Improve Your Investing Methods: Undertand the Work of W.D. Gann
- Market Predictions
- Publications
- Focus of This Book
- Trading Rules
This chapter is from the book
This chapter is from the book
This chapter is from the book
Market Predictions
As an author, I want to give you a reason to read this book that goes beyond my assurances that the material is useful. So I want to begin by referring you to some of Gann’s greatest market predictions and how he profited from those moves. Throughout Gann’s works, he advised his students to use all their trading and forecasting tools all the time to discover the forces at work in any given market. Therefore, sharing his forecasting/trading successes should give you confidence that the information ahead in this book will help improve your own investing methods.
One of the most concise and publicly accessible records of Gann’s market predictions is an article written by Richard D. Wyckoff in December 1909, titled “William D. Gann: An Operator Whose Science and Ability Place Him in the Front Rank—His Remarkable Predictions and Trading Record.” The article was published in Volume 5 (Number 2) of the Ticker and Investment Digest, a very influential stock market publication at the time.
The first part of the article directly explores Gann’s general methods of market analysis. Later in the article, Wyckoff shares the findings of William E. Gilley, who was brought in to validate the success (or failure) of Gann’s methods. Gilley was an Inspector of Imports in New York with 25 years of experience with the markets. During the time that Gilley observed Gann, he watched Gann make 286 trades. Of those, 264 were winning trades, for a success rate of 92 percent!1
Above all, Gilley documented a series of predictions that Gann made during October 1909. Some of Gann’s more remarkable predictions are as follows:
-
Union Pacific (stock)
“In 1908 when Union Pacific was 168 1/8, he told me that it would not touch 169 before it had a good break. We sold it short all the way down to 152 3/8, covering on the weak spots and putting it out again on the rallies, securing a 23 points profit out of an eighteen-point move.”
United States Steel (stock)
“He came to me when United States Steel was selling around 50 and said ‘This Steel will run up from 58 but it will not sell at 59. From there it should break 16 3/4 points.’ We sold it short around 58 3/8 with a stop at 59. The highest it went was 58 3/4. From there it declined to 41 1/4 – 17 1/2 points.”
Wheat (commodity futures)
“At another time wheat was selling at about 89¢. He predicted that the May option would sell at $1.35. We bought it and made large profits on the way up. It actually touched $1.35 1/2.”
Wheat
“One of the most astonishing calculations made by Mr. Gann was during last summer (1909) when he predicted that September wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling below $1.08, and it looked as though his prediction would not be fulfilled. Mr. Gann said ‘If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what price it is now, it must go there.’ It is common history that September wheat surprised the whole country by selling at $1.20 and no higher in the very last hour of the trading, closing at that figure.”
United States Steel
“In our presence Mr. Gann sold Steel common short at 94 7/8, saying that it would not go to 95. It did not.
On a drive which occurred during the week ending October 29th, Mr. Gann bought Steel common at 86 1/4, saying that it would not go to 86. The lowest it sold was 86 1/8.”
I hope that Gilley’s observations presented within the context of Wyckoff’s article have brought your attention to what Gann was able to accomplish investing in the markets. Gann dedicated his life’s work to understanding the markets and the principles that govern them, and it is no small feat to have such insight. This is why what Gann had to share through his books and courses is of such great value. The lessons taught in those pages are among the tools he used to master the market as he did.