William Delbert Gann (1878 – 1955) introduced innovative technical analysis tools such as the Gann angles. William Delbert Gann is said to gain 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).

 

William Delbert Gann Trading Rules

 

1. Only trade active markets

Gann recommends trading exclusively high-volume markets where your entries are always easy and you pay a tight trading spread. An active market means a liquid market and lower transaction costs.

 

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

A great number of trades means you pay too much to your broker. Avoiding frequent trading leads to the reduction of transaction costs. 

 

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

Trade any kind of market bullish or bearish without getting emotionally attached to a particular bias.

 

4. Do not try to guess tops or bottoms

Tops and bottoms are the outcomes of random events. It is impossible to predict the exact levels where the market will stop and reverse.

 

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

Focusing on the real value, and not the market price. Phillip Fisher once said: "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

Portfolio Diversification is a essential for long-term success. Most professional traders never allocate more than 2% of their capital in any trade.

 

7. Never let a profit run into a loss

Capitalizing profits before they become a loss. Moving your stop-loss is the perfect way to ensure a great portion of your profits.

 

8. Never average a loss

Cut your losses short and do not increase a losing bet.

 

9. Always use stop-loss orders and never cancel a stop-loss after you have placed the trade

Reduce your risk by applying a stop-loss and follow your strategy with discipline.

 

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

In other words, trade only if you are able to ensure that you can understand the trend.

 

11. Distribute your risk equally among different markets

Always applying Portfolio Diversification (in terms of different assets, markets, currencies, economic zones, etc).

 

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

Balancing your trading decisions with discipline and logic by eliminating your emotions.

 

13. Never change your position without a good reason

Stay loyal to the reasons that made you open a position.

 

14. Reduce trading after the first loss; Never hedge a losing position

By hedging a losing position you enlarge the potential for a loss. A bad trade usually affects your morale and the effectiveness of your decision-making, cut it short

 

◘ William Delbert Gann Trading Rules

Giorgos Protonotarios, Financial Analyst for Forex-Investors.com (c)

 

 

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