Before you start to do anything in trading, you should first make sure you have a very strong foundation and plan of what it is you are going to study, trade and invest in.

Ninety-nine percent of people will never get to the knowledge and understanding of markets and cycles that the great W.D.Gann had. Gann dedicated his life to studying financial markets in an attempt to understand them, spending years studying day and night.

The more time you put into your trading, the bigger the rewards. The biggest failing that people have when they start trading, is that they believe that they can have all the knowledge needed to make all the money of their dreams within a very short period of time. This is not going to happen. You have to start off very slow, and gain more knowledge year by year. It took me twelve years to work out WD Gann’s commodity course (full time). It’s taken me twenty-five years to decode WD Gann’s books “The Tunnel thru the air or Looking back from 1940” and “The magic word”. 

Here are five of Gann’s principles that I recommend you start following, and keep working towards daily:

1. Good health: the better your health is, the quicker you will learn.

2. Gain knowledge: Start with Gann’s seven books.

3. Capital: eliminate your debt and have your own money to trade.

4. Patience: learn to wait for the market to get to setups in both time and price (don’t jump into a trade too early just to trade).

5. Nerve: when the market gets to your entry point, pull the trigger and place a stop lost.

Another very important thing to do is to get long term accurate data. You cannot possibly study Gann theory without high quality data. 

In my opinion, Gann works best on commodities, as there much longer term data available, and also, commodities cannot declare bankruptcy. Another point to note is that with the USA printing money like Germany in 1923, commodities are where all the money is to be made in the future.

There are a number of swing charts you can look at on Market Analyst. I suggest creating monthly, weekly, daily and point swing charts.

You will see my first chart that I have created is a 91 day (quarterly chart) swing chart of December cotton, cotton was one of Gann’s favorite commodities to trade. I have assisted Market Analyst in the development of their swing charts to ensure that the swing charts provide more detailed information than was previously available. As you can see it gives you the dates of highs and lows, cents per/lb the market has moved and number of days up and down. This information assists as it allows you to quickly see the over balancing of time and price. You can see very easily that the market has broken back through the lows of 2004 to 2007 turning the trend up. It’s moved up through to May, a seasonal high (In Gann’s book “How to make profits in Commodities”) at .6375 on the 12th.That was up 181 calendar days or half a time cycle (Time in the bible is 360, Time, Times and half Time = 1260 days or years.) Watch for resistance of 252 days up which will equal the move down from the all time high. (252 x 10 = 2520, this is twice 1260).

Half the move up is at .6757 a natural level to sell off from.

Now that I have my longer term swing charts sorted out, I can look closer at the market action, so I go to a 23 day swing chart (which is Gann’s three weeks swing chart). 22.8 days times 16 is 365.25 days (16 planes on Gann’s cover of “Tunnel thru the air”). You again can see very quickly that if we add .2050 cents (the first move up) and add it to .4625 (the last low on the 23 day swing chart in the following image) we get .6675, closest to the .6750 level.  

Gann also used the 2 day and 3 day swing chart, depending on where the market was positioned. The next chart is a 2 day swing chart. The 2 day and 3 day swing chart is based on the moon, as the moon changes sign every 2.5 days. The moon controls the masses emotions, so it is good to watch this chart in the final stages of a move. After the market makes a top, it will first over balance price, the first indication that it has turned down. You would then look at the 3 day swing chart to see if it has turned down, and go short with a stop above the swing high of no more the 3%.
 
In Summary, for greater understanding, read the first 64pages over and over of “How to make profits in Commodities” and especially follow his 28 rules on page 43 and 44.