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William Delbert Gann Trading Rules

William Delbert Gann Trading Rules

William Delbert Gann (1878 – 1955) was a famous trader who introduced new technical analysis tools like the Gann angles, the Hexagon etc. Gann forecasting model is based mainly on geometry and mathematics but also in astronomy. Gann introduced the the stock market angles {Basis of My Forecasting Method  -1935). The most important stock market angle according to Gann is 45° angle or 1X1, which represents a single unit of price under a single unit of time. William Delbert Gann is said to gained 50 million USD during the Great Depression. Only in 1933, is said to have gained 4,000% on his capital (422 winner trades in a total of 479 trades).

Picture: Gann's Personal Soybean Chart (May 1948)

William Delbert Gann Trading 

 

Here are Gann advices for stock-investors, comments by Giorgos Protonotarios.

 

William Delbert Gann 20 Rules for Successful Trading

1.Only trade active markets

Gann recommends trading only high-volume markets where entry and exit is easy and cheap. An active market means liquidity, and liquidity means low transaction cost.

2. Avoid getting in and out of the market too often

The reason is again to avoid high transaction cost. A great number of trades equals either lower profits or greater loses.

 

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3. Be willing to make money from both sides of the market

This is the common advice of many other great investors and refers to the ability of trading any kind of market bullish or bearish.

4. Do not try to guess tops or bottoms

The reason is that tops and bottoms are randomly formed in a chaotic system and thus can not be predicted. Furthermore, these tops and bottoms are formed in a very brutal way. A trailing-stop-loss order can provide a shield for those traders seeking to run their profits but as a general rule it is better to listen to Mr. Gann and not be greed.

5. Never buy or sell just because the price is low or high

Gann recommends focusing on real values and not on simple market prices. According to Phillip Fisher "The stock market is filled with individuals who know the price of everything, but the value of nothing".

6. Never risk more than 10% of your trading capital in a single trade

This is the golden rule of the financial markets. Portfolio Diversification is a very crucial issue that should never be ignored.

7. Never let a profit run into a loss

Gann recommends capitalizing profits before they become losses. Moving up your stop-loss is the perfect way to avoid the possibility that profits will suddenly become losses.

8. Never average a loss

Gann recommends not to apply what is called as the ‘Moyenne Strategy’. Moyenne is a stock-market tactic that involves averaging losses by buying more units in lower prices –This could also be called as the ‘Loosing Strategy’.

9. Always use stop-loss orders

Wise advice for all kind of trades either trading stocks, Forex or Commodities.

 

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10. Never cancel a stop-loss after you have placed the trade

Gann means to follow your strategy and not to alter it for any reason.

11. Do not enter a trade if you are unsure of the trend. Never buck the trend

What was after called as 'Follow-the-Trend'.

12. When in doubt, get out, and do not get in when in doubt

Gann means to control and to discipline your trading behavior according to your fundamental expectations.

13. Distribute your risk equally among different markets

An advice focusing again on the important concept of having a great Portfolio Diversification (differentiate in terms of assets, markets, currencies, economic zones etc).

14. Never trade to scalp a profit

Scalping is a very popular trading strategy nowadays in the Forex market.

15. Never get out of the market because you have lost patience or get in because you are anxious from waiting

Balancing trading decisions with discipline and logic.

16. Avoid taking small profits and large losses

That means in other words "Cut your Losses and Run your Profits". 

17. Never change your position without a good reason

Gann recommends again to anything in order to avoid transaction cost. Transaction cost reduces your real capital.

18. Never hedge a losing position

By hedging a losing position you enlarge the trading cost furthermore and that probably means loosing even more.

19. Reduce trading after the first loss; never increase

A bad trade usually affects your morale and the clearness of your decision-making.

20. Do not follow a blind man's advice

In nowadays, we can translate this advice into never trading according to information that you found in a no-name blog or in any other not-reliable informational sources.

 

Giorgos Protonotarios, Financial Analyst

For Capitalinvestor.org

Read More: »Warren Buffett Investing Tips | »George Soros Investing Tips

 

William Delbert Gann 20 Rules for Successful Trading 

Capital Investor (2013)

George Soros Investing Tips and Advice

 

 

George Soros Short History

 

George Soros is the man who broke the Bank of England in 1992, when he made more than 1 billion dollars short-selling the pound sterling. He is the manager of the Quantum Endowment Fund, a hedge fund investing more than $27 billion in assets.

 

1. Brokers: Finding the one broker who is actually in tune with your style of investment is essential. Once you find the right broker, stick to that person as a person.

 

2. Leisure Time: Sometimes investors forget one very crucial thing – living. Take a break from the busy world of investing and do remember to spend quality time with your loved ones.

 

3. Trial & Error: Form a hypothesis and get the opinion of others on it. When we take in inputs from people, we are able to get a better perspective. Once we actually form one, we can apply it in reality. If the thesis works good in the market, try and stick to it else withdraw from it and go for a new one. Trial and error is best for stocks.

 

4. Withdraw: If you are facing nothing but continuous losses in the market, it is better to withdraw your money and start afresh. The idea is to begin again with renewed vitality and optimism.

 

5. Investing: If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring and personal emotions have no place in investing. If you want to be successful in the long-run, base your investment decisions on rationality and discipline.

 

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6. Mistakes: I’m only rich because I know when I’m wrong. I have survived by recognizing my mistakes. You must recognize and admit your mistakes when you make them, cut your losses short, and move on to the next logical step.

 

7. Scenario Planning: The financial markets generally are unpredictable. Successful traders abide by this philosophy by heart. Markets truly are random and no one knows where, when, and how prices will move. The biggest opportunities lie in those unexpected events because most people are betting on the obvious, and in the market, most people are wrong. The key is to be ready for every scenario that can happen so that you can take advantage of the opportunities that lay ahead.

 

8. Turnaround: The worse a situation becomes, the less it takes to turn it around, and the bigger the upside. This is true in life as well as in investing. When you hit rock-bottom, every inch of improvement feels so much better and powerful.

 

9. Stock Bubbles: Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception. Stock market bubbles start with good corporate or economic fundamentals. Things just go out of hand when people’s misguided greed comes into play.

 

10. Keep Things Simple: The more complex the system, the greater the room for error. A simple but effective investing system will always beat the crap out of a complex system that doesn’t work.

 

George Soros Realted Video:

» George Soros at Wikipedia

 

More Tips: » Warren Buffett Investing Tips | » Richard Branson Tips

Read More» Forex Tips | » Rating Brokers | » Compare Brokers

 

George Soros Tips and Advice for Investing

Capitalinvestor.org (2013)

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