W D Gann, Trading System Pioneer
W D Gann , a gifted mathematician with an incredible memory for figures, is a legendary character in commodity trading circles.
He pioneered a trading system which uses historical data accumulated over a significantly long period of time to predict the most likely future outcomes in commodity prices.
In essence what his system does is say that all movements in the markets, whether stocks or commodities, conform to universal natural patterns.
You can now subscribe to the free Commodity Universe Ezine below, and get the latest articles on the commodity sector . Just your first name and email. It's as easy as 1-2-3! Each commodity and each stock has its own characteristic pattern and by accumulating data for the various commodities one can build a picture and forecast future trends.
So amazed were financial commentators and observers by his trading system and results that in 1909 the Wall Street Journal decided to take a closer look at how Gann achieved his results.
The WSJ sent a reporter to shadow the bold pioneer and announced that Gann was using principles based on natural law which have always existed but only in recent times regarded as a modern discovery.
Not surprisingly Gann’s latest thinking aided by publicity from the prestigious WSJ inevitably ruffled the established order within stock and commodity trading circles. Among his observations was one notable comment on the link between successful trading and knowledge and study.
Gann notes that over 90% of traders who did not prepare adequately through study would lose in the end.
The Natural Law in Commodity Trading according to Gann:
Certain parts of the law of vibration determine the rise in the price of a commodity, while a different rule explains the fall in price.
For sure, this approach may ask many of you to question the very idea of group psychology that some believe drives so called market sentiment.
But consider that the WSJ journalist who was shadowing Mr Gann in October 1909 for 25 trading days was able to report some very impressive results.
In this particular month our legendary stock and commodities forecaster executed 286 trades, some long and some short.
And during this period he increased his capital tenfold, that is a success rate of over 90%.
As someone with a science background and a believer in free will, I do admit it is very difficult to stand up and discount this trading approach, even if it implies that there is very little the trader can do.
In other words, it is like some amazing traders secret, the Holy Grail of trading commodities, and if you learn and understand the trading system with its vibrations and the time factor, then positive results will follow.
Some traders cannot get their head around the W D Gann principles, believing instead that more immediate factors determine commodity prices, while others accept its rather deterministic implications and live and breathe its trading rules.
|
