Research On The Core Thoughts Of Gann's Investment Theory And Applications

William D. Gann is one of the greatest investors in the 20th century; He had more than 45 years'history of investment in Wall Street. During his entire life, he encountered the World WarⅠ, the Stock Market Crash in 1929, the Great Depression in 1930s and the World War II. During that turbulent period, he gradually formed his unique investment thoughts and theory, and accumulated more than $50 million profits (of that time).However, in the past decades, most Chinese scholars' researches of Gann's theory seem a little biased. The first reason for this can be distributed to the richness of Gann's theory itself, which leads to separate understanding from different researchers. Secondly, there is a great lack of materials of Gann's theory in the past, which makes it very difficult for our scholars to seize a complete picture of Gann's theory, so their explanations of Gann's theory seem to be out of context. In recent years, Gann's works have been gradually introduced into China and translated into Chinese, which makes a great favor to numbers of Chinese investors who would like to turn to Gann's theory for guidance in their investment.In this situation, this paper breaks the old manner of explanations of those scholars, penetrates into Gann's original works, extracts several core parts of Gann's theory, makes a careful explanation of it, and then gives several examples of applications of his theory.According to Gann's general manner of introducing his theory, this paper first summarizes Gann's theory of the series of prepare work and the basic qualities needed for an investor who wants to trade in the security market. Especially, an investor must use a stop loss order properly to protect his/her investment in the market. Then, the following three chapters introduce the core content of Gann's theory, and they are price, time and trading volume. According to Gann's theory, price, time and trading volume are the three dimensions of the market and stocks' development; so, Gann's investment rules can be summed up in six words:space and time combined, trading volume confirmed.In chapter 3, this paper illustrates Gann's theory in detail on the 3 core aspects: price, time and trading volume. In the part of price configuration, this paper illustrates Gann's three core thoughts on judging the trend of the market or a particular stock, and they are the thought of market developing in sections, the fundamental rules of judging the trend and the percentage rules, including explaining how to judge the unbalanced market of time and space. The basic rules of estimating the trend contain the judgment of the beginning and the end of a great trend. On the time and cycle rules, this paper focuses on the Medium-term and the Short-term. Then this paper illustrates the space and time combined rule and the unbalanced market again in details. In addition, Gann created the Three Day Rule and the research of the months in which the Support and the Resistance appeared most frequently. For most investors, these two rules are not only easily understandable but also easy in practice. The final dimension is trading volume, this paper gives the rules of trading volume in confirming the trend. Besides, in Chapter 4 this paper gives several proper examples of how to use Gann's theory in trading practice. These examples use the several great trends of Shanghai Stock Composite Index to demonstrate the effectiveness of Gann's theory and make a deeper comprehension of Gann's theory. The last chapter summarizes the conclusions of this paper.There has always been a variety of ways of interpreting Gann's theory; this paper also uses one way of them. But I hope to extract the essence and restore the most realistic color of Gann's theory through this summary. Limited by the requirement of words and my ability, this paper is not perfect in the interpretation of Gann's theory, but I will continue to do research in the field. At the same time, Gann's theory, after all, is introduced from America, the right attitude to it should always be scientific; second, Gann's theory formed around the 1930s, whether it is useful nowadays is also a question, which needs more demonstration.