Jesse Livermore is famous for making (and losing) two fortunes in the stock market. Firstly in 1907, he famously sold the market short and profited to the tune of $3 million. Then in 1929 after noticing similar conditions to 1929, he again sold the market short and continued adding to his position as stocks plummeted which ultimately netted him $100 million. In today’s terms, that would be close to $1.5 billion!
Livermore was famously portrayed in the book Reminiscences of a Stock Operator, by Edwin Lefèvre which is still hugely popular with traders today.
Below you will find 22 of Livermore’s trading lessons that continue to stand the test of time:
- Nothing new ever occurs in the business of speculating or investing in securities and commodities.
- Money cannot consistently be made trading every day or every week during the year.
- Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.
- Markets are never wrong- opinions often are.
- The real money made in speculating has been in commitments showing in profit right from the start.
- As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.
- One should never permit speculative ventures to run into investments.
- The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.
- Never buy a stock because it has had a big decline from its previous high.
- Never sell a stock because it seems high-priced.
- I become a buyer as soon as stock makes a new high on its movement after having had a normal reaction.
- Never average losses.
- The human side of every person is the greatest enemy of the average investor or speculator.
- Wishful thinking must be banished.
- Big movements take time to develop.
- It is not good to be curious about all the reasons behind price movements.
- It is much easier to watch a few than many.
- If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.
- The leaders of today may not be the leaders of two years from now.
- Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.
- Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.
Finally, I leave you with the last lesson courtesy of AZ Quotes:
Happy Trading!
Gav.
