HOME OF GANN MADE
EASY "AND" RIGHT!
Welcome to the Price-Time Review's massive W.D. Gann Technical Library for non-subscribers.
-- IF YOU are just learning to trade OR this is your first visit to the PRICE TIME REVIEW'S FREE GANN SECTION--
--"PLEASE" SCROLL DOWN AND "READ" all of--
ABC-D of GANN (just below)
--VIEW the FIRST THREE "KEY EXAMPLE CHARTS"--
at the links below ABC-D of GANN.
--READ THE CHECK LIST OF: The must know Basic's of GANN"
--Click here to SKIP to <Free Gann Menu & Free Master Courses >
TUNNEL TO THE TRUTH
QUICK AND EASY ABC-D of GANN
with "Basic Gann--must know--Check List"
copyright(c) 2006-7-8-9-2010 Price Time LLc
THE ABSOLUTE MINIMUM FACTS THAT EVERY TRADER, ACTIVE INVESTOR, OR INSTITUTIONAL MANAGER NEEDS TO KNOW ABOUT W.D. GANN'S METHODS:
(A) OVER his 50+ years as a major wall street speculator, and innovative developer of trading tools and methods, <W.D. Gann> discussed or out right invented "around" forty-one different THINGS TO DO in order to determine key support, resistance, and according to his own words: "places to watch for a change in trend." Unfortunately, since his death, in 1955, it is now clear that nearly all of those methods have failed the test of time.
However, there are a few, a very few, of HIS METHODS that actually show "exceptional" support and confirmation on some, or nearly all, historical real world Stock Market Index Charts...and many individual stock, commodity, and bond charts.
IF you already know "exactly" which of Mr. Gann's methods are supported, then good for you, and good luck. IF, on the other hand, you do not know exactly what works--most of the time or at least far more often than random--then that is one of the "things" we are here for.
(B) While all of Mr. Gann's work is open to on-going interpretation, subjectivity, and outright speculation, there are a few old hands that have spent the massive time necessary to dig deep into the bowels of Mr. Gann's dirty details and come up with his key methods; as well as, the logical and historical evidence to support them.
Needless to say, we are one of those "old hands," and our evidence is presented--nearly every week--in our many "real world" Gann charts, for all to see and confirm for themselves...or at least which can be confirmed or refuted by those traders capable of rational thought and logical reasoning.
(C) Just remember that the PRIME OBJECTIVE of any and all TECHNICAL or PATTERN ANALYSIS METHODS, including Mr. Gann's, IS: to locate "CLUSTERS" of support and resistance (S/R), and not ONE PLACE --or at least only a few places-- where a change in trend is MORE LIKELY THAN RANDOM.
That is to say, the PRIME OBJECTIVE is NOT to spot dozens to hundreds of "places" that will most likely be at-- OR NEAR-- any and all changes in a trend JUST BECAUSE of the shear number of "places" being identified": which is EXACTLY what is being hyped for many of Mr. Gann's FAILED METHODS .
(D) While it is clear that few people would take a college course that didn't included an instructor or professor of some kind, it appears as though many traders who fail to understand Mr. Gann's work are those willing to "go it alone."
Like most things in life that people say are "too complex," Mr. Gann's KEY METHODS (our words and not his) are easy to learn and apply IF you are at least reasonably intelligent and willing to spend the massive amount of time necessary to read and study every little detail of them...or you find the right professor to help you through it.
WHETHER you plan to "go it alone" or locate that professor...you are in the right place to start.
Editor of the Price-Time Review.
--PLEASE SCROLL ON DOWN--
THREE "KEY" and current (2006-7-8) EXAMPLES of PTR'S weekly GANN CHARTS are at the URL links below:
<KEY CHART #1: NASDAQ Proxy (QQQQ) Bear Rally?>
<KEY CHART #2: DOW, bullish Tunnel thru Air but to Where? >
<KEY CHART #3: SPX, "ahead of time" & above the key 1:1 angle up >
WHILE WE HAVE LOTS OF MOST CURRENT (2009-2010) GANN CHARTS, BUT THEY ARE FOR SUBSCRIBERS ONLY.
--PLEASE SCROLL ON DOWN--
:::::::::::::::::::::::::::::::::::::After long years of practical experience, I have discovered that Geometrical Angles measure accurately Space, Time, Volume and Price.
Mathematics is the only exact science, as I have said before. Every nation on the face of the earth agrees that 2 and 2 make 4, no matter what language it speaks. Yet all other sciences are not in accord as mathematical science. We find different men in different professions along scientific lines disagreeing on problems, but there can be no disagreement in mathematical calculation.
There are 360 degrees in a circle, no matter how large or how small the circle may be. Certain numbers of these degrees and angles are of vast importance and indicate when important tops and bottoms occur on stocks, as well as denote important Resistance Levels.
When once you have thoroughly mastered the Geometrical Angles, you will be able to solve any problem and determine the trend of any stock.
After 35 years of research, tests and practical applications, I have perfected and proved the most important angles to be used in determining the trend of the stock market. Therefore, concentrate on those angles until you thoroughly understand them. Study and experiment with each rule I give you, and you will make a success.
TAKEN, "WORD FOR WORD," FROM W.D. GANN'S <MASTER STOCK COURSE >, 3RD EDITION, 1954
--PLEASE SCROLL ON DOWN--
--BASIC GANN "MUST KNOW" CHECK LIST --
IF you are intelligent enough to LEARN from someone else's vast experience, mistakes, and accomplishments, THEN this check list will save you time, money, and most likely a lot of hair loss.
(1) W.D. GANN "invented" about 41 different "tools," or "methods," to trade with...MOST OF THEM "DO NOT WORK"!
(2) Mr. Gann's few "valid methods ," that do work, are "only" ONE of the NINE technical, economic, AND fundamental trading methods that do "INFLUENCE" stock prices, and, maybe, prices of commodities and currencies too...BUT only "MOST OF THE TIME" and "NOT ALWAYS"!
Therefore, NO TRADER should "EXPECT" that his methods ALONE, or even all of the EIGHT-NINE valid technical methods combined, will determine the trend --or the changes in that trend (CIT)-- BY ITSELF. "End of story"!
(3) There is NO GANN MAGIC BULLET or any GANN MAGIC FORMULA that will directly equate ANY STOCK METRIC --as in price and/or time-- DIRECTLY into any FUTURE SINGLE "POINT" that "WILL" forecast an "absolute turn" in a trend. "Another end of story"!
However, Mr. Gann's few "valid methods" WILL IDENTIFY "lines" of support and resistance (S/R) THAT CAN "THEN" BE used in conjunction with the S/R lines and points identified by OTHER TECHNICAL METHODS --like the Fibonacci , Cycles , Candle Patterns , and Elliott Wave Theory -- to LOCATE "CLUSTERS" of S/R where a CIT is "MORE LIKELY" to occur, or even FAR MORE LIKELY to occur, THAN RANDOM...when "roughly coinciding with the fundamentals and/or traders "sentiment."
(4) There is "absolutely NO DOUBT" that Mr. Gann constructed ALL of his charts to one of, or all of, five (5) CLEARLY DEFINED "CHART TIME SCALES" and THEN placed his ANGLES of 1:1, 1:2, 1:4, 1:8, 2:1, 4:1, or 8:1 on those charts...to YIELD "EFFECTIVE SCALES" of 1/8, 1/4, 1/2, 1.0, 2/1, 4/1, or 8/1 POINTS or PRICE PER DAY, WEEK, OR MONTH...and usually PER MONTH!
Therefore, in order to duplicate his trading methods for using the GEOMETRIC ANGLES and/or the GEOMETRIC SQUARES "then" a trader "ABSOLUTELY MUST" use one of those five CHART SCALES and the GANN ANGLES placed on them...or a direct derivative of them (using what is called a "frame.")
While this could be done "exactly like" Mr. Gann did, as in drawing and labeling the background grid BEFORE placing any open-high-low-close DATA on it, by hand in his case, there is no need to do that here in modern times.
The reason I say that is because it is now fairly easy to apply one of two methods to EITHER: 1) "Adjust" an existing chart on any given computer screen to FIT the correct GANN SCALE, "OR" 2) To construct an OVERLAY or BACKGROUND "over the top" of an existing chart so as to CORRECTLY FIT the Gann angles to it.
Needless to say, once the Gann Geometric Angles are "correctly" placed on, or drawn on, "any financial price verse time chart" THEN the Gann Geometric Squares can also be "correctly" drawn.
While a few trading and charting software programs give users the ability to either DRAW ON "or" ADJUST their charts to the CORRECT GANN CHART SCALE, if that is feature is not available then the chart can be easily exported to any cheap drawing program (using a screen capture program or the Print Screen Key), where those Gann Angles and Squares can then be easily drawn over the existing chart...of "whatever it is."
While Mr. Gann CLEARLY defined the five CHART SCALES for TIME that he used for his GEOMETRIC ANGLES AND SQUARES, he DID NOT tell anyone which chart scale to use for any given stock or commodity chart.
The reason for that is simple and logical: he didn't know which one to use UNTIL he visually determined which scale was ACTIVE --as in "important-- to the stock, index, or commodity being traded.
In addition, we also note from our own back testing, visual confirmation, and statistical analysis that there are many cases where these Gann Angles and Squares just plain DO NOT WORK. Needless to say, those are the charts to avoid when using Mr. Gann's methods.
While I can't give anyone any first hand and practical advise on which charts do work in the area of commodities or currencies, I can say that there is "virtually no doubt" that these Gann Angles and Squares do "INFLUENCE" the trends, and changes to them (a CIT), for "NEARLY ALL" the major U.S. stock indexes, and many, many, U.S. individual stocks...especially the big boyz in Dow, Spx, Ndx, and Cmpx.
(5) Mr. Gann's "infamous" SPIRAL CHART, which is now being called the SQUARE OF NINE(9), is "based on" a complete fallacy, and it is CLEARLY NOT the "basis of his whole trading thesis." Therefore, anyone who says so is either grossly mistaken, an outright liar, a complete idiot, or all of the above.
(6) The last, and MOST IMPORTANT "thing" about Mr. Gann's methods that I will share with you, FOR FREE, IS THIS: The ABSOLUTE BASIC and MINIMUM "KEY" to working his methods is to DRAW IN --or otherwise position-- THE KEY 1:1 angle OR "OTHER GANN ANGLES," on YOUR CHART when viewed in the PROPER TIME SCALE.
Please READ THAT PARAGRAPH as many times as needed until it "fully sinks in," as this is the KEY to learning and using what Mr. Gann himself described as: "The Basis of my Forecasting Methods."
After that, YOU CAN DETERMINE for yourself WHICH, if any, of the KEY 1:1 angles are active --as in one (something) per day, one (something) per week, or one (something) per month-- OR one per (period) "inside" a frame multiplier, (x), OR divisor (/)...like one point per month could be one hundred points PER month for a certain index, and one per day could be one/8th or one/2th...for or 1/8 or 1/2, per day, week, or month for a certain commodity or currency. OR, of course that "frame" could also be: one (x) 2, or one (x) 4, or even one (x) 100 per day, per week, or per month for stocks and/or stock indexes...yielding effective scales of 1, 2, 4, 8, 1/8, 1/4, 1/8 POINTS PER MONTH FOR INDIVIDUAL STOCKS or COMMODITIES and THOSE SCALES X 10/100/1000 POINTS PER MONTH for INDEXES.
Needless to say, IF that 1:1 angle (also 45 "degrees" IN THE CORRECT GANN CHART SCALE) IS NOT placed correctly THEN none of the angles --OR squares-- will be correct.
In that case, you are a heck of lot better off NOT USING Mr. Gann's methods then attempting to use something that is: GANN MADE EASY AND WRONG!
THIS IS the ABSOLUTE "BOTTOM LINE" for using Mr. Gann's METHODS, and anyone who speculates otherwise will "very likely" pay a dear price for their misguided assumptions ...or outright "denial."
After all, NO technical method is BASED ON any "exacting" LAW OF SCIENCE --or any Voodoo Magic-- and they only WORK because enough traders read about them, believe in them, and back them with real world money. And, SINCE true GANN TRADERS, especially those who actually know what their doing, are only a small portion of the world wide trading community, fortunately a lot of the big and smart money, then only a pure novice would "expect" otherwise.
Based on our own "extensive" back testing, AND real world trading, listed below are the GANN "KEY," or "VALID METHODS" that actually do work MOST OF THE TIME...or AT LEAST "far more often than random":
1) THE GANN ANGLES:
The Visual GEOMETRIC ANGLES are what Mr. Gann himself called: "The basis of my forecasting methods." (Ref: The Angle Course inside his Master Stock and/or Master Commodities Course ).
Once the KEY GANN ANGLES of 1:1 (1x1 or 45 degrees in the correct
Gann Scale) --as well as the 1:2, 1:4, 2:1 and 4:1 angles-- are "correctly placed" on any chart, THEN a trader can apply Mr. Gann's VISUAL GEOMETRIC "SQUARES" OF: Price, Time, and/or Price "to" Time.
Note that there MAY BE only one 1:1 angle that is "active," or "clearly most important," in a given stock or index --like the one placed on a one per month scaled chart-- BUT sometimes a trader may have to "apply" and "test" all the 1:1 angles to VISUALLY SEE which one -- "IF ANY"-- is ACTIVE or MOST IMPORTANT to that stock or particular index...like the 1:1 angles on the one "something" per day, or the one "something" per week, charts.
While Mr. Gann identified two different types of VISUAL-GEOMETRIC SQUARES, of price, time, OR price to time, he DID NOT "clearly" name them...so WE DID!.
AT PTR we separated the two types into:
(a) Mr. Gann's FIXED GEOMETRIC SQUARES--like the Square of 52 (clearly meant to be used for 52 points, of "something," over 52 weeks but which could also be 52 points, of "something," over 52 hours, days or months too). Or, his self identified MASTER SQUARE of 12 ...which was clearly meant to be for 12 points, of "something," over 12 months but which could also be 12 points over 12 hours, days, or weeks too...or 12 x (10), 12 x (100), or 12 x (something that HAS visually worked over long time periods) per month in the case of stock market indexes.
(b) Mr. Gann's VARIABLE GEOMETRIC SQUARES, which HE CALLED: a) the " Square of the Price Range to Time ," b) " Squaring Time with Bottom or Extreme Low Price ," and c) " Squaring Time with Top or Extreme High Price ."
These "squares" are, as you would expect, NOT FIXED, and are determined by the PRICE OR TIME "gained" --OR ""lost"-- by a "PRIOR" RALLY OR CORRECTION, for the "RANGE," OR by the square of the "absolute" price of a PRIOR TREND HIGH --or a PRIOR TREND LOW -- for the square of the HIGH or the square of the LOW (in "price only" TO future "price and time.") .
TAKE SPECIAL NOTE HERE that this RANGE "AWAYS" starts from a "serious" HIGH or LOW in a trend, and NEVER from any fixed or predetermined TIME of the day, week, month, or year ... END of STORY!
While this MAY SEEM "too complex," IT IS NOT. In reality, the FIXED SQUARES are "rarely active," and for the VARIABLE SQUARES we "usually" end up with only the SQUARE OF THE RANGE --of a PRIOR rally or correction-- AND only in ONE KEY GANN SCALE...more often than not the one HE IDENTIFIED as "most important": the MONTHLY SCALE of one "something" PER MONTH.
By the way, when I say ONE "something," per hour, per day, per week, or per month, that "something" is: price per share, like in $1.00 per share per time or price per volume. As in, $1.00 per barrel per time for crude oil, OR any other VALUE PER UNIT per TIME (h-d-w-m-y) that can CLEARLY DEMONSTRATE a real world "strong tendency" to "roughly follow" a LINEAR PRICE to TIME "progression"...at least MOST OF THE TIME!
ALSO take "SPECIAL NOTE" here that MANY, or actually most, stock or "other" INDEXES (indices or ETF's) require a FRAME of REFERENCE.
This FRAME of reference was something that Mr. Gann was "very vague" about, and somewhat "confused about" too in my opinion, but which is an absolute necessity as based on real world, and modern day, index charts.
The FRAME of REFERENCE is actually just a SIMPLE MATHEMATICAL DIVISOR, like /10, /40, /100, or other /?? value, OR a MULTIPLIER, like x10, x40, x100, or "x whatever," that will TRANSFER a real world index, like the U.S. S&P 500 index (SPX), "back into" the range where Mr. Gann's ANGLES, SQUARES, and CALCULATORS can be applied EASILY and more ACCURATELY.
Fortunately for us, someone at one of the major trading agencies (Dow Jones and/or Standard and Poors for example) has already identified and applied these fixed divisors for us...in MANY "but" NOT ALL cases.
For example, the U.S. S&P 500 INDEX ( SPX ), has its own PROXY (SPY) and already has a fixed divisor of "/10" (10:1) that "transfers" the current SPX index range, of 0-1500, back into the SPY range of 0-150...where Mr. Gann's angles and squares can be "more accurately" calculated and "tested."
Needless to say, the DIA proxy (/100) is to the DOW , and the QQQQ proxy (/40) to the Nasdaq 100, what the SPY proxy (/10) is to the S&P 500 index ( SPX ).
However, also note that many of the OTHER INDEXES --that are clearly outside of the 0-100 or 0-1000 range where Mr. Gann' s angles and squares "should be worked"-- do not have a DIVISORS (a frame) already "in place" for us.
For example, there is no proxy for the Amex Semi-Conductor index, SOX, or for the AMEX Internet Index (IIX). While a "frame" or "divisor" MAY be located by individual traders, IN GENERAL it is better to just stay away from applying Mr. Gann's methods to these indexes...and then just "assume" they will "roughly follow" along with their big brothers, like the Nasdaq 100 index (NDX), and/or the Nasdaq Composite index (CMPX).
2) Mr. Gann's SQUARE OF ODD AND EVEN NUMBERS "clearly have HAD," and still DO HAVE, a huge influence on many, but not all, stocks and indexes. However, while we show and explain this method on nearly all the charts we post to our <PTR Weekly Subscription Service> , we AVOID to explain this very powerful method here in the FREE GANN SECTION...for what should be obvious reasons.
(3) The 3rd GANN TOOL that we do apply to our charts, although we note here and now that we currently consider it to be "highly skeptical" and "not statistically verified" at this time --to say the least-- is what Mr. Gann "loosely" called the SPIRAL CHART , but which has somehow become known as his "infamous" SQUARE OF NINE .
This CALCULATOR, or "simple look up table," is COMPLETELY DIFFERENT than his Visual, Geometric, Squares and Angles, AND this method does use some simple mathematical "squaring" --AS in #^2-- and the finding of ROOTS --AS in Square Root #-- for a chart's PRICE VALUES.
These CHART PRICE VALUES for "calculating" FUTURE PLACES for support, and/or resistance (S/R), and a "possible" change in trend (CIT), are "projected" values based on current price --or index values-- taken at the major LOWS and/or HIGHS for an individual stock, an index, or, maybe, a commodity or currency.
While it is ABSOLUTELY CLEAR that the UNDERLYING BASIS, or thesis, for this method WAS to locate "future points" along a "POSSIBLE" trend that is following a " Parabolic Curve ," a Parabola, and not following a linear "straight line" --as most traders INCORRECTLY "assume"-- WE, at PTR, have "absolutely no doubt" that this underlying basis, or thesis, is a FALLACY .
That is to say, we are ABSOLUTELY CONVINCED that the LONG TERM trends for STOCKS, or stock indices especially, have a STRONG TENDENCY to follow an EXPONENTIAL GROWTH CURVE , and NOT, any Parabolic Curve OR linear, "straight," line.
AS for the intermediate and short term trends --as in hours, days, many weeks, many months, and even a few years-- we see where these do, many times or even most of the time, "roughly follow" a linear straight line...even when viewed in LINEAR (not semi-log ) SCALE.
While we can't ABSOLUTELY be sure that stocks TEND TO FOLLOW Newton's first LAW of MOTION, a body at rest TENDS to stay at rest and a body in motion TENDS to stay in motion AND move in a STRAIGHT LINE, it sure APPEARS TO DO JUST THAT for the NEAR TERM (many days to a few weeks), and the INTERMEDIATE TERM (many weeks to a few months) time periods. However, note that this does NOT appear to be the case for the LONG TERM trend (a few years to many decades).
This MATHEMATICAL CALCULATOR METHOD, be it called the Natural Squares Calculator, the Spiral Chart, or the Square of Nine (9), is explained in deep detail for this Free Gann Section , the Subscriber's Side Gann Introduction, and the Professional Pattern Trader's Ebook .
In addition, you can view the SIMPLE METHOD that we use to identify ONLY the "future" PRICE LINES of support and resistance (S/R) located by this GANN CALCULATOR METHOD.
(4) MR. Gann's PARABOLIC TREND and the SQUARE OF ODD and EVEN NUMBERS, "and/or" the FIBONACCI NUMBERS, are "clearly" the "MAJOR TECHNICAL INFLUENCE" on many U.S. stocks and stock indexes. NEEDLESS TO SAY, while we could, we will not cover this KEY SUBJECT here in the free section of our service.
(5) At the Price-time Review we make extensive use of the GANN SWING CHARTS, BUT we DO NOT use them to SWING TRADE as defined by Mr. Gann. His full method is defined <here> , and our use of the SWING CHARTS to filter out some short term "noise," AND to provide a background for placing our manual Elliott Wave counts on, to help confirm or refute those wave counts determined from other style charts, is illustrated <here> .
AS FOR THE "OTHER" GANN tools and methods that "WE" have LITTLE TO NO FAITH IN, the short list is as follows:
1) A few of the CYCLES that Mr. Gann identified by using the "completely erroneous concept" of "SQUARING A CIRCLE" --like 360/2 = 180 hours, days, weeks, months, or years, OR 360/3 =120 H-D-W-M-Y, or 360/4 = 90 H-D-W-M-Y, or 360/8 = 45 H-D-W-M-Y, and SO ON out to 360/180= 2 H-D-W-M-Y-- are ACTUALLY some of the MAJOR CYCLES that we have identified in the U.S. Stock Market by using advanced statistical software...like the Fast Fourier Transform, Digital Linear Filters, and Sine Regression Analysis.
However, we consider that to be only a pure coincidence and PLACE "very little value" on Mr. Gann's THEORITCIAL CYCLE WORk.
Never the less, I will say that for the SIX to SEVEN key U.S. Stock Cycles that we have identified --USING Visual Elliptical Fitting (tm), and Advanced Spectrum Analysis-- like the 2-Year, "technology," Cycle , just as one example-- we are happy knowing that if there are still some Gann Traders in the world giving value to his cycles then they would USUALLY be working: "more with us than against us"!
2) In OUR "educated opinion," AND based on our extensive back testing to confirm or refute this claim, "WE" CONSIDER anything based on the Pseudo Science of ASTROLOGY to be "nearly without merit."
I say "nearly without merit" here because this is another area where even methods based on totally erroneous concepts can have "some influence" AT THE MAJOR TURNS, "IF" they "just happen" to coincide with a real world CLUSTER of major technical support and/or resistance...OR coincide with some actual real world economic news and data.
Now, while there is no doubt that SOME COMMODITIES, like anything dealing with the growing of grains and food stuffs, are "somewhat" dependent on the four seasons of the year, and these four seasons CLEARLY do coincide with the 365 day (360 degree) ROTATION of Planet Earth, that in NO WAY implies that other FINANCIAL entities have any "strong correlation" to those same four seasons or any relationship to the earths rotation...and especially to any so-called "alignment" with other planets.
AS for that last part, and any horoscopes or other such non sense, I place right up there with the Easter Bunny and the Tooth Fairy...if you know what mean.
At the Price-Time review, we deal in reality and not Hocus Pocus, so anyone who places more than a casual amount of faith in those kinds of "illogical thinking" will not find us very pleasant to be around...to say the least!
NOTE this quote from the Wikipedia Encyclopedia: "The scientific community generally considers astrology to be a pseudo science or superstition as numerous Western astrologers have failed empirical tests in controlled studies." http://www.reference.com/search?q=astrology
For the Price-Time Review LLC
"Co-Editor and Realist"!
" Charts are records of past market movements. The future is but a repetition of the past. There is nothing new. As the Bible says 'The thing that hath been, it is that which shall be.' History repeats and with charts and rules we determine when and how it is going to repeat. Therefore, the first and most important point to learn is how to make charts correctly because if you make an error in the chart, you will make an error in applying the rules in your trading."
The Basis of My Forecasting Method
The Gann Angles Course...2nd edition (1934) W.D.Gann (1955)
"W.D. Gann and the Five Forces: After many years of professional trading, we have come to be firm believers that the Fibonacci ratios and retracements have the most influence of the Five Advanced Forces of Technical Trading (FAFTT's), but Mr. Gann's angles, a few reliable and truly periodic cycles, Elliott Wave, and Dow Theory are not far behind."
For The Price-Time Review
Founder and Co-Editor
TUNNEL TO THE TRUTH
The "BOTTOM LINE" and FAST TRACK on how to correctly apply Mr. Gann's Angles and Geometric Squares of "price, time, and price to time."
GANN "BASIC" AXIOM #1
(Of 2 listed here for free and of 10 total in Ebook)
FIRST OF ALL, and FOREMOST, students and traders must come to understand that Mr. Gann did NOT draw his charts on just any old paper bag or roll of toilet paper he happened to find lying round when he need it.
Like any and all statisticians, economist, accountants, engineers, and scientist he used either a pre-printed graphing paper --like those available from the 1890's to modern day-- or he drew the "blank" graph paper "grid" himself and then "plotted" the stock or commodity "data" on that "grid."
Of course, we DO NOT have to do either here in recent times because an exact replica of ANY "possible" graphing paper can be visually "drawn" on a computer screen, or printed on a modern PC based printer...end of story!
Look this first graphic over quickly, and then move on if this is old news to you, or JUMP to our Video (still working on this), or look up "graph paper" in an Internet Encyclopedia for more information. While our Video will be the better choice, it's not finished yet either.
>>RETURN FROM VIDEO or Internet Encyclopedia to HERE<<!
Once we have this blank graph paper, which would "typically" look like the one in the little graphic above, without any of my labels or text on it of course, we can THEN add our own tick lines, labels, and DATA to it.
This data can be added either as an electronic data file--like a daily close only or a open-high-low-close-volume file--or we could draw in each data point by hand...using a pencil on paper or a graphical drawing program running on the same screen as our "blank graph paper graphic."
Needless to say, I, and most other traders, have no time to be drawing the data points on graphing paper or a screen, and so we just "adjust" any common Yahoo chart, or one provided by E-Station or whoever, to the GANN SCALE the stock or index chart "APPEARS TO NEED, if any, in order to work with Mr. Gann's Angles and "Geometric" Squares.
However, before we can begin to add data to any blank graph paper, or a blank graph layout on a computer monitor screen, "WE" MUST DECIDE on the value that each line, both vertically and horizontally, represents EXACTLY. This is only logical since not knowing what the CHART SCALE is before applying data to it would be like trying to fit the preverbal "round peg into a square hole"...so to speak!
While this decision about what CHART SCALE to use for their chart data is one that every engineer, mathematician, economist, and others must decide BEFORE they apply "their" data, WE DON'T have to make that "total decision" ourselves. I say that because Mr. Gann "clearly" spelled out what FIVE SCALES HE USED for his charts, and it is ONE OF those FIVE scales that MUST BE followed in order to work his angles and squares correctly.
DID YOU GET THIS? It's a KEY!
THAT SCALE, or "SCALES," were clearly stated by Mr. Gann, and I make direct quote of him here: as "one point (or one something) per hour, per day, per week, per month or per year."
NOW, there is absolutely nothing earth shaking or uncommon about "his" SCALES, since each vertical line on the graph paper for a stock or commodity is nearly always SCALED to equal TIME, and each TIME "PERIOD" between each vertical line (or X), has to be "something" referring to a TIME PERIOD over which that real world data HAS BEEN, or will be, collected.
JUST stop and ask yourself "what are the most common" TIME PERIODS that most people would use for graphing data that is collected, or recorded, over "time."
Of course, the answers could be from micro-seconds to days to years, but the better answer would be "all of them or any of them AS NEEDED," and that is exactly what Mr. Gann defined...five TIME SCALES to be applied "as needed"...either only one of them or all of them (on separate graph sheets of course).
THAT IS TO SAY, since our STOCK DATA is collected on the basis for each "DAY," and then summed to get a total for each WEEK, then each MONTH, and then each YEAR, it would only be natural to DECIDE to use a CHART SCALE of one vertical space (one time span or period) that equals one day, one week, one month, OR even one year..."as needed."
NEEDLESS to say, for anyone who has ACTUALLY READ "all" of Mr. Gann's Master Courses, his angle Course, or practically anything else he wrote, you should recall that THOSE are the EXACT chart scales HE SPECIFIED and USED to construct ALL OF his charts. In addition, those are --without any doubt-- the same charts where he placed his "geometric" angles and squares.
THESE chart scales are NOT a coincidence, they are an absolute requirement and specification.
Based on what Mr. Gann clearly identified in his angle course, and what I have just stated in the prior paragraphs, here is the first and foremost BASIC AXIOM for working with Mr. Gann's "Geometric Angles and Squares":
GANN AXIOM #1:
All charts that use the Gann angles, and/or his "Geometric Squares," MUST have the "vertical lines," along the X or TIME AXIS, set to --OR "adjusted to"-- a SCALE OF one space of time (each X or time period between vertical lines) to be ONLY one hour, one day, one week, one month, or one year, and anything different is just plain WRONG!
NOTE THAT "nearly" all charting programs DO NOT SET their time scale to fit DAYS, WEEKS, MONTHS, or YEARS to "one something in price," or index value, and, therefore, WILL NOT have the correct GANN SCALE "as shown"! That ALSO INCLUDES any "so-called" GANN FANS or "semi adjustable" GANN FAN TOOLS. However, the correct position of the GANN ANGLES "can be" placed on any chart, eventhough, the scale will "almost never" WORK as displayed by the vendor or software.
NEEDLESS to say, if your chart is not drawn to one of these scales, OR if your software program is not constructing an electronic graph SCALE equal to one of those scales "clearly specified" by W.D. Gann for use with his angles and squares, your chart, and/or charting program, is TOTALLY WITHOUT MERIT for use with those angles and squares.
However, while most modern screen charts are not set to any of Mr. Gann chart scales "as delivered" from the Vendor, "you" can ALWAYS manually "adjust" the scale as shown to a correct Gann scale, OR "you" can manually draw in your own "correct Gann angles"...by placing them over the top of an the extisting chart as shown. Which is what we do "most of the time"!
Ok, that is the 1ST BASIC AXIOM for GANN'S METHODS, and unless you have this down pat then go back and read it again until you fully understand it.
There is absolutely no sense in using Mr. Gann's work without the angles and squares, and no sense in attempting to use them IF you don't fully understand what the correct Gann SCALE "has to be" in order to use them.
<GRAPHIC: By hand method to chart a GANN graph on graphing paper>
As a final few notes here, let me say that :
1) IF "U" say "no-way" to what I just stated above about Mr. Gann's chart scales, then I say go re-read, or at least read, the Gann Angle Course, and/or the Angle Course inside the Gann Master Courses, and then come back and tell me "no way"! WAY!
2) While I'll not go into it any more here, as it's covered in both the subscriber tutorials and the Gann section of the Pattern Trader's Ebook , Mr. Gann clearly specified the only possible CHART SCALES to be used with his work (more than one as in H-D-W-M-Y), BUT "HE DID NOT" tell anyone which one of those scales to actually use for any given stock or commodity being traded.
That is something that EVERY TRADER MUST decide, and learn, for themselves, eventhough, I'll now give you a "huge big tip" that I have learned from my MANY, MANY, years of working with-- and actually trading with-- the Gann angles and squares.
While scales of one "something" per hour, one "something" per day, or one "something" per week become "active" in stocks --or stock market indexes-- "once in awhile," by far the "most" common scale for stocks, proxies, and stock market indexes is for the key angles to be placed on a chart with a GANN SCALE of one point (or one something else) per month...which Mr. Gann called his "Master Square."
RECALL, one again, that those ONE SOMETHING PER PERIOD scaled charts may require a FRAME divisor or multiplier (as in /10, /8, x10 or x100), to yield actual scales of 1/8 per period or 100 per period for example, in order to work CORRECTLY with any individual stock, commodity, or stock market index. AND, also recall, that these angles MANY TIMES just plain do not have a SUBSTANTIAL INFLUENCE on a particular stock, commodity, or index.
In addition, in rare cases where we could use both or either the weekly and/or the monthly scale, we always go with the monthly scale...as Mr. Gann himself "clearly" stated, in both Master Courses, that: the "monthly chart was the most important."
3) Eventhough, all bar charts and candlestick charts have a "natural layout" where one bar or one candle equals one hour, one day, one week, or one month, the PRICE, and index values--now we are talking along the "Y" axis or space between each horizontal line on the chart paper or computer screen--are almost never shown correctly for use with the Gann angles and squares. SEE what I mean?
THAT IS to say, the "scale" or relationship between X and Y, as in price and time, is "almost" never set correctly as supplied by the popular free chart Web sites, like Yahoo or Stockcharts, and that is also true for nearly all pay for trading platforms and software...like IQcharts, TradeStation, OmniTrader, and MetaStock.
For example, if one X of time is one week, then each Y must be one(1) "something," like one "point" for indexes or one "dollar per share" for individual stocks (or 1/8 or 100 per period), so that we have a basic chart ratio, X to Y, of one X (x0, /0, or x?, or /?) to one Y, and not one X to 2, 3, 4--or anything else-- for "Y" other than one "something."
Note that while this is not "entirely true," since indexes many times require a FRAME (fixed numerical divisor or multiplier), it is what Mr. Gann assumed to be true and it would only confuse things if I were to illustrate the alternatives... hear and now !
Needless to say, if I haven't lost you by now, the only charts used by W.D. Gann for stocks or stock indexes were in the scale of one point, "or" one dollar per share, per one hour, per one day, per one week, or per one month.
While I do not trade them myself, Mr. Gann also identified one (1) percent (%) per week or month for interest rates, and one (1) dollar ($) per day, week, or month for most, well at least some, commodities.
Also, as explain later on, keep in mind that while the main scale--called the major ticks--were set to one of these one "something" per one period scales, Mr. Gann "sometimes" used the "minor ticks" in 1/8 of the major ticks, rather than the more common, 1/10 per period or "engineering scale," eventhough, either could have been constructed from pre-printed graphing paper at the time.
At the time Mr. Gann did "his thing" on Wall Street, in the early 1900's to early 1950's, you could buy pre-printed and "pre scaled" graphing paper that used 10 minor "ticks" per major "tick," the so-called linear decimal paper, but "I doubt" you could buy paper preset to 8 minor ticks per major tick, and that "may be" another reason why Mr. Gann drew some of his charts by hand... or even all of them for what I know.
While that last part is pure speculation and could be true, we "suspect" that he used 1/8 for the "minor ticks" because stocks were being traded in 1/8's of a point rather that 1/10 of a point, and, as I just said, that "may also be" why he had to himself construct some blank graph paper at times...most likley only in the very early part of the 20th century.
OH, if you, or I, or Mr. Gann even in the early 1900's, could buy graphing paper with a full sheet of 1/8" spaced horizontal and vertical lines with NO major or minor TIC LINES placed on it, what is now commonly called "sketching paper," THEN you, I, or Mr. Gann, could take a ruler and high light the lines where we want our major and/or minor TICs. This way, we would at least not have to draw out that whole maze of evenly spaced horizontal and vertical lines to form our background GRID. GET IT NOW...Trading-5?
By the way, as long as we are "speculating" about "why" Mr. Gann ended up with a "fair number" of hand drawn charts, there are a few rational reasons why he would not "always" use pre-printed graphing paper.
For example, he may have just wanted to view the long running trend of a stock or commodity in daily or weekly scale. While there is no doubt that long term trend charts could be more easily recorded on weekly or monthly scale graph paper, you would also not have the "finer detail" provided on the daily high-low-close charts.
IF that was your goal, or Mr. Gann,s goal --long term charts with a lot of daily records-- then your chart is going to get large, or huge, after just a few years, and we know that at least some of Mr. Gann's charts were constructed on 11"x17" artist paper.
Ok, enough of this "speculation" since it really doesn't matter why he did those few charts by hand anyway, since we can re-produce any required scale on any monitor with relative ease here in modern times...assuming you have our Ebook to show you how . HUM! Ok, lets get back to what we don't have to speculate about, or at least what we should not have to speculate about.
<Graphic: GANN SQUARE of 144 and "Master Chart">
By the way, that SQUARE of 144 was constructed as an "overlay," using tracing paper, and it could be placed over any of Mr. Gann's charts that WE CALL Mr. Gann's "FIXED SQUARES," as long as they were "correctly constructed" to 1/8 inch per day, week, or month for time, and 8 points per inch for price...which could then be labeled as each 1/8 point (or 1/8 something) per hour, day, week, or month..."as needed" for LOW PRICED commodities or LOW PRICED stocks.
AT PTR, we DO NOT use the concept of an OVERLAY, and that is WHY we can construct a valid Gann chart on top of "any existing chart"...and on any monitor or for any printer.
GANN BASIC AXIOM #2
Below, is a "key" FREE EXAMPLE of a MAJOR GANN CHART we recently posted to our Stock and Bond Market Analysis and Forecasting Service: The Price-Time Review
This is typical of the hundreds of professional Gann analysis charts we have made over the years. The PROOF that we promote the correct Gann Angle and Geometric Squaring method is in those hundreds of charts where price sticks to them like glue...and/or bounces from them at the major CITS.
In addition to the action of price to the angles we place, the main trend for the vast majority of those "hundreds of charts" had an eventual outcome, in line with the "character" predicted by Mr. Gann, at our Gann Angles...when viewed in retrospect from some time in the future.
That is to say, for example, if price run to the 1:1 angle, going up from below it, and then bounced hard off it, once or twice, and then drifted back away from below, it was then very likely to run back "down" and "test" the 1:2 angle coming up, from above it...per the correct Gann method we define.
While this "character," as in being considered bullish or bearish when based on a current chart position in relation to it's Gann angles, was only "'vaguely" described by Mr. Gann in his Master Courses, we do go over this in more detail for the Ebook.
GANN AXIOM #2
LIKE WE HAVE SAID A THOUSAND TIMES before, to those who do not see or refuse to "see," YOU CANNOT just "square the range" of a prior rally or decline to get the Gann Squares, or place the Gann Angles, UNLESS that range actually did "naturally square" its price with its time...in "ONLY" index points, or $/share, TO: one "something" per hour, per day, per week, per month, or per year. As should be expected: THAT is "exactly" what W.D. Gann DID SAY! Read KEY QUOTE below!
MAJOR GANN QUOTE and our key comments to it: posted 3/2007.
FOR a very "clear and simple example" of this common trouble point for many Gann students, you can LOOK at that Nasdaq 100 "Proxy" chart (QQQQ)...below . On it, the "range" of the big decline down, from 3/10/2000 down to 10/10/2002 was -100 "proxy points" (120 down to 20) over "exactly" 31 "months." That 31 month time period is also "about" 600 trading days, 930 calendar days, 130 weeks and 2.6 years.
Therefore, the price (index value in this case) DID NOT "square" its price range to its time of the range for ANY of those SCALES above (600 TD, 930 CD, 130 WKS, or 31 months). THAT MEANS "the range" IS NOT "square" with respect to it's own price of the range TO it's own time of the range.
THEREFORE, a Gann trader CANNOT just make a so-called "mirror imag" of that decline, or just flip over the angles made coming down, for the NEW GANN squares and angles that will be placed to "look back up into the future space for a change in trend."
WHILE this is CLEARLY THE WRONG WAY to place Mr. Gann's angles, and check for his squares, the VAST MAJORITY of all Gann made "something" books instruct their readers to use that INCORRECT "mirror image method." In addition, nearly every software program we have seen charts from, since we did not buy them "all" ourselves to waste money, also used this WRONG WAY to place the Gann Angles...or some totally bogus "NON-ADJUSTABLE" GANN FANS.
In addition, I have actually had one self proclaimed "Gann Guru's" call me, not just e-mail me, and "get hot" about how: "he doesn't have to measure anything because he can see where the angles go...most of the time." I also had a second "self proclaimed" blogger Guru write me a long and nasty e-mail proclaiming the "exact same" thesis. HUM?
Well, I immediately ASKed them, in a return e-mail in one case and via a telephone conversation in another case: "how do you SEE where the angle should be placed when a trend first starts out from a 'possible' CIT"?
From the guy on the phone I got dead silence, and then lots of mumbo jumbo and double speak followed. The second Guru, who emailed me, and who surly must be an colleague or fellow blogger of that first "person," since he essentially recanted the same old story again, hammered out the same bogus thesis, and SO I ASKed him in my e-mail reply:
Even IF you could "visually see" where "an ANGLE" goes on any given chart, HOW do "you" know which Gann angle it is? AND, since you can't know which angle it is by just looking at a chart without having an ABSOLUTE SCALE for reference, then I suspect you don't even know how to use Mr. Gann's 1:1 angle to determine "implied direction and strength of a trend." RIGHT?
The first want-a-bee blogger Guru hung up and has never called back, and the second one replied with an even nastier email that triggered a full page DIATRIBE from my wife, as I was in the hospital at the time. While we have never heard from "him" again, we see that he continues to spit out his bogus method on a popular Gann based blog. Go figure? Evidently W.C. Fields was wrong...in that you can fool most of the people most of the time!
While these two clowns are a worse case example, we also did a web search just the other day and found one "old Gann program," that had been updated to a Graphical Windows style screen from the old style text screens of the late 80's and early 90's, now being "hyped" and sold under a new "updated" name, that clearly uses that same old "squaring the range regardless method" to "incorrectly" locate its "somebody's" angles.
Additionally, we located another, but totally new, "TRADER" program that after checking the sample charts carefully we found that it's so far out to lunch that the developer, and/or programmer, had to be a complete moron when it comes to Gann.
Ok, so much for this mini rant, lets move right along here.
For the QQQQ chart below, IF the 2000 to 2002 decline "HAD taken" 100 months THEN the range in price, of -100 points LOST, "would have" squared to 100 months down...from the start of that range back at 120 and the all time high in 3/2000. THEN, and ONLY THEN, could have a Gann trader simply just "square the range" and use it to "correctly" place the Gann key angles looking back up.
GET IT NOW? HUM! I think "ya all" are "fun-in me"...as "we ons" say in the South...south of somewhere anyway!
Ok, lets take it from the top.
The "ONLY" CORRECT Gann square for this NDX proxy, QQQQ, which is the same as NDX but does not need a "frame" (divisor) to be valid for a Gann Analysis, is shown by our graphic below. NOTE THAT, our squares are the same as what Mr. Gann described and pictured in his ANGLE COURSE.
THAT IS TO SAY, our new example Gann square--for this theoretical case of QQQQ -100 points over 100 months only--would have "squared" price with time BECAUSE that -100 points lost in the range of the prior decline (3/2000 down to 10/2002) "would now be" equal to a +100 months OUT from the TIME of that "same top"...where the prior range began in 3/2000.
THIS square is what "we call" the "BEAR SQUARE," a name that WE have bestowed upon it since Mr. Gann did not clearly identify it with a name, is called this because "IT SEEMS LIKE," for now only, that the majority of major down trends--corrections or bear markets--END within the "time span," and/or "price span," of this square. I say "seems like" here because this is still one area that we feel needs more statistical analysis to confirm or refute.
Remember, that in his Angle Course, Mr. Gann said: "when time runs out expect a change in trend." Needless to say, IF QQQQ has not already turned down toward that lower right hand corner of the Bear Square, which we highly doubt, at 20 again in 2008, THEN we should "expect," but are not guaranteed, that this proxy, and all of the NASDAQ based indexes (like IIX and SOX) by direct association to it, will "most likley" make a change in trend...from up to down or down to up.
FOR QQQQ, we "think" the trend CIT will be from up, as it has been since the major low in 10/2002, to down, but we can only "observe and react" to the actual re-action that DOES OCCUR on, or near, 7/2008 (+100 months or 8y+4m "out" from 3/2000).
By the way, just keep in mind here --once again-- that while the Gann angles are a serious technical line of support-resistance when it comes to "influencing" the CIT's of stocks and stock indices, they are still only ONE OF the five major technical forces acting on those stock and indices --in addition to the economic fundamentals-- at any given time, and they, by themselves, provide no "guarentee" to FORCE a CIT anywhere.
While I can't go into it here in any detail, also NOTE that the Gann Square that we call the "Bull Square," and what Mr. Gann "vaguely" called the "square of the range," is the same "size" as the 100x100 "Bear Square," EXCEPT that we place it to start at the LOW OF THE RANGE, and with the 1:1 angle--and the "diagonal of the square"--looking back up. In this real world case of the Nasdaq 100 Trust (QQQQ), that low was made on 10/9/2002.
IN addition, and finally, Mr. Gann did "separately identify" the "square of the of the high"--where he meant a HIGH price TO ZERO...which we label as SQ.-HIGH. In this case, for QQQQ, that means there "could be" a Gann Square of 120 points (the high in 2000) by 120 months, days, weeks, or years, "placed at the high in 2000.
While we do not show this "square" in our work, or at least not very often, we do keep mental track of it, and we will place it on the analysis chart IF it looks like the square itself, or one of its angles, become important.
In general, this square is only valid "DURING" the decline down from a high to form the "range"...at a "major" long term low. After the "range" has been determined, it is unlikely that this square, or its angles, will be relevant again UNLESS the new up trend fails and the chart price trend comes back down to take out that prior, "and major," low for the range.
That is to say, even after a clear up turn in trend we still can't just forget about this SQ-HIGH entirely, since any "retest" and "failure" of the prior major low in price--from the all time high--brings this square, AND it's angles, back onto our radar screen...so to speak.
By the way, and needless to say, for the QQQQ's that would mean that SHOULD the index break back down and take out the 10/2002 low at 20, AS WE EXPECT IT WILL sometime well into future, THEN a key "target' for a CIT back up would become 120 months, or 10 years, from the 3/2000 HIGH...or "about" 3/2010. SEE "IT" now?
BOY, I can almost hear the lights clicking on!
In the same fold as the "square of the high (to zero), Mr. Gann also identified the "square of the low," which we label SQ.-LOW. Which is to say, the "price low to zero." In this example of QQQQ, which made a low for the range of that decline at "about" 20, this is a "square of" 20x20 where we have 20 points "by" 20 days, weeks, months, or years...and usually months!
Needless to say, this 20x20 "square" would start at the major low and "look back up" into what Mr. Gann called "space," and which is, of course, just the chart "area" where FUTURE chart data will appear...eventually!
However, note that for this square, which is "seldom" of any value, or "active," that 20x20 square starting at the low of the range, at 20 on 10/10/2002 for QQQQ, and looking "up" into the "empty space" of the future (from 10/2002 forward to "whenever")...essentially places it "inside" the BULL SQUARE. As many students and traders may recall, Mr. Gann referred to that empty space of the future as just "space," and the SQ-LOW inside the BULL-SQ. as the "square within the square."
While the term "square within the square" (SWS) was used by Mr. Gann to identify the SQ.-LOW, he also, unfortunately, used the same term to define an "area" of high support or resistance that lies "near" the center of all his "Geometric Squares." This SWS, and Mr. Gann's "pivot point"--the so-called Center of Gravity (COG), are identified and fully detailed in our Pattern Trader's Ebook.
OK, let me repeat that again too, as there seems to be some major "mystery" about Mr. Gann's use of the word "space." After studying this stuff for who knows how long, to long, I'm nearly certain that all Mr. Gann meant by "space" was the "OPEN SPACE" on a graph or chart where one of his squares extended from an "existing" low, or a high, and "looked out into" the "blank" chart area where future data would be recorded.
AS A FINAL NOTE HERE LET ME SAY, that the key to "fully understanding" Mr. Gann's angles--not that you have to "understand it" to use it--is that HE STARTED with a chart GRID and a SCALE, on paper for him but which can just as easily be on a monitor for us, AND THEN he applied the chart data (open-high-low-close) to CORRECTLY FIT that grid.
Therefore, it is false, and nearly insane, to "EXPECT" or "ASSUME" that many different software programs that all "fit" their charts to FILL the "form," the background, or the screen--that each software designer selects on their own and which almost never is the same as someone else's--can all be setting the correct GRID at the same time...AND the GRID and SCALE that Mr. Gann started out with. WRONG!
Like I said, the logic of that kind of "assumption" is not only clearly false, but in my opinion borders on incompetence and stupidly; eventhough, there are many, many, true believers, that will never see this "faulty reasoning" for what it is.
GET IT NOW? NO! KLUNK! Sorry--but the FREE Game is Over! To continue please put a quarter in the slot, and since we don't have a slot then try $34 for the E-book , or $19/month for the best stock and bond market forecast on Planet Earth.
Editor and Co-Founder
The Price-Time Review (tm)
HEY YOU! YES "U"! If that Gann chart didn't "cause you to pause," then try out this one, at the URL below, where the DOW is now "Tunneling Thru Air" to where?
<10/2006: DOW blows out 4-year cycle and breaks into a new bull square?>
IF "U" are a mutual fund trader, the manager of a fund, a professional financial writer, or any other professional person who can spot world class trading information and analysis when you see it, then our highly acclaimed Stock and Bond Market Analysis and Forecasting service should be right up your alley...so to speak. Like "they" say, whoever "they" are: the most valuable commodity is information, and to which we will add, "that key information is our business."
NEED more "real world" PROOF? Ok, try this next SPX chart! SAVE IT to your disk and follow it in the future, THEN we will discuss it again next year and see what the few nay-sayers left have to "say."
<SPX Gann Analysis: 12/23/06 post with running updates.>
On the other hand, IF you are a DO IT YOURSELF type trader just out looking for some top notch Gann information to educate yourself with, THEN you just passed up one of the most powerful Gann charts you will ever encounter...that QQQQ chart. Yes indeed! IF you did actually, "pass it up," without hearing the ground shake-shake-shake or the alarm bells ring-ring-ring then you do have at least a "fair" ways to go in that education.
While there are three different charts on that graphic, all three are of the same Nasdaq 100 Trust (QQQQ), all illustrate the use of a 40:1 "frame" (divisor) for this trust to the NDX, IIX, SOX, and CMPX proxy, and all three convey the exact same information from our Gann Analysis to the educated observer. Of course, the one on the left does have a little more detail on it.
IF you are now, or if you were at one time, or if you seriously want to be a competent Gann trader in the future, OR IF you at least currently posses the knowledge to become one, then everything about that left hand chart--except for the Elliott Wave count labels--should be "crystal clear" to you, and it should be silently telling you everything those key Gann methods have to say about it.
IF it is, then good for you, and I firmly suggest you not waste any more time "re-reading" Mr. Gann's books, trading courses, or "letters." Just be damn sure you're NOT finding "squares" by dividing the range by eight...as that fallacy has become the amateurs biggest "Gann Trap."
On the other hand, if any, even a small, even a tiny, or even an infinitesimal, aspect of that chart is NOT "crystal clear" to you, AND/OR you could not reproduce it for any other stock or index upon request, then I firmly suggest you either: 1) jump for the fast track into Gann by purchasing and reading our on-line E-BOOK , which cuts through many, many, many, many, torturous hours of hair pulling and foul language to get right at the heart of Gann's methods, or 2) go down the free but difficult route by reading, re-reading, or attempting to read, all of HIS original material.
If you choose the latter route, then a great deal of that "original material," like his Master Stock Course (500+pages), and Master Commodities Course (400+pages), can be downloaded from our site for free, by making a simple "email form request"...from a menu selection below.
If you decide to go this "hard" but free way, then WHEN you come back to get the E-book, as many seem to do, then just be sure to remember that you were forewarned. I know, I've been way down that road and done that myself.
By the way, if you think that the 4Q chart posted above is helpful for your trading or education, then you haven't seen anything until you see the "FULL" and updated Gann analysis chart for the S&P 500 index (SPX)...showing it's "Date with Destiny."
GANN INTRODUCTION AND LIBRARY
|HUGE NOTE: AS of
12/15/2006, we are just now transferring "many"
of our "subscriber side" GANN library and information
selections to this free section.
Since a lot of links have to be chased down and re-entered, this will take awhile. As we make the transition, those items below that are identified in BLACK TEXT "are" already accessible to visitors, as well as subscribers, while the items still identified with "dark gray" text are only available to subscribers until the transfer is completed. Also note that a few selections are now, and will remain, reserved for subscribers only... see **
--PLEASE SCROLL DOWN- and select a menu "#" to view!
Note**: Parts of our Subscriber's Side Gann Introduction deals with the "root" basis of his methods, and they are part of the highly informative "details" we have published our Ebook to clarify. Therefore, any line item on our FREE GANN MENU , above, that is marked with a ** means that this section is only accessible to subscribers, eventhough, we still hotly contend that the best route to learning Gann is thru our Ebook .
Click here >TO GOTO THE Price-Time Review Home page<
Checkout out some of the these examples, links below, from our
Market Analysis and Forecasting Service.
<Short Term Analysis example: SPX candle charts for 12/8/06>
<Intermediate Term Analysis example: DOW's Gann chart for 10/1/2006>
<Long Term Analysis example from PTR's 2006 RoadMap--posted 1/25/06>
<Weekly Summary for week ending 12/8/06 w/ projections for 12/11-12/15>
To CHECKOUT our world class trading model, the MSAR, that can put anyone's trading capital on something "close to" an "auto-pilot" to obtain 20%-40% annually compound growth rates (CAGR) , "without leverage", just click the next link and follow the yellow brick road:
<PTR's MSAR aggressive trading model> for long and short ONLY trading in the Nasdaq's NDx trust (QQQQ) only, via a single buy-long or sell-short signal from the Nasdaq Composite index (CMPX).
For The Price-Time Review
All original content is copyright (c) 2003-7 PriceTime LLC
--PLEASE SCROLL DOWN--
Main INTRODUCTION TO THE MYSTERIOUS WORLD OF W.D. GANN, AND THE PRICETIME REVIEW'S TECHNIQUES, METHODS, AND THEORIES FOR APPLYING HIS WORK TO MODERN DAY INVESTING AND TRADING.
PTR's MAIN GANN INTRODUCTION
W.D. Gann...Tunnel to the Truth?
STOP-HALT-ALTO-ARRET! Everyone PLEASE go back and "re-read," and then "re-read" it again, that last sentence of the last paragraph in the yellow quote box above. THIS IS the absolute KEY to using Mr. Gann's main trading methods...angles and squares!THIS quotation, above, is one I "borrowed" from an article that appeared in a major magazine a few years ago, and as far as I'm concerned it's typical of the confusion, non-confusion, mystique, supported, and unsupported speculation that surrounds what W.D.Gann did, and didn't, say. For those not familiar with who W.D. Gann was, or how his methods and theories became so well known in the trading and investing communities, this "Trader's World Article" , by grandson, gives a good historical over view of the man and his work.
If you have managed to "survive" all of, or at least the majority of, his trading material, like I have, and still haven't pulled out all your hair in the process, then consider yourself lucky, or at least persistent, since I'm quite certain there are far more adventurers that have fallen by the wayside in comparison to those who have survived the "full" GANN journey.
While I would like nothing better then to stay clear of any personal interpretation of his work, the only why that can be done is to either simply not use it, or "re-invent it" under my own interpretation while continuing to refer to it as a product of Mr. Gann.
That is, of course, the path many have taken and I shall not seek to join their lot. Never the less, since I do want to use at least a few of his methods, and yet have no desire to reinvent his wheel, I will just put forth my own interpretation of a limited foundation of "his work," that I feel can be supported by Gann's own words, charts, overlays, and/or the look up tables he called "calculators."
To that end, I will supply that support when referring to those few methods that "I think" are "somewhat" clear, and appear to have both an actual correlation to market prices and some wide spread support throughout the trading community.
To ourselves, at PTR, it is very clear that W.D. Gann spent a lot of time talking about what price levels and time periods "are important to watch for a change in trend," but spent little or no time talking about the specific levels that they "will be." In our opinion, the reason for that should be fairly obvious...as he didn't know what they would be! That, of course, only makes him human, since know one else, of this earth anyway, "knows" what they will be either.
Unfortunately, W.D. Gann did "neutered" the misbelief that he could do the impossible, even when his "technical" writing demonstrates otherwise. Perhaps, it is best to mentally separate W.D. Gann the Technical Analyst from W.D.Gann the clairvoyant and prophet, to the extent that is possible.
For anyone who seriously studies his work, and keeps and an open mind about what Mr. Gann is "actually" saying in his investment newsletters, books, and study courses, then I would expect the majority to "most probably" end up with the same conclusion I have.
Before I "totally retired," in 2001, I ask five of my colleagues, all engineers and very familiar with working on technical subjects, if they would read Mr. Gann's Angle Course, and some parts of his Master Stock Course , and give me their impression of its merit. The conclusion of this group, as best I can recall it, was unanimous in it's "generalized opinion" that W.D.Gann's grasp of mathematics was "naive," and his underlying concepts "appeared" to be erogenous.
Now, while getting the same "general" opinion from four engineers (one didn't respond) is somewhat unusual, it is by no means a scientific analysis of the subject. I suspect that the writings of W.D. Gann are somewhat like those of many other authors who put forth opinions that are not easily verifiable, and since I have now found myself in that same position, more than a few times, I can easily relate with W.D. Gann the writer.
After spending over eleven-hundred dollars to purchase, and many, many, hours reading his study courses, market letters, and books, I'm still not sure if W.D. Gann actually believed he had discovered some wonderful new "scientific method," to predict the path of stocks and commodities, or he was only trying to convey that: his "methods" were to find the "swing trends" and the points for support and resistance...which he called "places to watch for a change in trend."
Need less to say, there is a immense difference between the two. In my opinion, if he was trying to convey the latter, and it just came out confusing and unclear, then I agree with him and applaud his is keen insight into the markets, if not his poor communications skills.
On the other hand, if he truly meant to articulate his work as a "scientific method" base on some hypothetical Master Mathematical Formula, or the absolute myth that stock prices follow some pre ordained and a linear progression that can be broadly applied across all--or most-- financial instruments universally, then there is absolutely no doubt in my mind that the man was either a con artist, a fool, or both.
Now, I know those are very harsh words, but I want to make sure our position here is clear, and not confusing, ambiguous, and misleading. We hope that no one will ever have to say that we didn't really mean what we actually said because we were just being cleaver by writing in some kind of cryptic code that only a few "gifted" Gann fanatics can understand...for those who know exactly what I mean!
What we will do is make it crystal clear that we use only those few Gann methods that he wasn't vague and confusing about, and for which we have good to strong evidence to support, and for which we know from our own experience do work in actual trading..."some or most of the time." After all, what "should" new traders be looking for, a few methods that do work "most of the time" or many dozens of "theories" that swing from the rational to the ridiculous?
As you may recall, Nostradamus "supposedly" wrote in metaphoric verse to avoid the "heretic" hunters of the sixteenth century, but what would be W.D. Gann's reason for doing that in the twentieth century, especially when he was being paid for his investment opinions?
In addition, if he truly had any secrete formulas, or "master calculators," that he was trying to protect, then why not just keep quite about it rather then lay down a big line of baloney to cover his trail after going out of his way to write a book designed to inform the public to their very existence.
To me, this just plain doesn't wash, and all those lame attempts to rationalize this reason don't wash either. Therefore, in my opinion, any arguments along those lines are merely an example of supporting one fallacy with another...the so-called "Straw Man argument"!
Our bottom line opinion on W.D. Gann is that he was indeed a "savvy" market trader, who was guided by the rare natural gift of intuition, experience, hard work, and gambler's spirit. The author of the following magazine article, in the 1909 edition of the Ticker and Investment Digest (which later became the Wall Street Journal ), arrived at essentially the same conclusion a century earlier when he said: "Endowed as he is with such qualities, we have no hesitation in predicting that, within a comparatively few years, William D. Gann will receive recognition as one of Wall Street's leading operators." In a lot more ways then one, W.D.Gann was a true "operator."
Therefore, at PTR, we choose to believe that W.D. was an honest man, who believed in what he was "preaching" to the public, and never really intended for his work to be taken so "uncompromisingly." Some proponents have even suggested that Gann was a true mystic and one of those rare individuals who actually do posses a heightened sense of intuition, or maybe even a real touch of ESP. This latter premises is pure conjecture; eventhough, it would explain W.D. Gann's personal success, or reported success, when many of his theories "seem to be" very misguided when exposed to the light of proof.
There are a few publishing houses, and Websites, who are making a good deal of money, and maybe even a lot of money, selling W.D.Gann material, and some of it was my money. As for myself, if the material I purchased was actually developed by Mr. Gann, and the material was being sold by the legal copyright holders to it, then I have no regrets about the $1,100+ I spent...because I knew the highly speculative nature of the material and I still decided to purchase it.
After reading and working with the materials I purchased, some of which is now being boot legged across the Internet for a lot less than I paid for it, I found the majority of the it to be interesting and informative. But, never the less, I have little doubt that a good deal of it, and most likely the majority of it, is pure fantasy, conjecture, and wishful thinking.
In addition, eventhough the Gann methods are only a secondary, confirming, type indicator for us, number 2 out of 4 total, I can say in all honesty that they have "definitely helped" make us money over the last few years.
For the time being, I have no intentions of exposing, attempting to expose, or even accusing, any Gann "alternative" or "derivative" theories of falsely advertising their "invention" as being "based" on his work, which I could easily do. However, I will warn everyone that the "most likely" reason that some of those "odd-ball" W.D. Gann's theories do work, "some of the time," in the real world of trading, has a lot more to do with their being the self fulfilling prophecy from his widely read writings and theories, rather than the theories themselves.
So, unless someone else's "simplified and easier" adaptations of Gann's original work becomes popular enough to overshadow Gann's underlying basis for those "adaptations," then it's highly unlikely that they will achieve better then a "mean" success when scrutinized by a true statistical analysis. That is to say, an objective analysis including the total "estimates" and the number of times that price and/or time "failed" to follow their projections, rather then just quoting the few times they "got it right."
Again, using that other master of confusion and paradoxical verse as an example, Nostradamus, it's easy to see that this vague esoteric style of writing would most certainly increased the chances of a prediction being achieved, or at least yielding that general perception.
Since Mr. Gann's and Nostradamus' metaphorical writings both seek to highlight general relationships and conflicts, rather then specific details...where people, or possibly nations, are described as animals, and major figures are referred to by their attributes, it's easy to see where they are wide open to speculation.
For example, in many of Nostradamus' quatrains he refers to "beasts ferocious with hunger," "the great one," and "a cage of iron," all of which are general terms with metaphorical elements. This does lend itself well to a subjective interpretation, and when the exact meaning is unclear, it's easy for "believers" to plug in their own experiences to reach some sort of association to reality.
The black and white unequivocal proof that Michel de Nostredame was a gifted mystic, a charlatan, or just a misguided businessman looking for a way to make a fast buck will never be known for sure, and the same can be said of W.D. Gann.
In the end, each trader will always be faced with making their own judgment on this issue. As for myself, I choose to believe the neither Nostradamus nor W.D. Gann were true mystics or charlatans, and from that you can "infer" what I do believe.
While it's knowing the first of and the last of all the DIRTY DETAILS that separates amateurs from the professionals, and the Internet has advanced the availability of Gann information, everyone has to proceed with caution since that same Internet has also made it easier for those who "have it wrong" to teach many others: "how to do it wrong."
Fortunately, the same Internet has also made it easier for those who do it right to reach out and prove "the right way" to those who are objective enough to understand that proof when they see it for themselves. OUR PROOF IS IN OUR many subscriber side and FREE GANN CHARTS, which are posted for all to see and "judge,"...if that person understands the proof they are viewing.
Before I go further into which of W.D. Gann's methods we employ at the Price-Time Review, let me say one more thing that should just about summarize our philosophy for dealing with his work. It is our "opinion," that the reason no one has published a "detailed review" of Mr. Gann's Master Mathematical Formula, is because it is "extremely unlikely" that one exist. If there was, then why would he bother with all the other "methods" he worked on until he died, in 1955.
In addition to that, another piece of logic that makes little to no sense is: if he had this "secrete" to the financial markets, as some third party book's advertise, then why would he still be making a living by writing market letters and giving trading course...well into his seventies.
No, I don't think so, and therefore, we choose to use only the few methods that do appear to have some merit based on his keen observations rather then his naive approach to basic mathematics. There can be little doubt that W.D.Gann tried to reduce a complex world of "gray" into a simple world of black and white, and to transpose a vast array of complex growth sequences and exponential curves into simple straight lines and weak parabolic curves that always followed his simple price to time rules.
He was not the first to do so, nor will he be the last. However, in the end, financial analysis is a highly complex "gray" world involving a wide composite of different cycles, patterns, waves, exponential growth, fundamentals, and outright random chaos.
That is not to say that these patterns don't follow Mr. Gann's "theoretical" sloping straight lines some of the time , because they do. As a matter of fact, the short term and intermediate term trends are many times close to forming a sloping straight, linear, line , as, more often then not, a stock's price will "consolidate" in an area and then "thrust" itself upward (or downward) in a "series" of short, straight, lines lasting from a few days to a many months in time.
However, the longer a price trend "evolves" the stronger the tendency is for it to revert back to the underlying financial value of the stock, which is based on the "compounding" of retained earnings and exponential growth curve formed by it.
Therefore, the overall pattern is most likely to look like a string of sloping straight lines connected between corrections to form an exponential growth curve...when viewed on the long term "linear" scale chart.
In addition, as we pointed out on our Website, many exponential growth curves also "look like" second degree polynomial curve, also called a parabolic curve or parabola, as formed from the simple quadratic equation of price squared "mathematically"--as in P^2--during much of, or most of, the trend...except for the final "asymptotic" thrust.
AT the PriceTime Review, we strongly oppose the idea of any "fixed square," circular calculator, or mathematical equation that will "supposedly" directly convert "TIME" into "PRICE," or price into degrees of a circle and then into time...period and end of story.
We also reject the erogenous interpretation, that some proponents have put forth, that W.D. Gann's underlying assumption was that stocks move in straight lines, defined only by linear mathematical functions. What W.D. Gann actually said was that stocks tend to follow the 1x1 "moving average angle," and the word "average" leaves open the possibility of anything from a narrow channel about the "average" to virtually no channel or boundary at all.
Even when the ANGLES ARE DRAWN IN RELATION TO THE SCALE ON HIS CHARTS, he did not say or mean that a stock's price will follow this sloping "straight line." What he vaguely said, and MOST LIKLEY meant, was that this angle is many times the dividing line between an up-trend and down-trend, and it's very often the key support or resistance "line," if viewed on the correct SCALE.
Also, something he failed to be explicit about, but which is very obvious when you actually work with these angles, is that more then one of HIS SCALES may have to be considered at any one time to judge which one is currently the most important to the trend being analyzed.
Since W.D. Gann clearly stated the scales he used for his charts, then I see no reason for any confusion about this area of his work, yet some proponents have managed to change his simple method into a highly complex process with extremely little or even no evidence to support their rogue thesis.
SO does that mean we think all of Gann's methods are without merit. No, not at all! We have seen plenty, no not just plenty but massive numbers of chart pattern that turn on the Gann angles, and the one eighth divisions of his squares.
While we highly "suspect" this has a lot more do with Gann's rule of 1/8ths being close to the Fibonacci retracements, and the large number of traders using his methods, then any "Natural Law," we don't want to set aside any technical analysis method if it truly appears to have some merit based on actual performance, and wide support in the trading community, as some of Gann's methods do.
Therefore, and in conclusion, it would be very rare that we would place a trade without checking the current trend against the Gann angles and the rule of 1/8ths. In addition, we nearly always either draw or just calculate the "squares" for most of our trades.
So, there are the main W.D. Gann's methods that we use and believe in because we have been able to confirm them, to our own satisfaction, that they do work in actual trading.
BY the way, as explained in detail latter on, when we say "the Rule of Eight's, like in 1/8's, that method ONLY identifies the "horizontal lines" of price support and/or resistance, based on the advance or decline from a "prior" RANGE, and DOES NOT "define," in ANY WAY, the GANN ANGLES.
Be sure to remember this KEY POINT, as there are many novice traders being taught the wrong way for positioning the angles, and an error there will usually, or at least many times, wipe out all accuracy for trading his ANGLES AND SQUARES.
F OR those who want to believe in the so-called Square of Nine, also being called the "Natural Squares Calculator, or attempt to tie his methods into some form of astrological "calculator," then there are plenty of services to accommodate you, and they're a lot of materials and study courses to educate yourself with.
However, we will stick to what W.D. Gann was clear about, what we understand, and what we know works "most of time," when based on our own observations and trading. After that, we'll leave all the rest for others to speculate on.
The Gann trading methods we use at PTR1) The Gann Swing Charts: While our trading style is actually closer to "trend" or "position" trading than "swing" trading, we do use the Swing Chart, and swing method, except that we trade the weekly charts and get our "confirmation" from the combination of the following: 1) A daily and/or weekly modified version of the "parabolic SAR technical indicator," and 2) an "acceptable" Elliott Wave count--and measurements--on either the Swing Chart or P&F chart, in combination with an acceptable Ewave count from our own analysis or the software we employ.
are as follows:
That is to say, we DO NOT directly trade from the Gann Swing charts, we only use them to apply Elliott Wave counts to AND to verify a signal from our MSAR trading model.
2) The "so-called" Rule of Eighths for dividing PRIOR historic "campaigns," for an advancing "rally" or a declining "correction," into eight "horizontal lines" that Mr. Gann "contented" were areas of support or resistance (S/R)...that were "places to watch for a change in trend." By that definition we take that quote to mean...places more likley for a reversal than random.
These 1/8 divisions of the prior rally, or correction, are in "absolute price" and on LINEAR SCALE charts ONLY...as Mr. Gann NEVER worked in semi-log scale; eventhough, Fibonacci and Elliott Wave Theories DO require that scale for the LONG TERM TRENDS.
Thee "lines" of S/R can be identified as fractions, such as: 1/8, 1/4, 3/8, 1/2, 5/8, 3/4, 7/8, or 8/8=1 of the PRIOR TREND, OR they can be identified in percentage terms, such as: 12.5%, 25%, 37.5%, 50%, 62.5%, 75%, 87.5%, or 100%...of the PRIOR TREND. In addition, while Mr. Gann never used the word "retracement," these S/R lines based on the "Rule of 8ths" are essentially the same, or very nearly the same, as many of the so-called "Fibonacci Retracements."
FOR most experienced traders, you will NOTICE right away that these 1/8 divisions of the PRIOR trend is, for all practical purposes, the same as a RETRACEMENT in Elliott Wave-Fibonacci theory. That is to say, one reason that the Fibonacci (FIBO) Retracements--"of a prior wave or trend"--are our NUMBER ONE "trend reversal forecasting tool," is because the key FIBO levels of 38.2%, 50%, and 61.8% are "nearly" one and the same with Mr. Gann's 3/8, 1/2, and 5/8 horizontal lines placed on the same "prior trend"...but called: 'the Rule of 8's or 1/8ths"
Needless to say, in the "area of" those mid trend lines, of 3/8 and 38.2%, 1/2 or 50%, and 5/8 or 61.8%, we have a lot of Gann Traders and Elliott-Fibonacci traders all on the "same page at the same time," and as a result the "probability" of a CIT "in those areas" increase dramatically.
By the way, the "reason" that ONLY those three lines near the mid trend, of a correction or rally...3/8-1/2-5/8, are so strong is that 38.2% and 61.8% were the ONLY "retracement" levels identified by R.N. Elliott and C.J. Collins in their original works on Elliott Wave and Fibonacci RATIO THEORY, and the so-called 23.6% and 76.4% retracement levels were "concocted" within the last 20-30 years. OF course, in reality it doesn't matter if those "Fibonacci ratios" are valid or not...since W.D. Gann clearly DID identify 25%, as 1/4 or 2/8's, and 75% as 3/4 or 6/8's.
That is to say, there is absolutely NO 50% retracement in Elliott Wave or Fibonacci Theory, so it's only Gann traders who "should" help force the turns off of 1/8, 1/4, 1/2, 3/4, and 7/8. HOWEVER, since Robert Preachter did "mentioned" retracement lines at 23% and 78% during his "re-write" of R.N. Elliott's major works, those levels NOW "seem" to have a "fairly solid" following by Elliott-Fibonacci traders as well. Therefore, these seem to be only slightly less reliable than the big boyz at 38.2%-3/8, 1/2-50%, and 5/8-61.8%. As for who actually "identified" this stock market "characteristic," Gann or Elliott, I'll leave that to others to speculate about.
In the final summary for this Gann, and/or Elliott-Fibonacci method, we can say that we do have "a lot faith" in the "horizontal price lines" (or index values) that this method identifies...for the major CITs or decision points.
However, let me also restate that "dividing the range by eight and using those line segments to construct the Gann Angles and/or Geometric Squares is a complete fallacy"! THAT IS UNLESS: that "prior range" just so happened to be "square with it's time"....and the vast majority are not! This "critical detail" seem to be one of the major areas of "mass confusion and error" for those "attempting to learn" Mr. Gann's key methods from self proclaimed "Gurus"...who themselves are" clearly confused."
While some say that Mr. Gann used this rule to divide TIME up into 1/8 segments in the same way he did PRICE, the actual truth is that he NEVER identified any RULE OF EIGHTS...period, and I defy anyone to show me where he did.
What he did do, was divided the "MAJOR TICKS" for PRICE , or index values, "on his charts GRID" by eight to find "prices" in 1/8th points--or 1/8 dollars per share. In addition, he also used a so-called "Square of the Circle," where he then divided the circle by 3, 4, 8, 16, 32, 64 and 128ths, to get "degrees of the trend," which are MY WORDS and not his. Unfortunately, Mr. Gann did not actually use those exact words and he should have...as it would have saved me a lot of wasted time during my Gann education.
Anyway, if you become a subscriber to our service you will get hit with enough of this, and other Gann methods, on a slow but continuous basis so as to become
well versed in the theory yourself. Of course, the more you read and work with these methods the faster that education will progress.
ONCE AGAIN, at PTR we "divide" the RANGE of a prior advance or decline to get the HORIZONTAL lines of support and/or resistance (S/R) for PRICE, BUT WE DO NOT in any way attempt to construct our Gann Angles from these "lines."
Note that the set by step procedure for constructing the Gann Angles is laid out in our menu selection #4: Gann Scale, Angles, and "Frames of Reference."
3) The use of Gann's "Anniversary Dates," and a VERY few of his maze of periodic cycles. However, in general, we consider the vast majority of Mr. Gann's cycle work to be "mostly without merit," and his Master Time to be "highly unrealistic." Needless to say, our Cyclical and Spectrum Analysis has identified cycles that have far exceeded Mr. Gann's in predictability and reliability. As a matter of fact, we are nearly 99% certain that the actual MASTER CYCLE is---for subscribers only--AND NOT Mr. Gann's 20 year cycle.
4) The Gann Angles are, in our opinion, the first or second most important of his methods...depending on who you think identified the "retracements and division by 8s"?
This method, or theory, is based on the widely confirmed OBSERVATION that many, many stocks have shown at least some "good" to "strong" tendency for price to reverse off of one or more of Mr. Gann Angles...WHEN--AND ONLY WHEN--these angle are "Correctly Constructed" on charts draw on non-standard 1/8" x 1/8" graphing paper...OR "correctly projected" on to a computer monitor.
While Mr. Gann "placed" angles down to as small as 1/128 of the circle, 1/12th of the 45 degree "diagonal' of his square and 1/24 of the whole 90 degree angle of that square, we, AT PTR, only place what WE CALL the "KEY GANN ANGLES," which are the 1:1, 2:1 and 1:2 "angles" WHEN labeled by rise to run or a "ratio"...rather than in "degrees."
The reason we don't like "degrees," is that "typically" that "label," or "unit," is best suited for use with circles and triangles, rather than "actions" of price inside a "square" or frame of reference. Of course, in much the same way that RADIANS, which represent length or distance on the perimeter of circle or arc and can always be converted into "angular degrees," we can use what ever label is understood by the trading community...if clearly identified on a graphic.
For us, the 1:1 and 1x1 labels, for the big boy diagonal angle of the square and 45 degrees on charts drawn to the "correct scale," are more suited to identify the angle of a two dimensional "trend" within a square than "degrees of circle"...and we just plain like 1:1 better than 1x1.
THE KEY GANN ANGLES ARE: one of the major angles of: 1) The 1:1 angle, which is also referred to as the 1x1, the 45 degree angle, or "rise = run angle," or 2) the 2:1 angle, also referred to as the 2x1, the 63.4 degree angle, or the rise 2x the run angle, or 3) the 1:2 angle...which is also referred to as the 1x2, or 26.5 degree angle, or rise = 1/2 the run angle.
Once again, at PTR, we use the ratios of the slopes (rise to run), of 1:1, 1:2, 2:1, 4:1, or 1:4 to identify the KEY GANN ANGLES on our charts.
These angles are applied according to Gann's rules within the "actual" frames of reference," if any, and his four to five "most common" CHART SCALES, which W.D. Gann "clearly" did identify and which we have spelled out "very clearly" in our E-Book and weekly Gann Analysis.
5) The Squares of Price, Time, and Price to Time: While W.D. Gann's actual procedure for this method seems to be widely misunderstood, we really can't see why that is the case because to us it appears to be one of the few methods he wasn't vague about.
While Mr. Gann never actually came out and said so, he actually describes two major types of "Squares," which WE LABEL as "FIXED" and "VARIABLE," eventhough, like I just said, Mr. Gann did not actually call them anything or than "squares."
Since we cover this in deep deal for the "Squares Introduction," I don't want to get to involved here, eventhough, I will cover the very basic idea behind both as follows:
1) the FIXED squares are just that, in that they have fixed AND predetermined values for price, or index value, and time. For example, his square of 28 at the top of this page is a FIXED SQUARE (SQ.) of 28 "points vertically" by 28 days, weeks, or months horizontally (28x28), and so is his SQ.-52, meaning 52 points in 52 weeks or one point per week for a year.
More examples of his fixed squares are: his SQ.of 90 means 90 points in 90 calendar days for a quarter (13 weeks), or one point per calendar day. His MASTER SQUARE of 12, which is a odd ball "fixed square," represents
twelve "one point per month" for 12 month "squares" added into a string or cluster of 12 squares...which ends up as a "huge square" of 144 x 144 at a scale of one point per day for 12 years.
While I'll not get into it here, that SQUARE of 144 is "one of " the charts Mr. Gann referred to as his Master Square; eventhough, the term he should have used for it was: "Master Overlay," since it was constructed and designed to be an "overlay," as in tracing," to be placed over any of his FIXED GEOMETRIC SQUARES.
2) What we call Mr. Gann's VARIABLE squares are those which he somewhat described as the SQUARE OF THE RANGE, eventhough, in that section of the MASTER STOCK COURSE he also describes the squares of the high and the low in the same terms. AT PTR we call the "square" of the high and low the "square of the high" and the "square of the low," how original, but we call the square of the range the BULL SQUARE "AND" the BEAR SQUARE, which are always the same "size,"...where that "size" in price and time depends on the points "gained or lost" in the PRIOR rally up or correction down.
The difference between a BULL SQUARE and a BEAR SQUARE is that one starts where the RANGE STARTS, and the other starts where the RANGE ENDS, which is illustrated by this next little example chart.
ANYWAY, since the detail description of FIXED and VARIABLE squares are covered elsewhere in the Gann Introduction, with graphics, that short description and the one chart should hold you over for now.
As I said above, the "Gann Squares" are placed on the same chart as the Gann Angles, after the correct scale and frame of reference, if any, have been determined. We try to show all time frames on the same chart unless there is a reason not to, but the vast majority of all stocks, indexes, and proxies usually come down to just one "frame," or chart scale anyway...which is "usually" the one point per month scale.
While we usually make the key frame "look square," a process we call "adjusting to the correct view," and the others, if any, will only be represented by their 1:1 angles. In a rare case, the square of different scales may be shown on the same chart, but if they are then those not to scale will "look like" a oblong rectangle, eventhough, they will be "square" with their own time period...which is the KEY to Gann's methods.
That is to say, if a "index" trend first starts out with a strong move then we might need to "put on" the 1:1 angle for the one point per day frame as well as 1:1 and 2:1 angles for the one point per week or one point per month scales. If "things" get too cluttered, we will have to divided up the frames onto different graphics.
An exact explanation of the Gann Angles and Squares, with detailed how to graphics, are the main backbone for our Professional Pattern Traders Ebook.
(6) What is being called Gann's " Square of Nine ," is actually Mr. Gann's "SPIRAL CHART." While we are still highly skeptical about this method actually being formulated by W.D. Gann, it does seem to fit well with his life long gradual transition from straight line thinking into working with geometric curves.
Many times a wave pattern follows a rough series of short straight line "thrust" that end up be connected into a larger and more complex pattern that is itself either a "twisted" straight line, the exponential growth curve it "should be," or even an INCORRECT parabolic curve falsely based on the squares of roots of price and incremental, even, "steps" in time.
While Mr. Gann never clearly explained the concept of this "SPIRAL CHART," and he never allude to it's characteristic trait of mathematically squaring odd numbers on the ever increase apex of a spiral curve, it is very clear that some "de facto" assumptions have been made by the trading community, and also some rules have been established based on those assumptions, or so it seems.
As best as I can tell, there are essentially three major conflicting interpretation for using this Gann Calculator. While I don't want to get into this in any large detail here, since it is well covered in other parts of this introduction (see SQ-9 on the "Gann Introduction" menu), I will "touch" on it lightly.
While we are "nearly certain" that the underlying basis of this "SPIRAL CHART," also being referred to as the "Square of 9," or the Natural Squares Calculator" is BASED ON THE FALSE ASSUMPTION that stock trends will eventually regress into PARABOLIC CURVES, we also see that it is "close" enough to the "real" exponential growth curves that it is useful in our trading.
For a clear and clean explanation as to this fallacy, please follow the next link....below.
<GANN's PARABOLIC curves verses EXPONENTIAL GROWTH>
As for the method itself, one of the more popular methods for using what we will now refer to as "the Square of Nine," is what we call "the full angle conversion method." This method essentially uses a formula to convert first price and then time (from a prior high or low) into degree of a circle and then postulate some rules based on whether these two "angle" values coincide, are opposite, or conjugate (at right angles to each other). At PTR, we do not subscribe to this method, but we do "track" the angles because at some critical points of support and resistance, its hard telling just how much difference a few traders using this method can make.
The other two methods essentially come down to what is commonly called the Fixed (or static) Square of Nine, or the Dynamic Square of Nine. Since Mr. Gann never made any reference to a Dynamic Square of Nine, we fail to see how that concept can be supported. However, if a so-called Dynamic Square is made to correspond to Gann's original fixed square, then we have no objections to that. process as far as price is concerned, but time is a different matter.
While we have tried just about every method to calculate time, we have ended up developing our own method, which is not based on any roots or angles of price, but rather on identifying the actual observed price "steps" in time, per revolution within the spiral, and then "projecting" those "steps" into the future.
As it turns out, our method of applying the price targets to his key ANGLES works out "exceptionally well" on price lines, and either better or equal to the other methods on time. As I said, this is covered in detail in the section for the Square of Nine, which can be selected at the Gann Introduction menu...above.
These six trading methods identified by W.D. Gann, which are NOT the Five Forces of Technical Trading, are the subject for the rest of this general introduction to our application of his work. The next section can be accessed at the link below, or from the Gann "introduction" menu.
For the PriceTime Review
Copyright (C) September 1, 2003
TO CONTINUE, CLICK HERE >GANN FREE INTRO PAGE 1< TO FOLLOW THE COMPLETE INTRODUCTION.
OR, CHICK HERE >EBOOK < TO GO TO OUR Pattern Trader's Ebook introduction and AD.
OR, YOU MAY RETURN TO THE NON-SUBSCRIBERS HOME PAGE BY CLICKING HERE >HOME<.
COPYRIGHT (c) 7/27/03
B Bonfoey "CO-EDITOR"
4) DISCLAIMER :
PriceTime Review is designed to help readers obtain a trading education and discuss ways to trade the markets using technical and pattern analysis in the decision making process. There are no warranties implied. The fundamental concept is that you should NOT rely solely upon the information or opinions you read at the PriceTime.net web site. Rather, you should use what you read here as a starting point for doing your own independent research on all trading methods and theories. Then judge for yourself the merits of the material provided by the PriceTime Review.
No comment or discussion should be construed to mean that we are recommending any particular metrology, theory, or trading system. We recommend that you research all trading systems, methods and market strategies thoroughly then carefully consider which, if any, is appropriate for you in light of your experience, objectives, financial resources and other circumstances. This web site and its information is provided for guidance and information purposes only. This web site, it's content and it's product offered is not intended to provide investment, tax, or legal advice. The information contained herein has been compiled from sources deemed reliable and it is accurate to the best of our knowledge and belief; however, PriceTime Review and PriceTime LLC does not make any guarantee as to its accuracy, completeness or validity and we cannot be held liable for any errors or omissions.
Changes are periodically made to this web site and they may be made at any time. All information contained herein should be independently verified and confirmed. Neither PriceTime.net nor PriceTime LLC will accept any liability for any loss or damage whatsoever caused in reliance upon such information.
Reader agrees to indemnify and hold harmless PriceTime.net, PriceTime LLC, and it's employees and associates from and against any damages, costs and expenses, including any legal fees, potentially resulting from the application of any of the information provided by PriceTime LLC from the PriceTime.net web site.
This disclaimer applies to any damages or injury caused by any failure of performance, error, omission, interruption, deletion, defect, delay in operation or transmission, computer virus, communication line failure, theft or destruction or unauthorized access to, or use of record, whether for breach of contract, tort, negligence, or under any other cause of action.
PriceTime.net and PriceTime LLC makes no guarantee that you will make money using our comments or methods. The Reader agrees to assume all risk resulting from the application of any of the information provided by PriceTime.net, PriceTime LLC, it's employees, and it's associate employees. By using this web site, including any applets, software and content contained therein, the visitor agrees that the use of this web site and it's information product is entirely at his/her own risk.
PriceTime Review ™ is the trademark of PRICETIME LLC, and cannot be used without written permission.
1) NOTE ABOUT OUR USE OF COLORED TEXT ON GANN POSTINGS
THE TEXT THAT IDENTIFIES DATA, INFORMATION, OR OPINION THAT IS PART OF AN ORGINAL POSTING, OR IS A "MATERIAL" REVISION TO A PRIOR POSTING, FOR THIS CURRENT ADDITION OF THE REVIEW, WILL "USUALLY" BE SHOWN IN RED.
BLACK TEXT IS USED FOR PERMANENT HEADINGS, TITLES, AND INFORMATION BLOCKS WHICH ARE INTENDED TO REMAIN WITH THE SECTION POSTINGS EITHER INDEFINITELY, OR AT LEASE FOR A FAIRLY EXTENDED LENGTH OF TIME.
BLUE TEXT IS "USUALLY" RESERVED FOR PREVIOUSLY POSTED INFORMATION OR OPINIONS FROM PRIOR UPDATES THAT HAVE BEEN COPIED OVER TO THIS POSTING EITHER: 1) JUST AS THEY APPEARED IN A PRIOR POST, OR 2) AS THEY PREVIOUSLY APPEARED BUT WITH A FEW MODIFICATIONS, ADDITIONS, OR DELETIONS THAT PTR DOES NOT CONSIDER MATERIAL, LIKE CORRECTIONS FOR GRAMMAR OR SPELLING. FOR EXAMPLE, THE LONG TERM OPINION WILL USUALLY NOT CHANGE FOR MANY MONTHS, OR EVEN YEARS, AND, THEREFORE, IT WOULD APPEAR IN RED IN THE ORGINAL POSTING, AND THEN BE CHANGED TO BLUE IN EVERY POSTING THEREAFTER UNTIL SOMETHING DID REQUIRE A "MATERIAL" CHANGE. THEN, AFTER "ABOUT" TWO WEEKS (ON AVERAGE) THOSE CHANGES WOULD BE CONSIDERED PERMANENT, AND THE TEXT WOULD THEN BE TURN BACK TO ALL BLUE, IF NOTHING HAD BEEN MODIFIED OR DELETED, OR CHANGED TO BLACK WITH SOME RED, TO SHOW PERMANENT STATUS WITH MODIFICATIONS, ADDITIONS, OR DELETIONS THAT PTR CONSIDERS MATERIAL.
All original content is copyright (c) 2003-6 PriceTime LLC
FULL SCREEN END PAGE