W. D. GANN'S MECHANICAL METHOD (OVERNIGHT CHART)
In W. D. Gann's 'Stock Market Course' he introduces us to something he called "Mechanical Method," or the 'Overnight Chart.' Gann further elaborates on the method and adds some slightly different twists in 'The Commodities Course.'
Later in life, Gann becomes a bit frustrated that his students were straining to learn the more intricate astro-based techniques in 'The Truth of The Stock Tape,' and 'The Tunnel Thru The Air.' The older he grew, the more he would emphasize this ingenious system. Compared to Gann’s astro-numerology, "Mechanical Method" is simpler, self-contained, and was dependent on external data.
Originally designed for the US Indexes, the Mechanical Method identifies a 2 to 4-day trend for its entries and exits. It is flexible, and can be used for shorter timeframes like intraday or intra-week. The real beauty of the Gann's Mechanical Method is that it is self-contained. It works independently of astro and numerology, because it captures a repeating short-term pattern inherent to equity markets. This ancient market pattern determines the trader's risk, reward, and money management.
Mechanical Method has taken us nearly 10 years to decode. Though Gann's descriptions of this system seem fairly simple and straightforward, the basics for decoding his description are found in other places in his written works. There are a couple tricks to this, and we know many people who trade something close to self-evident in Gann's description. They all lose money. Gann's actual methods differ significantly from what he seems to say in his public books.
The Mechanical Method wows you once it is unlocked. Inside of Gann’s wonderful discovery are found timeless principles measuring supply, demand, and near-term market direction over a couple days. To see a picture of it, it simply looks like a bunch of random entries and exits on a chart. But the back-testing tells another story. We had to repeat it over and over by hand, because it looks too good to be true. To the left is the entire 2019 back-testing of Mechanical Method by the month of the ES with just 2 contracts. Many of the positions exit before EOD. The numbers represent points. We usually shave 10% off the profitability.
Though many traders and investors reel at the market volatility of 2020, W. D. Gann's Mechanical Method seems to work better. See the table to the right for 2020 through July All this through the most volatile market in American history.
Included in the back-testing stats are some 100-point scores over the last few months. This always elicits the question, "Why would you teach this?" The next few lines will answer that question.
There were also some 100-point risks over the last few months- even some that went overnight (get it.....the 'Overnight Chart?). This is why the Mechanical Method is not a winning trade button. Restating the above, the market pattern and volatility will dictate the risk and reward if we stay true to Gann's system. Gann even had a special move-stop-to-breakeven formula that kicked when "normal markets" were exceeded (this rule kicked in during January and has stayed implemented so far.)
So this is why we teach Mechanical Method. Will the guy trading his last $15k in his mom's basement find this a winning trade button? But trading professionals with the capital, discipline, and possibly the automation will find Mechanical Method worth many times the price of our "W. D. GANN: MAGIC IN THE MARKETS" Course.
WEBINAR: THE BLACK SWAN & W.D. GANN20 MAY 2020
Magic In The Markets Course17 & 31 JUL 2020
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.