I'm not sure how many of you have heard of a fellow by the name of W.D. Gann but he's arguably one of the most successful investors of all time. I'm just reading one of his books called Truth of the Stock Tape. He wrote it in 1923 almost 100 years ago. It's actually a collection of 4 books titled (1) Preparation for Trading, (2) How to Trade, (3) How to Determine the Position of Stocks & (4) Commodities. I'm not quite half way through the book. I insist that everyone here should go and read this book as soon as possible. So much of what Gann writes about mirrors what Will is teaching us. Guess what Gann's most common reference is ? You got it, Supply & Demand ! So far I think I've seen it mentioned at least once on ever page that I have read.
I just read one of his illustrations about Studebaker in 1920-23 and I couldn't wait any longer, I just had to come and make a post about this. Can you believe it, he actually talks about a DBD on Studebaker's Weekly chart from Sept 4, 1920 to Jan 6, 1923. I'll attach the chart. Of course he didn't call it that but that's exactly what it is. His commentary on the stock is about 5 pages long so it's quite in depth. I want to just quote a short bit that he writes about this DBD pattern. Remember back then you only got prices from a ticker tape machine that would sit in your broker's office. Gann used to actually plot all of his own charts by hand. Can you imagine having to do that ?
"During the period from October 9 to November 6, when
prices were fluctuating within the range of two or three
points, and each week getting up around 59, the man watching
the tape would have been fooled many times, because
each time it made 59 it would look like it was going higher,
and how could he tell but that the buying would be great
enough to carry it through. The proper thing to do when
a stock makes a level like this is to sell out and go short with
a stop one to two points above the level; then wait until
supply or demand forces it higher or lower."
Gann was looking at a Weekly Chart where as all the retail traders were only looking at the daily prices coming over the ticker. Gann was getting the bird's eye view. Can you see the similarity to Will talking about using larger time frame charts ? There is so much more. I really do recommend reading it.
Gann learned his craft by getting price data for as far back as records were available, plotting charts manually and then studying the charts to figure out what was happening. In the early 1900's he had studied charts going back several decades. Now we're 100 years later and price is still doing the exact same thing as it did then and it will probably keep doing the same thing for another 100 years.
With Will's permission I would like to post a link to the .pdf for the book so everyone can read it. You can also just Google "W. D. Gann, Truth of the Stock Tape (1923)" and the first result should be a link to the book.
Cheers & happy reading everyone.
Canadian_Paul
You can also just Google "W. D. Gann, Truth of the Stock Tape (1923)" and the first result should be a link to a free pdf for the book. I tried it and it worked.