William Gann was one of the most famous stock traders and technical analysts in the early 20th century. His Gann theory was one of the three most famous classic technical analysis theories in the 20th century. In his later years, Gann wrote a comprehensive book - "45 Years on Wall Street". This is his trading experience and lessons learned from working on Wall Street for 45 years, condensed into the 24 rules of trading. I would like to share it with you and learn from it. Welcome Communicate with each other.
1. Fund management
Divide the principal into 10 parts and use no more than one-tenth of the principal in one transaction. For example, if you have 1wu to trade, then your stop loss cannot exceed 1ku each time, and the position is determined by the loss. At the opening point you think is appropriate, calculate the stop loss position to 1000u before opening an order. If you are a novice, bear If you are less capable, you can also divide the principal into 20 or 50 parts, so that the loss will be reduced accordingly.
2. Stop loss must be included when opening an order
Open an order with a stop loss to protect your principal. Plan the stop loss position before opening an order, instead of impulsively opening a position and then thinking about when to stop loss. At this time, you have no plan, and there is a high probability that you will not know where to stop loss, which is very dangerous.
3. Don’t overtrade
Excessive trading violates the first principle of money management. If you divide your money into 10 parts, you will lose 1/10 each time. In the case of frequent trading, if you make a mistake ten times a day, you will lose all your principal. Don't over-trade and wait patiently.
4. Don’t let profitable orders end up with losses.
Don't let floating profits turn into floating losses. Once there is a certain degree of floating profits, set a protective stop loss near the opening price. If an originally profitable order is eliminated with a loss, it will have a great impact on the mentality, which is much worse than if the original profitable order is eliminated with a stop loss. It’s still uncomfortable. Old leeks should be able to understand this. As for how many floating profits to set a stop loss, it depends on the individual’s acceptance level, which is usually more than 3 points.
5. Don’t be an enemy of the trend
If you are not sure which side the trend is on, then don't trade. In a bull market, the trend is obviously upward, and in a bear market, the trend is obviously downward. Don't confidently run away from the top and buy the bottom, and go against the trend.
6. Leave the scene and observe when you are confused.
Continuing from Article 5, if you cannot distinguish the trend, stop trading and wait for the trend to be clear before entering the market.
7. Buy varieties with sufficient liquidity
Currencies that are actively traded, stay away from illiquid targets. For example, for new currencies on exchanges, the liquidity is actually very poor. Even for airdropped tokens, you know there will be obvious market crashes, but in fact you cannot grasp the lack of liquidity.
8. Diversify risks
Trade multiple targets instead of going all-or-nothing. Don’t put your eggs in one basket. Even if there is a clear trend market, there will be fundamental problems with a single product that will lead to going against the trend. My suggestion is to start with mainstream currencies and transactions. Diversify investments among varieties with higher market value.
9. Try to use more market orders
Don't just use limit orders, be effective and flexible in dealing with entry at market prices. Sometimes the market comes very fast, and limit orders often miss the market. For example, when setting a stop loss, sometimes the market moves very fast, and the exchange's price limit stop loss can easily miss the stop loss opportunity and cause a large loss.
10. Do not terminate the transaction without reason and strictly follow the plan.
Don't change plans arbitrarily without good reasons. Many people will panic and think about settling down after making a certain profit after opening a position. When the price moves in the desired direction, you should be patient at this time. If you are worried about a large profit retracement, you can refer to Article 4 and set a protective take-profit or moving take-profit near the cost price.
11. Withdraw cash in time
If your transaction is relatively smooth, you can transfer part of the profit to a backup account or withdraw cash in case of emergency. The money that has not left the casino will never belong to you. When trading, you should not return all the money you earn. Throw it into the snowball, and put some of it in another account for emergencies.
12. Don’t buy stocks just for a dividend
In cryptocurrency, don’t buy some currencies just because of some profits from airdrops or pledges. You will often end up losing a lot for a small amount.
13. Don’t try to increase positions to reduce costs
Try not to continue to add positions to reduce costs. This is the biggest mistake that traders may make. The more they fall, the more they buy. If you are lucky, the price will rebound to the ideal position several times to make profits. However, if it keeps falling without rebounding, it only takes one unilateral move. It will take away all your principal. Gann saw countless big guys on Wall Street going bankrupt because of bargain hunting.
14. Don’t go out because you lose your patience.
Don't enter the market because you are impatient for a long time. Wait patiently for trading opportunities. Don't place orders just for the sake of trading. Don't leave the market because of lack of patience. When you have an order, wait patiently for the results of stop-profit and stop-loss.
15. Avoid small profits and big losses
Don't make a small profit and leave the market before it reaches your take-profit position. Don't hold the order at the planned stop-loss position and let a small stop-loss turn into a big loss. A big loss but a small profit. , the final result is loss.
16. Do not cancel the stop loss point you have set during the transaction.
Continuing from Article 15, once the stop loss is set, do not cancel it at will, otherwise a small loss will be magnified into a large stop loss.
17. Avoid frequent transactions
Frequent trading fees will also unknowingly wear down the principal, and frequent trading means an increased probability of losing principal, so be patient and wait.
18. Be clear about only going long and not short.
Speculation is not investment. In a bull market, the market trend is obviously rising. At this time, you like to go long. But in a bear market, when there is an obvious downward trend, don’t go long and go short on rallies. Keeping your trades consistent with the trend is the way to make money.
19. Don’t buy because the stock price is low, and don’t sell because the stock price is high.
Some currencies were originally worth 100 US dollars, but dropped to only one dollar during the bear market. At this time, do not buy them because the price is low. In fact, they can drop 90%, such as Luna. On the other hand, if a certain currency only has one dollar, and it rises to $100 during the bull market, don't go short because its price is high. In fact, it may rise to $1,000.
20. Pyramid adding method
Pyramid position addition means that when you open a position, you first open a relatively large position, and then as the market moves in the desired direction, then you make a small increase in position at this time. For example, in an upward trend, it rises a bit and enters a consolidation area. You have to wait until such a consolidation area continues to break upward. At this time, you will add more positions, break through again, add more positions, if you don't break through, you won't add more positions. .
21. Pick small-cap stocks when going long and large-cap stocks when going short.
In the currency circle, it is very easy to go long and choose small currencies in the bull market. It is very, very easy to double at this time. For varieties with insufficient liquidity, closing short positions with stop loss will often have huge slippage, while shorting those with sufficient liquidity will Mainstream currencies, such as Bitcoin, will be relatively safe.
22. Do not do hedging transactions. When the direction is wrong, clear your position, admit your mistake, and wait for opportunities.
Many people do not stop the loss when the long order reaches the stop loss position, but open a short order to hedge. This is meaningless. If you think the price will continue to fall, you can close the long order and open a short position, or open a short position when the stop loss position is reached. Stop loss and rest, leaving the original long order and then opening a short order will only waste the margin.
23. Plan your trade, trade your plan.
Never change your trading plan arbitrarily without a good enough reason. You must have sufficient reasons for a transaction and execute it according to the established plan. Do not leave the market easily before the trend reverses.
24. Don’t add chips after making profits for a period of time
Don't increase your position just after making a few profits. If you always trade one Bitcoin at a time, after you have experienced many profitable experiences, you will be extremely confident in yourself. When the next opportunity comes, you increase your chips and trade. If you earn 10 Bitcoins, if you lose money at this time, you will make all the previous 10 gains go to pieces. As the saying goes, whenever you want to make a big move, you will always be beaten.
The above is the condensed essence of Gann, the real trading master, who has been working hard on Wall Street for 45 years. I have used scenes that are easier for currency users to understand. It is very helpful for newcomers to understand trading. If you are interested, you can also You can check out Gann's original work. You are welcome to repost and collect it. If you think this article is helpful to you, please follow me. I will continue to output high-quality content in Binance Square. Thank you!
