Posted By: TradersLog

©Hallikers Inc. Reprinted with permission of Traders World Magazine (www.tradersworld.com )

Rule #1. Strive for Success

To be successful the most important rule is to strive for success. This means you must

exert effort and put a lot of hard work into your effort. You must have both the short term

and long term charts necessary for trading the markets you trade. They must be always

up-to-date and you need to watch them on a daily basis so your mind gets use to their

price and time movement. You will then learn the secret of trading and see how the entire

price movement continually evolves.

Rule #2: No One Owes You Anything

You must succeed on your own. It is all up to you. The markets, stockbrokers, brokerage

firms, news letters dont owe you anything. Gann never took anyones newsletter. He did

it all himself. The markets are there to provide you a service for buying and selling the

markets you are trading. They really dont care that you make money. The markets are

there for the brokerage fees. The more you trade, the more money the brokerage firms

and exchanges make. You must be knowledgeable of a reliable trading method that you

can use to extract money from these markets. This method must be able to help you

Rule #3: Plan Youre Way to Profit

when you enter a trade you should have a figured a game plan for both the entry and exit

of the trade. The plan should be definite and not subject to changes to your psychology

during market hours. Gann knew exactly what he was doing all the time. You should

have a stop in the market at all times, because you never know when a time cycle might

based on the time and price objective. However, if the price has not been met by the end

of your time cycle, you should then exit at the market.

Rule #5: Profit Ratio

You should set your profit ratio at 3 times your risk factor. Go back on the previous

charts of the market you are trading and determine how much the market has risen or

fallen and then set the loss ratio based on that. For example, if you have found that wheat

usually rallies 12 cents then you should have a stop set at 4 cents.

Rule #6: Trade in Private

Never under any circumstances reveal your trading positions to anyone. Your mind must

be in complete harmony with your trading positions. When you reveal your positions to someone, they will immediately start to question the trade and start to erode your

Rule #8: Double Tops

Double tops offer you the best method of selling a market. What is happening is that a

time and price high is being challenged. In most cases, the upward timing of the market

has run out and it is in a downtrend. You should use the first rally to test the top as a

selling point. In many cases, it ends up being a double top. Check back on the particular

market you are trading on previous double tops and see what the market needed to do to

Watch the markets for inside days. This means that the previous days market high and

low is inside of the previous days range. You will find that after a long-term price.

Brokers are constantly bombard with conflicting news which distorts the current view

Rule #11: Reversal Signals

Understand and look for reversal signals. This will tell you the trend of the market short

term. When the market runs up for more than five days and then gaps up, fills that gap,

Rule #12: Fibonacci Sequence Numbers

Gann never talked about Fibonacci Sequence Numbers, but he did use them. This was

one of his secrets he kept to himself. Everything in nature and in the markets is based on

Fibonacci Ratios of .382. 500 and .618. Markets will move according to the Fibonacci

Rule #13: The Right Broker

You should choose a broker who complements you and thinks like you. The broker

should take your order and fill it with the utmost speed. In commodity trading today it is

important that your order gets to the floor within seconds. The new electronic trading has

helped increase the speed. The broker should be willing to give you all the technical and

All the stops you use should be based on percent of the price of the current market. Check

back and you will find that a certain percentage stop works on the market most of the

time and it is based on the current price of the market. Usually a 1 percent stop will

protect you. Check back and see what previous stops have held the market and you will

find one secret to trading successfully.

Rule #16: Trading Positions

There are three different positions you can be in at any one time. Those being long, short

and neutral and not in the market. Dont be afraid to be out of the market. When cycles

are changing, there are times when you should not be in. Changing cycle markets give

you poor signals. You are also constantly being stopped out in these markets. If you are

stopped out of 2 3 trades, you probable wont take the next trade because of psychology

want to buy corn at $3.00 you should place the order at $3.01. That is a little above the

price level. The price level of $3.00 is a strong psychological level and many orders are

placed there. The chances are that you would not be filled at that price level and the

You should not dismiss fundamentals. They are what move the markets. You should

always be aware of upcoming reports, weather and other fundamentals in the

commoditys markets. In stocks, you should know whats happening with sales, earnings,

new products, management and other fundamental factors. The technical charts will then

give you a leading indicator as to how those fundamentals will change. For example, in

commodities the market will often go up into a report. The report will come out bullish

top is broken the market is ready to start up and all lows should then be bought. Using a

stochastic oscillator on your charts sometimes tells you the relative importance of any

particular swing high or low.

Rule: #22 Pyramiding

Pyramiding can be extremely profitable. You should buy 50% of your position on the

cycle low or known bottom according to your time and price cycle work. Keep your stop

below this low. Then at the wave two bottom you should add 25% of your position. Yes,

you need to know Elliott Wave to trade. Place your stop for that position below that low.

At wave, four buy another 25% and place your stop for that position below that low. On

the last wave up which is the Fifth, you should start peeling off positions and removing stops starting with the first positions taken. When you think the market has topped take

Rule: #23 Trade with the Main Trend

Gann always said go with the main trend. It is very important. You can buy reactions

against the main trend and this can be very profitable. Reactions will usually be 1, 3 or 5

days, weeks, or months. That means that if the market reacts beyond 5 days then it will

react 1, 3 or 5 weeks. If the market reacts beyond 5 weeks then it will react 1, 3 or 5