FREQUENTLY ASKED QUESTIONS
Following are the answers to some of the most frequently asked questions we get about W. D. Gann, his trading system and methods, and our “MAGIC IN THE MARKETS” Course. As this entire website is designed to save us time on the phone, the detailed answers below should clear up a lot of the questions you have before calling us.
WHO TAKES ‘W.D. GANN:MAGIC IN THE MARKETS?’
Three groups of people generally take the course. First, the smallest group is made up of esoteric researchers and wealthy individuals who are either fascinated with this material or Gann or the financial markets are a passion of theirs and the price will not effect their bottom line.
The second group is growing, and they are professional market analysts. In the ultra-competitive field of market analysis and research, they find that W. D. Gann’s unique methods can give sent them apart from their contemporaries by gaining an edge not found anywhere else in the field of technical analysis of financial markets.
The third group is of course traders and investment managers. Of this group, more and more portfolio managers are turning up as we have begun to gear the course to professionals that manage portfolios under mandates such as sector rotation, relative strength, and mandatory sector investment.
Of course there are professional traders for large institutions (some of the biggest stateside), prop firms, and private traders. Those that have benefited the most from the course are those who already have a defined approach to trading or investing in the markets and integrate Gann’s methods as filters to more precisely define entry and exit prices and times, forecast the trend directions and duration in advance, tune their present indicators to the natural cycles of their market, and better limit risk. For these traders the methods of W. D. Gann fill in the gaps in their approach that they cannot fill through conventional market analysis.
And still others want to learn the exact methods that W.D. Gann used to analyze and trade the markets. Note to the reader: unless you have a very similar makeup to W. D. Gann, the above approaches are recommended to help you more quickly realize the statistical edge that these techniques can offer.
WHAT ARE THE PRE-REQUISITES FOR THE ‘W.D GANN: MAGIC IN THE MARKETS COURSE?’
(Or, “How can I prepare for the course?”) As we’ve spelled out in the above question, recipients of the W. D. Gann “MAGIC IN THE MARKETS” course have been diverse. So let’s break the answer down by audience:
First, let’s address those who have studied something called “Gann,” but are not active, consistent analysts or traders. Those that are able to immediately apply the concepts in the “Magic” Course to the financial markets are analysts or traders who already have a consistent approach to the markets and are frequently “pushing the button.” Trying to learn how to approach the financial markets AND learn the new paradigm of Gann’s exogenous market techniques and systems at the same time can be overwhelming. The easiest and quickest way to begin applying these techniques is to take one or two of Gann’s systems or techniques and synthesize it into your existing trading or analysis system.
The good news is that there are no expensive books or prep work that you must undertake. W. D. Gann did not publish anything that would work “out of the box.” All his public material constituted coded reminders to his students and did not reveal his true system. So the best prep is to be familiar with approaches to the market you are interested in. We can recommend some specific books on Gann’s recommended reading list once you have signed up for the course.
Most likely the true methods of W. D. Gann will be a new paradigm to even those that have “studied W. D. Gann’s concepts” for years. We have had a number of people approach the seminar with a background in “broken Gann.” They took other courses (and paid dearly for it) in what Gann displayed of his concepts publicly (not the real use) and made some kind of trading setup out of them using something resembling Gann’s use of the square or angles. Usually they have no concept of systemization, rules, objectivity, or back-testing statistics. Occasionally they are looking for the unicorn of the magic alternating cycle. Many have lost money and have not seen anyone else make money at it. They then try to find the key to make their “broken Gann” work in our material.
Also, we offer preparatory webinars for those who register and give a deposit for the course that will help them before they attend the seminar.
DO YOU GIVE PREDICTIONS, TRADES, OR ENTRIES AND EXITS IN ADVANCE TO THOSE CONSIDERING THE COURSE?
Not anymore. We used to, and even included live trading via Skype to many. It just got to be too much of a pain in the ass for several reasons. Take the subject of forecasts and predictions. To begin with, our legal counsel does not want us to post anything of a predictive nature due to liability concerns. The signals for Gann trades are tied to rules and a system. To communicate all of those is like teaching the course in advance, and most traders are not profitable because they can’t follow rules.
Looking at the example of a polarity-line system on intraday crude for example, the statistical edge is achieved over each month by trading every day and taking every entry signal in the month. In back-testing this particular system, we can’t find a month going back where it loses money for the markets we recommend. But some months of the year are frustrating because they are flat. Assume we have five people asking for 1 month’s worth of signals (which again is a pain in the ass) and the month turns flat. Well, based on that I would have a hard time seeing the magic of Gann. But a professional trader measures returns using drawdowns in the equation. When he or she sees that the worst drawdown is a flat month, the technique becomes invaluable.
A word about back-testing. W. D. Gann used his own profit-to-loss percentages which excluded breakevens. He advertised rates around 83% if you get a median for the stats he published. Included in our ‘Magic’ course is backtesting on most markets that far exceeds industry standards. But for the sake of accuracy, we must start the testing with the function of an individual technique using testing rules that come closest to how Gann used the tool. For example, we can test the polarity lines on most markets as a standalone trading system with Gann’s conservative rules in his books. Gann never gave stats but showed actual trading results over a year on these in “The Stock Market Course.” So we look for is the lack of any monthly drawdown going back years to include the method in the course. In this way, the technique is superior to most trading signals because of the historic void of monthly drawdown.
Another example is the “17” Day Divination. Now there are dozens of ways to trade a bias that the market will be up or down from the open. And as we mentioned above, almost everyone who takes the course has a different trading approach. So we test the functionality. The trend is predicted ahead of the open, and we need the market to move in the predicted direction in the majority of magnitude and time (or at least 75% of an opposite move that may also occur) from the open on that day. In 2018, this occurred 83.1% of the signal days, of which there were over 200. Similarly, see the testing criteria for cycles in the questions below.
But combining the techniques as Gann did gets tricky to test. In “Truth of the Stock Tape.” Gann uses the Arcana to predict market trend and duration, Minor Arcana points to pinpoint entries in trend direction off minor moves against the trend, and a volume cycle to confirm. This is the main approach in the book. How do we test this? Entries on every minor point? What about breakout traders who want early entries into the trend? Fibonacci traders? Order flow trigger people? And such a system produces different risk and reward each day, not to mention weeks or years. Quite simply, there is no way to test such a combination that would be normalized to predict performance on today’s market. And there is now way to test such a combination that would be relevant to the majority of trading styles.
And Gann changed the combination of these techniques depending on what market, timeframe, and culture he traded in. Once he was observed making 248 trades in 1 month on stocks. But in the 1930s for many years he only made under 30 stocks trades each year, most of which were swing trades. And our clients can be stock day traders, soybean farmers using a 30 year cycle, portfolio managers operating under mandates, or industry professionals having to buy regular amounts of a commodity. So we are forced to test the intended function of each of Gann’s methods separately over time, and can only test the stand-alone techniques as trading methods.
DOES THE COURSE INCLUDE THE MAGIC ‘UP/DOWN’ UNICORN CYCLE?
Yes, we teach W. D. Gann’s original alternating cycle generation method and it back-tests extremely well. No, it is not a unicorn. Gann’s original method for projecting intraday, monthly, yearly, and larger cycles like the Robert Gordon 7 Days using the Law of Vibration are included in the course. You can see the examples (many) on our cycles page. No, alternating cycles are not unicorns. Since you would not trade EVERY cycle leg, or turn, and each trader would approach these turns very differently, we cannot offer trading stats on these cycles. But we can statistically test the success of each cycle leg, and thus the whole cycle. Our test is this: the cycle should always alternate up and down. There are no ‘inversions,’ only failures. And for each leg to be a success, the price at the end of the cycle leg has to be lower or higher than the price at the beginning, corresponding to the predicted direction of alternation for that cycle leg. According to that test, our alternating cycles legs and turns experience a failure rate of under 8%. Not to mention that the market often has a significant move in the predicted direction even during many of these ‘failures.’ That being said, please read the following.
W. D. Gann used the term “cycles” many times in his writings when he was describing the Arcana Trend Machine as well as fixed cycles. And many references to the Arcana in “Tunnel Thru The Air” are mistaken for the “up/down” cycles working on several time frames. That being said, Gann attributed a relatively small space in his writings to what could be interpreted as “up and down” cycles. In many of his writings these ‘cycles’ just do not exist. Gann certainly did not “push” and review these techniques to his students in the same way as he did the Arcana, Day Divination and Polarity Lines.
Luther Jensen has some important things to say about catching every cycle turn on a daily chart. He advises against such a pursuit due to two important factors. First, the same cycles begin from more than one point in the year, blurring the clarity of trends and turns. Second, these cycles are subject to interference from news. As Jensen was talking about news frequency years ago, this phenomenon must be infinity more profound. Bottom line: You will need more of Gann’s techniques mixed in if you are going to make money from these cycles.
Jensen talks about confusion caused by interference of a plurality of cycles from yearly, monthly, and weekly applications of the same cycle, not to mention different cycles within those multiplicity of timeframes. He concludes by warning that lunations also contribute to market movement on a daily timeframe and bring further consternation to these cycles. We realize many people are introduced to cycles and Gann by methods of hunting for these up and down cycles. But it seems from Gann’s placement of alternating cycles in his literature that he used this technique to confirm other trading signals.
A final word of warning on alternating cycles. We cannot find anyone who is willing to produce a profitable account statement that can be clearly traced back to up/down cycle turns on a daily chart. Yes, we know of Gann practitioners who can produce such a statement but the trades stem from other techniques. This is a red flag. The cycles Gann studied had a finite set of causes. When applying the whole spectrum of these causes, we find some extremely strong and accurate up/down cycle techniques.
DO YOU NEED SPECIAL SOFTWARE?
Most of the techniques (with the exception of 1 or 2 intraday techniques) can be done by hand in under 1 minute, or with a hand drawn ephemeris like Gann used. And we actually provide the LOV software on Excel with the course. But you will want to use software to speed up your applications and enable you to trade multiple markets on smaller time frames.
We usually interact with professional traders who build their own trading platforms and spend tens of thousands on software and IT personnel. At minimum, an active trader spends several thousand per year on data and a professional charting/analysis platform. If you believe that a charting program that can measure bars counts on a chart is special, then you will have a problem. We include proprietary software with open code on Excel, Esignal EFS, and Wave59 Qscript.
Many traders who have taken the “Magic” Course have used Wave59 for years, as we do. Optuma has made great advancements in Gann application as well. Wave59 packages 2 to 3 steps of the process so you can focus on applying the technique quickly. This is immensely helpful in the stage where you first learn Gann’s trading techniques and want to hit the ground running.
DO YOU SELL THE MANUAL SEPERATELY OR OFFER THE COURSE ONLINE?
No and no. Each manual is crafted and updated to match each seminar and the analysts or traders in attendance. Each manual is only produced for a specific recipient. You would have to attend the course and see the material to realize that you must be present in person to see how it is applied.
We do not do anything online or make electronic copies of any material due to piracy concerns. This material is far too unique and valuable. Everyone we know who has gone the electronic route has been pirated. The above also applies here: You would not get the same understanding of this material online, as many of the examples in the seminar are demonstrated on recent, live data.
DISCLAIMERFutures, Equities, and Options trading has large potential rewards, but also large potential risk and is not suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures, stocks or options on the same. No representation is being made that any account will or is likely to achieve profits or losses similar to anything shown on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. No one associated with this seminar or Chicagodaytrading.com are Registered Investment Advisors, Commodity Trading Advisors, or certified, registered, affiliated or approved in in any way with either the National Futures Association, Securities and Exchange Commission, Commodities Futures Trading Commission, or any other organization.
The “Magic In The Markets” course exegetes and replicates, as best as possible, the original trading and analysis techniques of the late trader W.D. Gann; and not necessarily the trading methods of the author or presenter of the course. Traders using Gann’s techniques may not be able to duplicate the trading results of W.D. Gann for many reasons, including, but not limited to, skill of the individual trader and the changes in financial markets since Gann traded. Recipients of this course receive hypothetical, back–tested data and not actual trading results. In an attempt to include all the markets and time frames that Gann traded during his lifetime, course includes far more applications to market instruments and time frames than the author or presenter can possibly trade. Course author & presenter has sources of income apart from trading. “Magic in the Markets” contains both Gann’s combinations of trading & analysis techniques and standalone techniques that can be integrated into existing analysis or trading approaches. Hypothetical back–testing of the performance of the function of analysis techniques are displayed pictorially for many markets and time frames on recent market data.
CFTC RULE 4.41
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.