W.D. Gann & Commodities Trading

Commodities Defined

A commodity is any physical substance, such as food, grains, and metals, which is interchangeable with another product of the same type, and which investors buy or sell, usually through futures contracts. The term is used more generally to refer to any product traded on a commodity exchange; this would also include foreign currencies and other financial instruments and indexes.

The price of the commodity is dependant on supply and demand factors. Risk is actually the reason exchange trading of basic agricultural products began. For example, a farmer risks the cost of producing a product ready for market at sometime in the future because he doesn't know what the selling price will be. A speculator can pay the farmer or anyone else producing commodities because the speculator wants to make a profit. This is called trading in futures.

The following is a list of commodities available for futures trading:

• Agricultural: grains, oils, livestock, wood, textiles, food products

• Metallurgical: metals, petroleum, chemicals

• Interest Bearing Assets: T-bills, bonds, notes

• Stock Indices

• Currencies

When it comes to commodities, most traders tend to focus on energy markets. Crude oil is by far the most consumed commodity on the board.

But traders who have recently been following the best performing commodities know that the Grain complex has been the "place to be."

A lot has been written and spoken about legendary W.D. Gann, considered by some to be the greatest trader of all time. There's no doubt his now seminal work on market cycles and price behaviour is without equal. Gann is believed to have profited by over 50 million dollars trading the markets.

William Delbert Gann was born in Texas in 1878. He did not complete grammar school or attend high school, being under obligation to work on his family's farm.

Gann began his trading career working in a brokerage in Texarkana while attending business school at night. He moved to New York City in 1903 at the age of 25 and opened his own brokerage firm, W.D. Gann & Co.

In 1919 at the age of 41 Gann began publishing a daily market letter which covered both stocks and commodities and made annual forecasts. In 1924 Gann's published his first book, Truth of the Stock Tape. His market forecasts during the twenties have been said to be 85 percent accurate. Gann prospered during the Depression, which he predicted would end in 1932. He acquired seats on various commodities exchanges, traded for his own account, and wrote the Wall Street Stock Selector in 1930 and New Stock Trend Detector in 1936. He later moved to Miami, Florida where he continued his writings and studies up until his death in 1955 at the age of 77. He is buried in Green-Wood Cemetery in Brooklyn at a location that looks toward Wall Street.

W.D. Gann's work, while very powerful was, until quite recently, beyond the comprehension of even highly experienced traders. This is primarily because his methods relied heavily on historical price data – more than one hundred years worth – and intensive analysis of that data to identify likely tops and bottoms in the markets.

Gann applied his methods to all markets including stocks, commodities, energies and currencies, and proved to be equally successful in all of them. He was hailed as a genius at the time. Even today there are very few analysts who have the ability to fully understand Gann's methods, and fewer still who can successfully apply these strategies to today's markets.

"Through the law of vibration every stock and commodity in the market place moves in its own distinctive sphere of activities, as to intensity, volume and direction. All the essential qualities of its evolution is characterized in its own rate of vibration. Stocks and commodities, like atoms, are really centers of energies, therefore they are controlled mathematically. They create their own field of action and power, power to attract and repel, which explains why certain stocks and commodities at times lead the market and turn dead at other times. Thus, to speculate successfully, it is absolutely necessary to follow Natural Law. Vibration is fundamental, nothing is exempt from its law. It is universal, therefore applicable to every class of phenomena on the globe. Thus, he affirm, every class of phenomena, whether in nature or in the market, must be subject to the universal laws of causation, harmony and vibration." W.D. Gann

"Remember, everything in this universe is elliptical or circular in motion; that applies both to the abstract and the concrete, the mental, physical and spiritual. Every thought you think makes a circle, and it comes back to you.
From "The Tunnel Thru The Air" by W.D. Gann

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