| W.D. Gann is one of the most famous traders of all | | | | be no market - as we would all know the price in |
| time, and has a huge devoted following - however | | | | advance! |
| the fact is, Gann never made the huge profits many | | | | Gann's theory is subjective - and he really had no |
| of his disciples claim. | | | | way of predicting the future with accuracy. It's all |
| He did not have a success rate of 90%, as is often | | | | subjective analysis and this is NOT a predictive |
| claimed - the logic his methods are based upon are | | | | theory. |
| unsound, and his predictive methods don't predict - | | | | Gann's Logic |
| they leave everything to subjective opinion! | | | | The basis of Gann's theory is the principle that price |
| Let's examine his theories of investment in more | | | | and time must balance. |
| detail and see. | | | | His methods are based on the squaring of price with |
| Let's look at some common myths about how great | | | | time - this occurs when a unit of price equals a unit |
| a trader Gann actually was: | | | | of time. |
| Many sources quote Gann's trading profits at $50 | | | | Gann for example would take a prominent high in the |
| million dollars, however this is not true. | | | | market, convert that dollar unit into a specified period |
| An interview that Alexander Elder had with his son | | | | of time and project it forward. When that time is |
| tells the truth. | | | | reached, price and time are squared - and a market |
| Firstly, his son confirmed that when his father died in | | | | turn is due. |
| the 1950s his estate was valued at just $100,000 - | | | | What? - How can one unit of price equal one unit of |
| and that included his house. | | | | time? If you think about and answer this question for |
| Secondly, his son confirmed that Gann was unable to | | | | yourself, you will see how absurd the connection is. |
| make enough money from trading, and therefore | | | | This isn't the only inconsistency used in his analysis - |
| supplemented his income by writing and selling | | | | we also have the legendary Fibonacci numbers which |
| courses. | | | | are supposed to work with stunning accuracy - but |
| W.D. Gann's Predictions | | | | they don't, and neither do all sorts of astrology and |
| Many sources quote he had a success rate in all his | | | | geometry, that appeals to the far out investment |
| trades of over 90% - again not true. We can easily | | | | crowd. |
| deduce this from the value of his estate. | | | | As we have seen, Gann was a trader who had |
| If he could make money trading and had a 90% | | | | modest success, and claimed to have discovered a |
| success rate, he would have made hundreds of | | | | predictive theory - which predicts nothing with |
| millions in his trading career - and he clearly did not - | | | | accuracy. |
| that's why he had to sell books and courses. | | | | Finally, we have so many subjective indicators |
| The only evidence of a 90% success rate came | | | | cobbled together, that the theory can prove anything |
| from a small number of trades - and was not | | | | in hindsight, but if you want a tool to trade the |
| representative of them all. | | | | markets look elsewhere. |
| Gann's Methods are Predictive | | | | For those of you still not convinced - I recently saw |
| Gann came to the conclusion that all natural | | | | on the Internet, Gann's trading methods selling for |
| phenomena are cyclical - including financial markets. | | | | under $1,000! |
| This is true, but this is an obvious statement - we all | | | | Sounds like a bargain to get trades with 90% |
| know we're going to die but when exactly? | | | | accuracy - I wonder how many serious money |
| A predictive theory is not a predictive theory if it | | | | managers have it on their bookshelf. |
| can't predict. | | | | Enough said. |
| If Gann's theory really is predictive, then there would | | | | |