Stock traders, futures traders and forex traders are always looking for the Edge. That little bit of information about the markets that nobody else has seen yet. But when there are already a gazillion copies of TradeStation out there the oscillator combination that can give you, and you alone, the Edge becomes more and more difficult to find.
Legendary traders like W.D. Gann found the Edge, and not by looking under the same street lamp as everybody else. Much of what Gann wrote, and much of that written about him, is obscure to the point of uselessness. One thing that Gann did make clear enough, however, was his belief that all publicly traded markets move in repeatable cycles or patterns. Not so much easily discernible time cycles but cycles based on the relationship of price and time. One thing he said was that “When price and time square change is inevitable.”
If left unexplained the significance of that particular quote would remain as obscure as his others. Gann did leave us with the Gann Wheel, however – a curious circle of numbers that is actually a square root calculator. It must have come in handy in the days before computers and electronic calculators. The Gann Wheel is the basis of the Square of Nine, and we believe the conceptual foundation of all Gann’s work.
The Square of Nine is unique because unlike every other method of technical analysis, the Square of Nine is totally indifferent to whether the input variable is a price, a range of prices, or a number of trading days or calendar days. They are all the same and completely interchangeable. Say what? That can be a little hard to get your brain around after spending years studying chart patterns, exotic moving averages, and oscillators. That’s the beauty of it.
Price and time become interchangeable by converting them to degrees of a circle. Squares and square roots are part of that process. Once price and time are conceptualized only as degrees of concentric circles we could care less about their actual magnitude. At that point we care only about their orbital relationship. Are they in opposition, conjunction or square? You will find that almost every significant high or low pivot point is indeed in opposition, conjunction or square to a previous price, range or time.
Is this what W.D. Gann meant in his 1909 Wyckoff interview when he said “just as the pendulum returns again in its swing, just as the moon returns in its orbit, just as the advancing year over brings the rose of spring, so do the properties of the elements periodically recur as the weight of the atoms rises.” One other very special aspect of the Square of Nine is that the more you study it the more you learn how much you don’t know!