Timing the grain markets through the understanding of cycles.
Identifying the major trends that bring you the most profitable opportunities.
making the complex understandable
Grain Market Timing
W.D. Gann left a legendary trading record. He did not however leave much behind that would clearly explain what made his success possible. Yes, he wrote books and did a few interviews, but nearly everyone agrees he guarded his methods. It may very well be that he thought a simple explanation wasn't possible or that his knowledge was only worthy of those who would discover it for themselves. Whatever the case may be, the result is that today, there are a multitude of "experts" that attempt to explain his methods, with many conflicting opinions. Regrettably these arguments have produced in the general public a skepticism about Gann and his methods.
I do not pretend to be a "Gann expert", but after 15 years of studying the grain markets, I found certain discoveries aligning with statements and assertions that Gann made so many years ago. What follows is a tutorial explaining what I think his enigmatic assertions actually meant.
In order to understand the things W.D. Gann said, there is a fundamental concept that one must grasp. He often mentioned the link between TIME and PRICE. He even went so far as to say "Time equals Price". In part its meaning is taken to be that we must model PRICE the same way we model TIME. Time is the circling movement of the earth around the sun. It travels a complete cycle and then simply repeats the process..... over and over again. In other words, time is seen as traveling around a circle, and this is the same way we should view price. One point of significance of this revelation is the fact that there are only 360 locations on the circle. When time has travelled around the circle of its orbit, it returns and repeats the same location, it does not create any new ones. This fact is very simple, but it is a most necessary concept. It will reveal a perfect oder when applied to PRICE.
Gann gave a value to the position of the earth (time) as it moved around the circle of its orbit. The starting point or zero was the fall equinox of September 22. From here each degree of revolution around the sun increased the value by one until a complete cycle brought the earth back to the starting point to begin again. This is how the position of the earth (time) was seen to be equal to a value (of price). For example, every year on December 13 the earth has travelled 80 degrees past the zero point of the autumnal equinox (Sept. 22) In this manner, the position of December 13 can be seen to be equal to 80. But it can also be 440 (360 + 80 = 440). With another complete cycle added to 440 this same position could also equal 800 (440 + 360). This concept of time equalling price is fundamental to understanding how Gann viewed the markets. Most everything he discussed requires an understanding of how "time equals price".
Take a very close look at the chart below. It contains the simplified movement of nearby soybeans during the years of 1973 thru 1975. Please note the three turning points highlighted in red, namely the October 30, 1973 low, the October 4, 1974 high and the December 15, 1975 low. These are the 3 extremes reached in price during this time period. At first glance there doesn't appear to be an equal spacing between these three PRICES. However, when viewed on the circle of 360 degrees a PERFECT order appears.
After bottoming at $5.18 in late 1973 prices eventually top out at $9.56. As you can see on the circle contained in the chart, price travelled a complete cycle (360 degrees) past 518 plus another 78 degrees to reach 956. This circle has both 596 and 956 labelled as the same location. They are simply separated by 360 degrees (596 + 360 = 956). This illustrates how every price shares a location with other prices that are another 360 degrees around the circle.
Next, notice where price finally bottoms out in December of 1975. The price is $4.40. This is exactly 78 degrees BELOW the initial bottom of $5.18. In this manner one can see how prices balance on the circle. When modeled on the circle of 360 degrees, price can be seen to have rallied 78 degrees from 518 to 956 and then fell that same distance BELOW 518 to reach 440! These 3 prices make a perfect balancing 78 degrees apart. Gann once said that markets seek out a "gravity center". He likely was talking about the concept illustrated in this example.
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"TIME EQUALS PRICE"
To punctuate the link between TIME and PRICE, let us look closely at the December 1975 bottom. This is the clinching evidence to prove that time does in fact equal price. You see, as we saw in the example above, on December 15 the location of the earth's orbit reaches 442. This means that Soybeans declined in price until it met the position of the earth. At this major low time actually MEETS price on the circle. This is a great illustration of what Gann meant when he said "time equals price".
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