Trading Methodologies of W.D. Gann: A Guide to Building Your Technical Analysis Toolbox

W.D. Gann's works helped to pioneer the discipline of technical analysis, and they still offer immense potential value to investors and traders. However, Gann's original publications are esoteric and can be challenging to read and use. In Trading Methodologies of W.D. Gann, long-time day trader and expert technical analyst Hima Reddy brings these works to life for modern traders and investors. Reddy has distilled Gann's tenets into crystal-clear, bite-size explanations, and illuminated them with exceptionally intuitive charts and illustrations. Drawing on extensive personal experience, Reddy explains how Gann's insights into price, pattern and time can be applied in all types of markets and market conditions. Using this book, any experienced trader can discover the value of Gann's approach, and start utilizing it in his or her own trades. Then, with Reddy's discussion as a foundation, traders can delve more deeply into all of Gann's works, identifying even greater opportunities for profit.

Features

Illuminates Gann's hard-to-understand trading methods with clear, bite-size explanations and highly-intuitive charts and illustrations.

A short introduction to a lengthy and complex arena of topics that provides a sound starting point for learning more about Gann's trading methodologies
Provides a solid foundation for further study and application of Gann's methodologies
By an expert day trader, professional technical analyst, and Certified Market Technician (CMT) who applies Gann's work to real trades every day

Table of Contents

Foreword xv

Preface xvii


Chapter 1 The Work of W.D. Gann 1
Market Predictions 1
Publications 3
Focus of This Book 5
Trading Rules 6

Chapter 2 Elements of the Market 9
Basic Market Movement 9
Price Is King 10
Patterns Repeat 11
The Construct of Time 20

Chapter 3 Interpreting the Market 27
Gann’s View of Price Movement 27
Projections Based on Existing Price Movement 32

Chapter 4 Trading the Market 39
Exceeding Moves in Time 41
Triple Bottoms/Tops 49
Double Bottoms/Tops 57
Exceeding Moves in Price 63
Buy Old Tops/Sell Old Bottoms 69
Rapid Moves 74
Trading Ranges 80

Chapter 5 Application of Gann’s Principles 85
Gann’s Favorite Numbers 85
Gann’s Principles Applied Outside of Price 95
The Importance of the Closing Price 108

Chapter 6 Trade and Capital Management 119
Risk Assessment 120
Placement of Orders 123
Trade Initiation 126
Management of Trade 127
Trade Exit 135
Review 136

Chapter 7 Bringing It All Together 139
Exploring Gann’s Examples 139
Rigid Rules, Flexible Observation 150

Chapter 8 Beyond Trading Basics 155
Looking to the Left of the Chart 155
Recommended Reading 160
Obtaining Charts 161
Gann’s Writing Style and References 162
A Study “Partner”—an Invaluable Tool 167
The End...of the Beginning 170

Appendix A Gann’s 28 Trading Rules 173
Appendix B Affirmative Versions of Gann’s 28 Rules 177
Appendix C Gann’s Buying and Selling Points 181
Appendix D Gann’s Soybean Chart 185
Appendix E Google, Inc. (GOOG) Highs and Lows by Calendar Month 187

Index 189

About the Author(s)

Hima Reddy, CMT, was first introduced to technical analysis, and to the works of W.D. Gann, during her high school years by her father, who has had a passion for trading and the markets since the early 1980s. However, it wasn’t until after she completed an undergraduate Finance degree at Indiana University’s Kelley School of Business, and returned to her home state of New York in 2001, that she immersed herself in the markets. She simultaneously volunteered as a sponsorship coordinator for several Market Technicians Association conferences, traded equity and commodity futures under the tutelage and guidance of her father, and completed the Chartered Market Technician certification. In 2006, she joined Informa Global Markets, an independent financial research firm providing live, 24-hour market analysis. As Senior Technical Analyst, she was responsible for producing timely and accurate short-term technical analysis and trading strategies for fixed income and FX markets. With analysis ranging through multiple timeframes, her team also prepared written updates covering longer-term trends. Hima’s “guru” has always been Gann—the first market analysis book she ever studied in-depth was How to Make Profits in Commodities—and to this day that is her go-to guide to the markets. Since 2011 she has returned to trading independently and continues to write about the financial markets. Her primary methods of technical analysis include pattern recognition and time duration relationships within markets based on Gann’s methodology, momentum assessment through the use of the Relative Strength Index (RSI), Fibonacci relationships, and moving average systems including the use of channels for trade management. Hima now resides with her husband in Baltimore, Maryland.

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