Fundamental Trading Rules
FUNDAMENTAL TRADING RULES
By W. D. Gann
W. D. Gann writes . . .
“Keep this well in mind: For commodities to show up trend and continue to advance they must make higher bottoms and higher tops. When the trend is down they must make lower tops and lower bottoms and continue on down to lower levels. But, remember prices can move in a narrow trading range for weeks or months or even years and not make a new high or a new low.
But, after a long period of time, when commodities break into new lows they indicate lower prices and after a long period of time when they advance above old highs or old tops they are in a stronger position and indicate higher prices.
This is the reason why you must have a chart a long ways back in order to see just what position a commodity is in and at what stage it is between extreme high and extreme low.” – WD GANN
George’s Commentary . . .
As Mr. Gann is dealing with fundamentals, he provides here the most basic of definitions of what constitutes an up or a down trend. The main emphasis is on having enough background data or charts to verify where prices are relative to their extreme highs and lows.
Without this kind of reference data, it becomes easier to fall into the emotional traps of short-term price swings without the benefit of seeing just where those swings are occurring relative to extreme highs or lows for that market.– GR HARRISON