gann treatise

Gann Made EasyThe Treatise

A Man Who Never Changes His MindWill Have No Change To Mind

William. D. Gann

2006 GannManagament Ltd. All Rights Reserved. GannManagement Limited is authorised andRegulated by the Financial Services Authority

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William. D Gann.He was one of the most successful traders that ever lived.

Born in Lufkin, Texas on June 6, 1878, William D Gann started commoditytrading and stock market trading in 1902, and moved to New York City in1908, opening his own brokerage firm, W.D. Gann & Co., at 18th andBroadway.

William D Gann took more than 50 million dollars in profits out of themarkets! In todays markets that would be closer to 500 million dollars!After many decades of incredible trading success, W D Gann moved toMiami, Florida where he continued his writings and studies up until hisdeath on June 14, 1955.

So accurate were W.D. Ganns techniques that in the in the presence ofrepresentatives of a major financial publication, he made 286 trades in aperiod of 25 market days, on both the long and short sides of the market.Of these, 264 trades were profitable! Read articles on W.D. Gann in ourTrading Resources Articles. In 1933 Mr. Gann made 479 trades during theyear. 422 were winners and 57 were losers. The return on his capital was astaggering 4000%.

Mr. Gann consistently repeated these incredible trading feats, issuingamazing forecasts in a number of markets one year in advance.

His use of Natural Law and geometric proportions based on the circle,square, and triangle are as effective today in the Stock Market andCommodities Markets as they were 50 years ago. His techniques work inany market. His methods seem a bit unusual and even mystical to manytraders, but they have proven themselves time and again over the pastcentury.

Since his death, W.D. Gann has become something of a legend infinancial circles. His capacity to make big financial gains (both on themarket, the Cuban lottery and horse racing) gave him a reputation foruncanny knowledge of market trends.

THE PROGRAMME INTRODUCTION 2

Preplanning 6

1: FINDING THE DECISION LEVELS 7

A: The 1st Check -The Major Gann Levels 10i) The G1 Level 11ii) The G2 Level 12iii) The G3 Level 13iv) The G4 Level 14Rules To Apply 15

B: The 2nd Check - Percentages 18C: The 3rd Check - 50% Retracements 20D: The 4th Check - The Lesser Levels 22E: The 5th Check - Past Tops and Bottoms 24F: The 6th Check - Triple Tops and Fourth Attempts 26G:The 7th Check - Natural Number Levels 27

2: TRIGGERING THE SIGNAL 29A: The Trend Indicator Line 30

A New High & Low on the Same Day 30A 'Within' Day 30The Application of a Trend Indicator Line 31

B: The Trigger To Buy 32i) The Action on Prices Rising to a Decision Level 33ii) The Action on Prices Falling to A Decision Level 34

C:The Trigger To Short 35i) The Action on Prices Rising to a Decision Level 36ii) The Action on Prices Falling to A Decision Level 37

3: TAKING PROFITS 39A: Taking Profits After Buying 40

i) Taking Profits After a Fast Rise 41B: Taking Profits After Shorting 42

ii) Taking Profits After a Fast Fall 43

4: LIMITING LOSSES 45A: Cutting Losses After Buying 46B: Cutting Losses After Shorting 47

IN CONCLUSION 50

THE CASE STUDYThe Japanese Nikkei Index 16,17,19,21,23,25,28,48-49

4INTRODUCTION

It was on a hot, sunny, Spanish day in August 1972 that I found myselfwandering my weary way down a back street of the historic Majorcancity of Palma. Normally I would have found the weather and theenvironment exhilarating. However, on this occasion I was walking with aheavy heart for I was returning from the local hospital where my three yearold son was suffering from a very badly crushed foot after an accident inthe hotel in which we were staying. In order to while away some time andrelieve my anxiety, I decided to call into a small bookshop which I hadnoticed on the far side of the narrow street in which I was walking. I entered.The step I was about to take would change the rest of my life.

Eight years previously I had set up anInsurance Brokeragewhich had developedfrom a generalised insurance service tobecome a specialised pensions adviser forsmall to medium sized companies. Theunitised pension contracts we sold gavecompanies the option to direct their capitalinto general areas of investments such asthe stock market, the bond markets, cashand the property markets. As there wereconsiderable amounts of money involvedit was obvious that a sound advisoryservice to assist in the switching of fundswould be of great value to our clients.

The UK stock market prior to the Spring of1972 had had a good rise and it seemedfairly easy to make money, especially to ayoung naive investor from the industrialNorth of England. I decided to give theopportunity of investing my capital of100,000 to my local Broker, with thepromise that if his recommendations weresatisfactory then the opportunity tomanagethe pension monies under our controlwould be granted to him.

My nightmare soon began. As soon as Ientered the stock market it topped out andmy capital dived in value. I was confidentlyassured at regular intervals that all wouldbe well, we were just experiencing a shortterm correction. (Things never change, dothey?) However, matters went from bad toworse. I could not sleep and suffered fromcold sweats, & I soon found that the worry

was badly affecting my ability to run mybusiness. When my capital was halved Itook a deep breath and sold all myholdings. The relief was incredible.

My excursion into an area in which I hadno knowledge had ended in disaster, asindeed it should have done. Ignorance isbliss perhaps, but ignorance of the financialmarkets is almost always disastrous foryour financial health. I was on my way tothe realisation that there are very few whohave the right to call themselves specialistsor professionals. Most are totally unawareas to how the markets truly work. Theyguess, and they guess, and they guessagain ~ until their ignorance is exposed.Idiots can sure play bull markets but bearmarkets sure destroy them.

I entered the market in the third guessstage with the onslaught of the worst bearmarket in Britain ever just ready to happen.The market collapsed by 80% in less thanthree years.

After my ignominious exit from the marketthere were decisions to be taken: Should Irun away and leave my clients to their owndevices? Should I attempt to find a morecompetent adviser? But where would thissaviour be found, and how would Irecognise his ability? Or perhaps I shouldteachmyself to do the job, despite my totalignorance. Yet where would I find theknowledge & experience to find success?

5It was to recover emotionally from my ill-fated market experience and to consider mydilemma that I found myself in Palma walking into a minute second-hand bookshopdown a tiny back alley with not a person in sight. Hardly a scene to trigger a set ofcircumstances that would eventually give me a knowledge which would change my life socompletely and pave the way for an experience full of satisfaction and contentment. Mylife as a technical analyst and investment adviser was almost on its way!

A little sun streamed in through the tinyshuttered windows of the bookshop, justallowing me, after a brief adjustment, tonote that the books were written inSpanish. Being English, and thereforedevoid of any talent in foreign languages,my interest rapidly diminished. I was aboutto leave when I noticed the back of a book,the faded drawing of the Wall Street StockExchange just peeking out from under alarge book on the life of the Spanish painterGoya.

The cover was a bleached orange withappallingly small white print, almostimpossible to read in the half-light. If I wereto duplicate the circumstances with mypresent flawed eyesight, I would probablyhave left and my life would have taken amuch less rewarding path. The author wasa severe looking man named William D.Gann. Despite the poor print I was able toread the following :

OneofthemostastonishingpredictionsmadebyMr.Gannwasduring lastsummer [1909]whenhepredictedthatSeptemberwheatwouldsellat$1.20.ThismeantthatitmusttouchthatfigurebeforetheendofSeptember.AttwelveoclockChicagotime,onSeptember30th(thelastday),theoptionwassellingbelow$1.08anditlookedasthoughthepredictionwouldnotbefulfilled.Mr.Gannsaid."If itdoesnottouch$1.20bythecloseofthemarket,itwillprovethatthereissomethingwrongwithmywholemethodofcalculation.Idonotcarewhatthepriceisnow,itmustgothere."ItiscommonhistorythatSeptemberwheatsurprisedthewholecountrybysellingat$1.20andnohigherintheverylasthouroftrading,closingat that figure.

After my experience of the sheer ignoranceof some market operators and my ownnightmare, this was a bolt from the blue.:"Ifitdoesnottouch$1.20bythecloseofthemarket,itwillprovethatthereissomethingwrongwithmy

whole method of calculation". What aremarkable statement to make. How wasit possible to so accurately determine topsof markets? The proof of a lifetime's workapparently depended upon the price ofwheat before the close of trading on thatday being at the 120 level. This statementI found astonishing, and still do.

I opened the book and was confronted withfigures, comments, statistics, charts andprices in what could only be described asan assortment of ideas in no apparentlylogical order. The writing style wasconfused and showed no fluency but myinterest was still, surprisingly, aroused.

Excited, I bought the book immediately. Icouldnt wait to get back to the hotel poolwhere I read, and read, and read. Yet inspite of my original excitement, I couldntcome to terms with the proposition putforward by Gann that market movementsare mathematically based and that the enmasse judgements of the world's investorscan be assessed by simple mathematicalprinciples. A mistake that took me over 5years to correct!

My in terest in techn ica l ana lys isst imulated, I got down to work toaccumulate data, and I commenced myonslaught by reading every book I couldlay my hands on on this fascinating study.I read 135 different books over the nextfew years and came to the conclusion thatmost were written by intellectuals in orderto sat is fy the i r egos or were themeanderings of amateurs. I decided thatthe fundamental approach was not for me.There was far too much guesswork and Ifound it difficult to believe in the accountsas presented by the auditors.There werefar too many accountants' deceptions tobe considered before taking a view.

6I resolved to leave the guessing game to others and I am delighted to have done so asI know of only a few using this approach who have been successful. The performanceof funds managed on fundamentalist principles, this being the vast majority, fail in themain to keep ahead of the averages.

At the end of a 5 year period I had consumed much and thrown most away. I was left withan interest in Joe Granville's moving averages; the pattern principles of R. N. Elliott; andthe mathematical assessments of W. D. Gann. During that time I had found the bottom ofthe 1972/1975 bear market and had delighted my pension clients by keeping them liquidin the frightful fall of 1974 and then entering the market in the last week in December1974. (SEE CHART 1)

Mon 3 Jan 1972 to Fri 30 Dec 1977 Monthly

Buy Signal

FINANCIAL TIMES (1972 - 1977)CHART 1

I entered the marketjust before the top.

Nevertheless, all was not well. Overall, the practice of combining a number of differingprinciples had, like mixing the primary colours together, produced a murky grey mixture ofsuccess and failure.

Granville's moving average techniques had a detrimental psychological effect, being bynature late in triggering buy and sell signals. More importantly, the technique is doomedto failure when floundering in trading ranges, where a series of damaging losses areinevitable.

The Elliott wave principle was an interesting intellectual exercise but with, for me,severe inherent problems. In the corrective stages there are a myriad of alternatives tocome to terms with and there is always doubt as to where the waves commence, thusleaving many questions unanswered. Doubt is one of the trading curses, and a luxury theinvestor can do without.

My breakthrough occurred when I realised that I had had the answer back in 1972 when myson's misadventure directed me to that small second-hand bookshop where, by chance, fatehad placed 45 Years in Wall Street by W. D. Gann, with just a little of the book peeping outfrom under a testament to that great painter Goya.

The purpose of this treatise is to introduce the basic principles of one of the worlds greattraders, W. D. Gann, and so supplement the Gann books that have just been translated intothe Japanese language.

7Perhaps the predominant reason for Ganns methods not being used more widely isthat practitioners in the early stages of development generally concentrate on thesophisticated aspects of the techniques which, whilst having a magical fascination,require long and concentrated study. This can be a very rewarding intellectual exercisebut it complicates the issue and does not provide early practical assistance in makingprofits on the markets.

Above all, it should be realised that Gann made most of his fortune in the early part ofhis life before he discovered the sophisticated aspects of his analysis. A furtherconstraint on appreciating the genius of Gann is that his most rewarding techniqueswere not disclosed to the general public in his books, reserved as they were for thosewho paid for his exclusive courses. It is therefore difficult for the student to both fullyabsorb and then practice the method without an extensive period of study.

In my case it took me several years to first absorb the information and then place itinto its historical context. It was then necessary to analyse it before coming eventuallyto the realisation that, by simplification, the discoveries could provide a discipline toopen up a comparatively easy route to profitable investment. In fact, the lesssophisticated the investor, the better the chance of success. Consequently, the followingmethod has been developed to eliminate the need, at least in the early stages, todelve into the more academic aspects. New students, even without any previousknowledge of technical analysis, can commence trading profitably within a few monthsof study.

My 15 years' experience of teaching thousands of Gann students has taught me thatthe simpler the chart the more profitable the results. My endeavour will be to be asclear and as precise as possible with the help of simple but helpful charts.

In this essay I will submit the step-by-step procedure I teach which I have discoveredover the past few years has the maximum impact on new Gann students withoutassaulting their intellectual capabilities. Perhaps a more comprehensive book will follow,but I am certain that an understanding of the basics and their application will be muchmore helpful than diving in the deep end at the outset.

8300% 200%66.66%

25%

-50%

Mon 1 Mar 1982 to Mon 25 Oct 1993 Monthly

MITSUBISHI HEAVY IND.CHART 2

The lows of 1990 & 1991 werecalculated from informationdating as far back as 1982 andfinally confirmed from the 1989top (also the absolute high).

PRE-PLANNING

The biggest advantage Gann's rules bestow upon his students is that the system is theonly one I know which allows advance planning of trades and is not laggard in nature.

It allows the investor to isolate decision areas both above and below the current value ofthe analysed investment. The levels can be identified weeks, months or even years inadvance! (SEE CHART 2). If and when these pre-determined areas are reached, a buy, sellor hold decision process based upon the daily moves is followed.

However, there is no certainty that the levels will be reached :

Never anticipate that the signal will be a buy or a sell.

A pragmatic approach at this point is vital.

Let the market tell you what to do.

91:

F IND INGTHE DECISION LEVELS

10

33.33% 25%

Thu 1 May 1986 to Thu 21 Oct 1993 Monthly

POUND/US DOLLAR SPREAD (X 100)CHART 3

One of the most important discoveries Gann made was that there is a relationshipbetween every low price and every future high price. Also, for every high pricethere is a relationship to every future low price.If this claim is true, then by studying historical data the investor can establish all importantfuture highs and lows. That this is possible is clearly demonstrated by CHART 3, the weeklyvariant of which was published in the Euromoney training manuals early in 1992 andwhich isolated nine months in advance the exact top of the British Pounds rally againstthe US Dollar.

200%75%

-66.66%

MITSUBISHI BANK LTDThe lows of '90 & '92were foreseen from dataas far back as 1983.

CHART 4

Mon 3 Jan 1983 to Fri 22 Oct 1993 Monthly

This is an exciting prospect which, as a Gann student of 20 years, I now take for grantedbut which most find difficult to accept. It is now my challenge to put before you the ruleswhich will enable you to establish these turning points for yourself, perhaps even decadesin advance as evidenced by CHART 4.

11

T he following approach introduces a procedure which leads the investor througha series of tests and then ultimately provides the levels at which to considerbuying, selling or shorting. It would be beneficial if you were to take each step ata time in a logical fashion rather than skip from one step to another in a haphazardway.

A word of warning :

Due to the nature of Ganns techniques it is vital that you use accurate and regularlycorrected data.

Traded prices must be used, not quoted prices.

As much back data as possible should be to hand with an absolute minimumof five years.

Do not assume that data from the providers is necessarily accurate. Check itout for Gann will not work on inaccurate data.

The chief reason why I did not realise the real significance of Gann in my early years wasthat I was using inaccurate quoted prices. Amistake that wasted several years of profitabletrading & resulted in the unnecessary checking out of other, inferior methods of analysis.

12

A: THE 1ST CHECK - THE MAJOR GANN LEVELS

Gann considered one of his greatest discoveries to be the calculable relationship betweenhistoric highs and lows and future levels of intermediate highs and lows. I call these theMAJOR Gann levels, being the first levels to place on the chart.

(The levels are established by referring to the historical highs and lows, after adjustmentsfor rights and scrip issues.)

For ease of reference the levels are coded as follows :

G1 G2 G3 G4

13

I ) THE G1 LEVEL

This G1 level is the most important of all Gann levels and is found by simply taking theextreme high price and dividing it by two. It is therefore 50% down from the extreme highprice.

Example -If the historical high price is 2,200,then dividing 2,200 by 2results in the G1 level being put at 1,100.

(This G1 level of 1,100 would then be placed on the chart, provided it is in reasonableproximity to the current price. If it is not, then it should not be placed on the chart as itwould detract from the clear picture we are attempting to create.)

The power of this level can be judged by CHARTS 5 & 6.

Mon 2 Dec 1985 to Thu 21 Oct 1993 Monthly

HONG KONG HANG SENG INDEX

The G1 Level

CHART 5

Historical High

Mon 1 Nov 1983 to Thu 21 Oct 1993 Monthly

The 'G1 level here isbased on the 'All TimeHigh' of Jan 1972

The G1 Level

DOLLAR YEN SPREADCHART 6

14

I I ) THE G2 LEVEL

This is the second most important level and is found by adding the historical high and lowtogether and then calculating the mid point by dividing the result by 2.

Example -If the historical high is 2,200and the historical low is 1,100,then the total is 3300which, if divided by 2,results in the G2 level being placed at 1,650.

(Only place the G2 level on the chart if it is in reasonable proximity to the current price.)

Note the power of this level on CHARTS 7 & 8.

Mon 3 Sep 1979 to Thu 21 Oct 1993 Monthly

SPAIN MADRID SE

The G2 Level

CHART 7Historical High

Historical Low

Mon 1 Jul 1985 to Fri 22 Oct 1993 Monthly

AUSTRALIA METALS & MINERALS

Note that the levels are aseffective as selling levels asthey are as buying levels.

The G2 Level

Absolutelow: Jan1975

CHART 8

G1

G4

15

I I I ) THE G3 LEVEL

The third most important level is found by dividing the historical high price by 4.

Example -If the historical high is 2,200then, having divided by 4,the G3 level is placed at 550.

(This level should be placed on the chart only if it is in reasonable proximity to thecurrent price.)

Note the power of the level on CHARTS 9 & 10.


The G3 Level

FUJI BANKCHART 10

Historical High

Historical High

Mon 3 Sep 1979 to Thu 21 Oct 1993 Monthly

YEN INTEREST RATES (3 MTHS)

The G3 Level

CHART 9

G2G1

G4

16

IV) THE 'G4' LEVEL

This level is 25% of the difference between the historical high and low added to the historicallow, and is calculated as follows :

Example -Historical High 2,200Less Historical Low 1,100Difference 1,100Divide by 4 275Add to the Historical Low

275 + 1100 = 1375 = the G4 Level

Note the power of this level on CHARTS 11 & 12.

The G4 Level

The G4 level suppliedsupport in 1990 andresistance in 1992.

Tue 1 Jan 1980 to Fri 22 Oct 1993 Monthly

MITSUBISHI CHEMICAL IND.CHART 12

Historical Low

Historical High

Mon 1 Jan 1979 to Fri 22 Oct 1993 Monthly

MITSUBISHI BANK LTD

The G4 Level

CHART 11

Historical High

Historical Low

17

These then are the most important levels to influence future prices and are the firstcalculations to make when anticipating future highs and lows. They should not beused in isolation but should become the first and most important of the series ofchecks which will direct your attention to an important turning point in the future.

The first step has been taken. Now it is important to adhere to the following rules in orderto interpret the current price in the context of these levels. Very often the rules will have aprofound effect on your assessment of the current position and of possible futuredevelopments.

RULES TO APPLYTO THE MAJOR' GANN LEVELS

RULE 1The first time the level is hit is always the strongest and safest point to buyagainst the trend. Each subsequent test is less safe but still a strong point for achange in trend. (SEE CHART 5).

RULE 2The levels are both support and resistance points and are equally effective inreversing both falls and rises to the levels. (SEE CHARTS 8 & 9).

RULE 3If the G1 & G2 levels are far apart there will often be a trading range within thelevels. (SEE CHART 9).

RULE 4If the G1 level is broken on the down side, in the vast majority of cases the fallwill only be reversed when it hits the G3 level. (SEE CHART 9).

RULE 5If the G1 level is broken and the G4 is between the G1 & G3 levels there willoften be a rally from the G4, but this will be only temporary in nature as thelikelihood is that the rally will reverse & finally fall to the G3 level. (SEE CHART 8).

RULE 6If the G1 & G2 levels are wide apart the midpoint between the two levels oftenproves to be a support and resistance level.

TO SUMMARISE

The G1 Level = 50% of the extreme high & zero.The G2 Level = 50% of the total of the extreme high & extreme low.The G3 Level = 25% of the extreme high & zero.The G4 Level = 25% of the extreme high & extreme low added to the extreme low.

These then are the first calculations to place on your chart, fromwhich themajorturning points of the future can be determined . Rules 1 to 6 will give you aninsight as to where you stand when you first make your analysis & will allow youto reassess your position as time passes. If, for instance, you are below the G1level, you will probably see a fall, firstly to the G4 level & then to the G3 level.

18

THECASESTUDY-TheJapaneseNikkeiIndex

The JapanNikkei has been chosenas our case study inwhichwewill followeachcheck to the final conclusion.Thestudyshouldanticipateall themajor turningpointsof the index.Each stepwill be takenafter the relevant section hasbeenexplained.Using thisprocedurewillhelp todevelop theanalysis ina logicalmanner.Theanalysisshouldbe lookedatasa jigsawpuzzleand theaim isultimately toplaceall thepiecescorrectly to construct acompleteandclearpicture.

I have every confidence that the techniqueswill achieve this purpose to your totalsatisfaction.Thesameexercisecanbeapplied toall financial indicesand instrumentsanywhere in theworld,whether theybe individual shares, commodities, currencies,interest rates,bondsetc.

In thedozensofseminarsandworkshops I runeachyear Ichallenge thedelegates topickany investment to testwhetherornot it is ruledby theGannprinciples laiddownin this treatise.Over the lastdecade theGannanalysishasnever letmedown.

Despite the lackofpreparation I knowofnoother technique inwhichproponentsareprepared to takeon this task.Gann techniquesoncemasteredaremagical in theirapplication to thewholeof the speculativemarkets. I hope the following casestudywill gosomeway toproving thepoint.

Mon 3 Mar 1975 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (X 10)

The object of this casestudy will be to prove thatthe path of the Nikkei isnot random but followsthe rules laid down byW.D. Gann.

CHART 13

19

CASESTUDYNO1

JapanNikkeiIndex-THEMAJORGANNLEVELS

ThemajorGannlevelscomputeasfollows:theG2(21,375);theG1(19,475);theG4(12,588)&theG3(9,738).

The January 90/ October 90 fall was arrested by the G1 level.

The March 91/August 91 fall was arrested by the G2 level.

The break of the G1 level in April 92 suggests that the index will fall tothe G4 level, where a rally can be expected, but that eventually theindex is likely to fall to the 9738 level.

The rally under the G1 level was thwarted by the upside resistancecaused by the G1 level.

Up to the time of writing the index has acted strictly in accordancewith themajorGannrulesandlevels.

Mon 3 Mar 1975 to Fri 22 Oct 1993 Monthly

JAPAN NIKKEISPREAD (X 10)

January 1990 :All Time High

July 1975 :All Time Low

Mon 1 Jul 1985 to Tue 26 Oct 1993 Monthly

JAPAN NIKKEI SPREAD (X 10)CHART 14

The break through the'G1' level suggests aneventual fall to the 'G3'level.

G2G1

G4G3

20

25%** 25%** 33.33%** 33.33%**50%***** 12.5% 66.66%* 16.66%75% 6.25% 100* 8.33%100%* 3.125% 133.33% 4.165125% etc 166.66% etc150% 200%*etc etc

Note - * indicates degree of strength ie. importance.

The most important percentage is the 50% level from past important highs andlows.

The next in order of importance are the 100/200/300% etc.

If the 25% and 33.33% levels occur at the same level, this is as important as the50% level.

The 25% & 33.33% in isolation are next in importance.

The rest follow.

First identify the significant highs and lows, then apply the 25% percentages followed bythe other percentages calculable from these levels. Next find the levels which fall intogroups above and below the current price. The objective is to find a series of percentageswhich group around the other checks especially the Major Gann levels and the 50%retracements. (SEE NEXT CHECK).

When the bands of upper resistance and down side support have been established, takeoff all the other levels to leave an uncluttered chart with which to assess your futuretrades.

B: THE 2ND CHECK - PERCENTAGES

This is the second most important check and the one on which I place most emphasiswhen determining the decision levels.

Certain predetermined percentages calculated from past significant tops and bottoms (orhighs and lows) are placed on the chart and will help to identify future tops and bottoms.Decision levels will be established when the calculations fall within a series of close bands.

The rules assert that all future tops and bottoms have a mathematical relationship withpast tops and bottoms. Here this means that future rises and falls will be controlled by thefollowing percentages calculated from important past tops and bottoms:

The base percentages are 25% and 33.33%. To this base the following multiples anddivisions from tops and bottoms are added :

21

CASESTUDYNO2

JapanNikkeiIndex-PERCENTAGEMOVES

Nowweturnto lookathowthetopofeachrallycouldhavebeenanticipatedbyapplyingthesetpercentagesasprovidedbythe2ndcheck.

The January 1990 extreme high at 38,950 :

a) 16.66% from the June 89 low was 38,393;b) 12.5% from the September 89 low was 38,378;c) 12.5% from the October 89 low was 38,779.

The July 1990 high at 33,190 :

a) 16.66% from the April 90 low was 32,291.

The March 1991 high at 27,270 :

a) 33.33% from the October 90 low was 26,373;b) 25% from the December 90 low was 27,037.

The September 1992 high at 19,280 :

a) -25% from the November 91 high at 18,876;b) 33.33% from the August 92 low at 18,920.

16.66%

16.66%

33.33%25%

-25%33.33%

Mon 1 Jan 1988 to Tue 26 Oct 1993 Monthly

12.5%JAPAN NIKKEI SPREAD (X 10)

CHART 15

12.5%

22

C: THE 3RD CHECK - 50% RETRACEMENTS

The half way point, or 50% point, of any move is always a good level at which to expect areversal.

The longer in time and the wider the rise or fall, the more significant the level. For instance,the G2 level is the 50% retracement of the historical high and low and is therefore themost important, especially if the period between these two levels is a long one.

However, the 50% level of a move only lasting a few weeks can be significant, especiallywhen it falls in line with the other checks. If you are a short term trader then the 50% levelof daily or hourly moves becomes significant.

Leave the 50% levels on the chart where and when they support the levels formed by thefirst two checks. Remove all the others.

23

CASESTUDYNO3

JapanNikkeiIndex-50%RETRACEMENTS

TheJuly1990highwasat32,840:

the 50% retracement ofthe January 90 top (38,710)and the April 90 low (27,680)is 33,195.

TheMarch1991highwasat27,270:

the 50% retracement ofthe July 90 high (32,420)and October 90 low (19,780)is 26,100.

TheSeptember1992highwasat19,260 :

the 50% retracement ofthe January 92 high (22,200)and the Aug 92 low (14,190)is 18,195.

r.5

r.5

r.5



24

D: THE 4TH CHECK - THE LESSER LEVELS

(Note only - Do not place them on the chart) :

In our first check we looked at theG1, G2, G3 &G4 levels, which we calculated by referenceto the extreme highs and lows. Gann also divided the extreme high and zero and theextreme high and the extreme low by eighths and thirds. The results are then used aslevels of lesser importance, in support of the main levels of the 1st Check.

The 3/4 level, however, should be considered as being of equal value tothe G4 level.

These remaining calculations should be looked at to see if they support the previouschecks, then noted but not placed on the chart.

Example : where the extreme high is 100 and the extreme low is 20.

EXTREME HIGH 100 EXTREME HIGH 100

7/8 87.5 7/8 903/4 75 * 3/4 80 *5/8 62.5 5/8 701/2 (G1) 50 **** 1/2 (G2) 60 ***3/8 37.5 3/8 501/4 (G3) 25 ** 1/4 (G4) 40 *1/8 12.5 1/8 30

0 EXTREME LOW 20

Note - * signifies degree of strength

25

CASESTUDYNO4

JapanNikkeiIndex-THELESSERLEVELS

Thelevels foundbyusingChecks2&3(Percentagesand50%Retracements)shouldthenbe inspected tosee if the lesser levelsprovidesupport butmakeamental noteonlyof theirpresence.Donot leave themonthechart.

Fri 1 Sep 1989 to Fri 22 Oct 1993 Monthly


G2G1

G4G3

26

E: THE 5TH CHECK - PAST TOPS AND BOTTOMS

(Note only - Do not place them on the chart)

Look to see whether there have been significant tops and bottoms in the past to supportthe levels that have emerged from Checks 1 to 3.

Buy when prices advance above these old tops and sell when prices fall belowthese levels.

An important level at which to buy is on a break into new high ground, while the significantlevel at which to sell is when the price falls below an historic low.

27

CASESTUDYNO5

JapanNikkeiIndex-PASTTOPSANDBOTTOMS

Makeanoteof theprevious important topsandbottomswhichsupportyourcalculatedlevels asperChecks1,2,3&4. If there is no support frompast highsand lows treatyourprogress todatewithsomesuspicion. Itwouldbeprudent tostart againasyourdecision levelsshouldnormally reflectpast topsandbottoms.

Mon 1 Aug 1986 to Thu 21 Oct 1993 Monthly


October 1986low supported1992 lows

Oct '87 top supportedthe lows of Sept '88 &April '90 & the March'91 top

November 1987lows supported1990 and 1992lows

28

F: THE 6TH CHECK - TRIPLE TOPS & 4TH ATTEMPTS


Special note should be taken of any triple bottom or top formations which develop atsupport or resistance levels.

ATRIPLE BOTTOMwill normally advance faster and further than the previous twomoves.Should the move not rise rapidly from the triple early in its rise but climb slowly, theadvance will be usually reversed at the 50% retracement of the previous fall and thenattack the lows again. This 4th attempt usually goes through.

A TRIPLE TOP has the reverse effect, with the fall faster and heavier than the previoustwo falls. Again, if the move from the triple top is slow and sluggish, expect a fourthattempt at the triple top level with a break into new high ground.

Most large moves emanate from triple tops and bottoms.

1 2 3

Weekly High/Low

AN EXAMPLE OF A TRIPLE TOP

29

G: THE 7TH CHECK - NATURAL NUMBER LEVELS


This is a further check to establish that an important decision level has indeed beenlocated and to establish whether the price is on a natural Gann number. These numbers,multiples and divisions of 360, are calculated as follows :

45 (1/8)

90 (1/4)

120 (1/3)

360

180 (1/2)

135 (3/8)225 (5/8)240 (2/3)

270 (3/4)

315 (7/8)

Some interesting features are:

If a half or full circle (180/360/540/720 etc) is broken on the upside,the rally will usually rise at least to the fifth circle or half circle (216/432/648/864).

If a half or full circle (180/360/540/720 etc) is broken on the downside,the fall can be expected to drop to at least fifth under the circle or half circle(144/288/432/572 - these are also multiples of 144 i.e. the square of 12).

The full circles are always important levels to look for a change in trend.

You will also find that many moves coincide with these natural numbers. Forinstance, on a rise of 360 or its multiples, look for a change in trend if the levelfalls in line with the other checks.

CHART 19 shows that the Nikkei has been dominated by trend changes on full, half &quarter circle moves. As the price lowers, smaller divisions of 360 will become moreimportant. This could be observed when the quarter divisions became dominant during1992. The reason is that percentage moves increase at lower levels, therefore, onoccasions, terminating on the quarter divisions. On a fall to very low numbers, eighths &sixteenths will become evident.

30

CASESTUDYNO6

JapanNikkeiIndex-THENATURALLEVELS

TheNikkei indexhasstuck remarkably rigidly tomovementsassociatedwith full andpartial circles as follows :

1- The January '90 to April '90 move equalsa FALL of 3 circles (1080 points).

2- The April 90 to June 90 move equalsa RISE of 11/2 circles (540 points).

3- The July 90 to October 90 move equalsa FALL of 4 circles (1260 points).

4- The October 90 to March 91 move equalsa RISE of 1 circle (360 points).

5- The March 91 to August 91 move equalsa FALL of 11/2 circles (540 points).

6- The August 91 to October 91 move equalsa RISE of 1 circle (360).

7- The October 91 to August 92 move equalsa FALL of 3 circles (1080).

8- The January 92 to April 92 move equalsa FALL of 1 circle (360).

9- The May 92 to August 92 move equalsa FALL of 11/4 circles (450).

10- The August 92 to September 92 move equalsa RISE of 11/4 circles (450), etc.

Fri 1 Sept 1989 to Thu 21 Oct 1993 Monthly


12

3

4 5 6 7

9

810

31

2:

TRIGGERINGTHE SIGNAL

Now that the decision levels have been established, only patience is required as you waitfor your investment to approach the upper or lower decision level.

To trigger the buy, sell or short signal it is necessary to refer to Ganns trend indicator line.

32

A: THE TREND INDICATOR LINE

The Trend Indicator Line, commonly referred to as TIL, is obtained by referring to the dailychart of highs and lows.

Provided the chart shows higher tops and bottoms, the trend indicator line moves up eachday to the highest price, continuing to do so as long as the market makes higher tops andbottoms.

As soon as the chart shows a lower bottom, move the trend indicator line to thelower bottom.

Continue to move it down as long as lower bottoms are made.

Move the line back up to the top when a higher bottom and higher top is recorded.

A new high and low on the same day

IF a higher top is formed in the early part of the day but the price then goesdown and makes a bottom lower than that formed on the previous day,

move the trend indicator line to the higher top and thenmove it down tothe bottom of the day.

CONVERSELY, IF a lower bottom is formed in the early part of the day but theprice later goes up to a new high, then

move the line to the low for the day and then to the top for that day.

33

A within day

A WITHIN DAY occurs when a share makes a higher or identical low and a lower oridentical high to those of the previous day.

In other words, the spread for the day has remained within the previous day'sparameters.

IN THESE CIRCUMSTANCES,

keep the trend line at the low for the day if the previous moves show thetrend line on the lows.

SIMILARLY,

keep the trend line at the high for the day if the previous moves show theline to have been on the highs.

THE APPLICATION OF A TREND INDICATOR LINE

If the trend indicator line is forming higher tops and bottoms, the short term trend is up. Ifthe trend indicator line is forming lower bottoms, only the short term trend is down.

Top

Bottom Bottom

TopTop

A BOTTOM on the trend indicator line is when the TIL has gone from a high price on aprice spread to a low price and then back up to a high again. (There may be more than3 days making up this formation.)

A TOP on the trend indicator line is when the TIL has gone from a low price on a pricespread to a high, then back down to a low again. (Theremay bemore that 3 daysmakingup this formation.)

34

B: THE TRIGGER TO BUY

When the price rises or falls to decision bands, watch the trend indicator line at theselevels and, when the trend is established at the decision area, go with the trend.

The decision levels can be predetermined well in advance of any action you might wish totake. This grants you sufficient time to prepare yourself emotionally and financially to takeaction at the appropriate time. It also means that arrangements with your broker, bankeror financial advisor need not be rushed.

You will find with experience that the majority of major turning points in price will start fromthe selected levels. However, they are not infallible. You must at all times protect yourselfwith an exit or stop loss level. (SEE SECTION 4 - LIMITING LOSSES).

All investors, including the greatest of traders, experience losses on a fairlyregular basis.

Keep losses small and you will survive even after a losing spell.

Allow your losses to grow and you will almost certainly fail.

Your chart should show :

i) The decision level below the current priceand/or

ii) the decision level above the current price.

A fall to a decision level would be a level at which to consider a purchase. However,some of the best upwardmoveswill emanate from a break upwards over the decisionlevel shown above the current price.

You should not be deterred by the view that the price is too high. The price is never toohigh to buy provided that the trend is up. It will probably be helpful in these circumstancesto remember the old saying:-

Bull [rising]marketsclimbawall ofworry.

35

I ) THE ACTION ON PRICES rising TO A DECISION LEVEL

When the current price reaches the upper decision level,

a purchase could be considered on strength higher than the decision levelband.

To verify strength you may find the following hints useful in deciding the day of yourpurchase once the price has risen to a decision level. When you see a higher trend linebottom form on or over the top level of the band of resistance this should alert you tostrength above the level of resistance, which implies higher prices.

Notes - A higher trend line bottom means one which is higher than the previous bottom. 'Band' means the area created by close percentage calculations.

When the chart shows that a higher trend line bottom has formed on or over the previousbottom, higher prices are indicated. In this event, after the first hour of trading ask yourbroker for the current price, & EITHER :

If the price is above the high of the previous day, then higher prices are indicatedand a buy will be triggered; or

If the price is below the previous day's high, do not buy; or

If the chart continues to show a higher trend line bottom,

(i) Give the Broker instructions to buy over the high of the previous dayor

(ii) Keep a check on the prices during the day and only buy if you see theprice strengthen above the high of the previous day.

REPEAT this process for every day that the higher trend line bottom persists, and has notproduced a price lower than the previous day's low.

BUY SIGNAL

Highestlevel ofthe band

Lowestlevel ofthe band

Buy onstrengthover thishigh.This is a higher

trend line bottomthan the previousone

DECISION LEVEL

36

I I ) THE ACTION ON PRICES falling TO A DECISION LEVEL.

After the price has fallen to the decision area,

wait for a higher trend line bottom to form on or over the highest decision levelbefore considering a purchase.

To verify strength follow the procedure is as described above for buying but this time thesignal will be provided by a fall to the level of support followed by a higher trend linebottom forming.

Notes - A higher trend line bottom means one which is higher than the previous bottom. 'Band' means the area created by close percentage calculations.

When the chart shows that a higher trend line bottom has formed on or over the previousbottom, higher prices are indicated. In this event, after the first hour of trading ask yourbroker for the current price, & EITHER :

If the price is above the high of the previous day, then higher prices are indicatedand a buy will be triggered; or

If the price is below the previous day's high, do not buy; or

If the chart continues to show a higher trend line bottom,

(i) Give the Broker instructions to buy over the high of the previous dayor

(ii) Keep a check on the prices during the day and only buy if you see theprice strengthen above the high of the previous day.

REPEAT this process for every day that the higher trend line bottom persists, and has notproduced a price lower than the previous day's low.



This is a highertrend line bottomthan the previousone.

Buy on strengthover this high

BUY SIGNAL

DECISION LEVEL

37

C: THE TRIGGER TO SHORT

You should be just as willing to sell short as you are to buy.

Your chart should show :i) The decision level below the current price

and/orii)the decision level above the current price.

38

I ) THE ACTION ON PRICES rising TO A DECISION LEVEL

If the price rises to the upper decision area,

wait for a lower trend line top to form on or under the lowest level of the decisionband before considering a short.

To verify weakness, you may find the following hints useful in deciding the day of yourshort when the price has risen to a decision level. When you see a lower trend line topform on or under the band of resistance this should alert you to weakness below the level,implying lower prices.

SHORT SIGNAL

DECISION LEVEL

Short onweakness



Note -A lower trend line top means one which is lower than the previous top.

When the chart shows that a lower trend line top has formed on or under the lowest levelof the decision level band, this implies that lower prices are indicated. In this event, afterthe first hour of trading ask your broker for the price, & EITHER :

If the price is below the lowest price of the previous day, then lower prices areindicated and a short should be considered; or

If the price is above the low of the previous day, do not short; or

If the chart continues to show a lower trend line top

(i) Give the broker instructions to short under the low of the previous dayor

(ii) Keep a personal check on the prices during the day and short if the priceweakens below the low of the previous day.

REPEAT this process for every day that the lower trend line top persists, and has notproduced a price higher than the high of the previous day.

This is a lower trend line topthan the previous one.

39

I I ) THE ACTION ON PRICES falling TO A DECISION LEVEL

When the current price reaches the lower level,

a short could be considered on weakness below the bottom level of the decisionlevel band.

To verify weakness after a fall to a decision level, you may find the following hints useful indeciding the day of your short. When you see a lower trend line top form on or under thelower level of the band this should alert you to weakness below the level of support, whichimplies lower prices.

Note -A lower trend line top means one which is lower than the previous top.

When the chart shows that a lower trend line top has formed on or under the lowest levelof the decision band, this indicates lower prices. In this event, after the first hour of trading,ask your broker for the price, & EITHER :

If the price is below the bottom price of the previous day, then lower prices areindicated and a short should be considered; or

If the price is above the previous day's low, do not 'short'; or

If the chart continues to show a lower trend line top,

(i) Give the broker instructions to short under the low of the previous dayor

(ii) Keep a check on the prices during the day and short if you see the priceweaken under the low of the previous day.

REPEAT this process for every day that the lower trend line top persists, and has notproduced a price higher than the previous day's high.

SHORT SIGNAL


Lowestlevel ofthe band Short on

weakness

This is a lowertrend line top thanthe previous one.

DECISION LEVEL

41

3:

TAKING PROFITS

It is generally acknowledged that most investors have great difficulty in determining thetime to take profits. However, if strict rules are followed, taking profits can become one ofthe easier aspects of successful trading.

42

A: TAKING PROFITS AFTER BUYING

Your daily chart should show the trend line. This trend line will enable you to see clearlywhen the short term trend has turned down. The trend turns down when the last trend linebottom is broken by one percentage point.

A TREND LINE BOTTOM occurs when the trend line which joins up the daily prices goesfrom the top of a daily spread to the bottom of a daily spread, and then to the top of a dailyspread. (There may be 2, 3 or more days making up this formation.)

TO PLACEA STOP LOSS subtract 1% from the lowest point of the last trend line bottom.

Daily High/Low

TREND LINE STOP LOSS after buying

24.1 is the price of thelast trend line bottom.The Stop Loss is 23.8(ie. 1% below).

Daily High/Low

THEN, if the chart shows that the spread for the previous day was on or below the stoploss level,

note the lowest price of the spread for that day.

After the first hour of trading, ask your broker for the current price, & EITHER :

If the price is below the low of the previous day, then lower prices are indicatedand profits should be taken; or

If the price is above the low of the previous day and the stop loss, do not sell; or

If the price is still on the stop loss but above the low of the previous day,

(i) Give your broker instructions to sell under the low of the previous dayor

(ii) Keep a check on the prices during the day and close the position if theprice weakens below the low of the previous day.

REPEAT this process for every day that the last price on the chart is on the stop loss.

43

100

Take profits on Signal Day(below the mean) or Day AfterRule (below the Signal Dayclose)

DECISION LEVELLowestlevel ofthe band


SIGNAL DAY & DAY AFTER RULE (SELL)

9590

I ) TAKING PROFITS AFTER A FAST RISE

If the price is rising FAST to a decision level then consider the use of the Signal Day orDay After Rule when the price hits the decision level area.

These rules are formulated to take into account that a sharp rise is often followed by asharp fall. The reason for applying them is that prices tend to fall far faster than they rise.This could result in your profits being quickly eroded before the trend line triggers the sellsignal.

THE SIGNAL DAY' (SELL)On the day that the price hits the decision level area, telephone your broker an hourbefore the close of the market to ascertain the highest and lowest traded prices for theday so far. From this information calculate the mean (middle or halfway) price. If the priceat the time of enquiry is below this level, this suggests lower prices and profits should betaken.

THE DAY AFTER RULE (SELL)If the Signal Day was not triggered, then the Day After Rule should be operated. Afterthe first hour of trading (on the day after the Signal Day), ask your broker for the lasttraded price. If this is below the closing price of the previous day, then this indicateslower prices and profits should be taken.

Notes -It is only when you use the Signal Day or Day After Rule that we would recommendthat you know about the price movements during the same day. Normally, you shouldmake your decisions from your charts the FOLLOWING day. This will help you to avoidmaking emotional decisions and will save you from unnecessary traumas caused bywide daily fluctuations.

44

B: TAKING PROFITS AFTER SHORTING

When looking to close a short position, your daily charts should show the trend line.

The trend line on the DAILY chart will enable you to see clearly when the short term trendhas turned bullish. This occurs when the price breaks above the last trend line top by 1percentage point or more on the chart.

A TREND LINE TOP occurs when the line which joins up the daily prices goes from thebottom of a daily spread to the top of a later daily spread, and then down to the bottom ofa later daily spread. (There may be more than three days making up this formation.)

TO PLACEA STOP LOSS, add 1% to the highest point of the the last trend indicator linetop on your chart.

TREND LINE STOP LOSS after shorting

Place stop loss 1% abovethe last trend line bottom.

THEN, if the chart shows that the spread for the previous day was on or above the stoploss level,

note the highest price of the spread for that day.

After the first hour of trading ask your broker for the current price, & EITHER :

If the price is above the high of the previous day, then higher prices are indicatedand profits should be taken; or

If the price is below the high of the previous day and the stop loss, do not sell; or

If the price is still on the stop loss but below the high of the previous day,

(i) Give your broker instructions to cover above the high of the previous dayor

(ii) Keep a personal check on the prices during the day and close the positionif the price strengthens above the high of the previous day.


45

I ) TAKING PROFITS AFTER A FAST FALL

If the price is falling FAST to a decision level then consider the use of a Signal Day orDay After Rule when the price hits the decision level area.

These rules are formulated to take into account that a sharp fall is often followed by asharp rise. This could result in your profits being quickly eroded before the trend linetriggers the signal to close your position.

THE SIGNAL DAY SHORT POSITION CLOSEOn the day that the price hits the decision level area, telephone your broker an hour beforethe close of the market to ascertain the highest and lowest traded prices for the day sofar. From this information calculate the mean (middle or halfway) price. If the last tradedprice is above this level, this indicates higher levels and profits should be taken.

THE DAY AFTER RULE SHORT POSITION CLOSEIf the signal day was not triggered, then the DayAfter Rule should be used. After the firsthour of trading on the day after the Signal Day ask your broker for the last traded price. Ifthis is above the closing price of the previous day, then this indicates higher prices andprofits should be taken.

100

95

Take profits onSignal Day



SIGNAL DAY & DAY AFTER RULECLOSE OF 'SHORT'

DECISION LEVEL

or Day After Rule

Notes -It is only when you use the Signal Day or Day After Rule that we would recommend that youknow about the pricemovements during the same day. Normally, you shouldmake your decisionsfrom your charts the following day. This will help you to avoid making emotional decisions andwill save you from unnecessary traumas caused by wide daily fluctuations.

47

4:

LIMITING LOSSES

48

A: CUTTING LOSSES AFTER BUYING

Losses must be strictly limited and quantified before buying. Once a limit has been set itmust NEVER be overruled or adjusted. This is perhaps the most important of all rules asfailure to follow the rule WILL result in large losses.

Place the trend line on the daily chart. When you buy, your stop loss should beplaced 1% below the lowest point of the last trend line bottom.

THEN, if the chart shows that the spread for yesterday was on or below the stop loss,

note the lowest price of the spread for that day.

After the first hour of trading ask your broker for the price, & EITHER :

If the price is below the low of yesterday, then lower prices are indicated andlosses should be taken; or

If the price is above the low of the previous day & the stop loss, do not sell; or

If the price is still on the stop loss but above the low of the previous day,

i) Give your broker instructions to sell (close the position) under the low ofthe previous day

orii) Keep a check on the prices during the day and close the position if the

price weakens below the low of the previous day.

REPEAT this process for every day that the price is on the stop loss.

CUTTING LOSSES WHEN BUYING

Place stop loss 1%below the low

Lowest levelof the band

Highest levelof the band

Buysignalled

49

B: CUTTING LOSSES AFTER SHORTING

Losses must be strictly limited and quantified before shorting. Once a limit has been setit must NEVER be overruled or adjusted. This is especially true when shorting, as yourlosses can be unlimited.

Place the trend line on the daily chart. When you short, your stop loss shouldbe placed 1% above the last high of the trend line top.

THEN, if the chart shows that the spread for the day was on the stop loss level,

note the highest price of the spread for that day.

After the first hour of trading ask the broker for the price, & EITHER :

If the price is above the high of the previous day, then higher prices are indicatedand losses should be taken; or

If the price is below the high of the previous day and the stop loss, do not sell; or

If the price is still on the stop loss but below the high of the previous day,

i) Give your broker instructions to close the position above the high of theprevious day

orii) Keep a check on the prices during the day and close the position if the

price strengthens above the high of the previous day.


Shortsignalled

CUTTING LOSSES WHEN SHORTING

Place stop loss 1%above the top

Lowest levelof the band

Highest levelof the band

50

THECASESTUDY-THEJAPANESENIKKEIINDEX

THEFINALPICTURE

CHARTS20AND21bring thevarious featuresdiscussed in theprevious casestudiestogether toprovideananalysisof theSeptember1992decision level.

The featureswhichcreated thedecision levelat1900were

the 'G1' level;

a50%retracement;

the33.33%level fromthe1992low;

25%downfromtheNov1991high;

a riseof 11/4 circles;

the lowof1990;

adoubletop.

The2chartsshow the Indexbeforeandafter thepricehit thedecision level.

The final chart isadaily chart showing theexactday tosell or go 'short' of themarketbyusing the trend line rules.

51

The G1 LevelThe 1990 Low

Mon 30 Oct 1989 to Week beginning 24 Aug 1992 Weekly

JAPAN NIKKEI (X 10)

-25% r.5

33.33%

CHART 20

The 1990 Low

-25% r.5

33.33%

Mon 30 Sept 91 to Week beginning 5 Oct 92 Weekly

JAPAN NIKKEI (X 10)

The G1 level

CHART 21

Sell triggered on lower trendline top if the signal day wasnot used at 1900.

JAPAN NIKKEI (X 10)CHART 22

Fri 24 July 1992 to Wed 6 Jan 1993 Daily

52

IN CONCLUSION

In this short introduction to the works of W. D. Gann I have attempted to do no morethan take the first step to enable you to appreciate the methods of the greatest of WallStreet traders. It has not been possible to cover all the discoveries made during Gann'slifetime. My challenge has been to present a clear and explicit method to isolate, in advance,future price turning points.

The study of the TIME factor in anticipating major moves is one of the more perplexing ofGann's discoveries, as is his method of predicting future events. In my view, such studiesshould come after that of price levels. Other important future studies are those on Gann'smoney management and trading rules whilst investors' psychology is an area which hasbeen receiving my special attention of late.

You now have the basic rules with which to calculate where you can expect changes intrend. It will be time to take the next step when these rules have been fully tested, provenand then appreciated.

I leave you with the comments of W. D. Gann.

"IwanttoimpressuponyoustronglythatifyouexpecttomakesuccessintheStockMarketyoumustputinplentyoftimestudying,becausethemoretimeyouputin,themoreknowledgeyougain,themoreprofitsyouwilltakeoutlater.Ihavegiventheruleswhichwillwork;youmustdoyourpart:youmustlearntherules,actonthemattherighttimeandputthemintoexecution."

Good hunting.

gann treatise

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