June 20, 2024


Phenomenal Business

W.D. Gann Square of Nine

In the early 1900s Wall Street and the New York stock market were very 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 news, and its often colorful characters, known as “Wall Street operators” at the time, were the main fodder for the nation’s gossip columns and notorious weekly magazines.

W.D. Gann was such a character, and one of the few whose name remains part of the 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 an historical aside the interviewer was Richard D. Wyckoff who in the following years became himself a famous Wall Street operator and stock market author.

Perhaps the reason the legend of W.D. Gann has endured was revealed in that 1909 interview. As Wyckoff said in his reporting “It appears to be a fact Mr. W, D. Gann has developed an entirely new idea as to the principles governing stock market movements. He bases his operations upon certain natural laws which, though existing since the world began, have only in recent years been subjected to the will of man and added to the list of so-called modern discoveries.”

In that interview W.D. Gann spoke of natural laws and something he called the law vibration although he never specifically defined what he was referring to. W.D. Gann was a prolific researcher and writer. He published many stock market and commodities trading courses in his 40 year career on Wall Street. Obtuse prose is the hallmark of all Gann’s writing. He alludes to many things without ever defining a single thing. Perhaps that is the reason he remains as enigmatic a character today as the day he gave his interview to Wyckoff almost 100 years ago.

At least one of W.D. Gann’s ideas is easily understandable in the making even if not in its application. The Gann Wheel, what most people think of as the Square of Nine, is sometimes called a “Square Root Calculator” or a device that “Squares the Circle.” This simple illustration may 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 numeral “1” at the center.

3 4 5

2 1 6

9 8 7

Formatting limitations prevent going any further but you can see the pattern that could continue the progression to infinity. In Square of Nine parlance we say things like 4 is 90 degrees from 2. That makes sense only if you can visualize that this rectangular table of numbers is enclosed in a circle (or series of circles) of 360 degrees. In this case, the number 4 is 1/4 the way around the circle from the number 2, or 90 degrees in 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 will have to continue the progression for at least two more cycles on a separate piece of paper to follow this next example, 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. Square 5.87 and we 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 thing as a 360 degree rotation up on the Gann Wheel. If “2” represents a 360 degree rotation then “1” represents a 180 degree rotation, “0.5” a 90 degree rotation, and so on. W.D. Gann tells us that 90 degrees in very important in the stock market. What he’s really saying is that adding and subtracting .5 (and exact multiples or proportions of .5) to the square root of a stock price and then squaring the result is very important!

If you spend even a little time experimenting with Gann Wheel math on some stock or commodities charts you will discover some interesting relationships. If it seems a bit confusing, do not fret. W.D. Gann spent 10 solid years developing his law of vibration and the next 40 devising ways to keep the last details his mystery.