45 YEARS IN WALL STREET WILLIAM D. GANNFOREWORD In 1910 at the request of friends I wrote small booklet, centled “Speculation « Profitable Profession." In this book Te T gave the rules that helped me to make a succes in my personal trading, ‘Fanuary, 1923, 1 wrote, “Truth of the Stock Tape” to telpthote who were trying to help themselves in speculation and investment trading. This book was favorably received by the public and many proclaimed it my Masterpiece. The ‘book fulled its mission as evidenced by letes from grate: ‘predicting the great panic in 1920 there vasa call for anew book to Bring “Truth ofthe tock Tape” Upto date 1 anwered that callin the early part of 1930 by writing “Wall Street Stock Selector” giving my readers the benef of practical experience in which I developed new res since 1923. Tn “Wall Street Stock Selector” I pre- diced the “Investors Panic,” and said that it would be the realest panic the world had ever known. This prediction ‘was fullled by the panic which ended in Joy, 1932, with tome stocks declining tothe lowest levels they had reached for the past 40 to 50 years great advance followed the 1982 panic and my rues helped many people to make substantial profits Ts 1935 satisfied readers asked me to write new book. | responded to that eall by writing my third book “New ‘Stock Trend Detector” in the later part of 1935, giving the benefit of my experience and new and practical rules which had discovered. ‘Since 1985 many changes have taken place; the market passed through the panic of 1937 which was foreest by me. ‘The decline ended in March, 1928, and « minor Bull Market followed to November 10, 1938. The second World War stared September 1,°1939, and ‘he United States entered the war in December, 1841. After ‘we were inthe war a further Tiguidation in stocks cecurred and final lows were eached April 28, 1942, when socks sold below the low level of 1938 atthe lowest levels since 1982, From the lows in 1942 a prolonged advance fllowedich comin aftr the end of he Jopanne Wat in ‘ea, 1985 946 May 29, sock ld atthe highest eel hey bad reached ince 1920. My rales end ey foreach {Spa ths sdvance and the sharp done hich loved to tuber 30,1546, when fal low was reached usec out ave ped tng my Ut ook ond have guned more Knoledge rough acta markt oper: fant “The word i psc and esta, iveors and trader ar pled oe the boi depoion and he de cline in the ack mnie. Many have writen requting me te wte anew broke With te dese w bap ten T have Sriten 3 Years in Wall Set” ing the bene of my perience andy new dno i SI no ny lyse te ne god.” T hive mor ince tan T can apend for my seedy erforesny ony ee in wing ite Bok toga w oter the mot vale ponte KNOWL” EDGE! If few finde way to mae safer avenments 5 sje wil have been acomplia aad render willbe ny ewe W. D. Gans. July 2, 1949 INTRODUCTION In 1926 1 read “Truth of the Stock Tape,” written by W.D. Gann in 1923. To me it was a masterpiece. Thea in 1927 T'met Mr, Gann and since then I have read all the books he has written. The rules he has laid down have awealy benefited me when times were good, also when they were trying. Imvone place he says “Remember when you make a trade, you can he wrong, therefore place a stop low order for your protection.” Another rule saye, “When in doubt gt out of the market” ‘Then again he says, “When you have nothing but hope to old on to get out of the market." That I am ‘writing this should indicate T have followed these rules and ‘others in is books, and they have pald off cha been my pleasure and pevlege to read Mr. Gann’s latest book, “Forty Five Years in Wall Sicet.” before it toes t press, and T commend it to others. What he has rien here isthe result of many years of research and study. “He is the only man T ever knew who I thought had worked es much as Mr. Thomas Edison Tm this his latest book, the rale on short time period price correction is a valusble one to any investor. Time Period rules three day and nine point charts and anniversary dates, are new discoveries by Mr. Cann, that I have never ead about from anyone else, ‘This book contain rules that will help one make profits and keep them, if the roles ere learned and applied without hope oF fea Jaly, 1949, Cuanence Kien,45 YEARS IN WALL STREET CONTENTS Te More Dist to Make Profits Now ‘Than ‘Before 1932? Why You Haw Let Money in Socks and How 13 Make it Buck : Rates for Trading in Stocke Be 28 Reser Falling len : How to Select Independent Movers Buying one Stock and Selig Another Shor IN. Percentage of High and Low Prices Maret ‘Acton Power the Ralee Prevent Pion of Dow ones 3D Indu Merages ee Maret Tl sown Story - V. Time Periods of Short Duration Comet Prices. Lgeideton afer « Ling Decline and Short” lyin» Bear Markt TL Final Liquidation in Gree Bear Markee 1 Secondary Dene after Sepember 8 High | | Sccondezy Rally : ‘Sharp Corrective Declines : Final High tm the Boll Markei Secondary all tn Bese Moret Final Liquidation Inthe Bear Maske End of ‘Short Bul Market, Sharp Deine and Cian Oot War Move Fie! Lows End of Beat Market > Final Tops End of Ball Market Steondery Decline ter Hheton: Sharp Quick Declines VL Time Periods fr Impotat Swings om the Averages VIL. Dow Jones 80 ndutial Averages Day Chart Mover ‘int Sings Dw Jones 3 nus Aver Biota Manes = VII, Month when Estee High and Lows were Recorded Monthy High ad Low Feces Each Year Dow Jones 3 gail Averages Tine Swings 1 m BRS Sas 4 ReeeseeEssEnssE e BeesCONTENTS (Continued) TR. Jane Lows Comparion for Future Highs ‘Amnverary De Inport” News: Events Resatnce Level 128130" Rerataee Levels 198.196 Revatance Levels 188 168, Vote of Sk Sil on New Yak Sock Echt XI. 15 Pale Uulty Averages Barron's Air Tramp Averages Stoke with Srl Number of Shares XI, Paty Call, Rights and Warzets on Stocks XL, New Discoveries and Teventions ‘rome Power 5 fa5 XIV, Great Maket Oper XV. Stocks Ligsidsted XVI. Can United State Ard. Avather War? ‘The Gonenrent Cannot Prevents Depresion ‘What Wil Cause the Nest Depron ov Panic? Great Panic Camieg™Future Hen of Stocks Gueok for 108 Preview of 195153, Cinclanion Ayswens 7o Tquimes 1 of the, Pat CHARTS tenia Averages 2Day Chart A 2. Dow Jones 30 Indral Averages Day Chat 8 3. Dow Jones 30 India) Averages 3.Day Chart © ‘4 Dow Jones 30 Indutial Averages 2Poit Chart 1 5. Dow Jone 30 Indesal Averaer 9.oint Chart 2 Average 9Point Chart 3 Averages Point Chart & Bacon's Air Transport Averaer Monhiy 9. Dow Joey 15 Public Uuty Averages A 10, Dow Jones 15 Poblle Uity Averages 1 Hleti Bond and Share Monthly 12 Pan Aneran Wold Aware Monthly 1. Ratio Corporation Quacery 45 YEARS IN WALL STREET CHAPTER | IS IT MORE DIFFICULT TO MAKE PROFITS NOW ‘THAN BEFORE 1932? Many people write me and es this question. My answer isNo, you can make just as grea! profits now as you ever ‘could, provided you select the right stocks 19 buy and sell. Changed conditions have changed market actions somewbat ‘The laws passed by the government regulate trading in socks and require higher margin. The income tax laws rake it necessary to trade fr the long pull swings in order to escape paying too much income tax. It no longer pays to try to realp the market because swings in a short period of lime do not wa Remaining inthe broker's ofice and trying to read the tape it out of date. You will benefit by spending your time making up charts and studying them. “Many stocks tht have heen Fisted for a longtime have hese seasoned and move more slowly. This eats out the possibilities for quick profits in a short period of time. ‘There Teno longer a large lint of stocks selling at high pices above 8100 per share and making wide fuctuations. 1949, June 14, when stocks reached extreme Low there were about 1,100 issues traded in that day. There were nly 112 stocks selling above $100 per share. Many of these were preferred stocks held by investors and this class of stocks moves in-a narrow range. On June 14 there were 315 stock selling below 20, 202 selling below 10, and 83 Selling below $5.00 per shaze, making a total of 60 sellingbelow 20 per share, or more than SO‘ of the total issues traded. With so many socks selling at Low Levels, you can only make money by taking long-pul trading poston. ‘Daring recent years many ofthe high pried socks have Aeclared stock dividends, spliting up the stock and puting tore stacks in the low price range. Larger Profs on Same Amount of Capital ‘You can make more money today than you could several years ago using the tame amount of capita. For example: ‘When a stock was selling a 8100 per share and you bought 100 shares you bad to pot up $10,000 or pay for it outright. And atthe time you could buy it on the 30° margin, if i you made a profit of $1,000 or 20%c ° ‘Av the present time, suppose you should buy. 1,000 shares of a stock selling at $10 per share on @ 50"% margin, this would requee $5,000 capital. If the Hock advances S points you will have made e profit of $5,000 for 100% on your capital invesiment. "With so many stocks felling at Low Levels with good prospects for future en hancement, you have opportunities for making profits just as fast today at ever before. Volume of Sales Smaller ‘The total volume of stocks traded on the New York Stock Exchange during recent years is much smaller. This is because people buy stocks and bold them longer. There are'no longer any pools oF manipulation in stocks since the pasting of the Security Exchange Repultions. This does hot mean that there cannot be Big Bull markets and large tuvances in the future, As time goes by stocks pas into the hands of investors who hold them for «long petiod of time. ‘The Routing supply is gradually absorbed. Then, when someting suddenly happens to start buying wave, buyers find the supply of socks scarce and have to bid them up. Iv always happens that the higher prices go, the more people want to buy. This causes a final grand rush and a rapid ‘vance inthe last stages of a Bull Market. History re Peas on Wall Steet and what has happened in the post will happen again in the future Tn January, 1996, the U. 8, Government made a rule compelling everyone who bought stocks to put up 100% ‘margin, oF in other words, pay for them eutright, Stocks were already selling at very High Levels and had been ad Yancing for three and a balf years. Did this ring by the government stop the public from buying sock? Tt id not ‘The Averages advanced more than 20 points and the advance lasted five months longer to May 29, 1946, when fil High wat reached, which proves that the government could not flop the advance in stocks as ong asthe people were in the ‘mood to buy. In fact,» lot of traders believe that the government took this action because it thought there would fhe a runaway advance in stocks and traders believing this ‘continued to buy stocks regardless of the margin required My experience has taught me tht nothing can sop the Trend as long asthe Time Cycle shows Up-Trend, Nothing ean stop its decline as long at the Time Cycle shows Down, Stocks ‘an and do go Up on bad news and go Down on good news 1949 in March, the government reduced the marginal 1 (quirements on stock to SO" margin. Many people thought this was very bullish and that it would start ¢ Bull Markt, but it did not. Stocks rallied for two days to March 30, then declined over 18 points on the Averages until June 14 ‘They went down beeause the Trend was down. The Time Cele had not run oat for Botom. (Cros Currents Stacks In reoznt years the market hasbeen move axed tha for 4 ong time. "Some groups of socks advance while others decline atthe same time. Ths is due to various causes atl conditions in the diferent industries, You can determine ‘hese cross currents and gt the Trend of any individ stock you keep up a Monthly High and Low Chet andl study ‘tan apply the rules which I give you.Wa You Have Lost Money 1s Stocks How ro Make Fr Back Why do the great majority of people who buy and sell stocks lse? There are three main reasone: 1. They ovetrade or buy and sell 10 much for their capital 2. They do not place stop lose orders or limit their lass, 3, Lack of Knowledge. ‘This is the most important reason of al Most people buy a stock because they hope it will go up and they will make profis. They buy on tips or what Someone else thinks, without any concrete knowledge of their fen that the stock will advance. ‘Thus they entered the tmatket wrong and did not recognize thie mistake of to coreetit-util to Tate. Finally they sll eos fear the stock wll go lower and often they sellout ne levels geting out atthe wrong time, making two mistakes, getting in the market atthe wrong time and geting out st the wrong time. One mistake could have been prevented, they could have gotten out right after getting in wrong. ‘They do not realie that operating in Stocks and Commodities i tbusines ora profession, the same as engineering or the medical profession. ‘Why You Should Learn to Determine the Trend ofthe Market ‘You may have ried to fllow marke eters and like many cers either lost money or failed to make profits, because the market letters gave a list of too many stocks fo buy or tell and you picked the weong one and let. A smart man ‘annat follow another man blindly even though the other tnan is right because you cannot have confidence and act on ‘vice when you do not know what iis based on. You will be able to act with confidence and make profits when you can SEE and KNOW for YOURSELF why STOCKS should 0 UP or DOWN. ‘That is why you should study all of my rules and make up charts for yourself on the individual stocks, as well as the tverages. If you do this you will prepare yourself to act independent of the advice af ethers, because you will know from TimeTested Rules what the tend ofthe market shouldCHAPTER 11 [RULES FOR TRADING IN STOCKS To make » sac in trading in tsk you mun gt the Anowldge ft you mo a before you Tove. Many trate go in he wock markt without any Know a Inve tlre ac of ter capa before they Ten that ts ecsary to fo though « pred of preparation before they Sav trading. Tam giving you the Benefit of more thn 13 Yeats of experince tn the sock market and laying down Tule whic you len and flo, wil make you a succes. “The fis thing for yout rai is that when you make ve you canbe wang; then you mst know what od to ferret your mite. The way todo tht Io lini Your ‘ia by placing Sop Lous Order 18 or 3 ps below the price a which You buy. Then if you are wrong. you ill TMtomatcly be sold ht and wl kein poston mee the trae! agua when you hve define indication, Do not foes mae etree on define rules and according define fection based on the rales which lay downs hi il give You a batr chance o make sss. eat ai of te rles nd examples nmy books, “Truth of the Stock Tape", "Wall Sret Stock Selector” and" Stok Trend Dees and study 12 and 23 rales which Turd ith hi book 49 Years fn Wall Sree, The rales tre goed and wil benefit you f yu stay Hem. Remeber that You can ever Tern foo mich. Almay be ready and wiling to len something news never have ed es that Yeu know ial iy dy you wil mt ake ey more scm Times an onions chonge end 3ou mt arn fo change with them, Human nature does tor change and tha othe reason history opete sd socks ac br) uch the some er erin conan year after year a nthe various eyes of ine Rule 1, Determining the Trend Determine the tend of the Dow-Jones. 30 Indust Averages or the 15 public utilities averages or the averege ‘on any group of stocks tht you intend to trade in, then select the sock in the group in which you want to trade and see if its Trend indications conform tothe Trend indicated by the Averages, “You should use the 3-Day Chart for the Averages land the Point Average Siring Chart as outlined later in ‘he book, and apply all ofthe rules for determining the right time to buy or ell Rale 2. Buy ot Single, Double and Triple Batoms Buy at Double and Triple Botoms or on Single Bottoms when they are neuser previous Od Bottoms or Tops ot re sistance levels. Remember the rule: Tops or cxlings which se selling points become fors, supports or buying points after these tops have been crossed and the market reacts to them, or sells slighly below them. Sell at or agsnst Single, Double or Triple Tops and, remember, that after an Old Top is broken by several points and the market rallies up to ot near it again, it Becomes a selling point. After you have ‘made a iade, determine the proper and safe place to place & Stop Loss Order, and give it to your broker immediatly 1 you do not know where to place a Stop Lose Order do nat smske the trade. Do not overlook the Fact that the ‘th time the everages ‘or en individual sock reaches the same lve its not as safe 'o sel, because it nearly always goes through. Reverse this rule al the bottom. When stacks decline tothe same level She ih time in mow eases it break the Botom and con The Meaning of Double Tops and Bottoms [A Double Top on the Averages can bein & range of 3 10 5 points. However, most Double Tops form in a range of ‘rom 1 to 2 points except st great extemes. The sume way tan extreme bottom. If there has been & previous bottomaround this same level many years back the Averages ean ‘cline 4 to 5. points below the previous bottom without fneating that they are going lower, and this can become & Double or # Triple Bottom. Thaividual stocks usually make « Double Top in a 2to3 point renge and sometimes within a1 102 poiot range,” The ih Botom: they make « Double Bottom in a 2 to 3 point range and sometimes the range is only 1 to 2 poinis Below the different bottoms. Stop Loss Orders should be placed on individual stocks 1 to 3 poins above Double and ple Tops, depending upon how high stocks are ae Stop Loss Orders should be placed under Double and Triple Bottoms 1 to 3 points vay. "A Triple Top or Bottom occurs when the Averages or an individual sock has reached the same level the 3rd time. ‘This often the safest place to buy or sell because the market moves away from 4 Triple Top oF & Triple Botiom much faster. Rale 3, Buy and Sell on Percentages Buy or sell on & 50% decline from any high level or 50% advance fom any low levels long a these restions or fallen are withthe mai tend. You can use the pereentge Of the individual stocks as well as the percentage of the SKverages to determine the resistance levels and buying felling points. You can use 3 t0 5 per cont, next 10 to 12 per cent, nex 20 to 25 per eent, 38 0 37 percent, 45 10 50 percent, 62 to 67 per cent, 72 to 7B per cea and 85 to 87 Per cent. The most important revistnce levels are 50% and oot and the proportionate pare of 100%. (See examples lnder Chapter‘on Percentages of High and Low Price.) ee ee Buy on a 3 weeks reaction or dedine in Bull Market when the mun trend is up ts this i the average reaction i {Drtrong Ball Market. Ina Bear Market sell on « rally of “round 3 weeks after you know the tend is down, “Aer & market advances oF decines 30 days or more, the next ime peri to wate for tops and bottoms is around ell on 3 Weeks Advance or Decline ae 6 10 7 weeks which will be a buying or selling level pro tected, of course, with Stop Loss Orders according to re sistance level. Aller market rallies or declines more than 445 to 49 days the neat ime period ie around 60 to 65 daye ‘whichis about the greatest average time that « Bear Mazket Fallies or a Bull Market reacts, Rule 5, Market Moves in Sections Stock market campaigns move in 3 104 Sections or wave. Never consider that the market hat reached final top when itmakes the rat section in move up, because if it ir» veal Bull Market it will run atleast Sections and possibly Defore a final high is reached. na Bear Marke, or declining market, never consider the market as Binal bottom when it makes the frst decline or Section because it will run 3 and possibly 4 Sections before the Bear campaign is over Rule 6. Buy or Sell on 5 to7 Point Mores Buy or sell individual stocks on reactions of 5 to 7 poi When ¢ market is strong, reactions will run 3 to 7 points but wil not deeline as much as 9 or 10 points. By studying the Industrial Averages you will ee how often «rally r reaction suns less than 10 points. However, it is importent to watch 10'0 12 point rallies or declines for buying or selling levels on the average. ‘The next important point to watch is 18 to 21 points up or down from any important Top or Bottom Reactions ofthis kind inthe Averages often indicate the end fa move When to Take Profis—Afier you have bought stocks or sold them, the next thing you need to know is when to tke profit. Follow the rules and do not take pros until there fa definite indication of change in trend, Rule 7. Volume of Sales Study the total volume of sales on the New York Stock Exchange in connection with the time periods and study the rules ander volume of sales later on inthe book. Study thevolume of sles on individ! stocks based on the eles given, Tithe volume of sales il elp in determining when the trend is chaning. Rule 8, Time Periods The time factor and time periods are mot important in dlecemining «change intend because Time an over balance Price and when the Time is up the Volame of sales wil ne Sree ad oe ae ‘ates for Change in Trend—The wok market aver individual stocks follow a seasonal change intend which ‘tric indiferem year, but by knowing the important dates We tatcing tem you til beable o determine change io trend very quickly by eppying al the other rules. ‘The im potent dates areas fll Jnuary 70 10, and 19 to 24, ‘These are the mos i povittat he Binning of the yar, and changes in ten that eifoe several week and sometines several mnths, ear ound thse dates. ‘Check the records and prove it for ural * February 3 to 10, and 20t0 25. ‘These are next important to the dates in Janay March 20 1027. Minor changes occa around tl anv sometimes najor tops o ota oes. Apa Tt 12 and 20 0 25. Notas importante Janu and February, bt the Iter part of April is often quite portant foe change in tend ‘May 3 0 10, and 211028. The changes this month are cf as peat importance as those that oceur in January and rid many major Tops and Bottoms have occurred nd These dates inthe past anda change i trend has taken place Te 10 to 15, and 21 to 27. Minor changes i, end eco around these dates and in oe years exireme ighs and ‘Stteme Tons occur. Example? 1948, June 14 extreme highs 1949, June 1 extreme Tom, up to the time ofthis weiting. aly 7 10,21 1027. ‘This monh is net in importance to damuary because i i atthe middle of the year when dividend payments occur and seasonal changes and crop con ‘tions have some effect onthe change in tend of stocks “August 5 08, and 14 1020. This month is as important in some waye a Februtry for change. Check the back records and you will se how important changes occur around these dates, September 3 to 10, and 21 to 28. These periods are the ‘most rmportant of any inthe year eapecially for Top, or fi higha in a Bull Market, ax more highs have occurred in September than any other month. Some minor changes, both ‘up and doven, have oceurred around theve dat October 71014, and 21 10 90. Thete periods are quite important end some major changes have cccarred between these dates. ‘They should always be watched if « market has ‘been declining or advancing for sometime, November 5 t0 10, and 20 to 30. ‘These are very im portant for changes in'trend as a study in past history will prove. In election years « change in trend often occurs in the early part of the month, and in other years low prices fare recorded between the 20th and 30th, December 3 to 10, and 15 t0 23. The later period and running into the January period for a change in trend has ‘shown a high percentage of changes over a period of years. Refer to the Say chart tables showing extet dates when ‘extreme high nd low price has been reached and check these pest dates and watch them each moat i the future. ‘When looking up dates far Change in Trend, consider whether thé market has run from any high or low price 7 to 12 days, 18 to 21, 28 to 31, 42 wo 49, 57 to 65, 85 to 92, to 185 days. The more im portant the top and bottom that these Time periods lar From, the more imposant the change ‘Market OverBolonced—The Averages or individual stocks become overbalaneed after they have advanced or declined a considerable period of Time, andthe greater the Time period, the greater the coreetion or reaction. When 4 Time period on a decline exceeds the Time period of ‘previous deline it indieates « change in tend.” When the osBalanced and change in tend is taking olace. Reverse this rule in a Bear Market. When stocks have ‘been declining for & long period of Time, the first time tha arally exceeds the Time period of « previo indication thatthe trend de changing, at le temporarily. ‘The fit time thatthe price rallies greter number af points than a previous rally it indicate that the Space ox Price move- ment is Over-alanced and a change in trend has started. The Time change i more important than reversal i price. Apply all of the rule to ave if change in tend is due atthe Time ‘when these reversals take place ‘When the market is nesring the end of « long upswing ‘or along downswing and reaches the 3rd or 4th Section, the ‘wings upward will be smaller in price gains and the Tine period will be Tess than the previous Section. This is an Indication that a change in trend je due. Tp a Bear oF de ‘lining markt, when the Toes in points becomes less than the previous Section and the Time period ie Tey it ib an indica ion tha he Time eyee is runing out Rule 9. Buy on Higher Tops and Booms Buy when the market is making higher Tope and highe ottome which shows that the main trend is up. Sell when the market i making lower Tops and lower Bottoms which indicates the main trend is down, Time periods are always important. Check the Time period from previous Top to Top and from previous Batiom to Bottom. Also check the ‘Time required for the market to move up from extreme low to extreme high and the Time required for prices to move oven from extreme high to exteme low. Monthly High and Low Charts—When makes are slow nd narrow, and especially for low priced stocks all you need to do is keep up the monthly high and low char: when tivity starts you can start Keeping a weekly high and low ae and for tock selling at very high Tevels, keep the daily igh and low chants, but remember that the 3-Day Swing a Chart is much more important as « Trend Indicator than a daily hgh and low char. ale 10. Change in Trend in Bull Market A change in tend often occurs jst before or just after holidays, The following dates ate important. January 3, May 30, July 4, the early part of September, after Labor Day, October 10 to 14, November 3 1o'8 in election yetra, and November 25 10 30, Thanksgiving, and December 26 to 28, ‘his Inter period may run into the early part of Janvary, before « definite change in end is indicated, ‘When prices onthe Industral Averages or the individual stocks break the las low on # 8:Point Swing Chart or break the lat lw on the swing on « 3:Day Chart itis an indication that the tend is changing, at last temporarily Bear Market: tn a declining market when prices cross the ‘Top ofthe last upswing on a 9-Point Chart, ot cross the top of the last upswing on a 3-Day Chart, itis the First Signal for a Change in Trend. When prices are at High Levels ‘here are usually several swings up and downs then when the market breaks the Low of the Last Swing it indicates re versal and change in Trend. At Tow levels prices often narrow down and remain in a narrow trading range for some Time, then when they Cross the Tap ofthe last upswing itis important for a Change in Trend ‘Always check ose if the market is exactly 1, 2.3.4 0r 5 years from any extreme High or Low prie. Check back to se ifthe Time Period in 15,22, 34, 42, 48 or 49 months from ny extreme or low price, ab these ae important time periods to watch for Change in Trend. Rule 11. Safest Buying and Selling Points It is always safest to buy stocks after a definite Change in Trend has been established. After a stock makes bottom and has « rally then follows the Secondary Resction and ites support at higher botlom, When it starts to advance fd crosrs the Top ofthe Fest Rally it tthe safest Pace to Buy beeause the market has already given an indication of, tupttend. Stop Lost Ordets can be plaoed under the See: ondary Bottom. Safest Selling Point—Alter a market has advanced for 4 Tong time and made Final High and has the First Sharp ‘quick Decline, then rallies and makes the Second Lower Top. find from this Top declines and Breaks the Low point ofthe First Decline it ethen Safer to Sell because it has given the Signal tht the main Trend has changed tothe Down side. 2Day Reactions and Rallies: Ths is a most imp time period in very fast ative markets. Reactions wil tun 2 days and not decline into the thied day. This wil Ihappen many mes before there is any indication of a Change in Trend. "When a stock or the Averages react only 2 days, itis im very strong postion, You will find some of these 2eday mover shown inthe table forthe 8-Day Cha In an active, Fast Declining Masket, rallies wll be shar and fast, ony Tasting 2 days. Study the table for the Da CChact and you will find many alles ofthis kind uring the fall of 1929 and during 193031 when the big Bear Market ras under way. Remember socks are never too High to Buy as Tong asthe ‘Trend ie Up and they are never too Low to Sell as Tong. 8 the ‘Trend i Down; but do not overlook the fact that you must always use a Stop Lost Order for your protection. Always Go With the Trend and not againe it Buy.stocks in Strong Position and Sell Stocks in Weak Positions. Rale 12, Price Gains in Fost Moves When markets ae very active and advancing or declining very fast they average about 1 point per calendar day ‘When the Movement on Averages or individual stocks is 2 points or more per day, itis far above normal and does not Fast very Tong. Movements of this kind occur when there are ‘Short Time Periods and a quick corective restion or de- cline ina Bull Market. When the Trend is down in « Bear Market these quick fest rallies correct the position in a short period of time, Read the information and examples tnder “Short Time Periods Correct Prices.” | want to impress upon you strongly that if you expect to make a sco in the stock market you most putin plenty (of time studying, hevause the more time you put iny the more Tnowledge you gain, the more profits you will take out later. ‘Over 45 years of practical experience in teying and testing rules have proven to me what is required for your success TThave given you the rules tht will work; you must do your part; you must Tear the rales, act on them atthe righ ime find put them int execution‘TWENTY-FOUR NEVERFAILING RULES In order to make a success trading in the stock market, the trader must have defnite rules and follow them. The Tues given below are based upon my personal experience find anyone who follows them will make 3 success Ame fc 9 es Diie rcpt 0 ea a and on etree etd Svinte your cna ae ASO area yur pow eno tnt ro ot Sve me ecnd_Sever bay of al yu He wt wo he ‘at Wain Te ri iP, Avett pot ren, Flo op i + wp Nsom soy te arpan sent be cd ony emerge Bice amde AULAE Sig i UN oe tw bt gor ai be wae tol Wo cad Reduce nea Was bping are he tl fw er ae ang aerg t When you decide to make # trade be sure that you are rot violating any of these 24 rules which are vital and im portant to your success. When you close trade with a Tos, go over these rules and see which rule you have violated; then do-not make the same mistake the second time. Experience and investigation will convince you of the value ofthese eles, and observation and stady wil lead you to a correct and practical theory for success in Wall Sereet. ‘Your fest thought must be how to protect your caital and make your trading as safe as powible. "There is one Sale, sure rule, and the man who vill follow it and never eviate from it will always keep his money and come ont head at the end of every year- This rule is divide your ‘aptal into to equal Parts and never risk more than one tenth or 10 per cent of your capital on any one trade. TE you start with $1000 you should not risk more than $100 {on yous Rest trade, and the way t init your lows eto place 1 xop Toss order.” is much better to have to shares of ‘tock and lote 3 point oF $30 than to have 100 shares and lose $300. "You can always Rnd new opportunites to make profits, so long as you have capital to operate with. Take tng heavy risks in the beginning endangers your capital and impairs your judgment. ‘Trade in such a way that you will tot be disturbed mentally by a losy if tcomes an1 feet that I cannot repeat too many times the value of using stop loss orders because ite the only safety valve f0 protect the investor and trader. An investor or trader ill place a stop loss order and one time out of ten the stop will be caught at the exact top of bottom. After this he Always remembers that and says, “If I place a stop loss ‘order, they wil jst go down and ettch My or jut Eo tnd catch i and then the market will go the other So he dacs not use the stop low order the next ine." His broker often tells him that stop loss orders are always caught. ‘The tradce forget that nine times out of ton the ‘sop loss order was right and would have prevented big losses, by getting him out at a time when the market was going aganst hm. The one time thatthe stop loss order gets you fut wrong it makes up for i in the next nine times that it ets you out right, So done fail rouse a stop loss order. [A wise man changes his minds a fool never. A. wise rman investigates and then decides, and a fool jst decides. Tn Wall Stee, the man who doce ot change his mind will soon have ao change to mind. When once you have made 4p your mind to make a trade and you have a rearon for it, do not change without a reason.” The most important thing chat [refer to i changing stop loss orders, oF cam telling stops when the market it going againse you. The first thing to do when you make a trade isto place a stop loss order, whichis far your own protection. Once you have placed a stop, you have acted wisely and used good judgment. To change your mind from this decision foolish and to cancel your stop, once you have placed it, js not based on good judgment but on hope, an hope can Tead to nothing but losses in Wall Street Nine times out often, when ance you place a stop loss order, if you newer ance i, i wil prove to be the best thing that ever hap- pened, and the man who adheres to this tule will make = Success. T reterate, if you cannot follow a rule, do not start to speculate because you vill ote all, and one of the tules that you must follow and never deviate from is to PLACE A STOP LOSS ORDER AT THE TIME YOU MAKE A TRADE AND DO NOT CANCEL IT. Hiscory repeats because of the weakness of human nature. The greed for quick fortunes has cont the public coundess millions of dollars, Every experienced stock trader knows that overtrading i his greatest weakness, but he continues to allow this weakness to be his run, There must be a cure for this grestest weakness in trang, and that eure is STOP LOSS ORDERS. "The weakest point must be overcome, and the stop lose order isthe cure for overerading eis jst a important to protect prot as itis to protect Your capa, When ene you have «prot on trade you Should never Ie it ran ino a ow." There are excepons fo thi ules and the amoune of the profs should detcrmine where stop loss orders should be placed, The following i about the safest rae that I can ive pou to use under average conditions. When once stk has moved pont in yur favor, place a stop lowe order where Jou Wil be en if iis aught In very asin, highprced stack vill pay you to wait unl’ stock shows’ proft of 4% § Points then move your sop iss order upto where You till ave no low should the marke revere. In thio way You wll have reed your rick to's minum and the po, Sity of profits wil be unlimited, As the sock moves sn Your favor, continu follow up with stp los ort, hu rotating and ineressing your profi Tes very important to know when to buy or sll, and you must have some rule or rome sigh 3s your indiation Tor the ime to place your order ta buy or sl. When youthink the market is reaching Bottom oF top, you will find that 7 times out of ro you will be wrong.” It is not what the market does today oF what You think itis going to do that important tis exacly what the indications are that Ie will do-at slater date when you expect to make profits "When a stock reaches low levels oF high levels and you want 10 take a positon, wait unt it shows a sign that the Trend has turned up or down. At Emes, you may miss the bottom or top by wating, but you will save money by not ‘making your trade antl you have eeason fo believe that you tre going withthe trend and not against it. She of the most important things that you should keep in mind isnot how much profit or how much loss you are Going to make, You should leave the money part out of the question, Your object should be to Keep right on the market Go with the tend of the market. Study all the time to determine the correct trend. Do not think about profs, If you are right on the market, che profits will ome.” IF you are wrong, then use the old reliable pro- tector, 2 stop loss order, [BUYING OR SELLING 100 S008 OR 700 LATE Investors often get out of the market 19 soon, because they have held stocks for + long time, waiting for activity fand higher prices, and then sell out on the ht move up ‘neo new tetitory, which i a mistake. See Swing Charts 2 Atchison, American Tel. & Tel, and New York Central fon page 113- "There i another type of investor who always gets out ‘of the marke too late, Because when the big advance comes the holds on and hopes thatthe stock will go higher than it ver docs," Tencver reaches the price at Which he wishes £9 Sell The first quick break comes, and he decides that if the Sock advances again to ite former high level, he will sell ‘ut, The stock docs advance but fails to get 38 high, then ‘Sedines sil lower, and he again fixes 2 price, in his mind ft which he will ell, but tht is only 4 “hope” price, and fhe bees the stock drift lower and lower until finaly in dx tust, he sll out after the stock has had a big decline from —— the top._Te i always well eo wait unl you cn ce ach in the trend before sling ont, but when once you do tee thatthe tend has changed hen all owt without delay. A food le for this Lind of = trader is 10 follow op with Sop loss orders even if tis 10 to 20 pola a. ‘Aton, nt delay, makes money in Wall Steet. There is noe hoping, a that wll ot tea the game Men who tumble on hope always go broke. You must op hoping Sd star thing. ‘Then, afer you think, nlese you ac the proper time, good Winking sles” Koowing when je act and nor doing will ot help any. Delays are tye kngerous "The lnger you Bope and delay taking scion fn the market, the worse your jdgment gets andthe si You areto make mistakes Stagnation seth and deste tion Action is Ife. Being right or wrong and'n0t sing trl never tae your money or hel You te make Tt Re ember, delay are alwayedangerovs Te much beter fo {ke sg om hanya erin in ould fever trade when si or depresed. Your judgment i sie bad when yo el nor phy Ono {he roles of ssutenefl peclator shoud be to ke het, for health is weal be There are two ways of pyramiding. One iso buy more cor sell more just at soon asthe market breaks int new ery of aie» ew hgh or ne To: Ins fat Fung market, you can conn to buy or sll every ‘or To points por down hen the market is moving i your favor ll depending onthe stock or your method of Pytamiing. My method ito determine the reaction levels nd how many points sock has reacted from temporary top levels or ried from temporary bottoms. Find ot whethce these reactions are ronning 35,7, 10, oF #2 points then buy or sell your tat andy 3rd, oF th lt for pyramid ing on reactions fom the top, wating for , 5. to pomtsMarke “Tf you fad followed hs rae on General Motors ume rae, which wil. Relp, you in pyramising, i Sf aie rencion and meanaing them Bi way wil gests "gvpyramid should alas be followed ap with stop See culd be 20 pnt der the marke, bra if was Mort readers expect too large profits from the busines of speclation, “They do not stop to. figure what a gain of Si per cents year means over 2 period of 10 to 20 384, ‘Starting with $1000 5 gain of 25 per cont per year for 10 a years equals $9,31325. $10,000 increased at the rate of 25 percent a year amounts to $93,132.70 in 10 years. You an see how easy isto accumulate 2 fortune in a reasonable Tength of time if one only is conservative and doesnot expect toormuch. Many traders come to Well Stet with the Hea ‘that they can double ther money in a week or 2 month. Tt cannot be done. There are exceptional opportunites at times, When a large amount of money can be made in one day, one tweak, of ane month, bat there big opportunities are few Ind far between, and when once you have one of them tnd make big profits, do not Let hope run away with your judgment and expect to continue to make profs right slong fon sch an enormous sale. Remember that the market maker normal moves most of the time and that you mast ike normal profs the greater part of the time. Many traders buy of sell stock without any thought of how much proft there is possiblity of them making and never think bout the posiblity of s Toss. This should be one of our rules: Never buy or sell a stock when you dont think you fan make more than 3 to § points’ profit unless you we a top loss order of only 110 2 point. does not pay, ot fn average, t0 risk 3 0 § point’ lose fora possible gain of $30 s points Try to make a trade where you have oppor faites, ora least where theresa promise of greater profits than louses. There is no use geting into stock when you think there is only a chance of making 3 to points, because you can be wrong an lose that much or more. Teis better fo wait until stock eros Resistance Level one way or the other and get in where the opportunities are for greater profits and longer swings. Scapers do not make money: they simply get scaled. Remember that to make a success your profits must always be greater than your loses, and Your rule must be to cat loses short and let your profts ‘When you make a trade and put up the required margin at the time and later the stock goes against you and the broker ells for more margin, the thing todo in most cases isnot to put up more markit, bt sell out atthe market or ayin inte you ar shrt_U you pt wp more maci, wae ncne ra a Tt ged Erni nar ete ac Nt ne fer man th eee arg fie 2uPaan Ted Seg ea dd tea neal fh remedies Ifthe broker hot to call You for a LLrLr—=s—sCs | _ rine wth [Never have a joint acount or tad in partnership aan if you can pony void When two-men have Seen together they may age po the Fhe ne 1S by Trang scum the gt time tal oe and tay be geen they ape tomate he ade eves where he ch comes come sng he tet willom er geo eine td oe Whepeode rhe rel wi Be that they wll make i take fe geting ou ofthe trade. One man will bold on {etiue fie ober one docs so want to get oat and Sally themes evap adie rade got i ha, en Sloe nd hope and aly ke a loss om what wae Eade that they sited together probly. Te is bard Jot ne mid to mor onthe sock market and Key ght Soc ph are evo ace and wo io wer dee” The only way tnt tro cool make a sucess it Tiveala be for one to do ohe baying and ling snd he ‘titra do noting bu place te nop loss order.” Sop iS dert w protes i of them when they mae mi (Sher tis Wa ae foreman and hi ie fhe {Shactum tgtber The acon of tog and oat of Rermgte shall be upto one mam who toad ean fo Re nace guekly and ne be ined by 9 paring Secatie dea fa average tae does nt wan 0 hear pan se TN it someting corn wh what BY hhope for. When they buy 2 stock they belive all the new, rumors, views and lies that are bull, but just let some port come out that is bad or let someone tel him some- thing unfavorable about the stock he has bought and he refuses to believe it Tes the truth that will heip him and truth that he should want to hear, not something that will build up his hopes and cause him ones later. A trader after hhe has made a mistake, says "I am going to do different next time” but he does’e and that i why we always have old lambs in WallStreet to lead the young lambs down the same lane to losses that the old lambs have followed, Real inside truth “about losses in Wall Street i seldom ever told ‘Traders, big and lide, always talk about thet profts and brag about their sucessful trades, but keep quiet shout their losses. "Therefore, the innocent lamb, when he comes t0 ‘Wall Street, is led to believe that there's nothing bat profits to be made, instead of hearing the other side of the story of how losses are made in Wall Sree, which i thing that would realy help him and prevent him from making, the same mistake. The new lamb should know that failing to place stop los order and avertrading have been the cruse of over go per cent of the failures in Wall Street. ‘There: fore in order to make a sucers he must actin 2 Wa) t avercome the weak points which have caused the ruin of others. When a trader makes 2 prof, he gives himelf credit and feels that his judgment good and that he di ital, himself. "When he makes loses, he takes a diferent at tude and seldom ever Blames himself of ties to fed the ‘cause with himself forthe loses. He finds excuses; reasons with himself that the unexpected happened, and that if he tad not listened to some one elte's advice, he would have made 2 profit. He finds alot of ifs, ands, and buts, which hhe imagines were no fault of his, ‘This i why he’ makes mistakes and Tosser the second time ‘The investor and trader must work out his owa salva: tion and blame himself and no one else for his loses, for