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Jesse Livermore


Jesse Livermore, in his office in 1929 just after the "Crash"--when he made over 100 million dollars.

Few investors have made and lost fortunes to equal those of the legendary Jesse Livermore, a notorious stock market speculator during the first half of the 20th century. He often remarked," Markets are never wrong; opinions are."

Human nature is no different today than it was back in the 1920s and 1930s when Jesse Livermore was a  major force on Wall Street. Investors have the same hopes and fears today that they had seventy or eighty years ago. Mr. Livermore saw repeatedly that the opinions of many of his colleagues were frequently wrong, as the market went on its own merry way in a direction contrary to what they had expected.

In these periods of gyrating markets where it is difficult to know the markets trend, Livermore remarked over 80 years ago:

"Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after an investor has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance."

 Reminiscences of a Stock Operator published in 1923 offers timeless wisdom for all investors and traders:

  • Never act on tips.
  • Use a system and don't deviate from it.
  • Never buy a stock because it has had a big decline from its previous high.
  • If a stock doesn't act right don't touch it; because, being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit.
  • Don't blame the market for your losses.
  • Never add to a losing position. A losing position means you were wrong.
  • Stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second unless the first shows you a profit.
  • Always sell what shows you a loss and keep what shows you a profit.
  • Don't argue with the tape. Do not seek to lure the profit back. Quit while the quitting is good--and cheap.
  • There is only one side to the stock market; and it is not the bull side or the bear side but the right side.
  • The speculator's chief enemies are always boredom from within.
  • A man must believe in himself and his judgment if he expects to make a living at this game.
  • Bulls and bears make money, but pigs get slaughtered.
  • Use money management at all times.
  • Establish your trading plan before the markets open.
  • Detailed your plan for each trade.
  • Establish entry and exit points and understand risk reward rations.
  • Accept small losses as part of the game if you want to win.
  • Trade markets from the short side.
  • Stand aside from a position, knowing you have taken a position.
  • Develop a trading plan for each potential situation you may face.
  • Do not look at quotes during the day.
  • Do not concentrate on break-even levels when you are losing.
  • Don't liquidate a winner to keep a loser.
  • Develop and maintain an exit plan. Follow this plan with rigid discipline.
  • Sustain your patience. Big movements take time to develop. 
  • Don't be overly curious about the rationale behind a move. The key to wealth in trading is simplicity.


Copyright 2004 ARB Trading | Risk Notice & Disclaimer
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