On page 62 of Gann’s book, How To Make Profits in Commodities, Gann states, ‘After considering three important factors, time, formations, and resistance levels, the fourth and next very important factor is volume of sales. The volume of sales is the real driving power behind the market and shows whether supply and demand are increasing or decreasing. Large buying and selling orders are shown in the volume of sales. Therefore, a careful study of the volume of sales will assist in determining a change in trend, ESPECIALLY AFTER APPLYING THE OTHER THREE FACTORS OF TIME, FORMATION AND RESISTANCE LEVELS.”
In the previous articles of the Gann & Elliott Wave the ﬁrst three factors were presented for illustration. First, the astrological TIMING points for trading the minor cycle of one year. Second, the G-A-N-N2-B/S (buy/sell) FORMATION, what it is and how to deﬁne it, and when to act upon proven confirmation of the pattern following Rule number 25, implementing an OFF-CON (I) & (2) condition. The third factor of importance was determining from a zero-degree beginning point of TIME, a square (90 degrees) or trine (120 degrees) in time or price on the GANN WHEEL, combined with the odd and even natural square-root numbers on the GANN WHEEL for support-resistance levels. The odd squares begin at the peak of the Gann Wheel, the Great Pyramid of Gizeh, with number one as the capstone. The next square root level, square or course of stones, begin at number two and ends with number nine or Y (three squared). The square root of these odd numbers, which fall on the ﬁxed angle of 41.475232 degrees to the South-West compass point, are the cornerstones for each course or square on the Great Pyramid.
An example in the previous article for the price high (2-5-88) on June ‘88 TBonds was 94-17. Converting 94-17 to 1/32nd Bond ticks (94 x 32 + 17) equals 3025 ticks. The square root of 30252 equals 55 (55 x 55), an important resistance level. On the GANN WHEEL, the zero-degree line intersecting the two-digit number 75 (10-19-87) price low is 180 degree opposition number 94, or 19 bond points. The difference in ticks was 625 ticks (25Th 625 divided by 32nds equals 19-17 bond points. Therefore, number 75 (75-00) plus 19-17, equals 2-5-88 PRICE HIGH at 94-17 (TO THE TICK)!
Now let’s analyze the September ‘88 T-Bonds. First, the astrological TIMING POINT to balance the week of 2-29-88 (l80) is due the week of 8-22-88, 9(1 square the week of 5-23-88 is 8-22-88. Price was 90~ square from 93-17 to 83-17, within nine ticks of the low price of 83-23 on the GANN WHEEL. Second, the G-A-N-N2- Buy formation began zero degrees on 8-16-88, marked “G” at 83-23, “A” formed at 85-11 on 8-19-88, on 8-23-88, “N”, signaling a PREPARE TO BUY condition (OFF-CON 2). At this point, a brief description of an OFF-CON condition I & 2 (OFE)ensive (CON)dition is in order. In the movie, “WAR GAMES” DEE-CON (DEF-ensive CON-ditions) were progressive stages of readiness prior to missile launch.
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For brevity, I only use two conditions of readiness rather than the four conditions in the movie. A stage (2) OFF-CON is “PREPARE TO BUY,” a stage (I) OFF-CON is the actual pulling the trigger for the buy executions CONFIRMING the G-A-N-N2-Buy formation, similar to the DEFCON (I) condition in the movie, where the missiles are actually launched.
Now, let’s pick up on 8-25-88 when the price drops below 84-16, the price low of “N”, which signals an OFF-CON (2) state of readiness, PREPARE TO BUY condition. OFF-CON (2) also gives the right to draw a I x I angle from N2 where the buy stop orders are placed. The I x I angle from N2 was at 84-31 on 8-2-88. For those traders who have substantial amounts of capital to risk (Fund Managers, Banks, S&Ls, Insurance Companies. Corporations and high-net-worth individuals), I suggest a TOTAL PYRAMID contract position of 10, 100, 1,000, 10,000, or 100,000 or more, using a 5-3-2=10, or 500-300-200=1,000 sequence to build the pyramid properly.
For this hypothetical trade, 1,000 contracts are placed thus: Place a Buy Stop for 500 contracts ﬁve bond ticks above the I x I angle of (84-31) at 85-04, next place a buy stop for 300 contracts one bond tick above “A” (85-Il) the zero degree horizontal at 85-12, add the ﬁnal 200 contracts M.O.C. at 85-21, as long as the CLOSE is above the I x I angle from N2 and in the top 1/3 of the total price range for a total pyramid of I ,000 contract. The initial sell stop is one tick below the low of the day the price closes above the I x I angle at 84-24. Initial risk is 18 bond ticks or $563.5() per contract (x) 1,000 TOTAL PYRAMID, or $562,500. plus commissions, fees and of course, any slippage for poor ﬁlls. August 29, 1988 was a unique trading day in the OFF-CON (I) BUY execution, as the TOTAL Pyramid of 1.000 contracts were triggered and secured by the close of the 29th. On 8-29-88, the G-A-N-N2-Buy formation conﬁrmed OFF-CON (I) condition with entry into Gann’s second section.
The ﬁrst objective to sell is 162 bond ticks added to the 83-23 low at “G”. One-hundred and sixty two bond ticks divided by 32 equals 5-02 bond points (83-23 + 5-02) 88-25 objective. Previous vibrations of 5-02 bond points (1+6+2=9). Why nine’? The number nine seems to have a deﬁnite “power” or “vibration.” Pythagoras is believed to have had a remarkable “WHEEL” by means of which he could predict future events. Look at the design and consturction of the GANN WHEEL (see ad in the GANN & ELLIOTT WAVE) the Trines 120Th240=9, l44=1+4+4=9, 216=2+1+6=9, 288=2±8+8=l8, or 1+8=9, 72=7±2=9 and 360=3+6+0=9. Gann’s MASTER NUMBER 45=I+2+3+4+5+6+7+8±9454+59
Nine is the basis of the unit value of ALL numbers. On Friday, 9-2-88, the price objective 88-25 was executed. Average cost for 1,000 contracts was 85-10. 88-25 minus 85-10 equals 3-15 Bond Points, or $3,468.75 per contract times 1,000 equals $3,468,750, less commissions, fees, and slippage.
Now, Gann’s fourth factor VOLUME OF SALES as another KEY, signiﬁcant in trading T-Bonds. Notice the KEY TO DAILY VOLUME at trend turning points is 490,000+ contracts on 4-14-88, 6-1-88, 6-14-88, and 8-16-88. Here Gann says the trade has made up its mind, a change of trend is eminent and reveals it through ONE-DAY VOLUME of 490,000+ contracts. Yet, even with the KEY TO VOLUME, Gann, in his inﬁnite wisdom, says, “In order to be a success, “FOLLOW A DEFINITE RULE.” Remember Gann’s rule number 25? Let the market prove ills at bottom with the G-A-NN2-B formation as the formation, provided nine trading days of accumulation prior to conﬁrmation of entry in OFF-CON (I) on 8-29-88.
In conclusion, I would like to make you aware of two Aphorisms of Pythagoras, number four and number nine (an aphorism is a short pointed sentence expressing a wise, clever observation or general truth). Number four states, “assist a man in raising or lifting his burden; but, do not assist him in laying it down.” In this article I have done my best to help and assist you in your trading by giving you the tools to raise yourself up and out of the 90 percent losers, 10 percent winners ratio, which because of human nature, stays the same every year. However, you must be responsible for your losses, as well as your gains, and not place the blame for your losses on others.
Pythagoras’ aphorism number nine states, “offer not your right hand easily to anyone.” This statement warns not to offer wisdom and knowledge to those who are incapable of appreciating them. Gann would cast a birth chart (horoscope) of the individual purchasing his courses. In this way, he was trying to determine if the individual was skeptical or was capable of studying long and hard about the truths he was trying to teach. Gann wrote voluminous am-mounts of material to create a desire in the individual to search for hidden truths, much in the same way the ancients in the past clothed their secrets in veiled language; such as the writers of the Bible, Plato, Aristotle, and Pythagoras, to name a few.
Gann, in his wisdom, realized the unregenerate do not desire wisdom and knowledge, but through indolence would eventually cut off the right hand that was extended in kindness to them. Once one learns to like themselves, has a continuous positive winning attitude, takes responsibility, practices the greatest of virtues-patience, and follows a disciplined technical approach to Gann’s rules, then, and only then, will it be your time and season to reap material wealth.