It still amazes me whenever I talk to sceptics of the great works of W. D. Gann. I have used his timing theories and cycle analysis to make profitable trading decisions, yet others will dismiss the theories without a second thought. I suspect that these sceptics haven’t put in the essential effort to really apply themselves to understand it, or it simply hasn’t been explained well enough. There is a third reason, and I know that many people expect trading to be easy, lucrative and the playground of billionaires, because it is very easy to buy or sell either online or by picking up the phone to your broker.
 
Still, I know the Gann theory works, just as well today as it did 100 years ago, and we will look at an example of this on an Australian stock Aquarius Platinum Ltd. This stock came to my attention as an article I read pointed out that the ever increasing demand of platinum is likely to make prices skyrocket due to diminishing supplies. Supply and demand, after all, is a key to successful trading...

If we look at the chart, we can see a major low formed July 13, 2009 at a price $3.74. This point I marked as ‘!’ on the chart. The next major top occurred September 21 at $6.10 marked B, followed by another major low October 29 marked C, and finally the most recent top January 11, 2010 marked D.

Gann told us many things, but one that is of relevance here is that highs and lows are not spasmodic or random; they form as a direct result of mathematical relationships to previous highs and lows.
 
By now adding the Time Price label tool to the chart, we can see some important information that gives us vital clues to the next campaign or movement in the stock.

From the low at A, we see that it took 50 trading days to reach the high at B. Nothing spectacular or unusual about that, but it does give us a reference range in time and price to record for future use.

Gann told us Time was more important than price, so we must remember the time frame and look for any relationships to this count in the future.

Now, let’s look at the next leg up from the low at C to the high at D. Again, we use the Time Price label tool in Market Analyst to see the details of this run.

The next chart (over the page) shows a remarkable market event that repeats consistently enough for educated traders to make great trades. The time count between point C to point D is 49 trading days, only 1 day different to the time it took from point A to point B.

Look closely at this chart and you will see another fabulous market tell tale, the pattern known as ‘Three lower tops’. Perhaps it could be called two lower tops, but nonetheless we have the major high at D, then two consecutive lower tops marked 2 and 3 which reveal a distinct lack of buying strength unable to continue the momentum to higher prices.

So, perhaps platinum will continue on to make stellar prices as the groundswell of orders for the precious metal builds, but not today as this chart clearly shows a repeat of a previous time frame and a sell signal pattern of three lower tops:  two definitive selling signals at point D.

This chart confirms the Gann theory is alive and well some 50 years after his death. It also proves that you will only achieve a result or profit which is directly attributable to the amount of effort you put into your education and trading. 

May the trading gods be with you.

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