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FALL 2021 TRADER’S WORLD ARTICLE

By Johannes Sundberg

I first discovered Gann in the late 90´s at a course I attended as a fresh professional technical analyst. That event started a journey that I am still travelling. I am soon to release my own book on the subject which is a milestone in my personal career and development. The book will provide keys and open the gates to many of the mysteries of Gann that have intrigued people for several decennia in an easy and understandable manner.

This is not an intellectual show off, all methods are applicable to real trading with tight stops, high accuracy and expected returns that by far surpass the risk. Yes, I use them in my own trading. I will return to the content of this book in a future article but will take this opportunity to talk a bit about the necessary mindset that is needed to learn Gann and decode his riddles.

When I first “learned Gann” in the late 90´s, I was told that stocks and indexes turns every 30, 45, 60, 90 etc. days and the teacher showed several examples proving this to be “true”. I knew some Elliott wave theory since before and together with this day count, I managed to accurately forecast the “mini crash” of 1997, the first part of the Asian crisis.

It is called mini crash today, but I can assure you that a decline of 554 points or -7,2% in the Dow Jones in a single day did not feel so “mini” when it happened for a newly graduated technical analyst. I noticed that we got a lower top on October 6^th, 1997, 60 days after the first top on August 6^th. The final low came on October 28^th, and guess what? We had another low 60 days earlier around the same date in August.

At the same time the largest financial Swedish newspaper ran a cover story highlighting the similarity between the stock market crash of 1987 and 1997 predicting an even deeper decline. My clients where mostly in cash since they had listened to my advice and sold after the lower top in October. After the spike low I gave them new advice to cautiously start accumulating stocks again, contrary to the recommendation of the financial media and most analysts. I was nervous but it worked. I was the hero of the firm that autumn and I had really got an appetite for Gann.

To be honest, I did not really know what I was doing, and pretty soon discovered it the hard way. One year later in July 1998, I understood that something nasty was going to happen, and once again I picked the top with the assistance of Elliott waves and Gann dates. I made a return exceeding 1500% in a few weeks trading options at the Gann dates. At that point of time the size of my ego was at an unhealthy “Master of the Universe” level.

In October, the market changed its pattern and I lost it all and some. It was a devastating experience! My ego imploded like somebody had picked a pin into a balloon. I made some attempts to trade it back, but I had to face reality: “You don’t know nothing yet!” Today I am very thankful for this experience, it was a turning point that also provided me with a lot of energy to continue working until I had really cracked it.

I had started working at a bank but had to hide my interest in Technical Analysis and Gann as fundamental and macroeconomic analysis where the only two accepted approaches to the markets there. The ruler of them all was “modern portfolio theory” that in essence says that markets are completely unpredictable and the only sensible thing to do was to “diversify” to decrease the risk and create an “efficient portfolio”.

I was good at playing theater and smart enough to learn MPT but at the same time suffered inside as I was not true to myself. I knew that the modern portfolio theory was built upon false assumptions. I namely wrote my graduation thesis about a simple trading range break out system and it actually managed to beat a “buy and hold” strategy. I will not bore you with all the details, but for me it became clear that those scientists that claimed that technical analysis did not work had not bothered to learn what technical analysis actually is.

Even if the day-to-day fluctuations are random, they still end up creating a trend, but the scientist refused to examine that. “If the daily fluctuations are random, no trends can exist, period.” I understand that this theory is supported by the large banks and fund management companies. It is the perfect way to convince people to not try to time the market and instead keep the money in the funds that pay their monthly management fees year in and year out. It also gives the impressions that those portfolio managers are doing something very complicated which justifies their fee levels.

The lesson we learn from this is that you have to stand by your convictions, even if there is social pressure on you to just throw in the towel on your search for Gann. It is not easy if you are a professional investor, as both the academics and the finance industry have a mutual interest in preventing us from seeing clearly. Your friends and family too are most likely influenced by this stubborn thought form. You will be questioned and you have to stay strong in your conviction. The best way to stand it is the age-old wisdom of “secrecy”.

After my 1998 debacle, I started to buy every book I could afford by and about Gann. Some theories looked good on paper and were illustrated by nice looking charts but I simply could not put them to practical use. The theories were often contradictory and impossible to trade from. “If this happens then X and if it does not happen then Y or Z or W…”, there was no end to it.

One book did, however, really change my direction, as it clearly showed that the planets where the “drivers” behind the market movements. I suddenly realized the true underlying cause behind Ganns 10-, 20-, 30-year cycles and others. I did however come to a point where that book could not help me any further and I later had to spend a few years “unlearning” it in order to proceed.

I started to hang out on Internet forums that were run by some really smart guys, at least they could throw out a lot of text that gave the impression that they knew something valuable. It took a lot of time and energy and led me nowhere.

At the same time, I had found a renewed interest in spirituality. I paid attention to the message that the only place where you can find the truth is inside yourself. Not on an Internet forum. I came to a point where I decided to stop this external hunt for Ganns secrets. I logged out of those forums, sold off some books, even threw some away and saved a few that had actually given me a little something.

As a teenager, I had started practicing what is nowadays known as “the Law of Attraction”, performing emotionally charged affirmations and convincing my mind that what I desired had already “manifested in the physical reality”. Some of you may think this sounds too woo-woo but I knew it worked. That was the way I got my first job as a professional technical analyst, against all odds.

I kept repeating my affirmation for several months, maybe it was even a year or more. “I have now cracked the Gann code and it feels fabulous” and I really experienced happiness and joy. One morning I was standing in the shower, preparing to go to work. Suddenly I got a flash insight, the light went on, “what if Gann meant this with his squares?” It was a blissful feeling. I’ve never experienced anything like that before! I had to rush to work but made sure to write my new idea down in order to not forget it in my excited state.

The same evening, I turned on my computer and put the new idea to test. And it worked! And again, and again! Never before had I been able to predict a turning point so accurately and so far in advance to the exact day. No dabbling with “orb of influence” or “synchronization of cycles” or some other excuses. I instantly knew that this must have been what Gann actually did but hid away in his texts in such a smart way.

You see, everything Gann wrote about works occasionally, counting 30-, 60-, 90-days will work wonderful from time to time and then immediately fall apart without forewarning. This will keep most people happy and busy and when it does not work, they think it is because they´ve “squared their charts” the wrong way or something else completely unrelated. Unless you get a glimpse of the real underlying cause, you will be running in circles. The lesson learned is: “Stop listening to false prophets and seek the truth within yourself instead.”

I had a personal issue that I had to deal with a few years later and desperately looked for help. One day I somehow managed to google up a magician. Not those standing on the stage dragging rabbits out of a hat, a real magician, somebody that could change reality. I asked for his help and was given an herbal bath that I should take for a couple of days. I did not know what to believe but I followed his instructions.

Just a week later, I woke up as a completely new, reborn man. All those bad emotions were gone (the issue involved a woman). I became very curious. What did he do? Since I had some experience in affirmations and the like, I was a bit open to the idea that there might be something in this. He asked me if I wanted to become his apprentice and I accepted immediately. Then I became scared but managed to build up enough courage to visit him to get some education.

No, relax, you do not have to become magicians in order to learn Gann. What this taught me however, was that there is a hidden world that exists and it is very real even if we cannot see it or touch it. My mentor and I had long discussions about the subject of “reality”. How is reality created? Most of those things you experience as “reality” are actually projections of your own “convictions”.

Our convictions, on the other hand, are products of what we have been taught as children, and our life experiences. We do not question what we believe to be true, we seek more evidence that supports our view. If we find contradictive evidence, we protect our conviction even harder. Our subconscious mind creates situations where our convictions and beliefs are supported. If you believe that you are less worthy, you will never make any money consistently in the markets, and you will probably attract a partner who, by bad behavior, reminds you about how lousy you are.

If you believe that the prices in the markets are just random noise, then do not even bother to understand Gann. If you believe that the only real truth is that which our scientist in the established natural sciences bring forward, you will probably have a hard time learning Gann too. You see, in order to really open up the door to Gann, you have to start to get rid of your boxed-in world view and open up to the possibility of another reality.

I dedicated a chapter in the book to this “how to reset your mind” challenge, as it will truly help you learn faster. This “unseen world” is not chaotic or random, it is not flashing rainbow colors and psychedelic music, otherwise we would not be able to base our trades on it. It is regular and follows certain rules that can be repeated time after time.

I will show you how a contemporary of W.D. Gann, that is Carl Gustaf Jung, actually gives us the perfect framework to really start to understand Gann and most importantly: “Why it actually works.” If we do not get an answer to the “Why”, we will not be able to build a new conviction, and that conviction is needed in order to fully penetrate the teachings of Gann. Else we will be filled with doubt and not able to make progress. Lesson: Open up your mind and start to see the world as a new born child without convictions.

One big obstacle to learning Gann seems to be the term “Astrology”, as it is a charged word for many people, and is associated with superstitiousness. The planets are a key ingredient in Gann’s work and should be understood to get the full picture, but Gann used them in a way that is unknown to most practicing astrologers of today. We might better call it “celestial mechanics” than astrology as most people think of it.

I talked to someone recently who had been studying Gann for many years, reading the same sources as I. I noticed he was just using calendar- and trading-day time counts. I asked him “Why?” He answered: “Astrology sounds interesting, but I´ve not had the time to learn it”. Of course, he would have had time if he had decided to do so. What you see here is a prime example of how a man’s ego tries to prevent him from abandoning his current belief system.

In order to be able to learn Gann, we have to soften our egos, unlearn some things we´ve learned in the past, and start to see a new reality. In that way, learning Gann is a spiritual journey. Profitable too when we succeed. Thankfully we are now in a cycle where astrology is increasing in popularity again which will make it easier for people to open up to Gann.

Just to make it clear: You will not learn Gann by picking up any astrology book, and I will even present to you a non-astro “Law of Vibration” trading application that works wonders, my personal favorite due to both easiness and profitability. In order to understand it beyond mechanical repeating, it will benefit you if you can accept that the planets have something to do with the markets. You see, when you screw up your charts, I might not be there to help you fix them. Lesson: Pay attention to the planets and their whereabouts.

I met another Gann enthusiast who blew up his trading account a couple of years ago. He showed me some impressive charts but I immediately saw that he lacked some of those very basic building blocks, the key stones if you so like. I was honest with him and said: “Very impressive, you´ve put down a lot of time and done some really complicated calculations, but it still looks like hit or miss, shots in the dark; you do not have a solid ground to build upon.”

He admitted I was right. He asked me which books he should read and I asked him what he had read up until now. He had read the same books as I had, and said: “But I think I am too stupid to understand them.” I told him he was certainly not. Those authors were not pedagogical enough. I guess many of you recognize the feeling, you read something, do not understand it and think it is your fault. We´ve all been there. That is something murky in the Gann community that I want to change. If you pay a good amount of money for a book you deserve to get something valuable in return.

When I had my “in the shower bliss” experience many years ago, I did not know what to do with this secret. I got scared, put it away, took it up and put it away again. It continued this way for many years. I work as a professional portfolio manager for an institutional investor and of course I sneak in a few Gann trades now and then but need to cover up the real reason behind them. I do not feel fulfilled.

When the Covid pandemic struck, I finally got the time to start writing a book. I thought: “I´ll begin slowly, 15 minutes a day, and just see where it ends.” This decision to write a book was a major game changer for me. You see, during this process I learned so much more than I had never believed I would write about. It was like the gates opened wide and new knowledge started to flow through me, I was the channel. I got “signs” and a feeling of being guided along the way. If I ran into a problem, the solution just presented itself the next morning. There have been many bliss experiences during the last year.

There is an old spiritual truth that every person has a gift and when he/she finds it his/her life purpose is to share it with others. The process of writing this book has certainly convinced me of that truth. Lesson learned: Share your gifts to those who appreciate them, you do not have to “throw pearls before swine” to be a sharing person. Keeping everything to yourself stops the flow.

I am not afraid that letting out some of Gann’s secrets would destroy the markets. Some of the most successful modern stock traders and “Market Wizards” like Mike Minervini, David Ryan and Dan Zanger build their strategies and success on the same foundation that Jesse Livermore laid out decades ago and that have later been refined by William O´Neill.

It all comes down to the never changing character of humankind and their emotions. Ganns teachings are “natural law”, and I think it is simply impossible for us to change it. I´ve seen occasions, like in connection to a Federal Reserve rate decision, where the algos go crazy and for a brief moment makes the prices deviate from their natural “Law of Vibration” levels. But they always come back and very fast too.

Even if mankind has started to open up spiritually, there will be many decades, probably centuries, before Gann’s teachings are accepted as the new truth. Let us enjoy them in our small club until then. If I am mistaken and Ganns teachings suddenly get understood and accepted by a wider audience, the consequence will be that a majority of people have to accept that there is a supreme intelligence in the universe. Considering the state of hubris that humankind is in at the moment, maybe that would not be a bad thing after all.

WINTER 2022 TRADER’S WORLD ARTICLE

By Johannes Sundberg

In my first article I wrote about my personal journey into the Gann world and what I believe are the necessary traits and conditions needed in order to make it possible to learn Gann and crack his code. To repeat it shortly that is: high level of integrity, not being pushed around by social pressure. Do not search for the truth on the web, find it inside yourself. The law of attraction can open the doors to enlightenment. “Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you.”

Some spiritual and personal development will help you too even if you cannot figure out how in the beginning. It is not necessary to go to the extreme and become an apprentice of a magician as I did, but some spiritual work will start to open up your mind and let you view the world in a new way that is not visible in the 3D world. Lastly, share what you learn with your brothers and sisters in order to keep the flow going.

In this article I will give a walk through of what you will find in my book that will be published in early 2022 by the Institute of Cosmological Economics. Before we go forward, I want to point out that I am a money manager by profession. That means I am more interested in finding good workable trade setups with a high probability of success and excellent risk reward ratios than in launching some high-flying theoretical model of the universe. The methods I teach are meant to be put into practical use.

In the first three chapters, I will make sure you have the basics right and can identify “the important angles” even if you are woken up in the middle of the night. Next, we go through a philosophical section about how our truths are formed, followed by some concepts of the great psychoanalyst Carl Gustaf Jung. As you will discover, CG Jung’s ideas about the “collective unconscious” and “synchronicity” will become very valuable as an explanation of why this Gann stuff really works. With this model, we can more easily integrate the teachings of Gann and have a solid ground to stand upon. This solid ground will make it easier to explore further and do new discoveries of our own.

After this introduction I will go through “Forecasting by Time Cycles” and show you how there is a planetary cause behind all of this. We will also discover the origin of cycles. This is probably familiar stuff to some serious Gann students. I will however also show you how the application of this, as popularized by many Gann researchers of the current time, simply cannot be the Holy Grail as the results are far too inconsistent.

We need to continue our hunt for truth and enlightenment if we shall be able to replicate the astonishing results of W. D. Gann. In order to open a new door, you have to close another one. I had to spend considerable time “unlearning” this stuff, but I am glad I finally did, as it took me to a new level. One of the reasons for this chapter is not only to provide you with the ground but also save you some valuable time.

We will go through some old texts and see how the origin of religion comes from our ancestors when they documented time cycles that later found a life of their own as characters and stories. Gann pointed us to the Holy Bible, but I will show how most ancient religions contains the same time cycles, even the Asatru of the “primitive barbaric Vikings” of Iceland.

It is now time to start to do some real work. After having gone through all the necessary introductory philosophical stuff, it is now time to start to decipher Gann and put our new knowledge to action. The first thing we explore is the foundational “square the high, low, range and time”. This is a prime example of where reading Gann by the letter can produce some results. If you do not mind a high level of inconsistency, it would probably keep you occupied for the rest of your career. If you, however, want to achieve astonishing results, you will have to dig some layers deeper to find the real truth behind this. When we know how to identify the true cause of the market movement, it makes all the difference, and I will teach you how to do just that.

Next, I will show you how some certain price levels are predetermined in the market. We will set up a trading tool on its own, but my intention is more of showing you proof that our theory works and to provide a rough roadmap for the markets. More precise methods will follow. We will also go through currencies as they can be a special case when it comes to converting prices to time.

Before we go to the next level, we will take a sneak peek into the temple of the Masons. Being a brother sworn under oath myself, I can of course not reveal all the secrets of the lodge. A lot of material is, however, public nowadays, and I will show you how Gann was most likely inspired by what he saw within the Masonic Lodge. I am sure most brothers are not aware of it, but if you have the right glasses on, you can easily see that the symbolism corresponds very well with Gann's market theory.

After having armed ourselves with some masonic mathematics, it is time to reveal one of Gann’s most highly guarded secrets. In the chapter “What did he mean by squares anyway?,” I am sure many of you will get your big Eureka moment, as neither I nor my experienced publisher Bradstreet Stewart have ever seen this insight in print before. This was the big discovery that I made many years ago, as described in the last article. “Congratulations! This is brilliant!” was the regard I received from Mr. Stewart after having explained this secret.

We will now turn to another one of Gann’s foundational discoveries, his “Geometrical Angles”. I know that they might seem too “basic” for many Gann enthusiast compared with the Square of 9 or other fancy wheels or geometrical chart overlays. But believe me, once properly understood, they hold the key to the Gann system. The problem is that most people seem to misunderstand them. Like many other Gann concepts, they can but will not always work when applied in a straight-forward manner as described in his texts. Others try to “resquare their charts” to make them work. Believe me, there is a much simpler solution once you learn how to find the true cause of the market movement.

We will now continue by putting all our methods together into one workable system. As you will see, this combination makes a remarkable difference and lets us sort out the really good trade set ups from the lesser reliable ones. I struggled for years refining my time cycle methods into perfection, but it was not until I combined them with the geometrical angels that everything fell into place. This will not only provide you with the most attractive trade set ups in terms of pinpointing the moments of change in trend but also reveals the likely price targets.

What you have read in the book so far would probably be the most clear, honest and true description of Gann’s real work that you have ever seen, everything written in an open way, and nothing put into disguise or put under a cloth of veiled language. Most is based on Gann’s writings in The Basis of My Forecasting Method, and qualify as a full book on its own, as according to my original intention. It is truly the basis of Gann. But since I just cannot stop researching and digging deeper, I decided to put in some more and it turned out to be a lot more!

Next, we will explore the concept of “following its track backwards,” figuring it was the shortest way to its lair. “The quickest way for you to learn how to determine future market movements is to study the past.” There can be several explanations for this famous Gann quote, and I will go through the ones I find most valuable. A popular trade among astro traders is the “retro-direct” trade. In my opinion it is not robust enough on its own, but I will show you a way of identifying those set ups that will work and let you skip the rest to the benefit of your trading account.

After having mastered the concept of squares, it is now time to expand our toolbox to incorporate other basic geometrical figures like the circle and the triangle. As you will see, we are still building upon the framework laid out by C. G Jung, by adding one piece to the next on a solid ground. Triangles are intriguing since they have some unique qualities like “If you have two you can calculate a third.” I will show you how to make calculations from just time and price alone that will truly twist your mind and make you realize that there really must be an astral realm where all this is taking place in subtle form to be then manifested in the marketplace!

Gann’s novel, The Tunnel Thru the Air has intrigued Gann researchers for ages. Much can be said and written about that strange book, but my intention is to demonstrate how what we have learned so far gives an accurate description and roadmap of Mr. Roberts successful campaign in Major Motors.

I will show you how the famous square of nine was probably Gann's way of providing the tool without having to reveal the underlying secrets of the LoV. We will take a new look at “The Tunnel” and Robert Gordon’s campaign in Major Motors and find a new explanation to his success in calling the final high that is much more elegant. We will also walk through Gann's classic “Auburn Motors” case by applying the LoV and you will witness how this law calls one turn after another, both in price and time.

Sometimes the “noise” of the market like algos running havoc at the announcement of a Fed rate decision, payroll data, or plain market manipulation can distort the picture. In the chapter, “Adjustment” I will show you a couple of ways to fine tune our already very precise methods even further. Remember, perfection is our goal, no excuses by “orbs of influence” or the like.

As I wrote in the introduction, I am a money manager by profession, and for me it is important to provide you with something that actually works. Therefore, I wrote a live trading diary in the chapter “Practical Examples” where you can follow a number of trades I took that are all based upon the methods taught in the book.

I accurately predicted the September 2, 2021 high in the SPX at 4545. I finished the campaign at September 20 with a profit of 393.5 points out of a 240-point move. The reason I could squeeze out more points than the size of the actual swing itself was because I was trading it actively by applying the Law of Vibration to an hourly chart.

I also put on a less good trade, having forecasted a top already at August 14, but since not all criterion were in place, I handled it cautiously and got out with a small profit, despite being wrong. Mistakes are unavoidable in this business, as all experienced traders can testify, but how you handle them and what you learn from them makes all the difference.

Dealing with position sizing and risk reward ratios deserves a deeper explanation, but I will give you the necessary introduction to the right thinking. I also forecasted the top in the Swedish OMX index in the middle of August and entered a successful short campaign as soon as the market started to show weakness at August 16^th 2021.

In the chapter “Time Tells the Price” I present some mind-blowing examples of how time itself can predetermine the future price levels. Most Gann followers are aware that the price creates the time cycle, but now it is time to turn that concept around. This kind of flip flopping between time and price is a major key to really understanding Gann, and when you understand the connection to the work of C.G. Jung, you will understand why this actually works.

I hope this article has increased your interest in my work and I really look forward to sharing my findings with you. The process of researching (25 years) and writing (2 years) this book have been full of so many indescribable, almost life changing, aha-moments! I really hope you will experience some of those feelings too.

(Note: My book will be released by Cosmological Economics early in 2022, so anyone interested can check the ICE site for more information and updates: www.cosmoeconomics.com. Or feel free to email them institute@cosmoeconomics.com for information or if you would like to reach me.)