W D Gann - Made $50 Million Dollars

What Was The Secret Of His Success?

Gann's innovative approach to trading is outlined in this article and we will give you an insight into how his trading methods can help you become a more profitable trader. W D Gann was a technical trader and employed a team of draughtsmen to draw charts of stocks on the New York Stock Exchange, as well as numerous commodities.

He then studied these charts and his view was: "What happened in the past will happen again" Gann then looked at the patterns in these chart for trading opportunities. Gann believed that markets were cyclical by nature and what had happened in the past would happen again. The reason for this was, human nature and all areas of trading were subject to a recurring law, which repeated itself over time.

Trading Philosophy.

Gann was a prolific writer and presented his thoughts and trading techniques in numerous books and courses. Some of his ideas were empirical studies, while many were mystical in nature. Ganns view was that certain laws governed not only the markets, but nature as well, and were universal in scope.

Price and Time.

Ganns most important contribution to the investing world was probably his concept of time and price and the interaction between the two. Gann believed that crucial price movements occurred when price and time converged. These convergences usually indicated an important trend change was imminent and traders could trade for profit at these points. If price and time were not in synch however, or did not converge, then time was always more important than price. Time, was considered by Gann to be the ultimate timing indicator and he believed, all of nature was governed by time.

"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.

"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." Trader psychology was one of the keys to repetitive price patterns in Gann's view.

Gann contributed many original ideas and innovative techniques such as: Swing trading, Gann angles, the Fibonacci number sequence and the golden ratio and many more, but his major contribution to the investing world were his thoughts on investor psychology. His insights into the emotions of hope, greed, and fear and how they caused traders to lose, are informative and support his theory of recurring market behaviour.

One of his most famous quotes was:

"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 fully aware that to succeed in trading investors needed to understand why other traders lose and to win a trader must become disciplined and trade without emotion. "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".