22 Trading Lessons From Jesse Livermore

| February 26, 2016

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:

  1. Nothing new ever occurs in the business of speculating or investing in securities and commodities.
  2. Money cannot consistently be made trading every day or every week during the year.
  3. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.
  4. Markets are never wrong- opinions often are.
  5. The real money made in speculating has been in commitments showing in profit right from the start.
  6. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.
  7. One should never permit speculative ventures to run into investments.
  8. The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.
  9. Never buy a stock because it has had a big decline from its previous high.
  10. Never sell a stock because it seems high-priced.
  11. I become a buyer as soon as stock makes a new high on its movement after having had a normal reaction.
  12. Never average losses.
  13. The human side of every person is the greatest enemy of the average investor or speculator.
  14. Wishful thinking must be banished.
  15. Big movements take time to develop.
  16. It is not good to be curious about all the reasons behind price movements.
  17. It is much easier to watch a few than many.
  18. 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.
  19. The leaders of today may not be the leaders of two years from now.
  20. 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.
  21. 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:

Jesse Livermore trading rule

Happy Trading!

 

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Category: Stocks

About the Author ()

Gavin has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. He likes to focus on short volatility strategies. Gavin has written 4 books on options trading, 3 of which were bestsellers. For more info about Gavin, check out his website http://www.optionstradingiq.com/.

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