Time Duration Trading Secrets & Statistical Validity

Secrets of time durations of profitable & losing day-trades

Most successful daytrades last approximately 7-minutes. That typial trade duration assumes the trader is using a reasonable profit objective and exiting the trade as his profit objectivegets hit.

Most losing day trades last about 45-minutes. That’s because the trader relies on hope once he sees the trade looking like a failure. So he hangs on to the losing trade hoping it will turn, finally the loss becomes too big forcing him to exit the trade after being in the trade for a much longer time than originally anticipated, mostly due to relying on hope.

How many trades are needed for good statistical validity?

Lots of stocks and commodities traders ask how reliable their track-record may be as far as statistical validity goes. They may see some statistics on seasonal trades showing a market was mostly uptrending from April to June during 12 of the last 14 years, for example. The same traders may have experience with their own trading system showing 8 of 9 winners following say a 5-unit moving average crossing over a 9-unit moving average.

None of those scenarios are valid from a statistical validity standpoint. That’s because according to mathematical experts and statisticians a minimum of 30 occurrences are needed for good statistical validity. Please keep this in mind when evaluating a trading system or trader metholodology. Anything less than 30 samples will not be statistically accurate.

Amazing trading 100-yrs ago by William D Gann

It has been asked in phone calls and emails if there is a method to predict futures markets turning points based strictly on
numbers and charts. The only way we know how to do this is to Square Price & Time and to draw Geometric Gann Angles using “Square Charts”, as outlined in our W D Gann Trading Course.

We also have some great reprints of old articles about W. D. Gann, the most famous stocks & commodities trader of all time. Here is part of a fascinating article about Gann written in 1909 by a newspaper which later became known as The Wall Street Journal.
“It is very difficult for me to remember all the predictions and operations of Mr. Gann which may be classed as phenomenal, but the
following are a few. “In 1908 when the Union Pacific was 168-1/8, he told me it would not touch 169 before it had a good break. We sold it short all the way down to 152-5/8, covering on the weak spots and putting it out again on the rallies, securing 23-points profit out of an 18-point wave.”

“He came to me when United States Steel was selling around 50, and said, “This Steel will run up to 58 but it will not sell at 59. From there it should break 16 points.” We sold it short around 58 with a stop at 59. The highest it went was 58. From there it declined to 41-17 points.”

“At another time, wheat was selling at about .89¢. He predicted the May option would sell at $1.35. We bought it and made large profits on the way up. It actually touched $1.35.” “When Union Pacific was 172, he said it would go to 184-7/8 but not an
eighth higher until it had a good break. It went to 184-7/8 and came back from there eight or nine times. We sold it short repeatedly, with a stop-loss at 185, and were never caught. It eventually came back to 17.”

“Mr. Gann’s calculations are based on Natural Law. I have followed his work closely for years. I know that he has a firm grasp of the basic principles which govern stock market movements, and I do not believe any other man can duplicate the idea or his method at the present time.”

Early this year, he figured that the top of the advance would fall on a certain day in August and calculated the prices at which the Dow Jones Averages would then stand. The market culminated on the exact day and within four-tenths of one percent of the figures predicted.” “You and Mr. Gann must have cleaned up considerable money on all these operations,” was suggested. “Yes, we have made a great deal of money. He has taken half a million dollars out of the market in the past few years. I once saw him take $130, and in less than one month run it up to over $12,000. He can compound money faster than any man I have ever met.” (Editor’s Note: these figures are based on 1909 Numbers)

“One of the most astonishing calculations made by Mr. Gann was during last summer [1909] when he predicted that September Wheat would sell at $1.20. This meant that it must touch that figure before the end of the month of September. At twelve o’clock, Chicago time, on September 30th (the last day) the option was selling below $1.08, and it looked as though his
prediction would not be fulfilled.

Mr. Gann said, ‘If it does not touch $1.20 by the close of the market it will prove that there is something wrong with my whole method of calculation. I do not care what the price is now, it must go there.’ It’s common history that September Wheat surprised the whole country by selling at $1.20 and no higher in the very last hour of trading, closing at that figure.”

So much for what Mr. Gann has said and done as evidenced by himself and others. Now as to what demonstrations have taken place before our representative: During the month of October, 1909, in twenty-five market days, Mr. Gann made, in the presence of our representative, made 286 transactions in various stocks, on both the long and short side of the market. 264 of these transactions resulted in profits – twenty-two in losses.

The capital with which he operated was doubled ten times, so that at the end of the month he had one thousand percent of his original margin. In our presence Mr. Gann sold US Steel common short at 94-7/8, saying it would not go to 95. It did not. On a drive which occurred during the week ending October 29, Mr. Gann bought Steel common at 86-1/4, saying it would not go to 86. The lowest it sold was 86-1/3.

We have seen him give in one day sixteen successive orders in the same stock, eight of which turned out to be at either the top or the bottom eighth of that particular swing. The above we can positively verify. Such performances as these, coupled with the foregoing, are probably unparalleled in the history of the Street.

James R. Koene said, “The man who is right six times out of ten will make a fortune.” He is a trader who, without any attempt to make a showing, for he did not know the results were to be published, established a record of over ninety-two percent profitable trades. Mr. Gann has refused to disclose his method at any price, but to those scientifically inclined he has unquestionably added to the stock of Wall Street knowledge and pointed out infinite trading and investment possibilities.

The complete William D. Gann article and others are located here