Gann's 29 Rules of Success (c) Halliker's, Inc.

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 don't owe you anything. Gann never took anyone's 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 don't 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
understand the price structure of the markets in regards to time and price movement.

Rule #3: Plan You're 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
turn against you. You should also have a profit objective in the market. So many traders
today lose because they are using computer oscillators to trade with and they never know
where they are going. They usually end up on trading with rumors and tips and use hope
and fear to try to make a success of the markets.

Rule #4: Plan your Orders

You should always use price orders to enter the market. By doing this you will limit your
risk and you can have a predetermined stop loss for the trade you are making. It also
eliminates slippage on the entry. When you exit the market, it can be with a limit order
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
confidence and concentration in the trade. You will then be a less effective trader and
eventually lose.

Rule #7: Margin

Over trading on low margins is why so many people lose in the markets. You should
never put a position on the risks over 10% of your capital. Every position you have in
commodities should be backed with 3 times the minimum exchange margins. That means
if the minimum exchange margins on wheat is $700 then when you buy a contract of
wheat, it should be backed with $2100. This backing can be done in several ways. You
don't have to have the money sitting in the brokerage account. It can be in a money
market account or in Tbills.

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
get through and break the double top. It is usually 1-2 percent of the price of the current
market. You should then set your stop based on that. The distance between double tops is
important. The longer the distance the more important it is. Double tops on yearly charts
are the most important, and then monthly and then daily are important. This is why you
should always be looking at long-term charts to see these tops

Rule #9: Double Bottoms

Just like double tops, a good double bottom offers an excellent trading opportunity. Most
major bull markets are created from these bottoms. Always keep an eye on all charts for
this development. Place the orders and use your protective stops to take advantage of
these trades.

Rule #10: Inside Day

Watch the markets for inside days. This means that the previous day's market high and
low is inside of the previous day's range. You will find that after a long-term price.
Brokers are constantly bombard with conflicting news which distorts the current view
move that this signal gives you an early warning that the market is about to reverse in the
opposite direction.

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,
and closes lower for the day, it indicates low prices. You should expect the trend has
changed. This is the strongest reversal signal. Another reversal is a market that runs up
for 5 days or more and opens steady goes higher and then closes lower and under the
previous days close. In many cases, the market will move at least 3 days in the opposite
direction after one of these reverse signals.
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
Numbers of 1, 3, 5, 8, 21 and so on. Watch for turns of the market on these numbers.

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
fundament research you need to succeed without question and in a timely manner. The
broker should never question your orders as you have put in the many hours of research
into this trade and you know the trend of the market much better than he does of the
market. Their only job should be to provide you with the best execution service possible.

Rule #14: Diversification

You should diversify your money so that you are in more than one group. For example, if
you are a commodity trader you should have positions in grains, metals and meats. This
helps to protect you from having adverse things hitting your one sector. This also
destroys your confidence. In the stock market, you could have positions in different
industries for protection.

Rule #15: Stops Based on Percent

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. Don't 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 won't take the next trade because of psychology
and that will be the one that works.

Rule #17: Odd Price Orders

When you place limit price orders, they should be not even but odd. That means if you
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
market would then rally sharply.
Rule #18: Fundamentals
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
commodity's markets. In stocks, you should know what's 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
and will jump the day of the report, just to turn down again the next several days.
Checking further you will find that the report was on a cycle high day in a major down
trend.

Rule #19: Anniversary Dates

Anniversary dates are very important. If you check back on your long-term charts (using
daily) you will find that harmonic years many times will move in the same direction. The
important harmonic years are every 10 years back. Therefore, if you find that December
Wheat made a high on October 20, 1978 and we are approaching October 20, 1988 watch
that anniversary date, If it reverses that same day it is very important and could lead to a
major reversal.

Rule #20 Gaps

Gaps are extremely important. There are three types. One is the breakaway gap, which
occurs after a congestion area. It usually leads to a big move in the market. The next is a
midway gap. This is a gap, which occurs after the market has moved in the same
direction for some time. It usually will tell you the market will move the same amount in
the same direction for another extended period. The last type of gap is the exhaustion
gap. It is where the market exhausts itself. For example, in a bull market when the bear
finally gives up, throws in the towel and the market gaps up, and trades a few days up
there, then finally starts down the market is through. The market will start a major
downtrend.

Rule: #21 Swing Charts

Swing charts are extremely important. They tell you the direction of the market. When a
previous swing low is broken, the market should be sold on any rallies and when a swing
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
off all positions, cancel all stops, and wait for the next major trend to develop.

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
months.

Rule: #24 Harmonic Cycles

Harmonic cycles are time cycles and they are very important. The major cycles are every
ten years back. You should have available long-term charts going back as far as possible
in daily format. Overlay these long-term harmonic charts on top of each other. If 90% of
them are going up during a time period then there is a high probability that the current
trend will go up.

Rule: #25 Square Time and Price

If the market bottoms at a set price then it will rally in hours, days, weeks, months or
years to square that price. For example if Dec Wheat bottoms at 250 then it will rally 250
hours, days, weeks, months or years from that bottom.

Rule: #26 Timing Points

Timing lows and highs are based on time and may not necessarily be the high or low of
the market. Sometimes momentum will carry the market further than the high or low.

Rule: #27 Time Overbalancing Price

Watch the rise and fall of the markets carefully. If the 2nd last reaction in an uptrend
drops for example 5 cents in corn in 3 days and the last reaction drops 5 cents in 6 days,
then time is changing to the downside and the market will soon decline.

Rule: #28 Watch the Timing Swings

Timing swings are important. Watch both time and price from lows to highs, highs to
lows, bottoms to bottoms and tops to tops. Keep track of them; as in many cases, they
are the same.

Rule: #29 Psychology and Health

Psychology is very important. Trade only when you are mentally and psychologically
strong. Your mind and body must be at its top condition when making critical decisions,
which risk large sums of money.