Time has done a great deal in adding to the legend of W.D. Gann and the trading methods
that made him an alleged $50 million in prots during his career. Yet, despite his four
published books and the stock and commodity courses he updated over the years,
a great deal of mystery has been attached to his methods of trading. It is often asserted
that Gann either did not reveal the most important of his secrets, or obscured them in his
courses with very little explanation.
For vendors of trading systems and approaches, this has been used very effectively as a
marketing tool in selling the “secrets” to W.D. Gann’s success. After all, the search for the “holy
grail” plays on all of our emotions, and our as sense of greed.
While we also have proted from the name of Gann, we believe Gann did reveal his
most valuable forecasting technique, and spelled it out in clear language. Its value can only
be appreciated by those willing to prove its effectiveness by looking back over hundreds of
years of data in each market.
When Gann said, “I have more income than I can spend for my needs, therefore, my only
object in writing this book is to give others the most valuable gift possible – KNOWLEDGE”, we
believe he was sincere. Our research to date, suggests that Gann’s greatest gift was his discovery
of what he referred to the Master Time Factor. In his various course he refers to the Master Time
Factor alternately as Time Cycles, Major Cycles, Master Time Periods, Extreme Great Cycles
and Law of Vibration. It is important that we provide a compelling argument from Gann’s own
published works, of why we believe that this was his most valuable contribution.
First off, it stands to reason that he would charge the highest price for his most valuable
instruction. In the 1930’s, he offered a series of three courses which he made available at $500,
$1000 and $3000. Needless to say, a cost of $3000 in 1930 dollars was a very steep $20,000 in
today’s dollars. The third course differed from his other courses in one major respect, it included
his “secret discovery of the Master Time Factor”. This he stated clearly in the sales brochure he
provided for those requesting information about his courses.
In this course, he lists the twelve things to look up before you make a trade. Heading
the list at #l is, “Annual Forecast determines year of Time Cycles, whether bull or bear
year and main trend of the general market up or down.” This was the Master Time Factor.
It is listed as #I because it is of primary importance. It is what makes many of his other
Reviewing some of his claims: “The law of vibration enabled me to accurately determine the
exact points to which stocks and commodities should rise and fall.” “ By studying time cycles,
you will learn why tops and bottoms are formed at certain times.” “In order to be accurate we
must know the major cycles.” “Always consider the annual forecast and whether the big time
limit has run out before judging a reverse move.”
This chastening by Gann to his students, is backed up by some of the most spectacular
forecasts of highs and lows in history during Gann’s 50-year trading career. His prediction
of the top for stocks in 1929 within three days, followed by a panic, is a matter of record
Traders World 309
accomplished this by using the Master Time FactoL
In his December 4, 1946 section under time cycles I quote, “Time is the most important
factor in determining market movements because the future is a repetition of the past and each
market movement is working out Time in relation to some previous Time Cycles. A study of
the various Time Periods and Cycles will convince you how the grain market repeats the same
price levels under the same Time Periods of some previous cycle.” In the various courses
Gann published between 1923 and 1954, he applies the Master Time Factor to wheat, cotton,
eggs, the stock averages and U.S. Steel.
Simply stated, Gann discovered that market action repeats based on specic time cycles.
The major cycles (not in the order of important) are 150, 120, 100, 90 82-84, 60, 50, 40, 30,
20,15 and 10 years. The lesser cycles are 14,13, 9, 7, 5, 3, 2, and 1 year. I quote from Gann’s
$3000 course, “By studying the yearly high and low chart and going back over a long period of
time, you will see the years in which bull markets culminate and the years in which bear markets
begin and end. Each decade or 10-year cycle, which is 1/10 of 100 years, marks an important
campaign. The digits from 1 to 9 are important. All you have to learn is to count the digits on your
ngers in order to ascertain what kind of a year the market is in.”
Following these instructions, when constructing a forecast in the stock market in 1991,
we look back at the years 1841, 1871, 1891, 1901, 19071909, 1931, 1941, 1951, 1961, 1971,
1971, and 1981, to establish what the overall trend was during these market cycles, and on
what dates specic highs and lows were made. If there is a consensus of cycles suggesting a
major topping year, and in the current market, prices are moving up into these important topping
dates, we look for a top and a change in trend down.
Typically, the yearly time cycles will have turning points on very similar dates. Once we
know whether we are due for a bull or bear year, we determine which cycle we are following
most closely and treat this as the dominant cycle. In the case of the stock market, the June
5,1990 high in stocks, one day off the 100-year anniversary highs on June 4,1890 (along with
1929 the most important bull market top in history) suggests that this is the dominant cycle
for us to watch (Figure 1-2). Multiple conrmation to this high was given by the major highs in
September 1869, on September 5,1899, November 19,1909, November 3,1919, September
3,1929, September 13,1939 and November 28, 1980. Taken together, they added up to the
major distribution top from October 10,1989 to June 5,1990.