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Legendary trader W D Gann amassed a fortune of $50 million dollars in the first half of the last century, although he died in 1955, his commodity trading systems are still used today by traders all over the world.
Successful commodity trading systems have the ability take the emotion out of trading, liquidating losses quickly and spotting and holding the big longer-term trends and that’s exactly what Gann’s Commodity trading systems did.
Gann’s Commodity Systems Track Record
Gann’s commodity trading systems allowed him to make some stunning predictions and trading gains such as:
1. He predicted improvements in business in 1921 and the Bull Run in stocks.
2. 1928 he forecasted the end of the Bull Market in stocks a full year in advance of the 1929 crash. He then bought stocks in the Dow at an all time low in 1932.
3. In 1935, of 98 trades in cotton, grain, and rubber, 83 trades showed a profit. His percentage of profitable trades was often 90? higher.
History Repeats Itself
Gann was a prolific writer and wrote extensively, outlining his thoughts on commodity trading systems in a series of books and courses. Some of his ideas were grounded in empirical studies, while others were more mystical in nature.
Gann’s major contention was that certain laws governed not only the markets, but nature as well and were universal in scope. He believed that human psychology was constant and that this manifested itself in repeatable price patterns.
“We cannot escape it (emotion) In the future it will cause another panic in stocks. When it comes both traders and investors will sell stocks, as usual, after it is too late or in the latter stages of a bear market”
He was aware that human nature was constant and influenced the majority of traders.
“Therefore, in order to make a success the trader must act in a way to overcome the weak points that have caused the ruin of others”
For more information on trading psychology excellent books to read any by Jake Bernstein, Jesse Livermore, Larry Williams, Van Tharp and Jack Shwager and you will see why human nature repeats itself.
The Influence of Price and Time
One of the most important thoughts behind Gann’s commodity trading systems was the concept of combining price and time.
Gann believed that crucial price movements happened when price and time converged. These points could indicate an important trend change was imminent. If on the other hand, price and time were not coordinated, or did not converge, time always held priority over price. Time was therefore considered by Gann as the ultimate indicator, because all of nature was governed by time.
In the “Wall Street Stock Selector” Gann said.
“Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law …” and, “It is action in one direction and reaction in the opposite direction. In order to make profits, you must learn to follow the trend and change when the trend changes.”
Making Big Profits with Gann
There are many commodity-trading systems to choose from and Gann with its unique method of technical analysis is worth serious consideration by any trader.
If you are, a day trader or long-term position trader, look at Gann’s commodity trading systems and see how they can help you become a better and more informed trader.
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