More lessons from W.D. Gann.(FINANCIAL MARKETS)

The book How to Make Profits in Commodities by W.D. Gann is an excellent textbook-type examination of trading methods used and discovered by Gann, one of the most respected traders and market analysts ever.

Following are just some of the many important elements I have gleaned from this classic trading treatise.

1. Gann says right off the bat: "A man who will not work hard and study and pay in advance for success will never get it. If you will put in the time, study and go over the records [of markets] you will be convinced that [Gann's trading rules] work and that you can make money by following the main trend of the commodity market."

2. Gann's favorite chart for trading most commodities is the weekly chart. But he also used monthly, daily and quarterly charts.

3. "You will always make the most money by following the main trend of the market, although to say that you must never trade against the trend means that you will miss a lot of intermediate moves which will make big profits. Your rule must be: When you are trading against the trend, wait until one of the rules gives you a definite indication of a buying or selling point at the bottom or top, where you can place close stop-loss orders."

4. Numerous times in the book, Gann discusses the extreme importance of having rules and following them.

5. "There are always two trends--a major trend and a minor trend. The minor trend is a reversal of the main trend, which lasts for a short period of time. When the main trend is down, it is much safer to sell ... on short rallies at a point where the rules indicate ... than it is to buy on [an upside] reaction."