There seems to be mixed sentiments about this fella: some thinks it's all mumbo jumbo and some think he's God. Was his one-year predictions really that accurate or was it all hype? Elder once interviewed his Gann's son and was told that Gann had difficulty supporting his family and when he passed on, his assets were deemed to be about $10,000. Gann supporters would probably say that most of his money has been donated, his son was keeping a secret, etc. Not that I think he's all hype, but am just interested if anyone actually knows the 'true' story behind this man or has successfully made money with his techniques.

I personally never heard of or met a rich chartist. That's probably because the so-called "analysis" is based on nothing but wind. I guess the ones that make money are making it more through the selling of their books full of "evidence" (look at the chart, here's when that would have worked!!). "A new sucker is born every 5 minutes". P.T. Barnum.

Hiboumalin,I'm assuming you've not read Market Wizards or other similar stuffs. Anyway, assuming again that you defined charting as technical analysis, there already has been a lengthy debate in this forum about these issues. Debate1Debate2Moreover, just because you haven't met one (rich chartist) doesn't mean they don't exist. I think Collector did say, and I agree, that quantitative finance is ultimately a form of TA, albeit a very sophiticated one. I'd like to keep an open mind on these things. D

Hi Duality,I read the three Market wizards books, and actually loved each and every page of them. You should check "The Encyclopedia of Technical Patterns" by Bulkowski. He computes the percentages of correct predictions of each pattern...I don't think there's any pattern that was correct more than 55% of the time, and even then that does not mean anything about the p-value of the predictibility of the strategies. Moreover, most of the Wizards of the early books have gone bankrupt today.Going back to your original question, there is no doubt that if you knew how to compute moving averages in the early seventies you would have made a killing in some commodities markets. But right now there is a lot of people with big computers, lots of money and plenty of brain power, and when you initiate a trade you have to keep in mind who's on the other side of the trade. If I remember right, Gann's methods are based on angles, slopes etc... Put 10 Gann followers in the same room and you get ten different answers. This is not science nor anything serious by any stretch of the imagination. I can imagine a world where technical analysis could have some predictive value in a time when computing a linear regression would take half a day (remember the punch cards anyone?), but today you have to find a significant statistical realtionship and have a theory of why it works to back it up if you want to trade on it.That does not mean that past prices are of no use to predict future prices. It's just that oyu have to come up with better stuff than angles.Good luck in your quest for the Truth,Respectfully,Hiboumalin.

Hiboumalin,Thanks for info. Can I ask, though, how you know that most of the early market wizards are busted by now. Also, sorry for the wrong assumptions. D

QuoteOriginally posted by: HiboumalinYou should check "The Encyclopedia of Technical Patterns" by Bulkowski. He computes the percentages of correct predictions of each pattern...I don't think there's any pattern that was correct more than 55% of the time, and even then that does not mean anything about the p-value of the predictibility of the strategies.That is really an understatement. Obviously, if you want to trade with some indicator or pattern given in a book, you will not get better than 50%, but if you work hard you can come up many indicators that can give more than 80% accuracy, which along with stop-loss becomes a 95% pseudo-accuracy measure. Is it really true that most of the original Market Wizards have gone bankcrupt ? Seems very hard for me to believe. One of the best advices I have got from some of the better traders is that "don't confuse a bull market with brilliance", so while I can expect some of the lesser than real-expert traders to go bankcrupt, I doubt it would be true of the majority. My role models are Ed Seykota and Mark Weinstein - I take them (in form of their description in the first book) as my benchmarks for trading. Do you have any recent info on both of them ?From what I last gathered from the net Ed Seykota is somehow involved with http://www.galtcapital.com/ although the website doesn't mention how good or bad they are doing recently. Didn't find anything on Mark Weinstein apart from the association of his name with Market Wizards.

Hi Pb273 and Duality. The info about the Wizards comes from personal friends and a couple of old articles posted on therighthardedge.com. I do not remeber the specifics as of now, but I will look for them (and shall post them here). The thing with most trend followers was that after a while, their entry point or entry signals had been spotted by other market participants who picked their orders, sometimes even giving birth to new patterns (e.g., the "Turtle Soup" pattern in "Street Smarts", by Raschke).Pb242, are you telling us that you have strategies that work 80%-95% of the time? If yes, I apply for an internship with you immediately!!Good luck all,Hiboumalin

have the got the name of site right? i couldn't get any site called therighthardedge.com.

My fault,the name is www.righthardedge.comhere

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I prefer to play a 55%-winning game once a day than a 80%winning game once a year ...

What we should care about is the expected value of the gains, not the probability of gain.

Hi Hiboumalin,Checked out the website. Pretty informative ... Thanks again. I agree with you that techical analysis or charting is a subjective matter. Clearly, this is because trading, I believe, is ultimately more of an art than science, although sometimes I do find it difficult to distinguish between them nor do I find that I should. Anyway, as I've also mentioned before, I also believe that all forms of market analysis, no matter how quantitative, is also technical analysis. I would have thought that trend-following methods still work (since we are still observing trends in the markets), although I suspect, they are no longer just comprised of simple moving averages. You said that today, we need to find significant statistical relationships in market data and support it with a theory. I'm pretty sure in the early trend-following days the statistical studies on the profitability of such strategies would be significant. Sure, the statistical results are probably invalid nowadays, but then again, markets are always changing. Even the current most sophisticated and mathematically sound models will have trouble maintaining their profitability as the properties of the markets evolve. So, the tools that traders use today, be it Neural Nets, GA, MESA, etc. are perhaps not too dissimilar in principles to their predecessors. Anything goes when it comes to the markets. As it's often said, a trader should find a system which suits him or her even though it may look extremely dubious to others. Anyway, I'm probably getting a bit side-tracked here ... all I want to know is whether the claims made about Gann is true or not. I don't really care if his methods do not apply to today's markets, if they ever did at all that is. D

Duality has read this before, but it is worth saying again, IMHO.Anecdotes on TA:my first research job included the responsibility (aka "horrible chore") of hand updating a large scale high-low-close time series chart for a very senior member of the firm. This was back in the dark days of 1985 when ya just couldn't zap 'em out on Excel. This guy was very successful, wanted 'em in ink, the size of a wall. Dog boy me did it. He used Gann.Latter, I filled in with our internal accounting department at FY end when we were rushed closing the books. I had the opportunity to make a query and peak into his profits from his trading book for these time series. So I did. He lost money. He made his money being a principal of the firm, not on his Gann trading.Latter, I met a guy who told me he paid his way through medical school using a TA technique. I read the obscure book he mentioned, follwed the technique as best I could on an old time series, made no sense of it, and so looked around for a better explaination. I found an expensive newsletter that instead did the work for you. $700 a year in 1985 $. I called them, asked about it, and they sent me a free sample issue. I noticed the publisher's address was located in my hometown, so the next time I visited my folks, I drove by the house where the publishing operation was. Small house, peeling paint, old car, lawn wasn't mowed. Neighbors had cars with "bond-o" as a contributory color. End of curiosity about said newsletter.I went to high school with a very famous trader who is known for his use of Eliot waves. He is fab-o successful. Buildings named after him, etc.I chatted with him about his success, and whether he really used the TA. He allowed that he looked at it, but mostly traded on his "gut."Someone once called Warren Buffett a "ten sigma event." Investors as successful as Warren are few, but they do occur, and perhaps occur randomly. In the spirit of Duality's earlier post on TA, I think there likely are lots of people who are a sigma or two over on their success using TA, but I expect this curve has giraffe-like kurtosis. But there is area under the curve in the positive side of return distribution.Sooooo.....those with the simultaneous conditions of 1) enjoying surviorship-bias and 2) underfed egos so they want to tell people about their success (i.e. write books and newsletters and enjoy their success visibly) then keep TA alive, even though the true returns for the entire population that employed the techniques is random.Given the above, I am not mystified that TA is still around.Gotta go read my horoscope, and the temple got in a new batch of pigeons, so I gotta be there for first evisceration so I know what to play on the open tmrow. Anyone seen my Urim and Thummim around?

James, BTW, these lines are extracts from Market Wizards and other books. Believe me, even though 95% of the TA users can't make money of out it, it doesn't mean that the same about the remaining 5%, after all, even without TA, 95% of investors won't make money anyway. Hiboumalin,It is perfectly possible to have strategies that can make money out of TA, 80-90% of the time, except these are unlikely to be found in a book. Are you guys based in US or UK ... if you guys are so sceptical of TA, lets do one exercise ... give me around a month's time to set-up systems for trading the FTSE and then lets have a forum post over here, where I will post buy/sell signals and we can paper trade them, okay ... and do this exercise for the next 4-6 months ... and see the results ... okay. Also, I (a) prefer to play on leverage, i.e. on margin with index futures ... typically 5 times and (b) compound the returns or losses, and then at the end of 4-6 months we can take a look at the P&L. Let me know if you guys are interested ... then only I will put in my efforts ... and we will be only paper trading okay ... no real losses or heart burns ... Okay ... the above paragraph is just an idea and I may not actually do it ... but let me know if anyone is interested in the exercise.