How to Trade by W.D. Gann
In this excerpt from one of Gann's most important courses, we delve into some hidden gems of trading, such as the art of pyramiding and special rules for surviving in financial markets
«After you have thoroughly mastered all of the lessons, be sure you are right before you make a trade. Never guess. Trade on scientific indications only» — W.D. Gann, from Master Stock Market Course
You must know exactly how to apply all the rules, how to draw the geometrical angles or moving-average lines from tops and bottoms; how to square Time with Price, how to bring up the important 45° angles or lines, which represent a moving average. You must know where to place a stop loss order and must look up what cycle the year is in, that is, determine from the Master Forecasting Chart whether it is a bull or bear year, whether the mean trend should be up or down.
Before you make a trade, either buying or selling, consider the position of each individual stock on the monthly chart; next consider the weekly chart and then the daily chart. If they all confirm an uptrend, it is a cinch to buy, provided you have located the point at which to place a stop loss order. On the other hand, it the cycle shows that it is a bear year and the monthly, weekly and daily chart show downtrend, then it is time to go short, but again, you must look for the most important point — where to place the stop loss order so that it will not be more than 3 points away and closer if possible.
What to look up before you make a trade
Following are the most important points that you must consider buying or selling a stock: