My Theory on Gann--The Man and the Method

[tech/a]

I think Gann was quite possibly one of the first if not the first Technical Analyst.
it was back in around 1900.
No computers no ticker tape. All of his charts would have had to have been hand drawn.
No testing software no massive data bases and no modern mathematics.
remember there are no planes in the sky and the sophistication of man in the markets was way behind what it is now.

He was a forward thinker who recognised tops and bottoms and turned to the most sophisticated tools he had knowledge of.

GEOMETERY.

I'm certain he was intrigued with highs and lows and I'm sure he saw the same rhythm in charts we all see after you've looked at 10,000 or so of them.

He applied his geometry using the Square rectangle and Circle to find commonalities in those highs and lows. Now he wouldn't have had 2000 charts to keep up dated possibly 50 or so as that would be all he could have recorded physically.

He found common "Points of interest" in his charts but also found that one "rule" couldn't be applied across the board--chart to chart.
So he found more ways of explaining How and when the next high or low would appear.
Applying Fans,boxes,angles,cycles,grids,lines,Ellipses,Circles and astrology.

Every time a theory wouldn't fit with his analysis he would find something that would explain (in hind site) why the high OR low occurred at that point.

Nothing was common enough for him to design a trading method.
Simply Gann never had one. I believe he died still looking.

His money was made (and indeed that's in dispute) from swing trading.

In 1900 when Gann presented his amazing technical skills it would have been seen as incredible. There was and never will be anything like it. Because that was the best and pretty well only form of technical analysis seen.

So complex was it that to the common trader it seemed like a language from the gods.
So accurate because there it was shown on a chart---and if you work back then you can see clearly how it was calculated. No one really knew what they were looking at. All they knew was the explaination was remarkable and even if there was another explaination for the next one (high or low) it didnt matter--because there it is!

If you look at Old style analysis like Edwards and Magee which was first published in 48 we see patterns appearing Wedges/Pennants/Triangles/Flags amazing formations which explain EVERYTHING---dont they?

But along comes the computer and Millions (quite possibly) who take up the Technical challenge,advancing to Mathematical application of OSCILLATORS,these truly are the Modern day manifestation of mathematical genius applied to the markets----arent they?

But now Gann can be analysed by 1000s
It can be checked and traded by many.
Understood for what it really is.

In my view an uncompleted work,a continuing and fruitless search for the ability to force upon the market a set of rules that it would abide by.
So we the trader can take advantage of it.

He never found it.
No one has and I'm afraid no one will.

But analysis will evolve.
Today we have VSA and Neural networks and tommorow something else will be developed by some genius with a theory that when applied gives an edge---even if only in his mind.

Enjoy the journey

 

[motorway]

Re: My Theory on Gann--The Man and the Method.

The term "ticker tape" came from the sound made by the machine as it printed, and tape simply refers to the machines using a paper tape printout as a rolling display of stock prices.[1] In 1867, Edward A. Calahan of the American Telegraph Company invented the first stock telegraph printing

TA is a dead end
FA is a dead end

There is only what there has always been

Accumulation
Distribution

& the

manipulation
involved to achieve either

In between
are mark up
and mark down


Much that is useful
is not original

Much that is original is not useful




motorway

 

[soso]

Re: My Theory on Gann--The Man and the Method.

TA is a dead end
FA is a dead end

And what do you say to those that consistently pull money out of the market using either of these?

 

[motorway]

Re: My Theory on Gann--The Man and the Method.

And what do you say to those that consistently pull money out of the market using either of these?

Nothing

A dead end does not mean you don't get close to where you want to go

A dead end might take you far of not...

To the extent your TA & FA gets you on the right side of ACC & DIS

To that extent you will succeed

But they are still dead ends
some much more dead than others

And some are probably dead set losing ways


prices go up down or sideways

They do that until they have moved enough

Then they go
up down and sideways

When they move

They move so far ----PRICE
involving so many trades---- VOLUME
& Take so long-------TIME ( as duration )


These are the waves of buying and selling

That reveal ACC DIS makeup & markdown

These waves have a starting Point and a Finish point

When one finishes the next one starts

They get stronger
They get weaker

They Diminish. They expand

They attract followings

The green below


Wave -oscillate -- vacillate ---- WINK

The market is always winking
at you or to you

motorway

 

[It's Snake Pliskin]

But analysis will evolve.
Enjoy the journey

Yes the journey is a fun thing to take. One's understanding of analysis evolves which may lead to new methods.

 

[luke256]

From my studies of Gann, he did have trading methods. Gann's book 'The New Stock Trend Dectector' provides a method of trading off a weekly bar chart and the Gann courses provide swing trading systems. From what i can see he used to vary the trading system to suit what he was trading.

The problem with new traders (my self included when i begin learning about the markets) is they want to use the exotic techniques like square of nine and be able to pick the yearly top or bottom of the market on their first trades.

As for the previous post, that TA dead, how do you determine if the market is in accum. or dist? If you look at a chart or use price/volume calculations that is TA in my opinion.

 

[motorway]

So much TA is Just hindsight (look at indicators.. they LOOK BACK )
So is much FA

Words can mean what ever we want
So depends on how you define things

An important distinction
in TA if you like for me
is between

Technical POSITION and TREND

Motorway

 

[luke256]

How would you determine the position (accum. or dist.) or trend (up or down) of the market without technical analysis or fundamental analysis?

To buy or sell I think a trader would need to use a TA signal or FA information. Otherwise they are just guessing. TA and FA can not be labeled as dead ends when they provide a means for consistant entry and exit signals.

I agree that they are calculated off infomation that looks backwards. Although many times what is happening before a large move in the market can signal the upcoming move. For example ASX stock gapped up recently: the swing charts (TA) prepared using Gann's rules where making higher tops and bottoms before the large surge upwards.

 

[motorway]

How would you determine the position (accum. or dist.) or trend (up or down) of the market without technical analysis or fundamental analysis?

Well it gets back to what we mean by TA and FA

If you mean this from my post above

prices go up down or sideways

They do that until they have moved enough

Then they go
up down and sideways

When they move

They move so far ----PRICE
involving so many trades---- VOLUME
& Take so long-------TIME ( as duration )


These are the waves of buying and selling

That reveal ACC DIS makeup & markdown

These waves have a starting Point and a Finish point

When one finishes the next one starts

They get stronger
They get weaker

They Diminish. They expand

They attract followings

Then yes .


Gann is interesting
He was on the right track with geometrical angles and what he says about them in "THE BASIS OF MY FORECASTING METHOD"

But I believe his application was wrong...

Wyckoff made clear distinction between TREND ( effect ) and POSITION
( cause )

There are Two Significant moderns who put heavy emphasis on "POSTION"

One of which is

Richard Olsen

Passive herding:
how traders get locked into the same position
A characteristic trader behaviour is that traders tend to hold on to losing
positions but to take profits early with winning positions. Whenever
price trends occur, traders on the right side of the trend closeout their positions,
whereas the traders with the losing positions stick to their positions.

As the trend progresses, the ratio of trend followers and counter-trend
traders tends to become ever more one sided, and eventually 70 to 80
percent of the open positions are counter-trend.

This is passive herding;
the traders opened their positions for different reasons, some of them were
following technical indicators, others followed some fundamental signal,
but they now have something in common – they sit on losing positions
with an unrealized loss and the likelihood of a margin call, if the trend continues.

Whenever positions of traders are very much one-sided with only long or
short positions, the likelihood of a small price spike triggering a cascade
of closeouts increases. This is typically the case when the price has reached
a new extreme. In this situation, traders need to be careful and ready
themselves for a likely avalanche due to cascading margin calls.
The herding behaviour is even stronger when the market has been trending
strongly and then rapidly changes its direction. Many traders will then
have the false expectation that the trend will just continue.

They go on opening
positions in the direction of the previous trend oblivious to the fact that the sign of the trend has changed. They are reluctant to realize losses
and thus there is strong passive herding. This is particularly dangerous;
a minor event would be sufficient to trigger a particularly violent cascade
of margin calls affecting all the traders who have been herding. The price
will then shoot off in the new direction starting a particularly strong new trend.

His how to trade is worthwhile ( though you must adjust a bit for Stocks )
and very Wyckoff

Download here and note his comments in the discussion

http://www.olsenblog.com/2010/07/think-about-press-how-to-trade/

Motorway

 

[luke256]

That makes sense, thanks for replying motorway. The Olsenblog link was interesting reading.

Regarding Gann has anyone been successfull with his other techniques.

I find that the double bottoms and double tops that occur at 50% retracement levels are strong trades.

At present i only use the sq 9 to back up other calculations. Does anyone use square of nine solely as a system to give buy and sell signals?

Overall i still find the basic swing trading (adjusted to the stock or contract)easiest and most consistant for making money from Gann's methods.