that we read about eventually as having excelled.

The Logic

Have you ever wondered whether or not you are capable of doing something to the extent that you shy away from it? The unknown is difficult to reckon with. I have a quote above my desk that reads, "The remedy for most fears is usually quite simple: Knowledge, liberally self-administered". Do you often wonder not just whether or not you are capable of doing something, but whether or not something is possible at all, or not? It's interesting to see where people shake out in those two questions. I think it is the focusing on a trait in people called "vision". The Bible says, "Where there is no vision, the people perish". Add to this now, the fear of the ridicule of your fellowman. If we are going to do something that appears to defy logic, you know that our fellowmen are going to let us know about it. Everyone has their own idea of how logic is logical, and it is dear to them. If you don't line up with their idea of what logic should be, then you have betrayed them. So if you attempt to use what society calls "faulty" logic---beware. A quote from Lewis Carroll, "If it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's Logic".

The Likelihood

Revisiting the questions posed in the logic paragraph above, let's interject the word "dreamer". People will say that you are a dreamer or are not a dreamer, and have negative and positive connotations both ways. It's a mixed bag. Most of the time it's hard to say whether you ought to be a dreamer or not, and depends on the context and who you are talking to. But let's shore ourself up and take the positive side. Let's explore the possibilities. You can do this in several ways. You can call on divine guidance, because if what you are attempting is honorable, "With God, all things are possible". Or you could be somewhat ornery and take the contrarian side and take someone saying a lot of negative things about something as a challenge. But the point here is to explore being overly positive, and see where it leads you. See if you can gain any insight.

The Possibilities

Microsoft had a good slogan on TV recently, "Where do you want to go today?" This is getting to the crux of the matter. We seem to get stymied by our past predicaments enough to set our mode of operation in life to be concentrating on the immediate. We may even break out of that mold a little, or even a lot, but we can't seem to step into an operating procedure that wants to create perfection, as we picture perfection to be. What is needed is more of what Microsoft is saying. If you could be completely satisfied, what would that be? Do you ever take any time to define it? Let's be totally demanding and ask for everything. Our sights are set too low. We are like the grasshopper that bumped his head on the jar lid so many times that he wouldn't jump any higher even after the jar lid was removed. I have even read in many places that there is no "golden fleece", no "keys to the universe". Before you label me as a kook, rethink. Read the legend of W.D.Gann, and then rethink.

The Mentor

If someone wants to be as successful as someone else, then they need to pattern themselves after that person. I know I'm not stating anything new, but it seems like that is where people fall down the most. People want to "cut to the chase" or take shortcuts, as if the mentor has done the groundwork themselves, and we are to reap the benefits of it. It seldom works that way. Instead, we need to use the pattern of the mentor, his mode of operation, and lay the groundwork ourselves. Gann saw this flaw in people and therefore he did not want to give aid to anyone that did not do his required homework. So Gann set out to create checks and balances that insured that whoever was to benefit from anything that he did should do the base amount of discovery, and then his works would aid the future discoveries. He was very good at this. But, alas, he was to be disappointed by the total lack of followthrough by anyone. Few made the attempt, and even fewer come anywhere close to getting to the ground floor. The author of the 1909 article in "The Ticker and Investment Digest" had this to say: "We submit this in full recognition of the fact that in Wall Street a man with a new idea --- an idea which violates the traditions and encourages a scientific view of the proposition --- is not usually welcomed by the majority, for the reason that he stimulates thought and research. These activities said majority abhors."

The pronouncement

I will be the first to admit that I have not tried very hard to find someone that has been able to follow in Gann's footsteps, but the looking that I have done hasn't produced one yet. I believe that W.D.Gann was so far ahead of the other traders that this world has seen that we don't properly comprehend the significance of that fact. Traders bandy about his name as if it is not reasonable to consider that his trading was on a plateau above all others. In my judgement, he was the most capable of any person that has ever lived to be called a perfect mentor. We in the trading business are fortunate to have this icon of perfection as a possible mentor if we so choose. The legend of W.D.Gann will be there for us to draw off of for a long time to come.

The Conclusion

We have an opportunity to be a super great trader like Gann. We have his writings allowing us to take him as our mentor. We have his admonitions to direct us in how to do this. We have to first do what he expected of us and then pattern after him. We have the option. We can opt to follow the crowd or we can follow Gann's lead. We know that it is possible to attain an accuracy in our trading so high that it is unreal, and we know that it is possible to predict all timeframes of price action far into the future, because Gann did it. Look at all of the price based and/or oscillator based traders out there that think that 60% is a "high" accuracy rate, then look back over your shoulder at Gann's 90% plus, and you decide. The next time that you take several losses in a row, and your nerves and discipline are in shambles, consider putting in the time to find out what Gann really did. The legend of W.D.Gann, properly studied, has the potential to make you a legend too.

By David Barry
















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The basic tool for the manipulation of reality is the manipulation of words. If you can control the meaning of words, you can control the people who must use the words. Philip K. Dick