In the early 20th century, Wall Street and the New York Stock Exchange were highly visible icons of burgeoning American power and influence. Although the average working family was not directly involved in the stock market as it is today, Wall Street was still in the news, and its often colorful characters, known as “Wall Street traders” at the time, were the main fodder of the gossip columns of the nation. and famous weekly magazines.
WD Gann was one such character, and one of the few whose name remains part of Wall Street legend even today. Gann became a public figure after giving an interview in 1909 to the then leading Wall Street publication, Ticker and Investment Digest. As a historical aside, the interviewer was Richard D. Wyckoff, who in subsequent years became a famous Wall Street trader and stock market author.
Perhaps the reason why the legend of WD Gann has endured was revealed in that 1909 interview. As Wyckoff put it in his report: “It seems to be a fact that Mr. W, D. Gann has developed an entirely new idea as far as to the principles that govern the movements of the stock market.He bases its operations on certain natural laws that, although they exist since the world began, only in recent years have they been subjected to the will of man and added to the list of the called modern discoveries.
In that interview, WD Gann talked about natural laws and something he called the vibration of law, although he never specifically defined what he was referring to. WD Gann was a prolific researcher and writer. He published many commodity and stock market trading courses in his 40-year career on Wall Street. Obtuse prose is the hallmark of all Gann’s writing. It alludes to many things without ever defining a single one. Perhaps that is why he remains as enigmatic a character today as he was the day he gave his interview to Wyckoff nearly 100 years ago.
At least one of WD Gann’s ideas is easily understandable in process, though not in application. The Gann Wheel, what most people think of as the Square of Nine, is sometimes called a “Square Root Calculator” or a “square the circle” device. This simple illustration can explain how and why these terms came about. You probably recognize that the illustration is just the first two rings of a Gann wheel with the number “1” in the center.
3. 4. 5
2 1 6
9 8 7
Format limitations prevent going further, but you can see the pattern that could continue the progression to infinity. In Square of Nine parlance we say things like 4 being 90 degrees from 2. That makes sense only if you can visualize this rectangular table of numbers as being enclosed in a 360-degree circle (or series of circles). In this case, the number 4 is 1/4 of the way around the circle from the number 2, or 90 degrees of circumference from 2. In the same sense that we can say that 4 is 90 degrees from 2, we can say that 6 is 180 degrees from 2, or half way around the circle.
You’ll need to continue the progression for at least two more cycles on a separate sheet of paper to follow the example below, but this is where it gets fun. The square root of 15 is 3.87. Add two to the square root of 15 and we get 5.87. We square 5.87 and get 34.49 which rounds to 34. Now we know that adding two to the square root of a number and squaring that sum is the same as a 360-degree upward rotation on the Gann’s wheel. If “2” represents a 360-degree rotation, “1” represents a 180-degree rotation, “0.5” a 90-degree rotation, and so on. WD Gann tells us that 90 degrees are very important in the stock market. What you are really saying is that adding and subtracting .5 (and exact multiples or ratios of .5) to the square root of a stock price and then squaring the result is very important!
If you spend a little time experimenting with Gann wheel math on some stock or commodity charts, you will discover some interesting relationships. If it seems a bit confusing, don’t worry. WD Gann spent a full 10 years developing his law of vibration and the next 40 devising ways to keep the last details a mystery.