Legendary trader W. D. Gann amassed a fortune of $50 million dollars in the first half of the last century, although he died in 1955, his commodity trading systems are still utilized today by traders all over the world. Gann's commodity trading systems were successful because said systems take the emotion out of trading and liquidate losses quickly as well as spot and hold the big longer-term trends. Gann's commodity trading systems allowed him to produce some stunning predictions and trading gains such as the prediction of improvements in business in 1921 and also the Bull Run in stocks. In 1928, he forecasted the end of the Bull Market in stocks a full year in advance of the 1929 crash. He then bought stocks in the Dow at an all time low in 1932. In 1935, of 98 trades in cotton, grain, and rubber, 83 trades showed a profit. His percentage of profitable trades was frequently 90% or higher.
Gann was a prolific writer and wrote extensively, outlining his thoughts on commodity trading systems in a series of books and courses. Gann's ideas were either based on empirical studies or mystical in nature. Gann's major contention was that certain laws governed not only the markets, but nature as well and were universal in scope. He further believed that human psychology was constant and that this manifested itself in repeatable cost patterns.
"We cannot escape it (emotion) in the future it will cause an additional panic in stocks. When it comes both traders and investors will sell stocks, as usual, after it truly is too late or within the latter stages of a bear market" He was aware that human nature was constant and influenced the majority of traders. "Therefore, so that you can make a success, the trader should act in a way to overcome the weak points that have caused the ruin of others" For a lot more info on trading psychology, excellent books to study are those by Jake Bernstein, Jesse Livermore, Larry Williams, Van Tharp and Jack Shwager and you will see why human character repeats itself.
One of the most essential thoughts behind Gann's commodity trading systems was the concept of combining price and time. According to Gann, significant price movements occurred when time and price converged. An forthcoming trend change can be indicated by these points.. Time was always prioritized over price whenever the time and price failed to converge. Time was consequently considered by Gann as the ultimate indicator, mainly because all of nature was governed by time.
"Just remember one thing, whatever has happened in the past within the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law ..." and, "It is action in one direction and reaction in the opposite direction. To be able to make profits, you must learn to follow the trend and be flexible when the trend changes," said Gann.
There are many commodity trading systems to select from. Gann's system, with its unique method of technical analysis, is worth serious consideration by any trader. If you're, a day trader or long-term position trader, look at Gann's commodity trading systems and see how they can aid you become a much better and amore informed trader.