...on most techniques after they are decoded. Then the stats for each technique or combination are tested against W. D. Gann's advertised percentage of 85%. In this way, we "set the bar high" of calling something "Gann."
In order for us to include a technique in the Gann "repertoire," it must both be decoded from Gann's writings AND be thoroughly back-tested to the point where it either functions or gives signals near Gann's successful trade threshold.
For example, let's take the alternating cycle technique. W. D. Gann did not trade every cycle leg. Each cycle repetition will be different. Most everyone we know integrates cycles into their trading plan differently. So how can cycles or cycle legs be uniformly tested? Anyone involved in professional trading systems knows the above-listed problems would make it impossible to meaningfully back-test cycles when each trader uses them differently.
The answer lies in normalizing the data and testing them for function. For each cycle leg, we apply scientific rules. Our rule states that, if a cycle leg is an "up" leg, the price at the end of a leg should be higher than at the beginning. Simple. using those criteria, we find that there is am 84- 94% success rate, depending on the type of cycle.
But that is only the first step. Further observation, and then further testing, shows us more. We see that our test results filter out some large moves in the middle of cycle legs that moved in the predicted direction, but we must list them as failures due to our test. We also find that most failures occur during non-regular US equity sessions.
Now we know that the few failures the system produces will effect us even less if we trade only US regular session, have a move-stop-to-breakeven in our system, and exit all trades at the end of US regular session. Now this technique becomes really attractive and comes with manageable risk.
Since Gann used the polarity lines as a stand-alone trading technique and gave us pages of results in "The Stock Market Course," we can test them trading hypothetical data on modern markets. Our testing is done by hand to confirm slippage.
The polarity lines should issue a signature % result. That is, on the next bigger time-frame, if we have chosen the right settings on our market, we should rarely, if at all, find a loss. For instance, if we are trading intraday crude, we should rarely find a losing month. If we do, it should lose by a few ticks. And the profits should be in the +225 for a high month.
So when we look at the results from a professional angle, that is the variance of returns divided by the variance of risk, we find this system is incredibly appealing for a professional trader because of the consistent absence of risk when testing the monthly returns. Even though we may have a couple frustratingly flat months, the consistent absence of risk gives us great confidence.
Our new Gann Center is located directly on River Road just seconds from Chicago's O'Hare International Airport in the heart of all major hotels and restaurants in Chicago's Rosemont Entertainment District.
VIEW OUTLINE & SCHEDULE. "Magic In The Markets" includes:
WEBINAR: DECODING W.D. GANN22 JAN 2020
Magic In The Markets Course3 APR 2020