Edition

IFTA JOURNAL
2017 EDITION
they are an essential component of almost every volatility or
option pricing formula. The theory holds that stock prices move
over the long and short term in a square root relationship. For
example IBM made a monthly closing low of 4.52 in June, 1962 and
monthly closing high of 125.69 in July, 1999. This is within a few
percentage points of the square of the sum of the square root of
the low price + 9 or (2.12+9)^2. GM made a low of 15 in November,
1974 and a high of 95 in May, 1999. Again, a few percentage points
from the square of the sum of the square root of the low + 6 or
(3.87+6)^2. There are hundreds and hundreds of these examples
across the stock, financial and commodity markets. Even a few
minutes with a pile of stock charts and a calculator will build
confidence that major highs and lows are related to each other by
additions and subtractions to their square roots. The Square of
Nine takes these square root relationships to a different level as
you will learn in the pages ahead.”
“We use the square of odd and even numbers to get not only the
proof of market movements but the cause“ (W. D. Gann, The Basis
of My Forecasting Method (the Geometrical Angles course), p.1. 6
Square of Nine
Before we continue with our illustration, it is important to
know some information about W.D. Gann. He was a financial
advisor and trader in the stock and commodity markets during
the first half of the 20th century. In the 1920s, he developed the
Square of Nine as a financial tool for trading and forecasting.
Methods of using it were taught by W.D. Gann in his private
financial seminars and written trading courses. In his later
books, he started to use Circle of 24 and Hexagon. In the
following paragraphs, the basic concepts that those charts are
drawn upon are going to be explained.
The reason behind the name “Square of Nine”:
In Figure 12, it can be noticed that every circled cell is an odd
square number and the first odd square number is 9, which
is equal to 3*3 and which also comes after the first complete
rotation; thus, the square is called by its cell number “Square of
Nine”. 8
In the upright side in the next figure (Figure 13), it can be
clearly seen that all circled cells are even squares. 9
Figure 12. Origin of “Square of Nine”
Figure 13. Circled Cells Are Even Squares
Complete Cycle Rotation:
W.D. Gann used the words “Square” and “Cycle” when
referring to 360 degrees movement around the Square of Nine
Figure 11 shows the movement from 50 to 81 as one 360
degree movement, or one complete cycle rotation. 7
Figure 11. 360 Degree Movement Around the Square of Nine
Square Number Halfway Points:
In Figure 14, for example, we will find that 121 is the square of
11 and 144 is the square of 12, so the half point line is crossing
the rotation path at approximately 90.5, which is considered
11.5*11.5and the same at the opposite direction. 10
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