Twelve Trading Rules - AI Analysis Prompt

Use this William Gann rule prompt to apply “Twelve Trading Rules” to a specific company. It turns a vague opinion into a repeatable checklist: what facts you must verify, which assumptions matter most, what would invalidate the thesis, and the common misreads that create false certainty. Expect a written output you can save: a thesis summary, key risks, and next-step questions for filings and earnings calls. If a claim matters, require primary-source citations before you act. Educational only — not investment advice.

Full Prompt

You are an investment analyst trained in William Gann's principle of "Twelve Trading Rules." Your core philosophy: time cycles, price-time relationships, geometric analysis. Your task is to analyze {Company Name} through the specific lens of this principle.

## Context
William Gann teaches: "Never risk more than 10% of capital on a single trade. Always use stop-loss orders. Never let a profit turn into a loss. Never average down on losing positions."

## Analysis Framework

### 1. Principle Application Assessment
- How does this principle specifically apply to {Company Name}?
- What aspects of the company are most relevant to "Twelve Trading Rules"?
- Rate the company's alignment with this principle: Strong / Moderate / Weak
- What would William Gann focus on first when evaluating this company?

### 2. Quantitative Evidence
- Identify 3-5 key financial metrics most relevant to this principle
- Analyze these metrics over the past 5-10 years for {Company Name}
- Compare with industry peers and historical benchmarks
- Are the numbers improving, stable, or deteriorating?
- What story do the numbers tell through the lens of "Twelve Trading Rules"?

### 3. Qualitative Deep Dive
- Evaluate the non-quantifiable factors William Gann would examine
- Management quality and alignment with this principle
- Industry dynamics and competitive position
- Business model sustainability viewed through this specific lens
- What would William Gann want to know that isn't in the financial statements?

### 4. Risk Assessment Through This Lens
- What risks does this principle specifically highlight for {Company Name}?
- What could go wrong that this principle is designed to protect against?
- Are there warning signs that William Gann would flag?
- Stress-test: How would this company perform under adverse conditions?
- What is the worst-case scenario from this principle's perspective?

### 5. Opportunity Identification
- What opportunities does analyzing through this lens reveal?
- Are there hidden strengths the market may be undervaluing?
- How does this company compare to William Gann's ideal investment?
- What catalysts could unlock value related to this principle?

### 6. Gann Verdict
- Summarize: Does {Company Name} pass the "Twelve Trading Rules" test?
- Rate the investment opportunity: 1-10 from this principle's perspective
- Clear recommendation: Buy / Hold / Avoid (based on this principle alone)
- What conditions would change your assessment?
- One-paragraph summary capturing William Gann's likely assessment

## Output Format
Present your analysis with specific data points in each section. Use William Gann's analytical style: technical cycle analysis using time, price, and geometric relationships. End with a decisive verdict.

Related reading (close the loop)

Pick one path below to turn the output into a checkable, repeatable decision policy.

Educational only. Verify facts with primary sources and apply your own constraints.

Basic Questions

Which of Gann's twelve trading rules are most important?
Core idea: Gann's twelve trading rules covering position management and discipline

✅ Using this AI prompt, you can systematically analyze any company or investment opportunity from this principle's perspective.

The prompt guides you to:
1. Assess whether the investment target meets this principle's core requirements
2. Identify key risks and blind spots
3. Provide a 1-10 comprehensive rating

Start by analyzing companies you know well for practice, then apply the framework to new investment decisions.

Usage Tips

How reliable are analysis ratings based on Gann's Twelve Rules?
Unlike Gann's more controversial technical tools, most principles in the Twelve Rules are strongly supported by modern behavioral finance and risk management theory. The effectiveness of rules such as stop-loss discipline, position sizing, and trend-following has extensive empirical research evidence. Analytical ratings are very reliable in assessing whether investors follow these rules—violating these basic disciplines is one of the primary reasons retail investors lose money. However, ratings are limited in that specific rule parameters (such as stop-loss percentage settings, position size determination) need to be customized based on individual risk tolerance, trading style, and market conditions. Investors are advised to first faithfully execute the basic version of these rules and make personalized adjustments only after accumulating sufficient experience.

Getting started

Does this prompt give investment advice or buy/sell calls?
No. It is a research helper that turns your thinking into checkable inputs and constraints: what evidence you must verify, what would prove the thesis wrong, and what common misreads to avoid. Treat the output as a draft, not a signal. Validate every material number against primary sources (filings, earnings releases, investor presentations, transcripts), and do not act unless you can write down (1) position-size limits and (2) explicit invalidation triggers.
What inputs should I provide for a reliable result?
At minimum: a 1-sentence business model summary, your current thesis (why it wins/loses), time horizon, and risk constraints; a valuation/price range; and the latest financial statements (profit quality, cash flow, debt/liquidity). Add context that reduces hallucinations: the exact filing period, known one-offs, key competitors, and what you do NOT know yet. If an input is missing, label it as missing evidence instead of letting the model guess.

Validation and boundaries

How do I validate the output?
Validate falsifiable claims one by one. Rewrite each key statement into something you can check: the metric, the period, and the source. Numbers must match filings; management claims must be traceable to transcripts/guidance; and “moat” claims need observable evidence (pricing power, retention, switching costs, cost structure). Anything you cannot verify becomes a follow-up task, not a decision trigger. If the model cites dates, confirm they are not beyond its knowledge cutoff.
When should I NOT act on the output?
If you cannot write down invalidation triggers, a position-size cap, or primary-source evidence for the key claims behind “Twelve Trading Rules”, do not act. The safer move is usually to reduce size, slow down, and schedule the next review.

More Rule Prompts

Explore other investment principles from this master.

Time Cycles

Time is the most important factor in trading. Markets move in cycles, and understanding these time cycles allows you to predict turning points with greater accuracy.

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Price and Time Square

When price and time are squared, a change in trend is imminent. This mathematical relationship between price movement and time elapsed reveals hidden market structure.

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Gann Angles

The 45-degree angle, or 1x1 line, is the most important. It represents a balanced relationship where price moves one unit per time unit. Angles above show strength; below show weakness.

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Square of Nine

The Square of Nine arranges numbers in a spiral pattern, revealing price levels of support and resistance. Key angles on the square indicate where prices are likely to reverse.

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