Trading cotton in “The Tunnel Thru the Air”, or a view from 1940
Financial markets have changed since the beginning of the 20th century, their list was enriched by Forex and new trading instruments, like Binary and Vanilla Options. In investment funds, brokers are assisted by analysts with the University Degrees. Nowadays, the markets are analyzed and predicted by means of econometric methods and neural networks.
However, traders are still searching for the Grail; new approaches don’t yield an average trader the return and the profits of some prominent speculators from the past, like William Gann, for example.
William Gann – the Finance Nostradamus
His public trading sessions with almost exact forecasts for highs and lows yielded the young trader the glory of the finance Nostradamus.
Periodicals regularly published financial forecasts by William Gann; stock traders paid special attention to his predictions during financial crises and market rises because of their accuracy, recognizing Gann as an expert analyst.
William Gann predicted the change of the government, followed by the crisis in Germany during the First World War; the start of stock markets’ fall during the Great Depression and the end of the recession. Gann’s newsletters, projecting the market cycles for the next few years, as well as his books, were instantly bought out by traders.
A common guy from a poor farm family couldn’t know the secret information about stock prices’ moves. It took him almost 13 years to develop his own system. During those years, he had been studying the markets, and had advanced from a mere errand boy to the owner of the “premarket” business, selling training courses.
The components of W. D. Gann’s success
- Correct term of the forecast – a year.
- Careful study of the market cycles, applying mathematics, geometry, by means of quotes history for over a hundred years. He believed everything occurring in markets to have historical reference points.
- Study of the space phenomena influence on human psycho-physical state.
The most important factor that allowed Gann and other famous traders (for example, Larry Williams) to reach such impressive yields is the right choice of the asset. William Gann, the “great speculator” Jesse Livermore, and many other traders, taking part in the open trading competitions at that time, were trading cotton.
What do you learn from the history of trading cotton – the leader of speculation?
The technological revolution of the 19th century resulted in increased global consumption of cotton, followed by the development of weaving productions. After the U.S. monopoly on cotton supplies had ended, cotton production was distributed across colonial countries and became the most popular commodity for speculating.
The explosive price rise for the “white gold”, cotton, in the second decade of the 20th century, and the appearance of futures trading with the financial leverage resulted in quick wealth of stock speculators. As the traders knew about weather conditions, affecting the crop yield and logistic, they soon acquired the skills of fundamental forecasting.
The right choice of the asset, mostly trading in the uptrend, resulted from the constantly increasing demand and allowed investors to build a pyramid of the purchased contracts and receive almost guaranteed secure income.
Drawing a parallel to the present times, I can pay attention the emerging “digital gold”, Bitcoin and other cryptocurrencies, whose multiplied price growth yielded millions to traders, having invested in it at the beginning of the cryptocurrencies age. In this respect, the yields of PAMM accounts on the crypto platforms are rather indicative; managers, utilizing the leverage of 1:3, receive the profits, exceeding the record-yields of PAMM managers in Forex.
“The Tunnel Thru the Air”, a book of mysteries or guideline to how to predict a crisis?
As early as in 1927, William Gann wrote a fiction book that received a controversial response from the critics; he described the events of the near future there.
Much later, after Gann had died, his disciples and the researches of his trading and writing noticed how accurate he had been, predicting the Second World War and the upcoming economic and political crisis.
The major lesson, William Gann tried to teach in his books, was about identification of the market cycles, if you see the historical chart as the price change during a certain interval of time. Application of such a scale allows traders to transom the random price swings into harmonic cycles and identify the market highs and lows in future.
Why do followers publish Gann’s theory
You won’t succeed in looking for direct instructions or trading ideas in Gann’s books. In the published books, his methodologies are described rather vaguely and ambiguously
Gann taught his most accurate methodologies and technical analysis tools on his master courses and seminars; the records were lost by his business partner after Gann’s death. That is why, today, you can only learn about the versions of Gann’s theory, restored according to the words of his disciples and the researches of his life and career.
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