Once you believe that trading is a game of probability, concepts such as right and wrong, profit and loss are no longer important. With the right expectations, market definitions will not be interpreted as painful or threatening, effectively neutralizing the emotional risk of trading. Maintain the consistency of the strategy and objectively confirm the advantage. This is the result of long-term experience. However, the advantage is not completely correct, it only represents a higher probability.
Therefore, before each transaction, you need to measure the risks in advance, be prepared to make mistakes, and fully accept the risks, otherwise give up the transaction. Trade based on your strengths without any reservation or hesitation, avoid associations, especially the influence of recent transactions, and remain independent and objective. At the same time, we monitor the possibility of making mistakes and impose disciplinary restrictions so that we will never violate the rules.
For example, here are a few highlights from the book:
1. Losing money is because you don’t abide by the trading rules, not because the trading rules are useless. Gann said, even if I give you the best rules in the world, you will still lose the money in your account due to human factors. This is what he said.
2. The most important thing in investment is the time period. Gann has 12 trading rules, which fully consider the role of the four elements of price, volume, time and space in trading. He believes that time period is the key to the success or failure of trading. No matter what kind of investment type, you must always consider how long the market has risen from the extreme lowest level, or how long it has fallen from the extreme highest level.
3. Learning to stop losses is the first step to avoid losses. Gann believes that every time you enter the market, your loss should not exceed one-tenth of your capital. Resistance will only make your losses bigger and bigger. Because in a contrary trend, it is foolish to expect a return on investment.
4. Following the rules of the market is a prerequisite for your survival in the market.
Always remember that it is your own fault, not the behavior of the market. The behavior of the market has caused you to follow the trend. Only by following its rules can you avoid speculation that is destined to fail you.
5. Don’t believe in those “sure-win” methods. Gann said that there is nothing new under the sun, and investment is not guaranteed to make money. What you need to do is to use rules and science to find opportunities that can make money, not making money itself.
6. Calmness is an essential psychological quality for investors. Gann believes that investment must be firm in your beliefs, so firm that your peace will not be disturbed by anyone, only in this way can you achieve success. If you have doubts, you must close your position and leave the market.
7. Have sufficient knowledge of the market. Gann's advice to investors is that before you lose money, please study the market carefully and never blindly guess the development of market conditions.
8. Learn position management, and trades should be entered in batches. Gann said, don't buy it all at once, arrogance is a sin. When an investor determines a market opportunity, he is often just the target of the market's manipulation.
9. The market does not last forever, and change is its only "constant". Gann told investors that in the investment market, no matter what the investment method is, it needs to be changed according to the situation, and the only constant is that you continue to improve yourself and respond to the changing market.