• April 30, 2021

WD Gann Trading Methods: Genius Trader or Overrated Guru?

WD Gann is one of the most famous merchants of all time and has a large number of devoted followers; However, the fact is that Gann never made the huge gains that many of his disciples claim.

It did not have a 90% success rate, as is often claimed: the logic behind its methods is not solid and its predictive methods do not predict, they leave everything to subjective opinion!

Let’s examine his investment theories in more detail and see.

Let’s look at some common myths about how good Gann was as a trader:

Many sources cite Gann’s business earnings at $ 50 million, however this is not true.

An interview that Alexander Elder had with his son tells the truth.

First, his son confirmed that when his father died in the 1950s, his estate was valued at just $ 100,000, and that included his home.

Second, his son confirmed that Gann could not earn enough money from trading and therefore supplemented his income by writing and selling courses.

WD Gann predictions

Many sources cite that it had a success rate in all its operations of more than 90%; again, not true. We can easily deduce this from the value of your estate.

If you could make money trading and had a 90% success rate, you would have made hundreds of millions in your trading career, and you clearly didn’t, which is why you had to sell books and courses.

The only evidence for a 90% success rate came from a small number of operations, and it was not representative of all.

Gann’s methods are predictive

Gann concluded that all natural phenomena are cyclical, including financial markets. This is true, but it is an obvious statement: we all know that we are going to die, but when exactly?

A predictive theory is not a predictive theory if it cannot predict.

If Gann’s theory is really predictive, then there would be no market, as we would all know the price beforehand!

Gann’s theory is subjective, and he really had no way of accurately predicting the future. Everything is subjective analysis and this is NOT a predictive theory.

Gann logic

The basis of Gann’s theory is the principle that price and time must balance.

Their methods are based on squaring the price over time; This occurs when a unit of price equals a unit of time.

Gann, for example, would take a prominent market halt, convert that dollar unit over a specific time period, and project it forward. When that time is reached, the price and time balance, and a market turn is expected.

What? – How is it possible that a price unit is equal to a time unit? If you think and answer this question for yourself, you will see how absurd the connection is.

This is not the only inconsistency used in their analysis, we also have the legendary Fibonacci numbers that are supposed to work with astonishing precision, but they don’t, and neither do all kinds of astrology and geometry, which attracts the far away. multitude of investments.

As we have seen, Gann was a modestly successful trader who claimed to have discovered a predictive theory, which does not predict anything accurately.

Finally, we have so many makeshift subjective indicators, that theory can test anything in hindsight, but if you want a tool for trading the markets, look elsewhere.

For those of you still not convinced, I recently saw on the internet that Gann’s business methods are selling for less than $ 1,000!

It seems like a bargain to get trades with 90% accuracy; I wonder how many serious money managers have it on their shelf.

Enough talk.

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