Timothy Walker

W. D. Gann’s Mechanical Swing Trading System



About the Author and his Work

Timothy Walker first heard of W. D. Gann in 2003, but at that time he didn’t know one end of a bull market from the other end of a bear. However, his background in law and communication equipped him with an excellent foundation for dissecting the forecasting and swing trading work of W.D. Gann piece by piece.

He started trading in 2006, and from mid-2007 worked on the trader’s help desk at Safety in the Market, where he had undertaken his own foundational studies in stock market trading. In 2008 he began presenting seminars for Safety in the Market and continued to do so until the end of 2012 when he relocated his operations to Thailand.

Since then Tim published his 1st work on Gann's Mechanical Trading Method and has taught four seminars on the subject in the ensuing years. He went back to work to complete his review and analysis of Gann's other works on the same subject culminating in his latest Part 2. Tim's research continues and he plans to continue his series analyzing Gann's teachings in careful detail though other applications of his research.

 

Publications

How to Trade Like W. D. Gann - Part 1

Tim's first book – How to Trade Like W. D. Gann - Part 1: An Exploration of the Mechanical Trading Lesson on U. S. Steel – was initially self-published. The Gann Swing-Trading community embraced the title and his 1st Edition soon sold out. At this time Tim realized that he would prefer to concentrate his efforts on research, writing and teaching rather than deal with the complexities of self-publishing. He then contacted the Institute of Cosmological Economics and we agreed to take over the ongoing publication of his trading books and courses.

How to Trade Like W. D. Gann - Part 2

Tim Walker's 2nd course on Gann's Mechanical Trading Method and Swing Trading System - How to Trade Like W. D. Gann - Part 2: Advanced Lessons in Gann's Mechanical Trading System lays out the evolution of Gann's trading system as it developed over 50 years. The US Steel course was NOT the only course on Gann's method. There were 5 other courses written over the decades that further developed and explained his ideas, strategy and principles in more detail and in different markets for both stock and commodities. Part 2 advances and refines the system to its highest level!

Gann Seminar Series

In 2016 Tim began presenting seminars to teach the principles of Gann’s swing trading as presented in his book. The seminars have been presented in Asia so far, but we are encouraging them to plan some for the US and EU in the future.

In the meantime we have arranged to provide our clients with the 6-hour Video Edition (provided on USB stick) of his most important seminar elaborating the principles and techniques taught in Part 1 of his Mechanical Method & Swing Trading Series.

The first seminar - How to Trade Like WD Gann - Part 1: Turning Lessons into Trading - presents a detailed analysis of Gann's many trades in U.S. Steel, elaborating the subtle points and processes in analyzing the sequential swings of the market. He demonstrates clearly and with many examples how to apply Gann's trading methodology with great effect! There are new and additional insights provided in the seminar which were NOT included in the book, since this seminar was presented 2 years after the publication of the book, and new discoveries were made during this time.

Currently there is only a Seminar available for Part 1, but in the New Year of 2022, Tim plans to create a 2nd Seminar detailing all the fine elements presented in Part 2, helping students to better grasp the fundamentals of Gann's system through a hand-held walk through and demonstration of the application of Gann's techniques.

Trading Examples

The following trade example is an excerpt from Tim's article in the Spring 2014 edition of Trader's World Magazine: As an example of how his method would apply today, let us consider a chart of the e-mini S&P 500 futures contract.

Gann wrote his lesson for stocks trading around 50-200, so we have to make some assumptions to adjust for a stock index trading at 1800. You would have to test these to work out the optimum numbers, but for this exercise, I am going to place stops 5 points above swing tops or below swing bottoms. Gann’s pyramiding rule was to add half the position size every so many points.

I will use 50 points here. We will take an initial trade size of 2 contracts, based on Gann’s risk management rules of only risking 10% of one’s capital on any one trade, which would require a capital of $50,000.

We will assume that we have been trading the S&P for some time and simply pick up the trades from the beginning of 2014. As the New Year dawned, we would be long at around 1788 from 18 December. This trade was stopped out around 1812 on 13 January. Profit 24 points x 2 contracts = 48 points. As the system requires us to reverse positions we will be short 2 contracts at 1812 with the new stop placed above the 31 December high.
The market continued sideways for several days more. Gann was careful in such situations not to bring stops too close, so he would have left them above the 31 December high. An additional contract was sold at 1762 on 29 January.

On 3 February a special rule was triggered. Gann didn’t even mention this rule at the beginning of his lesson and it is only in the trade examples that it becomes apparent. We would exit all short contracts at 1736 (total profit 178 points) and go long 2 contracts at that price.

Although the market went a fraction lower on 5 February, Gann’s rule for stops would have kept the long trade intact, and we are placed to take the full benefit of the strong rally that followed. An extra contract is bought at 1786 and another again at 1836. All 4 contracts were stopped out at 1860 on 12 March. Total profit 346 points.

Total profit on 3 trades is 572 points or $28,600. Thus the return on our $50,000 capital over the first 3 months of the year, without deductions for commissions, was 57%. But don’t forget that we are only trading with 10% of our capital in this example, so the returns on the actual “at risk” investment are much higher.  If we consider that our initial investment was approximately $5,000, and we generated a $28,000 return, we actually produced 570% on our initial investment in only 3 months! Not bad for a relatively simple mechanical system…

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