9 Gann Trading Rules

Unlocking Success with WD Gann Trading Rules: A Comprehensive Guide

WD Gann Trading Rules
WD Gann Trading Rules

Before learning WD Gann Trading rules, let us first know about William Delbert Gann, who was born in 1878 in America, today known as a renowned trader from 1878 to 1955, achieved remarkable success during the challenging times of the Great Depression.

His astute trading strategies led him to amass a staggering $50 million in profits. In the year 1933 alone, he executed an impressive 479 trades, out of which an astounding 422 turned out to be winners.

These triumphant trades allowed him to achieve an extraordinary overall gain of 4000%! What sets Gann apart is his innovative approach to stock market forecasting, which focuses on dates rather than solely relying on prices.

Explaining 9 WD Gann Trading Rules

W.D. Gann Trading Rule 1:
Backtest and Forward test your trading strategy first

Before trading on any idea or strategy, we must check that how many times this idea has worked in past. If you find good results in such test than yet do not trade on them. By this I mean, now you need to test the strategy in real market by doing paper trading. It means you do not have to execute a real trade and trade has to be traded on a piece of paper. Now if you find it is working more than 70% time with good risk reward ratio, you can plan trading on it.

WD Gann Trading Rule 2:
Implement Stop Loss Orders And Protect Your Capital

By implementing this risk management tool, you can set predetermined exit points for your trades. If the market moves against you, the stop loss order automatically triggers, limiting potential losses and protecting your capital. This proactive approach allows you to maintain control over your investments and minimise the impact of adverse market conditions. By utilising stop loss orders, you can enhance your trading strategy and safeguard your hard-earned capital.

Trading Rule 3: Determining the Ideal Capital for Trading

You must use only 10% of your total capital for trading business. Split your funds into 10 equal portions, ensuring that you never exceed one-tenth of your capital on any single trade. This approach minimizes risk and promotes a balanced investment strategy, safeguarding your overall capital while allowing for diversified trading opportunities. By following this disciplined approach, you can mitigate the potential impact of individual trade losses and maintain a sustainable trading practice. Remember, prudent risk  management is key to long-term success in the financial markets.

Trading Rule 4: Try to grow your capital weekly or monthly

This is very important rule. The reason is, most traders try to be a millionaire in one day! Well this is a wrong approach. You always have to keep in mind that once you make a profitable trade in a day just let that day end in positive figure. Respect what is achieved by you and do not risk that perk out of your greedy nature. Only this way you can accumulate profit that ultimately shall help growing your capital.

Trading Rule 5: Trade For your need and not greed!

It is a law of nature that whatever you do out of greed is harmful in the end. For example if you are thirsty you should just drink some water as much as it is needed. And out of thirst you can not show your authority on the whole river by considering that it is only mine as I am thirsty. There are others who need water just like you. So, when you trade, trade for your need and not for your greed that comes out of a selfish nature. Actually what you need is in abundance in nature like air, water and food, So respect nature trade in as much quantity as much you really can handle risk.

Trading Rule 6: Humans’ mind is not fit for trading!

Our human mind is not programmed well for trading. The reason is, the moment we take risk our mind becomes hyperactive and tries to track all influencing factors which can have adverse effect on your taken risk!
So, if your taken risk is really big and you are not capable of the other side effect (negative result) then you will face a tremendous amount of anxiety. This will result in loses because though your first action is correct you will not be in a position to be in a trade and shall change your mind out of fear. In the end, you will find ohh! my entry was correct but just out of fear I made exit at wrong time and If you could have stayed in a trade as per your plan you could end up making profit. In nutshell, you should take a small risk so that your anxiety of taken risk is easily handleable.

Trading Rule 7: Never have a revengeful attitude towards Stock market!

A trader who looses becomes more aggressive. As a result, trader takes increasing amount of risk not to make money but in ego and to express that they can rule stock market! Whenever you loose in trading just take a pause and do not try to win that same day. This might not be a good day for you for any reason.

Trading Rule 8: Do believe in astrology!

If your horoscope says that there is no scope in becoming a trader than just accept that fact. Stop doing speculation business, especially day trading! Consult a good astrologer and seek advise in this context.

Trading Rule 9: Do not try to become a trader with no other income source

If you do not have any other income source that can sponsor your trades’ stop losses than first generate a good income source. This is because, stock market is only for those traders and investors who can afford to loose some very small percentage portion of their wealth or monthly income. With good financial stability you will always be able to buy TIME value of market which is very very important.

I wish all above 9 trading rules will help you in your career.

Thanks for reading my blog.

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