V.10:6 (268-271): The Gann Method by John J. Blasic

The Gann Method by John J. Blasic

W.D. Gann's trading methodologies are not always easy to define or to analyze, which is a pity, since they can be applied to everyday trading principles across many different markets when interpreted correctly . John Blasic simplifies Gann's techniques in this article into terms more easily understood, sketching a brief background of the essential elements and how the applications can be applied within your trading strategy.

W. D. Gann firmly believed that knowledge is the foundation of all successful analysis. He constantly stressed that a novice should learn from the experts first hand and apply this knowledge daily. He viewed the future as simply being a repetition of a consensus of opinion of the past. Once a game plan has been developed, it is important to adhere to it and take advantage of the opportunities as they are presented. Knowledge and patience is the first phase of the game plan and stop-loss orders are the second phase. "You cannot get something good for nothing. You must pay with time, money or knowledge for success," he stressed. Gann considered this the key, and the only key, to becoming successful. Many of Gann's rules for trading are still followed daily. They have withstood the test of time by holding up in different market environments. (See "Gann's 28 trading rules.")

While Gann was successful with methodologies, he also researched the human element of trading and how the elements influenced different investors in different markets. He observed a vast array of methods that took into account factors that caused investors to buy at the top and sell at the bottom. Gann developed other rules to allow traders to take advantage of anticipated market movements through entry and exit points . This let traders "never to trade on hope and fear, but enabled them to know why the trade is being made," because anything else wasted not only time but also money. The human element has been, and always will be, the greatest weakness. The stock market is driven by human energy, and the habits and methods of individuals in the market will always be the driving force in the market. This allows the investor to buy and sell on solid ground rather than buying hope, which is another form of gambling. Do the opposite of what the general public is doing. Act when others are tiring. Investors should use their time to study human nature to anticipate when the crowd will throw in the towel.