W. D. GANN TREASURE DISCOVERED — SIMPLE TRADING PLANS FOR STOCKS. & COMMODITIES 7 7 m Bibi | es ae ROBERT KRAUSZ, snscne Cone see it tit BAL IM Anan MULTIPLE aime FRAME APPLICATIONS CHARTED BY THE FIBONACCI TRADER™ COMPUTER proanaw ue eticPress on. Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccesstu! people with talent. Genius will not; unrewarded genius 1s almost a proverb. Education alone will nol; the world is full of educated derelicts. Persistence and determination alone are omnipotent. Calvin Coolidge The previous page is an exact copy of the front co W. D. Gann’s original trading course CHAPTER CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 5 CHAPTER 6 CHAPTER 7 + CHAPTER Table of Contents The Real Story Gann Swing Trading Basics Basic Swing Plan Real Time Rules, Results, Charts 1987 - 1996 Basic Swing Pian For Stocks & Shares Rules, Results, Charts vu Phu na 1 Moat, For U.S. T-Bonds Rules, Results, Charts. i991 - 1996 Basic Swing Plan End of Day U.S. T-Bonds Rules, Results, Charts. ‘Advanced Concepts Multiple Time Frame ‘Swing Charting ‘Swing Direction and Neutral Slope Page t Page 9 Page 27 Page 103, Page 257 Page 331 Page 363, Page 385Tas book as dedicated 0 my sexfe Weanine “The best tuate Lees rane we Pleat Stony Who was the grestest markel researcher ofall ie? Botore you answer, consider this. Do yau know anyone wha has researched in depth the Following pice ar patos, astrnomy. multiple time fame tolaonships, swing chart trend dotentions. support and wesislance zones based on angles? Have you met any hagers Mat nave swestignted numerology, cen! and modern geometry, mathematical relator ships of numbers, squatng tee and price? Or Westem and Hindy astvology. ‘oytamd taclnology. ad the possible ties to the markets? Do yau know of tins degree of weseareh, and wahout a computer? Such a wader was WD Gann WO Gann was an emgima Much has been witten about Gann’s success. oF lack of Questions sil remain as to how great hs techeiques were, ot how poor Did he make fortunes or lose them? And more importantly, can any of his concepts stand up ia today's fast moving computer ven markets? ‘1d you ke that back nthe 1950's he charged some $5,000 for his courses? Al that lune, that as the price of an average thvee bedroom house in the USA, Today, the equivalent cost would be ove! $50,000, So, back then you had tobe prety serous about wading 1 pay that amount of money And yet, wouldnt thal price be worth i the techniques were genuine? ‘The answer fo this question les wiin each trader's perception of value. Some traders consider $38 95 1 high a a price lor a book describing a Wading technique, To othe, ‘val market Knowiodge is priceless Tue Roan AneKo "will show you what | consider to be valid market knowledge, based on WD. Gann’s ‘tginal work And what do I mean by valid market knowledge? The knowiedge isa set of fixed rules to rade by. You will soe that the rules are vals because they meet a number of quirements: constions that my twenty years of Wading have taught me are important. Beare | eiscuss his plan, though, | want to share with you the story of haw | came into Possession ofthis technical concept of sing trading W 0 Gann has published a number of books. unfortunately, the majonty of the te Gann ote in the manner ofthe ancient mystics; hiding he real meaning bebind the surface ‘planation, Having read his books many times ound his directions to be vague andconvoluted, And not just me, others, both his lolowers as wel a his detractors have tned {o explain his concepts in an understandable and usable way Nevertheless, vey few authors have succeeded. And as I sad, is Gans own faut A smal example a he challenge is his overuse of the word “square” squaring hme and pice. the square of rine: the square of 24, and onthe square Fortunately, while his books wore obscure trading courses are mote dtect and staigh fo the post ‘Some tea years ag0, {put oul the word here and in Europe that | was interested purchasing original W.D. Gann matotal, especialy his courses You eannat bebeve the nuts ‘hat fell tothe ground, rom con-men to dreamers All tras les to nowhev wa lew ‘mantis ago when the unierse rewarded my persistence. ight an my doorstep ‘Some of you may know that Joe Rondinone was the last tader taught by Gann belore he passed away tothe “great aging oom i the sky” Yow etn magine my astonishment luhen Flondinone asked me Iwas interested in some o1iginal Gann courses thal he bought trom Gann back 1985 Ronginone expla thatthe courses were typed on WO Cann tetost t n He ‘usual punted founat Also they wore aera ato by Cnr he pain A ve courses were thew orsqnal berdng Aller mich Haag wn eetind nn thn ue of $4 00 yes, you read that eowractly one daar), Mr Rondinane’s motwes were clea. cating tm ya those mine trader and reseaicher wha appreciates Mew rea aun a4 ts the tats aba region Fravkly bas amazed at my good forme and Joe s onernety The pra Harare trove eowsted of five courses and two unieashed pages, dated Apa 8.1955 and helo. Tune Peniods on the Master 7 Day Pevod fr Soybeans” Obwewsly Ihean wow a work n prowess, as Gan passed away soon alter that date ‘One method though. caught my eye Mhwas the Mechanical Method ad Trend Insiator for Tiading Gras" and it shouted to be stucied ist Given my pessonal approact 10 nading tis motiod was gwen printy, and the results oat examsntion are wnt you wi find the folowing chapters Belore we continue the story, 1 aH you to undossta te Importance of having a havkng plan Traoine Puans Alter 20 yeaus of trading. nd wt almost mipossible fo Hae without 9 plan Hint dows not Ihave fred ules Why? Why not ust keep up to date sth al he news, and lade as you se ft? Because. you do not have a set of ixed tues you rn do a ack test Wihout Ack lest how do You kuow i your plan worked 9 He pat? Yost Anow int ast because the plan produces postive esults inthe past, this dos not guarantee success in the future Bul do guarantee that he plan does not produce postive mathematical expectations during the back test then i will never work inthe future Let me ask you Would you consider bulding @ house without an architectural plan? Of course nat! No plan would lead to chaos. The same thing applies to trading, So what constitutes a good Wading plan? A vai raging plan must have some minimum ‘components 19 eam the right 10 be called valid, At the simplest love, a plan must detine + Market drecton (the general direction of the market for example, the overall trend) ‘Tradable rend (Ihe ade direction, in other words; the ammediate swing ) + Support and resistance points (exact zones) ‘Action points (entry-ext pyramid rules ) ‘+Money management techniques, These should include al east: {A} Capialrequited for your plan. 8) Stop and Stop Reversal nies ) Prot protection rules 1) Percentage of eapital per tade (This varies according to the plan } ‘ii a facig plan tials this description, you may be ready to trade. Now, back to my tory of WO 5 mechanical method "Slowly. | worked my way through the well worn pages, making notes as! went along Can you magne my surprise wlven I came to his [pages 11 and 12 (reproduced here on pages § and 6) and saw that Gann had atered some ‘ot his original caleulatons and signed these allerations in his usual purple nk? ‘These alterations were tited in between the paragraphs. Although the original course is ated June 1933. the actual ateravons were handwitten in early 1955. So lean presume {hat Gann thought was important enough te insert and sign i before he sent the course to Mr Rondinone And wha did Gann write? Very simply “Use 2 day chacts and rules better ‘than 3 day, Signed W.D. Gann” Does Mr Gann changing a three day swing dentin toa twa day swing delinton make it Into a weasure? 1 could ony come to @ conclusion by doing a comparative back test on today’s hyper markets using both day charts and intva-day ime periods, and that is exactly wat I! Charing by hand, a back test of the T Bond futures markets proved to me that W. D. Gann's new Two Day Swing Concept provided two pieces of vital formation: Fist, the tuend direction and secand, the pomts af support and resisiance The manner was simpyeti Winy the T:Bond market lor the back test? The 30:yea! T-Bond contiact was chosen fo ths test because this s my main trading vehicle, and my understanding ofthis marke s tytn is such that i the Two Day Swng dd not work weil enough, I woul spl this ikl, and ‘not waste any ime on luther research of ths tol Besides my own working knowledge of ths market, the T'Bond futures contact waded on the CBOT is current he second largest tutes contact in tho would. Just yesterday, a8 \wnte this, the day volume was over 400,000 contacts andthe open inovest was over {500,000 contracts Not only s this a giant market, bu beteve the mos! sophisticated luadls are involved There are hedgers, Bank Haders,senipers, mtorest ae players, alk trading for their own teasons and quannies Therefore. a raging concept s gong 19 work, then ths is Hho place where ! want 10 test fist So, what were the resis? No only di find thn held up mice en the Daly Chat but the intia-day resuts weve also acceptable. Alter satstying myseil on the Daly bars, by hand charting, | knew tho aci es! would be m computen2ng the ene concept “real time,"on a Muiple Tine Frame basis Fortunately, akendy hada real tne computer program, the “Fibanacei Tradex. thal tunchoned wm Muitiple Tene Frame formal, Rea Time or End of Day "Much excellent programming was done inthe Fibonacci Trader lo bring the ene technique to the standard of catty and user tiendliness thal! requved tom a Waders point view. But the toughest pat was silo come. All ol W.D"'s Swing concepts had tobe pulled together and integrated wih my approach to formulate a mecharvcal wading plan that was tradable and potable Those o! you who hhave tried 10 do this wil know exnely what lam ting about The ys not Nhe the oF place for a detailed discussion, bul wee pois must he mentioned 1. Any vale plan of his mechanea! nature must have a ile ptulsophe at basis can be geometie, mathernavel, time ovenind ery combusatinn Hse 2. Curve ttig of over eptinuzing” othe Kiss of Dea tang aes tan 849 Untortunately there are piogiams oul ye Hat encrunage eyeton dase to do st that Robustness 6 the kay wort 2 Must be dynnive enough to change wah he may The concepts and techniques embiodind i hese personat tracing meoxporaing Muligle Tame Frames, Fasona:ceaid Gata Welnues, Always mechiancal alvays hned les, nays wih soon bar Yextng 6 In active fostonoving narbots ond the big profits ote you will bake OTe Majo trading in active perks ta. Jf you foto thesn ra SPACE CHARTS ULES FOR ACTIVE MARKETS AT HIGH LEVELS. ony tines im Matory Went nos to at 44.75 40 43.90 par boned: Thats Wit Love'tovto abr por mabe jar ety anf how to get oat seer tors end bottoms IELIEIaPncvos iti on no fast shat you connot walt for Trond Line Bottone [Sipraten in twney corey nd' comet weit tor dally bottoms. te be broken oF Sauly tape’ te bo! eressna, sspectotty where the tonge In tse per beaned © 20Y, mon a market fa having 9 rapid advance or 9 rapid dectine of thie kind IRould arcp 0 space chart ofS palnte. Ay thie T neon, that during the day, Then" Ureat avetinan ge per tushal from any top: then odvances 3@ per bushel 70m “NP ction, you anouid record tt, then the firat tine that West breaks ender Totton of &secnorey consider shot the trand Rae reversed Cenporeriiy. TAs Joy oni o1 for one day ot for one or two days, but {t le a warning to get out, you shout alse torp a chart of 4¢ novenents if you are watching the topes 1 ts Iaportant to toop the Hourly Algh end! low and also wore the open}ng of the hor ant the elesing of the Row ppply the sone ralot thet you do to your Oot my Moh and iow chart. The iren"Vinn that the porter treats e Trend Line betton on the Hourly chart 2 ore 9 sorter of hours with tops around the sone Levol, oF bottont {or sronrat hours, then whan the norict crotaon 4# ser In nortos raster at ine nortrt that fs moving 4 to se par doy, 16 ADD of thene rutea ae given wow 19 protect your capital ond protect your Been eth eget te atways veo step inns anders. Thea Uy Your omer ee i he Biba al ASSWow To wane UP a-oay cxanr excerion 10 mut IWDIeATIOnS FoR CHANGE 1H TREND Fale a ~ coosstec mrs 08 sreuiisc sortoes OF s-04r 1OVES ‘ute 38 = sIRSE 3-DAY AEACTION O8 PALLY ‘wo REAL TIME" PLANS AND Two "END OF DAY" PLANS willbe shown ‘The Real Time Plans are: 'A) BASIC PLAN nth 10.year back tet for the 30-Year T-Bonds. '8) PROFESSIONAL PLAN wth a 6-yeat back test forthe 30-Year T-Bonds contact. The "End of Day” Plans are: 1) BASIC PLAN for ve major stocks ~ IBM, EU Lily, Philp Moms, Intel and JP. Morgan Enci with ts own 5-year back test 1B) BASIC PLAN for TBlonds, wath a 5 year back test This gives a total of 46 years of back testing Does ths mean that the plans only work on these commodities and stocks? No. Peshaps you should check into seme others Starting withthe basics we wilwotk up to advanced concepts and techniques. Whilst there ‘reno Advanced Plans included. there is more than enough to get your teeth into, Perhaps in my nex! book I wil cover "Advanced ot Intraday tans. Not only are the rules foreach plan clearly presented, bu the majonty ofthis Book is taken Lupinth the “veal meal, 1e the exact history of each and every back test, rade by trade, Chat by chart ule by rule. have Kept the fu 1 a minimum and for that reason this book ‘snot everyone's cup of tea ‘The sevous student who wil ake the time 1 check through the charts trade by trade wit realize what | am sharing, You can use as “stand alone” or blend it wth your own plan and your tools ‘Many thanks to al the people who made this back possible. Joe Rondinone, a friend, a teacher and a great trader. who provided the orginal Gann courses for this book. My fedior, Thom Harte, a true professional. Linda Long, who labored late into the night with Super humor Carlos Tescano de Almeida, our prog/ammer, whose patience deserves a medal. Thomas Long’ lechrieal Knowledge was of great help. Doug Shannon fr his excellent help back testing. There are many others to whom thanks are due for the kindness they have shown me. Tim Slater of Dow Jones and Co. Jack Schwager, who imerviewed me for New Market Wizards". Jon Lusi and Mike Tedesco of Standard 8 Poors Comstock Lary Jacobs of ‘Traders Worl To all my students on five continents {or their wust and confidence Best wishes and super trading, Robes Krausz, MM BCHEREAL TIME DATA The "Real Time” data throughout this book is provided courtesy of STANDARD & POORS COMSTOCK 1-800-431-5019 \d of Day" data throughout this book is provided y of PINNACLE DATA CORPORATION 460 Trailwood Ct., Webster, NY 14580 Telephone: (716)872-0845 Fax: (716)872-1597 GANN SWING TRADING BASICS Simplicity is often the voice of God. Albert EinsteinNEW GANN SWING CHARTISTO ‘SWING TRADING BASICS AND TERMINOLOGY Clear detistions of the fens used for hs echnical approach is required before tho Concept enn be understood and tndng ies apps ‘You wal tt thoughout this book thal 1am fond of definitions: fudging can only cause problems and iosses m the end Every deliton is dusrated by 8 Char. 1. SWING DIRECTION 1) Wihat eausos the swing direction to change? 1b) Wiha causes a pause m the swing direction and the to carey an in the orginal swing dvecton? 2, TREND A} What causes the rend te change? 1) How dans the fend go into Neutral? 3. SUPPORT AND RESISTANCE 2) Detntion of SuppoM and Resistance, 1) How does Support hold or fai? €} How does Resistance hold or ta? 4. SLOPE 2) Whats the Slope? ) Whats the diference between Slope and Trend? All of these definitions ate slistrated in he chars tat flow The explanations nest tothe charts will enable you to be aware ol he concepts oase reshze that inthe beginning we are focusing on ane time period only. the Daily Bars. As we progiess, the ileresing warid of Mulipie Tame Frames will be covered and analyzed,1. SWING DIRECTION vupswiNG cunt) vueswine cnantin FROM DOWN TO UP The Swing Direction can change to UP ONLY i you get TWO CONSECUTIVE HIGHER HIGHS 97 D Gann alee needed higher ws for ns swgs to change dct But in todays {ast computerized markets, do Hot use that quate L oownswinc. cHanT «2 Downswing cHaRT #2 FROM.UP TO. D0WN The Swing Omtction can change to DOWN ONLY you get TWO CONSECUTIVE Lowen Lows oth Swings ave applicable to any tme pevod A pause’ 1 the Saing is covered nthe Advanced Section (see page 387)