TRADING W. D. GANN'S TOKYO J-1 CYCLE
W. D. Gann is known for his cycles. The cycle he described in 'The Tunnel Thru The Air' as the "Tokyo J-1" is probably the most renown.
The Tokyo J-1 Cycle is a cycle of progression, as opposed to a cycle of repetition. That means that this cycle is drawn out in advance from a fixed starting point using Gann's Law of Vibration. One does not have to go back over certain past turns and try to average it out. Also, the sequence is always UP/DOWN alternating and does not vary- even if a cycle leg fails. Gann's Tokyo J-1 cycle is taught in its entirety in our "W. D. GANN: MASTER THE MARKETS" Training.
Scroll through the gallery below for the last 9 years of this cycle. Cycle legs were drawn in advance of the market. A red length denotes that the market energy was DOWN during this leg; green denotes UP energy. If a cycle leg is colored yellow, that means that the market failed to close in the predicted direction at the end of that leg as compared to the beginning. Gann didn't trade this cycle as a buy-and-hold, but that comparison is the simplest scientific way to test it.
Notice that the rate of failure among cycle legs is about 14% at most during any given year. That tells us this cycle is very reliable. Gann never traded his cycles as "buy and holds," but used the direction of the cycle leg as a long/short filter. He also had a strategy where he used the beginning of a new cycle leg as an entry trigger.
It is important to recognize that W. D. Gann never intended his cycles to be traded as a standalone. Price came from other methods. Most frequently, Gann combined this cycle with the Arcana trend prediction method and different rules for entry, exits, and money management. He called these trading rules "methods of operation."
You can learn the cycle perfectly, but in order to profit you must learn Gann's rules for trading the cycle. Gann had 3 main systems for entry, exit, and money management on the Tokyo J-1 cycle. These are cycle leg triggers, angle methods, and something he called 'balancing a stock.'
In the gallery below we see the results from the last 3 years for using cycle legs as triggers and integrating the Arcana trend as a long/short filter.
In the next gallery below we take a look at trades triggered by combining the Tokyo J-1 and Arcana with Gann's angle method of entry.
Finally, in the graph below we add trades from 2023 that were triggered using Gann's entry technique from his section on "balancing a stock" from 'The Truth of The Stock Tape.'
Gann's Intraday Mechanical Method is taught in its entirety in our "W. D. GANN: MASTER THE MARKETS" Training.