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Here is some very interesting information from "How to Make Profits in Commodities" by W.D. Gann written in 1942. This information is as important today as it was then, as the markets keep on repeating the same old moves and if we learn to read the markets, the sky is the limit for trading profits.
KNOWLEDGE - THE GOLDEN KEY TO TRADING PROFITS
The difference between success and failure in Commodities is the difference between one man knowing and following fixed rules and the other man guessing. Therefore is you want to make a success and make profits , your objective must be to know more than the other trader your trading against.
Observations, and keen comparisons of past market movements, will reveal what commodities are going to do in the future, because the future is but a repitition of the past. Time spent in gaining knowledge is money in the bank. You can have a large sum of money and lose it all without knowledge, but with knowledge you can take a small amount of money and turn it inot a large amount by gaining knowledge. A study of commodities will return rich rewards.
FOUNDATION FOR SUCCESS TRADING IN COMMODITIES
When you trade with knowledge you eliminate fear and hope. When you are no longer influenced by hope or fear, and are guided by knowledge you will have the nerve to trade and make profits. You must learn to trade on facts and to eliminate hope and fear. Learn to protect your capital and profits by use of STOP LOSS ORDERS. When you make a trade and you are wrong, there is only one way to correct that mistake, and that is to get out of the market or to use a STOP LOSS ORDER.
LEARN TO BE INDEPENDANT
If you study price movements, they will tell you more about what the market is going to do than any broker, newspaper, or so called inside information. The greatest help I can give you is to show you how to trade yourself. You must learn to be independent. Learn to do by doing, and to know by study and application. When you are trading with something that you KNOW works, you will have confidence and courage to be successful.
A DEFINATE PLAN
Make up your mind to have a definate plan for the future. Decide to follow rules when trading commodities. You have to put in time for study. You have to work hard to be a success at anything. I have studied and improved my methods every year for the past forty years and I am still learning.
KNOWLEDGE BRINGS SUCCESS
There is only one key which unlocks the door to big profits and that key is knowledge. You cannot get knowledge without work. I have made a success by hard work and you can make plenty of profits in commodities if you study and work hard. Work is the only way to find the ROAD TO RICHES in commodity trading or speculating. Without knowledge money is worthless. Money always comes to those with knowledge.
QUALIFICATIONS FOR SUCCESS
#1 - Knowledge
#2 - Patience
#3 - Nerve
#4 - Good Health
#5 - CapitalHOPE AND FEAR
I have written about this often in all my books, and I feel that I cannot repeat it too often. The average man or women buys commodities because they hope they will go up or because somebody advises them that they will go up. This is the most dangerous thing to do. Never trade on hope. Hope wrecks more people than anything else. Study the market, determine the trend, face the facts, and when you trade, trade on facts, eliminating hope.
Fear causes losses. People sell out because they fear commodities are going lower.
TRUTH OF THE STOCK TAPE
Here is some from Gann's 1923 book truth of the stock tape. Think of how true this information is all these years later.
In the United States a stupendus sum, reaching into millions of dollars , is wasted annually in follish speculations and unwise investments. This senseless waste can be traced to one and only one source, lack of knowledge. Men and women who would not attempt to adjust so common a thing as a kitchen faucet, but would hand it over to a plumber, the specialist, will on the spur of the moment and without the slightest preparation, undertake the investment of thousands of dollars in enterprises about which they understand absolutely nothing. Is it any wonder they lose?
If by writing this book about wall street I succeed in teaching only a few to leave wild gambling alone and follow the path of conservative speculation and investment, my work will have not have been in vain.
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Disclaimer - I am not a commodity trading advisor. The information on this site is for trading education only. There are no trading recommendations for any one individual made on this site and this information is paper trades for trading education. All trades are extemely risky and only risk capital should be used when trading.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.