my cousin asked me if we could collect the best advice and phrases on stock exchange, trading and investment from one of the biggest speculators and traders in history, Jesse Livermore, but to try to learn and reflect not only on the great successes he had... but not to fall into the serious mistakes he made.
He was someone who began to operate very early in the markets and in the stock market, who at the age of 15 had already won his first $1,000 dollars and who arrived in New York, where he managed to become a millionaire on several occasions, earning more than $100 million dollars... with great lessons to learn.
A large part of his experiences are novelized, in an agile and simple way, by a journalist who interviewed him several times Edwin Lefevre and who created a fascinating story of reading in which he told the life and work of Livermore, named precisely as follows:"Memories of a stock market trader: The novel biography of Jesse Livermore, one of the greatest speculators of all times".
The book includes a lot of thoughts, opinions and reflections, which are still more than valid today, both for investors, speculators, savers... (for those who are and for those who want to be) and applicable to the world of Trading, Stock Exchange and Investments.
Without a specific plan, clear and well-studied rules, operators have no chance of success. We insist, we will insist and we will always repeat the same thing: do not rush, take investments and trading "seriously", train, learn (or delegate who is also trusted), but never skip rules, rules, or look for easy or supposedly fast shortcuts. Before consistencies, there is always learning and constancy.
"I absolutely believe that price patterns are always repeated. There are patterns that appear over and over again, with small variations. This is because markets are driven by humans; and human nature never changes.
"I understand that uncontrolled emotions are trader's worst enemy; that hope, fear and greed are ever-present; waiting backstage to leapfrog and join the game."
"I never try to predict or anticipate. I only react to what the market tells me with its behavior. This is another way of saying: Follow your system, follow your rules and don't buy or sell any financial assets based on your "hope" that they will go up, down, or by your intuition, or by fashion, or because you like them.
The irrationality of the market is evident in the big upward markets, some traders specialize in buying stocks that make new highs with remarkable success.
The average man doesn't want to be told whether the market is bullish or bearish. What you want is to be specifically told what value to buy or sell. He wants something for nothing. He doesn't want to work.
The art of speculation is the most fascinating and unroutine art in the world. But it's not a game for stupid or lazy minded people, nor for men with an unbalanced emotional balance, let alone for the chance to get rich in a short period of time. Then you'll die poor. Is there any way to quickly enrich oneself by being a cook, architect, doctor, musician... overnight and without striving, learning or allowing the necessary time to master what you have in your hands?
Rational people act irrationally when they are afraid, and people are afraid when they start to lose money, our way of thinking is atrophied. It's implicit in our human nature. We can't turn it down. We must accept that. People have always tried to achieve something in exchange for nothing, and the great attraction of all "booms" is always, an instinct of play elevated by greed and an excessive desire for prosperity.
If my courage does not behave as I had predicted, I quickly close the operation, as I think it is not yet time to take a stand. Remember, there is always an explanation why an action acts in a certain way. But also remember that you run the risk of not becoming familiar with those reasons that move the market, or becoming familiar with them when it is too late.
of similar figures of past prices, which you must become familiar with in order to predict future prices. What really played me wrong in the past has been to ignore my stock market knowledge and play with my emotions. So I only operate when I'm sure the precedents will play to my advantage.
"Keep the number of shares you have in a manageable number." Well, he found that trying to follow too many assets was counterproductive. It is better that we follow only those we can control, not scatter or think that we will gain more if we "shoot" without reason or meaning to many markets.
"Every once in a while you have to be in cash and take a vacation." In this sense it is advisable not to spend 24 hours thinking about the markets in such a way that we cannot reason or know how to disconnect, however much we are passionate about this activity, or however much we may want to operate, or however much economic or personal need we have... we always insist that there is and must be a time for everything and a thing for every time....
"They say you'll never ruin yourself by taking profits. No, you won't do it. But you won't get rich by taking four points in a bullish market either. You should always try to look for "a reason to enter into an operation and a reason to leave it". Patience, discipline in execution, openings and closures...
"Take your losses quickly and don't think about them." The famous axiom of cutting losses or knowing how you are going to manage your operation and your income if things don't go according to your forecasts: to have a plan (in time, form, quantity and way of acting if the price doesn't go where you wanted).
"Don't try to operate the market all the time." It's not good for the operation, the results, or our emotions and self-control. As Livermore said,"There are many times I have been completely in cash, especially when I wasn't sure of the direction of the market and waiting for a confirmation for the next move. Set a schedule (either short, medium or long term, and respect it. After all, that's also respecting us)
"Prudent traders never argue with the tape." Never try to go against the trend (against whatever it is at that time, according to our system and our rules, and regardless of the time frame in which we invest). Do not pretend to "turn to the market", nor to think that "it should fall" or "it should rise".
Remember that stocks, currencies, indexes... are never too high to start buying or too low to start selling. This is your way of saying that bullish or bearish markets may last longer than we think. Look at the graph and reality, never predicting or predicting.
After spending many years on Wall Street and after winning and losing millions of dollars I want to tell you something: it was never my thinking that made me a lot of money. It was my settlement: my patience" Patience to learn, patience to experiment, patience not to operate with more than we can afford, patience to let the operations "breathe" and have their natural development, without rushing, but also without stopping to act or being all the time making excuses.
"Very few people are successful in the markets. Most people have a desire to become rich soon."That's why it's best to start little by little and draw up a"roadmap. Or let yourself be guided, or read a lot and practice, without haste, but with dedication and constancy.
When the market goes against you, you have hope that every day will be the last day - and consequently you will lose more than you should - and when the market goes in your favor, you become too afraid that the next day will be the last day of your profit and you take it too soon."It seems a lie, but they are reflections that are already close to 100 years old and that are totally valid so long after....
"Very few people are successful in the markets. Most people have a desire to become rich soon."That's why it's best to start little by little, study, train and learn a lot, and draw up a"roadmap. Or let yourself be guided, or read a lot and practice, without haste, but with dedication and constancy.
We could enumerate many others, just as useful and applicable, both in his time and later and try to put them into practice, for our own benefit (personal and economic), but as Jesse Livermore himself tells many times in his book, the real problem is that he recognized that he did not follow many of his own rules many times (it can happen to all of us, but we must try to force and commit ourselves so that we do not influence those mistakes"
Not complying with his rules, which he knew so well by heart, was precisely the reason why after becoming a millionaire several times... he will then be ruined a few more times, in a successive cycle.
He says that he made mistakes, and that he was aware of it (to which was added an excess of greed, impatience, greed, haste... and a great frustration at not fulfilling or doing what he knew he had to do).
And perhaps for alternating too often those states of euphoria and frustration, or for whatever reason, unfortunately in 1940 he committed suicide after a streak of loss (again the lack of emotional management, since he only paid attention to what was lost, to mistakes, and did not pay attention to what was good, what he had won or what he still had to win....) because ironically, at his death, he still had no more or less than five million dollars left.
