- Market Predictions
- Publications
- Focus of This Book
- Trading Rules
This chapter is from the book
This chapter is from the book
This chapter is from the book
Trading Rules
Some of the other books that analyze Gann’s works, and many of the websites and blogs that touch upon the subject, explore an important list of trading rules that Gann wrote back in 1949. 45 Years on Wall Street lists 24 “never-failing” trading rules based upon Gann’s personal experience (see p. 16 and 17 there). However, eight years earlier, Gann had published a list of 28 “valuable” rules in How to Make Profits Trading in Commodities (see p. 43 there). From the list of 28 rules to the list of 24 rules, Gann altered only a few rules, due to the focus of the subject matter (stocks versus commodities).
Appendix A of this book contains Gann’s original 28 rules, incorporating the stock-related edits. As you can see, many of Gann’s rules use negative words, such as never and don’t, to get his points across. The last of the 28 rules even states, “Avoid getting in wrong and out wrong; getting in right and out wrong; this is making double mistakes.” This rule really resonated with me when I first read it. It made me realize that if I could break down the elements of my thoughts and actions (essentially, these rules), I would be more likely to do the one thing Gann wanted his students to do but that he didn’t say outright: Get in (the market) right, and get out right.
To focus on correct action, I decided to go through Gann’s rules and rephrase any that were written with negative language. Why? Because I believe that telling students what they should or can do is a more effective teaching method than telling them what they shouldn’t or can’t do.
Therefore, Appendix B includes a second list of Gann’s rules, but in their “affirmative” form. I refer to the “affirmative” rules throughout this book where applicable.
To begin...
- Gann Rule (Affirmative) #26: Only follow another man’s advice if you know that he knows more than you do.
I’m sharing this rule first to encourage you to explore the rest of this book proactively. I have come to see how Gann’s trading methodologies work time and time again, but don’t take my word for it. Examine the examples and even observe your own markets of interest to see the knowledge at work.