WD Gann: Rules for Trading

To ask for a simple explaination is way beyond normal expectation.

Reason being, this trader may not be as tolerant with
you and your ego, as others have been on this forum.

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Whats this ego rubbish again? You've been asked by others to help out in their education as usual nothing comes back,you might as well be having your tarots read!

Your lack of content is shown in your personal attack-----AGAIN.

If my personal mailbox gets filled up with abusive rubbish again I WILL be sure that the law comes down on the instigators as hard as it possibly can.

why does he say never get in and out of the market too often?

What I have been doing since starting to trade in 2004, is to buy when the trend starts to change to up, and then sell when there is a significant drop.

Because I am using margin lending, I always watch my trade, if i make a profit, i will sell it to stop paying too much interest on the loan.

Usually in 2 weeks I will make about $700 before tax. I know if we dont hold a stock for more than 1 year the tax is higher, so now i am putting some money aside to buy some stocks that are consistent in performance, eg BIL and RIN, and go for long term holding (without a loan).

QUOTE

"I looked up Bowden. He makes 100% per month it says in his bio!"
MIT

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If Bowden claims he makes 100% a month then I would suggest his claims should be taken with a grain of salt.
I know someone who challenged Bowden to show his trading statements....he declined to do so.

Bowden is a wealthy man.......why wouldn't he be - he spent many years running Gann courses and charging people thousands of dollars a day to attend.
Bowden was once featured on a TV show where it was stated that he made his money from commodities. No mention was made of the millions of dollars he made from selling Gann courses.

Bowden's newspaper ads boldly stated 'Learn from the best in the world'.
But when he was challenged to a trading contest by a high profile trader, for the purpose of proving his 'best in the world' claim, Bowden didn't respond.

My dentist spent 25 grand on Bowden's courses, but lost money attempting to trade the methodology he was taught, as did at least a dozen other people I've spoken to.

When he was employed by Bowden, the late Neil Costa gave a presentation at an ATAA meeting during which he claimed the All Ords would go to such and such a level in that particular year, followed by 'the mother of all crashes' before years end. Presumably Costa was using Gann methodology (learnt from Bowden) to make these forecasts.
The 'mother of all crashes' didn't occur, and the All Ords fell more than 700 points short of his forecast.

Don't be fooled by big claims from gurus.

Bunyip

bunyip said:

QUOTE

"I looked up Bowden. He makes 100% per month it says in his bio!"
MIT

......................................................................................................

If Bowden claims he makes 100% a month then I would suggest his claims should be taken with a grain of salt.
I know someone who challenged Bowden to show his trading statements....he declined to do so.

Bowden is a wealthy man.......why wouldn't he be - he spent many years running Gann courses and charging people thousands of dollars a day to attend.
Bowden was once featured on a TV show where it was stated that he made his money from commodities. No mention was made of the millions of dollars he made from selling Gann courses.

Bowden's newspaper ads boldly stated 'Learn from the best in the world'.
But when he was challenged to a trading contest by a high profile trader, for the purpose of proving his 'best in the world' claim, Bowden didn't respond.

My dentist spent 25 grand on Bowden's courses, but lost money attempting to trade the methodology he was taught, as did at least a dozen other people I've spoken to.

When he was employed by Bowden, the late Neil Costa gave a presentation at an ATAA meeting during which he claimed the All Ords would go to such and such a level in that particular year, followed by 'the mother of all crashes' before years end. Presumably Costa was using Gann methodology (learnt from Bowden) to make these forecasts.
The 'mother of all crashes' didn't occur, and the All Ords fell more than 700 points short of his forecast.

Don't be fooled by big claims from gurus.

Bunyip

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That was Larry williams.

He challenged him to a 1 million trade off,when he was touring and lecturing.
It was reported in the FIN reveiw.Reckon it was 5 yrs ago or so.

Anyway Bowden declined.

Yep, it was Larry Williams who challenged Bowden.

Tell me tech/a.....why do you choose not to go short?

Bunyip

Well for one its a raging bullmarket and I'm sitting in longterm positions which are belting along.
I dont have the time to analyse possibilities for short opportunities,and I'm not trading derivatives or futures/indexes short term.

Its a valid way of trading but more like a sideline for me if I was involved in shorting.

...and as discussed before, the distribution of returns is lognormal.

Long term trend following doesn't work so well going short....because of 0.

wayneL said:

...and as discussed before, the distribution of returns is lognormal.

Long term trend following doesn't work so well going short....because of 0.

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Wayne

Could you explain in words please why you think a trend following approach isn't well suited to trading short. You mentioned this on another thread and included a couple of links to support your case, but I couldn't make any sense of the info in those links.

I see no reason why a stock that's in a nicely established downtrend can't be traded short as long as the downtrend continues. In fact I've ridden a few of them myself.

Cheers
Bunyip

bunyip said:

Wayne

Could you explain in words please why you think a trend following approach isn't well suited to trading short. You mentioned this on another thread and included a couple of links to support your case, but I couldn't make any sense of the info in those links.

I see no reason why a stock that's in a nicely established downtrend can't be traded short as long as the downtrend continues. In fact I've ridden a few of them myself.

Cheers
Bunyip

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Bunyip,

You sure can short stocks profitably, but it depends on your time horizon whether it will be succesful in the long term.

If you are take short-medium term trends (trades that last a few weeks only) or take swing trades, shortselling works fine. I made most of my income last calander year from short selling swings.

But if you trade the big trends, such as tech/a's system, it won't work.

Long term trend following really relies on fat tails in the distribution of returns to make it really profitable. That means you keep getting stopped out or picking up only small wins, until you pick up that one (or few) really big trends. Eventually you're sitting on nothing but outliers if you happen to be in a bull market. But thats why they take a while to get going.

But on the short side, there is no such thing as a relly big outlier, because you can only go to zero... and even that doesn't happen often on shortable stocks.

It's easy to prove. Just backtest it. Take techtrader for example and test it on the short side only. It doesn't work.

Remember we are talking about long term trend trading. Other styles are a whole 'nuther bowl of wax.

Here's an example: (assuming both traders trade on margin)

Trader (a) trades a stock from $1 to $11. He has made 1000% profit on the unleveraged amount.

Trader (b) trades the same stock from $11 all the way back to $1. That trader only made ~90% profit on the unleveraged amount.

Thats different from swing traders:

Trader (a) trades a stock from $30 to $33. He has made 10% profit.

Trader (b) shorts the stock from $33 to $30. He has still made 9.1%

Different situation alltogether.

Cheers

Wayne

Thanks for the comprehensive reply. You're right.....the fact that a stock can fall no lower than zero means that there is a limit on the profit potential of short trades, whereas with longs there's no limit to how high a stock may go, hence no limit on the profit potential.

Nevertheless, the profit potential of short selling can be considerable, and it can come in a relatively short period of time due to the steepness of downtrends compared to uptrends. But I'm only telling you what you already know.
Like you, my experience with short selling has been very positive.

Cheers
Bunyip