Gann was a rare mathematician. He was a student of numbers, number theory, and the progression of numbers. He often said his analysis theory was based on natural law and mathematics.

Since time progresses as the earth turns on its axis, and time is measured by numbers and progressions of numbers, and since prices in their movement upward and downward are measured in numbers, we can understand why Gann had an intense interest in numbers, number theory, and mathematics. And remember….he did not have a personal computer, or even a handheld or desktop calculator-just a pencil.

Gann said his trading method was based on natural and mathematical law. For years he refused to reveal any part of this method. The method was based on natural law, but the theory behind it was based on mathematics. Since price and time are denoted in mathematical terms (numbers), his system involved numbers and number progressions. He simply said he had researched far back into history and even went to India for old pre-Hindu records and philosophies as well as the ancient archives of the pre-Hindu period.

As we study Gann’s works, we begin to see the some numbers took a dominant place in his trading method. The square of numbers was an important issue with him, namely: 16, 25, 36, 49, 64, 121, and 144. He thought that markets moved in patterns sensitive to the price movement of these squares in terms of both price and time. For example, a rally in a specific market may have a tendency to find resistance 64 cents or 64 days from a bottom. Similarly, a decline in a market may find support 144 dollars or weeks from a top. This technique was combined with others that he developed, and it became a major part of his analysis tools.

Key Numbers

At this point, some of you may be discounting Gann’s methods because of their relative obscurity, but I would ask you to suspend disbelief. Gann found several numbers for a variety of reasons, some religious or spiritual, some historical, and some psychological. Whether or not his belief was reasonable or based on probable fact is largely irrelevant here-he used them as the basis for his trading, and they can work if incorporated properly into a technical trading system.

Gann researched numbers and cycles in many unique ways. Much of his research focused on the specific meaning of a number and how it relates to market movement. His research included the study of early Egyptian writings as well as cycle information. He also did extensive research of the cycles highlighted in the Bible. Records indicate that the early Egyptians considered the number seven to be the symbol of both earthly and eternal life. It is thought of as a number symbolizing a complete cycle, for seven is denoted as the number of time and rhythm. This information was used by Gann to develop a seven-day-cycle theory for short-term market moves.

Gann deemed three and one-half important, as it is half of seven, and in the Bible it occurs several times- for example, in the Book of Revelation, where the woman was sent into the wilderness for three and one-half years; during Daniel’s vision of 42 months (3 ½ years); when the Christ child was hiding in Egypt for three and one-half years; and during Christ’s public ministry, which lasted exactly three and on-half years. Gann used this information to study and research the 3 ½-day, -week, - month, and –year cycle, and applied the knowledge he gained to trade the market

Gann also considered the number nine important, as it occurs in the nine beatitudes recorded in Matthew’s Gospel, and he believed that nine corresponds with the number of stages of a disciple’s advance to a higher life. The number 12 was important to Gann, as it denoted space for him. He found it recurring in the twelve tribes of Israel, the 12 disciples, and the 12 houses of the Zodiac.

Other important Gann numbers are derived as follows: One year is 365 days, as this is the time it takes the sun to enter a hemisphere, move to the opposite hemisphere, and then return to the starting point. The movement of the sun produces definite seasons, affects crops and weather, and therefore has a dominant effect on our lives. For this reason the 30-day or sun cycle has dominance. Besides what has already been said about the number seven, it is important because of its link to the lunar cycle.

The number 144 was also important to Gann, whether because of there being 1440 minutes in a day (the decimal point is disregarded), it is 40% of a circle (360° x 0.40) = 144°), or because it is the square of 12. Numbers that occur repeatedly in the different sciences-such as mathematics, geometry, physics-cycles, and other natural studies were very important to Gann.

After studying mathematics and researching number patterns, Gann had to find a practical use for his newly acquired knowledge. Armed with this information Gann turned to the stock and commodity markets. After applying his strong background in mathematics to these markets, he concluded that markets adhere to mathematical law. From this conclusion he was able to develop his trading theory. This theory basically stated that market movement is governed by the forces of pattern, price and time.