W. D. Gann’s Timeless Stock Trading Rules

By | June 6, 2021 2:48 pm

William Delbert Gann was born on 6 June 1878 in Lufkin, Texas. His father, Samuel Houston Gann, was a teacher who traded in cattle and horses. He also owned a billiard hall. Gann’s mother, Susan Rebecca Gann (nee Trevation) spent much of her time raising W.D. Gann and his younger brothers and sisters. She taught the young William to read using the Bible – a book that was to later influence his thinking on the nature of markets.

William Delbert Gann was apparently one of the most victorious stocks and commodity traders that we ever had. A trader who created the technical analysis tools named as Gann Angles, Square of 9, Hexagon, and Circle of 360. W.D. Gann’s market predicting methods were based on geometry, astronomy and astrology, and ancient mathematics. n his trading career at some point, W.D.Gann took three year’s break to go to the U.K to learn and understand the history of selling prices of Wheat. During his thorough studies, he created some very influential and pioneering techniques, called the Square of 9.

As today is Birthday of WD Gann Sharing few of his Timeless Stock Trading Rules

  • Do Hard Work for  Success in Financial Market

To be successful the most important rule is to strive for success. This means you must exert effort and put a lot of hard work into your effort. You must be knowledgeable of a reliable trading method that you can use to extract money from these markets. This method must be able to help you understand the price structure of the markets in regards to time and price movement.

  • Always Plan your Trades

When you enter a trade you should have a figured a game plan for both the entry and exit of the trade. The plan should be definite and not subject to changes to your psychology during market hours. Gann knew exactly what he was doing all the time. You should have a stop in the market at all times, because you never know when a time cycle might turn against you. You should also have a profit objective in the market.Trading is a Function of “Defining Risk” as per “Trading Edge” and execution of the trade.

  • Plan your Orders

You should always use price orders to enter the market. By doing this you will limit your risk and you can have a predetermined stop loss for the trade you are making. It also eliminates slippage on the entry. When you exit the market, it can be with a limit order based on the time and price objective. However, if the price has not been met by the end of your time cycle, you should then exit at the market.

  •  Trade in Private

Never under any circumstances reveal your trading positions to anyone. Your mind must be in complete harmony with your trading positions. When you reveal your positions to someone, they will immediately start to question the trade and start to erode your confidence and concentration in the trade. You will then be a less effective trader and eventually lose.

  • Never Overleverage 

Over trading on low margins is why so many people lose in the markets. You should never put a position on that risks over 2% of your capital. Every position you have in commodities should be backed with 3 times the minimum exchange margins. That means if the minimum exchange margins on wheat is 80000 then when you buy a contract it should be backed with 240000. This backing can be done in several ways. You don’t have to have the money sitting in the brokerage account. It can be in a money market account or in Tbills.

  • Stops Based on Percent

All the stops you use should be based on percent of the price of the current market. Check back and you will find that a certain percentage stop works on the market most of the time and it is based on the current price of the market. Usually a 1 percent stop will protect you. Check back and see what previous stops have held the market and you will find one secret to trading successfully.

  • Know When Not to Trade

There are three different positions you can be in at any one time. Those being long, short and neutral and not in the market. Don’t be afraid to be out of the market. When cycles are changing, there are times when you should not be in. Changing cycle markets give you poor signals. You are also constantly being stopped out in these markets. If you are stopped out of 2 – 3 trades, you probable won’t take the next trade because of psychology and that will be the one that works.

  •  Odd Price Orders

When you place limit price orders, they should be not even but odd. That means if you want to buy Reliance at 2100 you should place the order at 2101. That is a little above the price level. The price level of 2100 is a strong psychological level and many orders are placed there. The chances are that you would not be filled at that price level and the market would then rally sharply.

  • Trade with the Main Trend

Gann always said go with the main trend. It is very important. You can buy reactions against the main trend and this can be very profitable.

  •  Watch the Timing Swings

Timing swings are important. Watch foe 20/10 Year cycles.

  • Psychology and Health

Psychology is very important. Trade only when you are mentally and psychologically strong. Your mind and body must be at its top condition when making critical decisions, which risk large sums of money.

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