A Tale of Two Legends of Technical Analysis (2) – W.D. Gann

Charles Dow -an American journalist who co-fou...

Charles Dow -an American journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. (Photo credit: Wikipedia)

William Delbert Gann, or WD as early on he preferred to be known, was born June 6 1878 in Lufkin, Texas. He came to the commodity trading of cotton, a market with which as the son of a cotton farmer he well understood, in 1902, the year Charles Dow died. Four years later he relocated to Oklahoma City, and thence to New York, working as a broker and a trader in his own name and for clients. This was a salutary time for him, and he reportedly lost a significant amount of money, but it was a time in which he came to formulate his unique view of markets.

It is hard to imagine two people more different in so many ways than he and Charles Dow. Consider Dow, careful observer of financial affairs on a national scale and professional newspaper executive; in contrast to Gann, entrepreneurial promoter of unorthodox concepts of market timing predictions for trading success.

Although Dow’s career was cut short after just two decades, few doubt his legendary status.

Gann’s many loyal followers, many of whom achieved trading success following his methods, have no doubt that he was a true legend of the new discipline for before he died June 14, 1955. Consistent with his reputation, he charged fees of $2,500 for some instructional courses, and as much as $5,000 for others. He provided clients with detailed hand drawn charts with his calculations on them, wrote newsletters, provided a personal advisory service for busy professionals, and managed the funds of others. He worked tirelessly himself, and at the height of his career employed 35 staff.

His legacy in technical analysis is somewhat controversial. Born into a committed Baptist family, he learned to read the Bible himself, and attended church regularly. His mother hoped he would become a minister, but he had a love of mathematics, and became an interested observer of market price fluctuations. The Bible has many curious coincidences of a numerical nature. With his observations on cycles in Nature, and his knowledge of geometry and algebra, he developed an interest in their application to market behaviour. Remarkably it would seem that he enjoyed such remarkable success with his predictions, which extended beyond just market forecasts, that he became a legend in his day.

In my opinion his outstanding contribution to technical analysis was his observations on the cyclical nature of markets, something not questioned today. He demonstrated an ability to use such historical knowledge for a predictive purpose, but most consider that the future remains essentially unknowable.

He wrote prolifically, and has stimulated the writing of many more books and articles on his methods by other authors.

Categories: History of Technical Analysis

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