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Trading Wisdom - Jesse Livermore


A lot have been written by and about Mr. Livermore. He was the man who reportedly made $100 million in a single day in the 1929 crash. During the crash, J.P. Morgan personally walked over to the N.Y. Stock exchange to ask Jesse Livermore to start buying and stop selling in order to save the markets.

He was an expert at following the right trend. Let's look at Jesse Livermore’s Wisdom (From Reminiscences of a Stock Operator):
  • Use a system and don’t deviate from it.
  • Never buy a stock because it has had a big decline from its previous high.
  • Do not concentrate on break-even levels when you are losing.
  • Don’t liquidate a winner to keep a loser.
  • Don’t argue with the tape. Do not seek to lure the profit back. Quit while the quitting is good–and cheap.
  • Detail your plan for each trade.
  • Trade markets from the short side, as well as the long.
  • Accept small losses as part of the game if you want to win BIG.
  • 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.
  • Use money management at all times.
  • There is only one side to the stock market; and it is not the bull side or the bear side but the right side.
  • Never add to a losing position. A losing position means you were wrong.
  • And Most Importantly (and the hardest to learn):
    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.

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