HOW TO REPRODUCE THE LEGENDARY RETURNS OF W. D. GANN
THROUGH LEVERAGED POSITION TRADING…
W.D. Gann’s How to Make Profits in Modern Markets
INTENT OF THIS COURSE
The intent of this course is to provide a trading strategy that allows for large returns from low risk investments. Trades have an average risk:reward ratio of 1:10, with a minimum return of 500% per trade to maximum returns exceeding 5000% per trade. The strategy employs straight forward analytical techniques explained in Gann’s How to Make Profits in Commodities to identify high value trade setups which can be employed using highly leveraged options strategies to generate large but safe returns.
The analytical techniques and strategy taught in this course do not require any prior Gann knowledge or any past trading experience. They can be easily understood and applied by any trader, new or seasoned, to great effect with very little time or difficulty. The strategy is based upon “leveraged position trading” so requires little time or effort to manage. Minimum capital requirements are very low, so someone with an account as small as a few $1000 can effectively implement this strategy.
BACKGROUND & HISTORY
For over a century, the spectacular results produced by the legendary W. D. Gann have inspired an undying interest in the teachings and methods of this great trader. Some people are fascinated by the esoteric foundations of his system, others by the practicality of his technical tools, and yet others by his phenomenal ability to compound small amounts of capital into huge returns.
It is this last point, however, that motivates most researchers to investigate Gann’s work more deeply. For most non-professional and amateur traders suffer from a common problem, which Gann addresses better than any other trader in history: a lack of sufficient investment capital. As the old adage goes, “it takes money to make money…”
This being the case, when people learn of Gann’s documented trading record of starting with a small amounts of capital, often only a few hundred dollars (equivalent to a few thousand today), and compounding it by 1000’s of percent into huge returns, they see an opportunity. If they could replicate those results, that would make a significant difference in their lives.
For instance, in Gann’s famous 1909 Ticker Interview, in one month, under observation by an auditor, Gann produced over 1,000 percent return with his trading. In the same article his associate, William Gilley stated: “He has taken half a million dollars out of the market in the past few years. I once saw him take $130, and in less than one month run it up to over $12,000. He can compound money faster than any man I ever met." Any truly honest Gann researcher will affirm that the primary reason they pursue Gann studies is in the hope of attaining similar results. But why exactly is this? The answer is quite obvious, if not fully crystalized in the minds Gann analysts.
Most “investors” or “professional traders” are defined as such because of the fact that they are working with larger amounts of capital, whether it be their own personal investment capital, or that of a pool, fund or company. This kind of trader therefore, does not have the same problem as the little guy who is just starting out, or the worker with the full time job and limited savings.
Both of these types generally have little time and even less money that they can afford to risk in a way which might significantly change their lives. The prospect of 10-30% annualized returns, which the larger investor would be ecstatic to obtain on a consistent basis, does nothing for the little guy with a small $5,000 - $10,000 account or less. Such minuscule returns will hardly pay his software and data fees, let alone allow him to ever get ahead. He needs a strategy that is quite different than what the mainstream “industry” has to offer, if it’s going to make a difference in his life.
So when such a person sees Gann’s ability to take a small account and compound it by 100’s or 1000’s of percent, it is this kind of strategy which he seeks to duplicate, since that is the only type of trading strategy that will make a difference. Many such amateur traders dream of nothing more than being able to leave their day job and make trading their true profession, if only they could find a way to produce enough income to live off of, without draining their trading accounts.
But is this even possible today? Or is it a mere legend from long times past? For most traders starting out in this business, the prospect of making “speculation a profitable profession,” as Gann intended his students to do, is a dream which they have little prospect of manifesting. However, this does not have to be the case, as there are modern approaches which will lead the serious trader to similar accomplishments.
GANN’S TWO LEVELS OF TRAINING
Gann himself divided his teachings and trading methods into two primary categories or phases, swing trading and trend or position trading. He always began his student’s training with swing trading, since that was the fastest way to bring a person with no knowledge or skills into the game. For this purpose, Gann had what he called his “mechanical methods” or “trend indicators.” Researchers like Tim Walker have applied Gann’s swing trading technique on the current S&P500 and produced over a 500% return in 3 months using Gann’s exact system.
Those returns are not bad, but they do not even come close to Gann’s larger returns cited above. However, these techniques were only the first step in Gann’s student training program. Once they had become proficient swing traders, having grasped the fundamentals of risk management and trade execution, Gann would then move them on to his more advanced teachings. These progressed from swing trading to leveraged position trading, or pyramiding with the major trend.
In this approach, rather than reversing one’s position every time the markets made a smaller intermediate reversal, as is done in swing trading, Gann would focus upon capturing the longer-term trend, often pyramiding his position as the trend progressed. It was these sorts of campaigns that Gann was most famous for, since this is where the huge returns were generated.
One may wonder why it would be that the larger returns were made riding the major trend in only one direction rather than trading each intermediate swing in both directions? It would seem that one would capture more point movement in the second scenario. The reason for this has to do with leverage! When swing trading, one generally cannot use too much leverage in one’s positions since there is a higher probability of being stopped out multiple times due to risk management.
Leveraging these kinds of positions through margin requires tight stop-losses in order to limit the greater risk produced by the leverage. Closer stops losses increase the probability of the stops being triggered which tends to eat up ones trading capital, even when the short term direction was correctly identified. So using too much leverage in swing trading is generally an ineffective strategy.
However, when one zooms out on the markets and rather than looking at each alternating short-term swing, instead looks at the larger intermediate to major-term swings, a new and different strategy comes into play. This strategy allows for maximum leveraging of one’s positions, without the assumption of significantly greater risk. For instance, when Gilley speaks above about Gann’s turning $130 into $12,000 in one month, there is absolutely no way to do this without using extreme leverage! The market simply does not have enough price action to generate these kinds of returns without the use of leverage.
There are not a lot of ways to generate high leverage. The most common is simply trading stocks, commodities or Forex on margin, which will often give from 2-6 times leverage for stocks, up to over 40 times leverage on Forex, with commodities usually falling somewhere in between. However, this is still not always the most effective way to achieve the kind of high leverage that Gann was using back in his day, at least not without exposing yourself to significant risk as mentioned above. The higher the margin leverage, the greater the risk becomes if the market moves against you, and again, the more difficult it becomes to place a stop-loss that will potentially keep you in the trade without risking more than you can afford.
If a market takes a longer period to establish its bottom before making a larger move, retesting the same low levels again and again, stop-losses can be triggered multiple times. If the stop is put at a further distance from the bottom, and the trader is wrong in his direction, the potential losses will be too great to meet the risk parameters for the account. So, again, unless one has perfect timing using the more advanced techniques of Gann analysis, margin trading is generally too risky a method to increase leverage. There must be another way!
So how does one accomplish this significantly higher degree of leverage while still limiting one’s risk exposure to reasonable parameters? This is one of the great secrets of trading, and of Gann’s compounding money the way he did. Without speculating about exactly what tools Gann himself used in his time to produce these results, we will simply jump to the tools that are available today to accomplish those same ends: OPTIONS. Gann wrote two short courses on options trading, proving that these vehicles were, without question, part of the toolkit he took advantage of. The following quote from his book 45 Years in Wall Street perfect illustrates our point, and proves that this is a strategy that Gann himself used:
“I consider PUTS and CALLS a profitable, safe way to trade because you can
risk a small amount of money and you cannot lose more than that,
while your profits are unlimited if the stock goes your way.”
W. D. Gann, 45 Years in Wall Street
There is a real art, or perhaps science, to using options to generate huge leverage with limited risk. This science is not well known by modern traders, and is very rarely used today, though the general vehicle is well enough known. Some great traders like Dr. Jerome Baumring used such strategies to control $20 million in Gold positions with only $200,000 in capital. Combining the strategic use of leveraged long options with intermediate-term position trading through a delicate balance of price, time and strategy provides the greatest opportunity to produce huge returns of any approach available to traders.
This technique is probably the closet one can come to what Gann himself was likely doing, without mastering the most advanced and difficult elements of Gann Theory. But what is surprising and particularly appealing about this approach is that it is easier to understand and apply than most other styles of trading. Leveraged position trading is far simpler than swing trading, requiring less risk and less effort. Yet it produces returns that are significantly greater than those be attained by swing trading, with only a fraction the difficulty.
This is exactly the approach most traders dream of discovering but simply do not know how to find. It provides a low risk strategy combined with high reward opportunities, with a risk:reward ratio that averages around 1:10. When a trader learns to identify specific trade setups that require little effort to analyze and trade, and then applies this leveraged option strategy, the returns can match the best results produced by Gann back in his day.
The approach uses Gann’s most fundamental though relatively simple techniques, like those presented in his book, How to Make Profits in Commodities, and identifies trades with an average 10:1 reward to risk ratio, the worst case being about 4:1, and the best case exceeding even 50:1, like the more legendary Gann trades. Following Gann’s specific rules, one never risks more than 10% of his investment capital to generate consistent 500% to 1000% returns, with the occasional exceptional trade that dwarfs these more consistent returns.
That means that for a $10,000 account, a $1000 investment will regularly turn into a $5000 to $10,000 return when the trades setups hit. When they miss, the maximum loss is only the $1000 investment, never a dime more, because the risk it strictly limited. And when one of the big setups hits, the return on $1000 can be 20, 30, 40 or more times the investment! When one is fortunate enough to capture a huge trade like this, which can happen perhaps once or twice a year, even more depending upon how many markets one tracks and what the markets are doing in the current time period, this kind of trade can truly change one’s life!
Of course, this can only be done using options, the magical leverage tool that also limits risk in a way that can never be accomplished trading underlying markets using stop-losses, which can be jumped or decimated by market gaps, closures, and limit moves. These can literally bankrupt a trader, not just blow out his account, but take his house and all of his savings.
When one buys options, this can never happen! Your complete maximum risk is fully determined at the outset, and unlike stops which always lose the full amount, one can exit a position early and recuperate a significant percentage of his risk capital.
So this is another reason that options trading provides far greater advantages over trading the outright markets. Whoever said that options were riskier than normal markets was not referring to the type of long options that are used in this strategy. This strategy only buys options, or trades long options, we never write or sell options, which can have the same risk exposure as trading the outright markets. So the implied risks in options trading do not apply to our approach.
The technique we are discussing here is not taught in any of the expensive options courses available today, nor is it discussed in any options trading books that have been published. The analytical tools have been discussed by Gann, and the basic options vehicles are presented in options books, but the integration leading to the strategy of how to apply them in this way has never been presented, as far as I have seen.
A PRACTICAL EXAMPLE
Let’s look at one brief example on Amazon.com to help give more context to this discussion. The following daily chart shows AMZN making a double or triple bottom in early 2015. Let’s say that we wanted to trade AMZN long from this bottom, a typical technical trade made regularly by any stock trader.
At the low, AMZN was trading around $286, and as one can see the market had a nice, strong move up to around $450, a gain of $164 per share or 57% over the next 3 months.
If we had purchased 100 shares of AMZN stock (we’re using 100 shares in this example since 1 option contract holds 100 shares), it would have cost us $28,600, and would have produced a profit of $16,400 in a few months’ time. All in all, this would be considered a very nice trade by most standards.
However, for a small trader with only a $10,000 account, who is only willing to risk 1/10 of his capital on each trade, this would have been a non-starter. He would have only been able to buy 3 shares of the stock for $858 (plus commissions) so his 57% return would have only been $492 (minus commissions) for this 3-month trade. Double this if he were trading with 50% margin, generally the maximum allowed in the US for an overnight stock trade, and you’d make $984 in profit.
That’s a profit of only $168 per month, or $336 per month trading on margin, not very impressive, hardly enough even to pay for account, platform and data fees. So a trade like this may be great if you have money, but if you don’t, it’s simply not accessible to you in any meaningful way.
Now let’s look at the same trade using a leveraged options strategy. In structuring a leveraged options position for this same AMZN trade, we could have paid $660 for one option contract, equivalent to 100 shares of stock, at the same time as the stock purchase example above. With this same move in the same time period, selling our option at the same time as selling the stock, our $660 investment would have returned $9600, a 1400% return on our investment. If the above stock trade was good by most standards, what would you call this? Phenomenal? Gann like?
Had we had a slightly larger account such that we could have afforded 2 of these options for $1320 (as our maximum 10% capital investment) we would have made $19,200, a larger return than was made on the outright stock purchase, but with only 5% of the capital, and with our risk locked in at $1320 as the very worst! I would certainly rather invest only $1320 to make $19,000 than invest $28,000 to make only $16,000, wouldn’t you?
One would almost have to think it stupid to buy the actual stock when you can make more with less buying an option instead, and that’s not even considering the potential risk. What if AMZN gapped down $50 overnight? What if this were 9/11 and the markets closed for days, opening again at historical lows? We’ve all seen both these scenarios in our lifetimes, and just look at how Amazon regularly gaps on the above chart! Even with a pretty conservative stop, you could easily lose $5,000 when your stop-loss order fires on the open.
To see more examples of the kinds of trades this course hunts, see the following link, where the author tells a bit more about his experience and approach, and where are listed a number of other trade setups where he traded a strategy like this:
In any event, this example should demonstrate why options are not only much safer than trading the underlying markets, but provide significantly greater profit advantages with their leveraging opportunities. You can now see in examples like this how old W. D. could have turned $130 into $12,000 in only 1 month. It is EXACTLY the same kind of trade as we are looking at here, and it is TOTALLY doable in this day and age!
In fact, some of the alternative options potentials for the above trade which I did not show actually provided the same percentages that Gann is said to have achieved, with much higher returns than those in our more conservative example. Anyone familiar with AMZN knows that moves like this are not that unusual. This is not some random outlier, a one of a kind, generational move, but a somewhat typical swing in this stock that may occur several times a year.
For those of you who simply do not believe this, I can tell you that I actually watched a trading buddy make this trade in early 2015, so that I can affirm as a witness that it is not only possible, but that these opportunities can be found regularly, if you have the right knowledge and understanding. I have seen my friend make numerous trades like this and even better than this over the last few years. The point being that this kind of trading is not only possible in this day and age, but is regularly accessible to those who know how to identify the trade setups and apply the simple strategy to take advantage of them.
One last point is that you will notice that this trade took little further effort over the ensuing 3-month period. There was no swing trading, no further analysis, and not much more to be done. The analysis used to identify this kind of trade setup is surprisingly simple! In fact, it uses some of Gann’s most tried and true techniques that require no complex Gann knowledge, no strange astrology, nor any complex technique or technology to master.
This type of trading does not even require watching the market during the day, and can be done afterhours with a minimal amount of analysis. Believe it or not, this strategy can even be applied using mostly monthly and weekly charts, as Gann himself instructed his students to do.
ORIGIN OF THIS COURSE
I have written about the value of leveraged option trading more than once over the years, and I continue to be surprised to find that almost no one ever really figures out how to apply this valuable and powerful strategy. While people pursue highly complex technical knowledge and advanced esoteric science in their analysis, they don’t tend to put the same amount of attention on understanding alternative strategic approaches like this, which can produce profits that outrun other methods of trading with a fraction of the effort. They only look at one side of the equation becoming lost in analysis which is too advanced while using strategies that are not advanced enough.
In my experience, traders are often just too stubborn and myopic to break out of their own preconceived notions and false assumptions in order to try something new and different. Far too many are unwilling to seek fresh ways of approaching trading, even if they are completely unsuccessful with what they are doing. And sadly, aside from seasoned professionals, the majority of amateur traders are total failures, when you look at their ongoing trading results. They have no working game plan at all, and in the end, most give up after accumulating significant losses.
The greatest difference between professionals and amateurs is that the pros have no choice but to do whatever it takes to become successful, or else they simply lose their jobs. Therefore, generally those who remain in the industry have developed some skillset that works. Over the years I have been fortunate to have known many successful traders with different talents, strategies and game plans, and I often try to convince them to create educational material to help struggling traders find similar successful. Some refuse, other’s tools just don’t apply to smaller traders, but some generously agree, and over time, it’s those, like Gann, Bayer, Baumring, or Ferrera who decided to give something back that has left us the trail of quality educational material that we all study in the hope of developing such similar skills.
In the same way, after watching my trading buddy successfully apply the strategy discussed above over and over again these last years, I couldn’t help but think that this would be an extremely valuable course for the many struggling traders out there who simply cannot seem to find a way to make consistent profits. I suggested to him that if he could present his approach clearly enough for amateur traders to understand, it could be one of the few courses that would make a serious difference in the results obtained by many well-meaning but unsuccessful traders.
Needless to say, for successful or professional traders, it would also serve to line up further profitable trades than they are already finding with their own techniques, which is something I know most professionals always seek. I find the professional’s attitude generally is, “if a course will give me one trade that I otherwise might have missed, it will pay for itself and the knowledge will be free. Anything else is gravy…”
My friend agreed that this strategy could be easily applied by unsophisticated traders, and would be an excellent approach for struggling amateurs. But he was not convinced that it would be a good idea for him to share his secrets, nor did he want to take his attention away from trading to write a course, which sounded laborious and boring compared to the excitement of trading. He suggested that perhaps when he was ready to retire, he might be more open to it, though he’s barely middle aged, so that would be a long way off.
So I continued nagging him and cajoling him, and after years of resisting my relentless badgering, he finally gave in and started documenting the details of his strategy and analytical technique. From an initial 144-page trading primer his work evolved into an elaborate 463-page trading course, laying out clearly, even for someone who knows nothing about Gann or options, every detail of the methodology required to apply the strategy discussed above.
His guidelines were set by two ideals: first, that it would be a book he would have wanted to buy himself 20 years ago, and second, that it would be sufficient to pass his trading knowledge onto his own son. We further agreed that I had to be convinced that the book was of a practical enough quality that could indeed pay for itself with a trade or two. If these specifications were not met, he’d just keep this book for his own family.
It was also important that there was no detail left unexplained, assumed, or “veiled,” such that some readers might gain access to the secrets while others would not. It had to be crystal clear and fully applicable by anyone with moderate intelligence and a general interest in trading, or it was back to the drawing board for further elaboration. The only way this course was not going to work was if somebody did not follow and use the instructions as laid out, and that would be their own fault.
It took him more than a year of dedicated focus, writing being a far more complicated task than trading itself, but after long labors and multiple rewrites, the course finally met all of our requirements, and we are finally able to offer it to our clientele. We are very excited to put this course out, because it fills a gap that was quite challenging, in presenting material that could produce tangible results without being overly complicated.
Further, finding a way for new traders with small accounts to be able to generate solid returns in their trading, enough to really make a difference in their lives was not easy. It couldn’t be something that would generate only 30% returns or even 100% returns, it had to do much more and remain safe at the same time. We feel that these goals have been thoroughly accomplished with this course.
In my opinion, this is probably the one course that has the best potential to significantly change the lives of small traders, turning their ongoing losses into wins, perhaps for the first time in their trading careers. I can personally affirm that the strategy presented in this new course recreates the style of trading that was demonstrated by Gann back in his day. I know this because I have watched it applied in real time over the last 3 years, and have seen it generate fantastic profits over and over again.
If you would like to see some examples of the trades that I watched Gordon forecast and trade over the last few years, see the following link. Gordon also wrote up some brief points about this course from his perspective that you will also find at this link:
Even a trader with limited time and a small account can catch an occasional few of these trades, enough to make a real difference in their life. With a little time and some dedicated practice, this approach has the potential to allow any amateur trader to “make speculation a profitable profession” as was dear Mr. Gann’s longtime intention for those who studied his works.
ONLINE RESEARCH & TRADING FORUM (6 Month Membership Included)
Finally, I was also fortunate to have convinced Gordon to monitor an Online Research & Trading Forum for this course. Initially the Forum will be used to provide a classroom environment where the author will help readers to clarify and master the analytical techniques presented in the course. As we said, we want to assure that no detail was left out, and that the material is fully comprehensible by everybody. It will also be a place where readers can discuss their analysis of the markets and their selection of the options for their trades, and get help from Gordon to assure they fully understand the strategic application and are doing it correctly.
However, this is not the main purpose of this Forum, since we expect that within a couple months most students will fully understand this material. After that, the Forum will serve a much more valuable purpose, once the students have mastered the analysis and know how to identify these specific trade setups. At that point the Forum group will work as a research team that together will be able to scour the global markets for these high value trade setups. The more setups that can be found, the more opportunity there will be to take advantage of them by everyone. Since we do not expect this group to be too large, there will be enough liquidity in most markets to allow everyone to trade the same setups. But a group can find a lot more trades than one person working alone for himself, and this is the key that will give added value to this group effort.
As such, we will be limiting the initial Forum Membership to a 6-month time period, after which membership in the Forum will require a paid subscription (price as yet to be determined). However, there will be an opportunity for active analysts who discover successful setups to receive bonus credits towards their subscription by sharing their finds with the group (i.e. say the subscription price is $500, we might give a $100 credit for each setup found, so that someone who finds and shares 5 successful setups will get their subscription for free). We simply must do this, because most forums like this tend to have a few active members who do all the work and the others take advantage of their research without giving anything back themselves.
This will allow all course owners a nice long period to have access to the classroom and get all their questions answered and to watch many real trades, while also creating a fair medium where everyone is contributing to the work or otherwise paying their way. Of course, Gordon will probably be the one finding most of these setups, at least initially since he is already doing so. This will provide an ongoing learning environment for new traders to watch and follow, almost like an apprenticeship, while also providing real trading opportunities for those who want to apply the knowledge.
PRICE & ORDERING
W.D. Gann’s How to Make Profits in Modern Markets
By ”Gordon Roberts” 463 Pages. Black Suede Hardcover.
Includes 6 month FREE access to Online Research & Trading Forum.
NOTE: This course requires the signing of a Non-Disclosure Agreement.
PRICE $ 3333.00
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