According to legendary trader W.D. Gann there are three main reasons why people fail in the stock market. The first is Poor trading strategy leads to earlier failure. You may have heard the saying “Failing to plan is planning to fail,” this is the same nothing. Without proper trading strategies and rules, majority of people fail from the beginning, losing money on their first traders. They never bother to learn the right strategies from the start and have already set themselves up for failure.
The second reason for failure is trading with the lack of proper knowledge and materials. Majority of the materials sold to investors is garbage. Gann stated this being that he read over 200 books concerning the stock market trading (about 50+ years ago). With this being said, only about a dozen of the books contained any quality material with W.D. Gann’s being one of the few. It’s the truth! W.D. Gann’s material has provided traders and investors with successful methods and technique for almost 100 years to date. Gann has provided the most comprehensive teachings of market science.
To trade without the proper knowledge is like a young man attempting to become a doctor because he attending medical school and so on. Though law here requires it, look to the amount of time many spend getting a four year education and perhaps conduct graduate work. The amount of time spent here in preparation to earn an income is very high. Applying similar study time to investing is a way one may familiarize them with the time test trading methods that assure highly probably success.
Lastly, unsuccessful trading rules and methods lead to demise in the markets. Simply said; even with the right strategies and methods, your portfolio will never be profitable without successful trading rules. 85% of traders admit to not using Stop Loss Orders, and more don’t even have rules to determine when and where to buy and sell. By developing a trading method based upon rules with protection of capital (stop loss orders) one may give themselves the best opportunity to remove emotion from the trading game by entering the market with a pre-set path to follow.
Emotions certainly rise with money on the line and Gann teaches us to put rules into place first that allow us to make un-emotional decisions in the market based on probabilities all while exposure is minimal through using monetary protection methods.
By removing the number one weakness, the human factor, traders have the best opportunity to make unemotional decisions and excel in their trading according to a predetermined plan of rules.
Gann teaches traders how to spot trends in fast moving markets and how to trade them while protecting 90% of all capital in an open trade. With this, traders are allowed up to 10 trades before going bust on their money. Gann paints a series of rules based on volume, price, and time which reveal to traders when to be in the market and out.
In conclusions, the human factor is the weakness which breaks most traders because they trade upon emotion and the game becomes that of a flaming gamble. By removing emotion through rules and stop-loss orders traders offer themselves the best probability to excel in their trading ventures.
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Anthony is an avid fan of the marketing and host of Gann Science, a website dedicated to the works of William Delbert Gann.
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