gann - new stock trend detector
I've just finished reading W. D. Gann's book "New Stock Trend Detector" (note: these are paid affiliate links, as an Amazon Associate I earn from qualifying purchases).
Like many of Gann's writing's, "New Stock Trend Detector" is a bit cryptic, though less so than many of his other booklets. Precisely because his writings are cryptic - some of them to the point of giving him the reputation of a swindler in some circles - they are best considered, and read, as a whole rather than indepdendently,
"New Stock Trend Detector" is actually quite readable by Gann's standards. It's 50 or-so pages contain just what the title says. It might not be new anymore, but it is a way to determine the trend of stocks. Matter-of-fact, many trader still use variations of Gann's rules to this day. As you'll have noticed I've said "variations of his rules" - that's where the cryptic part comes in: it almost forces you to build your own system - based on Gann's principles - since there are no clear instructions to follow.
At heart, I’ve been, and still am, a Benjamin Graham style value investor, but I've come to realize that, no matter how good (or cheap) a company is, if the market doesn't agree with you, it'll be hard to make a profit. Value investing, in my humbly opinion, is the only rational approach to investing and yet, it only works under certain circumstances (one being long time-horizons). Not to mention, value investing also takes a lot of time and nerves!
In other words, if you're trying to lock-in profits short-term or medium-term, you need to be invested in a stock the market likes at this point in time. There are a number of indicators to help you doing that, but the fundamental principle is the same as the one laid out by W. D. Gann almost a century ago. Follow the trend! To follow a trend you, obviously, need to know which way a company is trending in the first place. If you can get in on the action early-on (but not too early), profits are sure to follow.
It must be mentioned that Gann's method, today, are neither new nor unique. There was plenty of time for others to copy and adapt his methods. More importantly, some of his rules don't really work anymore in 2019. Some things that used to be true in 1920-1940 simply aren’t anymore. That being said, he lays the groundwork for all the modern trend-following techniques and there are many interesting (and useful) suggestions in this booklet and, as such, I can wholeheartedly recommend it to any student of the market.
I look forward to the day when we’ll have a number of technical analysis tools in our software offerings (which is sooner that you may think). The ideas from this book will help shape it (but not dictate it, remember that we aim to give you complete freedom over your decisions regardless of which tool, or technique, you use).
"A New Stock Trend Detector", like many of Gann's writings, contains some truly visionary (for their time) ideas that every investor should study. As I've said, this short booklet is best read in companionship with other texts by Gann so, many of which are unfortunately out of print, though you might have some luck by searching the web). On a related note, there's a thesis (or part of one) by Mr. Qiuru Fu, named: "Evaluation and Extension of the Gann Swing Trading Rules" which is worthwile reading. The paper gives further insight into Gann's trend-following rules as they are being applied today. Unfortunately it is not available for purchase and not in the public domain. My suggestion is to do a Google-search for the exact title - chances are you can find a copy. Yet another related book which you might want to add to your collection is Cliff Droke's "Gann Simplified".
Even if you disagree with his Gann's ideas, it's worth being aware of them. Whether Gann ever made money or not is irrelevant: his works contain a lot of fundamental truths which I consider visionary for the age in which they were formulated.
Shall you decide to order any of these books, please do so through the links provided in this article. As an Amazon Associate I earn from qualifying purchases.
PS: If you want to go all-in and buy Gann's collected works, we've got you covered too.