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I realize my negative post on certain stocks will rub the wrong way,but if my estimation of a stock is that it will continue
to tank and line the pockets of crooks,then I will post that
opinion.
I like many enjoy playing the wild west some,but there are times when the conditions do not warrant a trade,especially in the large
volume dilution phase of a stock which IMO ASYI finds itself in.
I'll tell you what,no more post for me on the ASYI board.I think I've had my say on that one.
Good luck.
FTD
I always find the correct sell price much harder to gauge than the correct buy price.If I buy,and the price dips below my loss
acceptable percentage,then I sell as painful as that may be,but gauging the depth of a winners run is more difficult to judge.
Trade well.
FTD
Yeah I kno i took profits because I didn't know
Should have held your AIG.
FTD
It's truly amazing how rude some people are on this board
Interesting......I'll check him out......marked your board.......$$$
Repeat after me folks;
I am a consistent winner because;
I objectively identify my edges
I predefine the risk of every trade
I completely accept the risk or i am willing to let go of the trade
I act on my edges without reservation or hesitation
I pay myself as the market makes money available to me
I continually monitor my susceptibility for making errors
I understand the absolute necessity of these principles of consistent success and,therefore,i never violate them..
courtesy of Mark Douglas "Trading in the zone"
It is a great activity - speculation. So rewarding beyond the $s - so much about the self.
I park a lot of my personal take minutiae here... http://investorshub.advfn.com/boards/board.aspx?board_id=19837
In the game since 79,and look forward to it every single day as long as i live :)
Get 'er done. It is an engaging read. It will go fast and you will want to pick it up again. I have been through it several times.
Some of the best stuff on ihub. Thanks for sharing. I am lucky I found Livermore's work and some folks who taught me this stuff "at the desk" from a grounding in these wisdoms. I try to share my outlooks that stem from this stuff as I wander around boards. You have shared the most important groundings and wisdoms with this board.
Yw dude,take care of this board :)
Reminiscences of a Stock Operator by Edwin Lefevre is mentioned by at least 3 of those interviewed in the book Market Wizards. According to them it is a MUST READ!
One of the next books I plan on reading is Reminiscences of a Stock Operator by Edwin Lefevre.
Great work! I think I'll adopt this board and keep it alive.
A more subtle but if not more important question for professional traders to ask is: If Livermore was so great, why did he ultimately lose his fortune again during the Great Depression and why was he not able to make a "comeback" again? This and the fact that Livermore had periodically suffered from depression throughout his life finally led to his suicide in 1940. What went wrong? Traders would often cite his lack of risk management, but I think it goes deeper than that. Perhaps he was getting older and lost his drive, but I believe there is a more important underlying theme and lesson to all this. I will discuss this in later paragraphs.
Early on, Jesse Livermore learned that in order to succeed in life, one needs to put in a great deal of time and effort to an endeavor that one enjoys doing. Of course, it didn't hurt that Livermore also had a great genius with crunching numbers and a great discipline for keeping records. It also didn't hurt in that Livermore was always willing to learn and was always receptive to new ideas. As a young lad, he chose the stock and commodities market as a way to keep score and to make his fortune, and this is what he did until the day that he died.
Livermore was a self-made man. He ran away from home at the age of only 14 and subsequently went to work as a quotation boy in Boston. He quickly learned the art of "reading the tape" and from here, he proceeded to trade in the bucket shops - and was so successful that he was practically banned from trading in all the major bucket shops in Boston. From the bucket shops, he relocated to New York and started trading on the Big Board in the office of E. F. Hutton. This was in the year 1897. By that time, Livermore had already gained a reputation as the "Boy Plunger" in all the bucket shops in Boston. He was only 20 years old.
Trading "legitimately" on the NYSE taught Jesse Livermore his first major lesson in how to consistently make money in the stock market. How? Within six months of opening his account in a legitimate brokerage firm, he had lost all his money - all $2,500 of it - approximately the equivalent of $60,000 in today's dollars. The average person will most probably swear off stock market speculation forever if he was to lose his entire fortune in the endeavor, but not so for Livermore. Of course, he was depressed. Any emotional being would be depressed on losing his entire fortune. But this unfortunate development only motivated Livermore to study his mistakes more carefully. He was able to beat the game in the bucket shops, so why not on the Big Board?
There are many lessons to be learned here. Let's start with the first lesson. Please note that I am not going to list them in any particular order. Each trader/speculator has to deal with their own trading flaws - some lessons may be more applicable than others to one trader but the same lessons may not apply to another type of trader - especially so if he has conquered them.
I've learned from Mr. Livermore that the two consistent factors in the market is fear and greed. This stock is absolutely no different, IMO. I cut my teeth trading on the otc market. The biggest lesson I learned was not to believe the story, and don't be greedy. This stock can be traded for profits, I do it. The key is to buy when others are fearful, and sell when its profitable. Wash and reload. I still have a core position because I still believe that it will have its day in the sun. I've wondered if I wouldn't be a lot better off keeping the money that's tied up in WZE to working on better quality stocks? I still feel that it will pay off handsomely at some point.
Good luck Serf!
Unless they stop the dumping(free paper) each and every time,the end result will be the same..then again you can wake up one day and have it gap to a buck lol.......
Who was Jessie Livermore?
Jessie Livermore was considered to be the greatest stock trader who ever lived. He acquired many vast fortunes in his lifetime through the art of stock market trading.
After the crash of 1907 Livermore had $3 million dollars in the markets and was living the high life. This is also when he began to be recognized as a famous trader.
He lost that but came back. By the end of the crash of 1929 he had an even greater fortune of $100 million dollars. This would have made him a billionaire by today’s standards.
Jessie Livermore was often called the “the great bear of wall street” because of his ability to make money by shorting during a bears market.
Even though he was a bear that did not limited to making money only in bears markets. He adopted a buy and hold strategy when the markets were bullish and a of sell and hold strategy during a downward market.
There are those who will argue that he is not such a great trader because although he made vast fortunes throughout his lifetime he also lost them all. Livermore died by suicide a broke man, a sad ending to a great trader.
There is much that can be learned by him for anyone who is interested in investing, or life for that matter. He only lost money when he did not follow his own rules. Every time he exited the market based on emotions it turned out against him.
Richard Smitten is an author who has written an autobiography about the life of this man called “Jessie Livermore world’s Greatest Stock Trader”. It is a very great book; I frankly could not put it down when I first read it.
Without a doubt I would recommend reading this book at least once for everyone interested in the investment world. It is very cheap, you should be able to find it for under $20, and it can teach you many great lessens about life.
Yep, everything happens for a reason.
On a brighter note, was sure it would hit 0.25 today lol......
especially after i saw all those shares for debt issued on the 10q yesterday,now we know why they ran it up lol...and where all that paper was coming from imo.
Jesse Livermore: Original Trend Follower and Great Trader
People wonder where great traders such as Ed Seykota find inspiration and influence? Jesse Livermore is one such man from the early 20th century. He is the early Trend Follower.
Jesse L. Livermore was born in South Acton, Massachusetts, in 1877. At the age of fifteen he went to Boston and began working in Paine Webber's Boston brokerage office. His job was to post the stock and commodities prices on the brokerage's price quotations chalk board. He studied the price movements and began to trade on their price fluctuations. When Jesse was in his twenties he moved to New York City to speculate in trading in the stock and commodities market. Over a time period of fourty years of trading, he developed a knack for speculating on price movements in stock and commodity prices. He was said to have accumulated and lost millions of dollars several times over. He earned the nickname of Boy Wonder. Jesse Livermore created a set of trading rules, based upon the lesssons of his personal trading experience. One of his foremost rules was: Never act on tips.
The unofficial biography of Jesse Livermore was Reminiscences of a Stock Operator published 1923. Below are selected quotes:
•Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
•I told you I had ten thousand dollars when I was twenty, and my margin on that Sugar deal was over ten thousand. But I didn't always win. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I'd have been right perhaps as often as seven out of ten times. In fact, I have always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game- that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn't know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily- or sufficient knowledge to make his play an intelligent play.
•It takes a man a long time to learn all the lessons of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.
•There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!
•I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, Well, you know this is a bull market! he really meant to tell them that the big money was not in the individual fluctuations but in the main movements- that is, not in reading the tape but in sizing up the entire market and its trend.
•The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight.
•?the average man doesn't wish to be told that it is a bull or bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn't even wish to have to think. It is too much bother to have to count the money that he picks up from the ground.
•To tell you about the first of my million dollar mistakes I shall have to go back to this time when I first became a millionaire, right after the big break of October, 1907. As far as my trading went, having a million merely meant more reserves. Money does not give a trader more comfort, because, rich or poor, he can make mistakes and it is never comfortable to be wrong. And when a millionaire is right his money is merely one of his several servants. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and to the soul.
•What I have told you gives you the essence of my trading system as based on studying the tape. I merely learn the way prices are most probably going to move. I check up my own trading by additional tests, to determine the psychological moment. I do that by watching the way the price acts after I begin.
•Of all speculative blunders there are few worse than trying to average a losing game. My cotton deal proved it to the hilt a little later. Always sell what shows you a loss and keep what shows you a profit. That was so obviously the wise thing to do and was so well known to me that even now I marvel at myself for doing the reverse.
•The loss of the money didn't bother me. Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went for a tuition fee. A man has to have experience and he has to pay for it.
•In booms, which is when the public is in the market in the greatest numbers, there is never any need of subtlety, so there is no sense of wasting time discussing either manipulation or speculation during such times; it would be like trying to find the difference in raindrops that are falling synchronously on the same roof across the street. The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privelege of proving conclusively that it cannot be found on this sordid earth. At first, when I listened to the accounts of old-time deals and devices I used to think that people were more gullible in the 1860's and 70's than in the 1900's. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.
•There are men whose gait is far quicker than the mob's. They are bound to lead- no matter how much the mob changes.
Favorite book
One of Livermore's favorite books was Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, first published in 1841. This was also a favorite book of Bernard Baruch, a stock trader and close friend of Livermore who also was one of the few people that did well in the crash of 1929.[7]
Jesse cited a lot of jokes, including an old story about "selling down to the sleeping point" from the book Speculation as a Fine Art by Dickson G. Watts.[8]
Someone loves the wizard lol....................
can you say hauppppppppppppppppppppppppppppppppppp lol..
I've noticed that myself. I've been sitting for a long time on this. To be honest, my butt gets sore when I sit too long. lol
I feel just as confident today as I ever have with the ole Wizz bang. Anything else tech related has gone up, I don't see why this wouldn't.
Look at all the positive divergences in the momentum indicators on the weekly chart.
Huge bid there today?
Jesse Livermore Quotations..
There is only one side to the stock market;....not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock market speculation.
Jesse Livermore # Stock Market, Learning, Knowledge Quotes
My plan of trading was sound enough and won oftener that it lost. If I had stuck to it I'd have been right perhaps as often as seven out of ten times.
Jesse Livermore # Winning, Loss, Smart, Strategy, Stock Market Quotes
If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money.
Jesse Livermore # Smart, Self, Money, Stocks, Profit Quotes
Speculation is a hard and trying business, and a speculator must be on the job all the time or he’ll soon have no job to be on.
Jesse Livermore # Business, Buying, Selling, Job, Risk Quotes
It takes a man a long time to learn all the lessons of all his mistakes.
Jesse Livermore # Mistakes, Life, Learning Quotes
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.
Jesse Livermore # Smart, Strategy, Knowledge, Wisdom Quotes
The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.
Jesse Livermore # Stock Market Quotes
From my point of view, the investors are the big gamblers. They make a bet, stay with it, and if all goes wrong, they lose it all.
Jesse Livermore # Investing, Wrong, Smart, Loss, Risk Quotes
If I hadn’t made money some of the time I might have acquired market wisdom quicker.
Jesse Livermore # Money, Stock Market, Wisdom, Experience Quotes
When I buy stocks for a rise I like to pay top prices and when I sell I must sell low or not at all.
I'm in total agreement. That's why I keep on adding. It makes no sense for a company like this to stay down. They have too many positives and I still can't find any glaring negatives. They have sold some shares, and a friend told me there was some insider selling in April.
I watch it trade every day and I see strength building.
still think the wizard will do a haup type move some day lol...
"We can't fear the past. Fear is a future thing. And since the future's all in our heads, fear must be a head thing."
When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don’t buy long stocks on a scale down, I buy on a scale up.
Jesse Livermore - Bear Market - Stocks - Investing
The market does not beat them. They beat themselves, because though they have brains they cannot sit tight.
Jesse Livermore - Stock Market - Self Control -
The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements.
Jesse Livermore - Stock Market - Investing - Learning
The average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think.
Jesse Livermore - Bear Market - Stocks - Stock Market - Laziness
I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up.
Jesse Livermore - Bear Market - Stocks - Stock Market - Investments
Wall Street 2
don't bother folks,totally missed the mark this time around.Charlie Sheens cameo was the best part of the flick lol imho...
The patterns he sought to identify were patterns in the prices. Modern traders - and indeed many traders in Livermore's time too - plotted the prices and volumes against time on a chart. Jesse Livermore, however, did not use charts. He preferred to look at the numbers themselves.
The Pivotal Point
Jesse Livermore wrote:
"Whenever I have had the patience to wait for the market to arrive at what I call a Pivotal Point before I started to trade; I have always made money in my operations."
Jesse Livermore Money Management Rules
Jesse Livermore's Rules for Money Management
For all of those who may not know Jesse Livermore, he was one of the greatest traders of the 20th century. He started out in bucket shops and was later able to amass a fortune equivalent to billions of dollars today. Livermore's rules for trading were sound and have sparked interest in the trading community for the last 75+ years. In this article, we are going to discuss the money management rules Jesse Livermore used when trading. These money management principles are just as valid today as they were when the market crashed in 1929.
Rule 1: Don't Lose Money
This is a simple of enough concept right? Well if it was this easy, we all would be millionaires. However, Jesse Livermore is laying out the basic tenet that a "speculator" should do everything in their power to stay in the trading game. So, one should not place all of their funds in one position. Also, it is not in the best interest of a trader to establish their entire position at once. Jesse Livermore believes that traders should enter trades in lots, where you would purchase your first 25% of shares at a pivot point and then continue to add to this position until you are able to take a full stake. The goal here is to add to a position as it goes in your favor, which again will prevent the loss of funds, because if you are wrong you can easily exit the position. This may work well for larger investors, or investors with longer timeframes, but I do not think this will work well for day traders, as this will dramatically increase your trading costs.
Rule 2: Always establish a stop
Jesse Livermore stated that a stop is one of the most important parts of trading. Livermore felt that a stop should be established prior to entering a trade. This stop should take in account for the size of your account and the volatility of the stock you are trading. Livermore's personal rule was that he would not risk more than 10% on any one trade. Livermore also stressed the fact that your stop, if hit should not generate a margin call. He felt that the last thing a trader should do is fund their account for a margin call. This is a recipe for producing massive losses, which is a direct contradiction of Rule#1. Livermore called traders who did not establish stops, "Involuntary Investors". Livermore described involuntary traders as people who buy and hold a stocks in hopes that they will rally. These traders will not sell their stocks for any reason until their targets are met."
Rule 3: Keep cash in reserve
Livermore felt that cash is king. A trader without cash is equivalent to Blockbuster with no movies. Livermore stressed that traders must fight the urge to constantly be in a position. This desire to constantly trade will tie up capital, that should be used for more promising opportunities. So, Jesse Livermore felt that a traders should always keep a portion of their account in cash, so that you are armed to take what the market offers you. Patience is the key to success, not speed.
Rule 4: Let the position ride
This for me is the hardest part of trading. I will at times put on two or more losing trades, which then affects my perception of risk and the market. Then on my fourth trade or so, I will put on a position and close it out right before it gives me a huge gain, because I have been conditioned to now believe that the market is only offering small moves. This part of trading, is proving to be my own personal struggle. Livermore believed that a trader that is able to keep their losses small and let their winners run would ultimately be successful at the game. He felt that if you were right in your position and nothing about the trade told you otherwise, that you should hold that trade as long as possible. Traders should be overly concerned and monitoring losing positions, but with winners, you should just let them run. Now this rule does not have any place for apathy. You should not go out and simply buy and hold a position forever. Remember, even with winners, you still must have a stop in place, do not forget money management Rule #2.
Rule 5: Take the profits in cash
Jesse Livermore felt that after a huge winning trade, you should take 50% of that and place it in cash. This money should be put aside in the bank, hold it in reserve, or lock it up in a safe-deposit box. I do not necessarily agree with this money management rule, because if you treat your investment wins as if they are going to eventually leave you, this must have some affect on your subconscious, which in turn will hurt your profits. I think if you put aside maybe 20% and then treat yourself to a nice dinner or a small shopping spree is better because it provides you positive reinforcements of your trading activities.
It is a shame that Jesse Livermore was unable to follow his own money management rules, because if he had, maybe his life would not have ended so tragically.
Jesse Livermore
Jesse Livermore seemed unbreakable. He started out in the bucket shops and moved through Wall Street like a force of nature. Livermore made and lost fortunes with seeming ease, building it up again each time he went under.
Despite making a fortune in the crash of 1929, Livermore somehow entered the 1930s near broke and unable to trade like he used to due to the new regulations on the market. With his last-ditch effort at a book a failure, Livermore slipped into a deep depression that ended in a hotel courtroom and a pistol. (Learn more in our article, Jesse Livermore: Lessons From A Legendary Trader.)
How Did Jesse Livermore Trade?
For one check out this link.
Jesse used to work as a 14 year old kid in the tape reading rooms for a living. He would track the bids and asks on all the tapes and over time he started to notice patterns in the prices that were predictable. As he started noticing these patterns he developed a set of rules listed below that he followed for the rest of his life.
Here are the stock trading rules that made Jesse Livermore’s one of the world’s greatest fortunes. Many successful stock and commodity traders still base their methods on these rules.
* Buy rising stocks and sell falling stocks.
* Do not trade every day of every year. Trade only when the market is clearly bullish or bearish. Trade in the direction of the general market. If it’s rising you should be long, if it’s falling you should be short.
* Co-ordinate your trading activity with pivot points.
* Only enter a trade after the action of the market confirms your opinion and then enter promptly.
* Continue with trades that show you a profit, end trades that show a loss.
* End trades when it is clear that the trend you are profiting from is over.
* In any sector, trade the leading stock – the one showing the strongest trend.
* Never average losses by, for example, buying more of a stock that has fallen.
* Never meet a margin call – get out of the trade.
* Go long when stocks reach a new high. Sell short when they reach a new low.
These rules he followed are used by many professionals even today. He started with $100 or so and as he started trading he turned it into $1000. He ended up quitting his job and trading full-time because he was earning more than what his boss’s were paying him. He ended up being worth about 100,000,000 in those days. In today’s worth, that would be the billions.
To assess Jesse’s fortune more scientifically, the measuring worth calculator gave the following results for today’s value of $100 million in 1929:
$1.26 billion using the Consumer Price Index
$1.02 billion using the GDP deflator
$2.27 billion using the value of consumer bundle
$3.97 billion using the unskilled wage
$5.51 billion using the nominal GDP per capita
$13.7 billion using the relative share of GDP
The key I believe is that he followed his strategy to a tee and refused to deviate from his rules. He actually lost all his money at one point after breaking his rules, that is where he learned to stick by them. He was a resilient man. His lifestyle wasn’t to shabby after he had attained his riches.
In terms of the lifestyle Livermore’s wealth bought, Patricia Livermore, Jesse Livermore’s daughter-in-law gave a fascinating interview in 1990 for a documentary about the crash of 1929. Here’s part of what she said about the Livermore lifestyle:
“They had a beautiful place on 76th Street in Manhattan on the West Side, off Central Park. They had a floor at 813 Fifth Avenue because Dorothea did not like to go to the West Side to change her clothes. They had a house in Great Neck. They had a summer house in Lake Placid. They had a house in Palm Beach. They had a private railroad car, two yachts. The only yacht that was bigger was J. P. Morgan’s. And they used one of them, the big one, very frequently when they went to Europe. They lived very comfortably…
Jesse Livermore had a ticker tape in every home that he owned, on his railway cars, on his yachts… They had several Rolls Royces, lots of chauffeurs. They had a staff of about 20 or 25 and in each place, in each house, see, and with the exception of Dorothea’s personal maid, they did not take their staffs with them. They simply kept them year-round in all their establishments…
Oh, they lived. They really lived… Mrs. Livermore was a spender. And, of course, she loved to buy. She spent her days buying and buying and buying…”
So all this to say that the one of the world’s greatest traders has a lot of lessons to learn from. But first and foremost God provides these sort of blessings. In order to be able to do such a thing, you must conquer several things, greed, fear, human behaviors that can psychologically disable your trading. So… I hope you enjoyed this article and to end this week with a great week of trading, we will finish with a quote from Jesse Livermore himself.
On Odds
“But I can tell you after the market began to go my way I felt for the first time in my life that I had allies – the strongest and truest in the world; underlying conditions.”
On Charting Basics
“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.”
From the Original Works of W. D.
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"Jesse Livermore - Market Master"
Jesse Lauriston Livermore was one of the best-known traders of the 20th Century. Few could accumulate money, or lose money, as quickly as Livermore.
Known as the 'boy plunger' because of the manner in which he would take large stock or commodity positions, Livermore lived as he traded - full steam ahead. He was very popular with members of the opposite sex due to his good looks and flamboyant life style.
Just Who Was Jesse Livermore?
Jesse Livermore was born in South Acton, Massachusetts, in 1877. The son of a farmer, he left school in his early teens, and traveled to Boston where he became a 'board boy' for Paine Webber. His position required him to update stock, bond and commodity prices on their large chalkboard.
As Livermore recorded the ever-changing prices, he noted that prices often moved in predictable patterns. He soon concluded that the markets could be beaten, and that large sums of money could be made.
At that time Livermore did not have sufficient money to trade in stocks himself, so he spent his lunch hours in bucket shops, where he could attempt to make money by predicting the direction of selected stocks and commodities. By the age of 15 he had made more than $1,000 - which would be a considerable sum in today's dollars.
Bucket shops were little more than gambling dens. After ignoring a warning to keep away from these establishments by his supervisor at Paine Webber, Livermore was sacked from his position.
The Boy Plunger was now a full-time trader. Such was his success that he was banned from entering the bucket shops in Boston. He then tried the mid-West and East Coasts, where he made some $50,000. He resorted to disguises and used false names in order to circumvent the bans. In his 20s, Jesse Livermore moved to New York.
In New York Livermore commenced his career as one of the greatest stock traders of all time. In 1906 he received a tip to short Union Pacific, and did so in a big way. The stock began to rise, and Livermore was in trouble. The San Francisco earthquake caused Union Pacific stock to plummet, leaving Livermore with a $250,000 profit. It also left him with a clear understanding of the dangers of blindly following tips.
In 1907, he gained a reputation as a 'bear raider', trading the short side of the market on a massive scale. It is believed that the powerful J.P. Morgan sent go-betweens to Livermore to ask him to scale down his activities.
W.D. Gann, in 45 Years in Wall Street (page 117) described Livermore as "one of the most spectacular traders of his day". Gann stated that Livermore was an honourable man who "believed in paying debts even after he had been relieved through the courts of bankruptcy".
In fact, Livermore and many other traders and investors, including Gann himself, once lost their money when the brokerage firm Murray Mitchell and Company failed in 1913. In Gann's words "In 1917 when Livermore came back and made a fortune, he not only paid back my proportionate part of money which I lost through the Mitchell failure, but paid everyone else". Gann added, "This was an honourable thing to do, and because of Livermore's honor and honesty, in 1934 when he was broke, I backed him and got other people to raise money and back him. Livermore came back again and made money".
Gann's one criticism of Livermore was that Livermore had only studied how to make money - not how to keep money. In Gann's words "He had the greed and the drive for power, and when he got a large amount of money, he could not trade conservatively. He tried to make the market go his way instead of waiting until the market was ready to follow the natural trend".
Livermore's success gave him a lifestyle that many could only dream about. The tall, thin blonde speculator bought a 200-foot yacht, the Anita. He dated famous women, including actress Lillian Russell. His trading exploits soon became well known, and people would often comment that someone was "as rich as Jesse Livermore".
During World War I, Livermore anticipated that coffee would have a substantial rise in price, and established huge long positions. His profits amounted to millions of dollars, however the coffee contract was voided. The government believed that he was profiteering at wartime. This bankrupted Livermore for the third time.
An aggressive trader, Livermore made, and subsequently lost, four million dollar fortunes. Much of the money was made using tactics prior to them being declared illegal by the Securities and Exchange Commission in the 1930s. The new regulations either prevented, or limited, tactics such as:
* using inside information;
* concealing his market positions;
* cornering stocks; and / or
* arranging for misleading, or incorrect, information to be published.
Livermore became well known for his tactic of waiting until a stock he had bought had risen to the point where he had made substantial paper profits, and then 'confiding' in a journalist from the New York Times, or other influential newspapers, that the stock was a great buy. Livermore would then unload his massive position, selling into the buying frenzy created by the journalist's article.
At his peak, he owned huge estates in several countries, Rolls Royce cars, and yachts, and was famous for his lavish parties.
He also maintained a secret suite of offices in Fifth Avenue. It was in these offices that Livermore ran a full-scale brokerage operation, with numerous telephone lines and private telegraph lines. The office featured a full size quote board, updated by his clerks. He also employed a team of research staff. The sole purpose of this office was to facilitate his own trading and investment activities.
In 1933, Livermore was suffering from depression. After a 26-hour drinking binge, he fell into a police station and told the policemen that he had lost his memory.
Unable to accumulate money at the rate he previously did, Livermore decided to sell his trading secrets in the form of a book. How to Trade Stocks was published in 1940 in two versions - a leather-bound edition, and an 'any man's' edition. The book failed to capture the trading public's hearts and minds.
Later that year, Jesse Livermore consumed two drinks in the Sherry-Netherland Hotel in Manhattan. He wrote an eight-page letter to his third wife, saying to her "my life has been a failure".
The man who had affectionately become known as the Boy Plunger, the Great Bear, and the Cotton King, then walked into the hotel's hat-check room, sat in a chair, and shot himself in the head. So ended the life of someone who was arguably the greatest trader of all time. Jesse Livermore, trader extraordinaire, the man who had made millions, left an estate of less than $10,000.
The New York Times had Jesse Livermore's epitaph as its editorial:
What good he did, what harm he did, what his life meant to himself and to others - such questions are for the novelist· His passion drove him on· He lived in a time when the speculating he did came to seem like that of boys pinching pennies· He left no clouds of glory behind him, nor any miasma of human misery that he had created· The 'Street' in which he operated is not what it used to be. His death punctuated the end of an era.
Livermore's Legacy
Jesse Livermore died more than 60 years ago. He left the world of trading three things:
How to Trade In Stocks
How to Trade In Stocks was copyrighted in 1940 - the year Livermore died. It is believed that he wrote the book in a desperate attempt to raise capital.
The book talks about the rationale of Livermore's decision-making process while trading.
Its ten chapters are:
I. The Challenge of Speculation
II. When Does a Stock Act Right?
III. Follow the Leaders
IV. Money in the Hand
V. The Pivotal Point
VI. The Million Dollar Blunder
VII. The Three Million Dollar Profit
VIII. The Livermore Market Key
IX. Explanatory Rules
X. Charts and Explanations for the Livermore Market Key
Following are some quotations from How to Trade in Stocks:
The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor. (Page 15)
On understanding the value of learning how to trade:
"How can I make some quick money in law or surgery?" (Page 15)
On doing your own work and thinking for yourself:
· let me warn you that the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions. (Page 16)
On the best trades:
Experience has proved to me that real money made in speculating has been in commitments in a stock or commodity showing a profit right from the start. (Page 19)
On taking losses:
Profits always take care of themselves but losses never do. The speculator has to insure himself against considerable losses by taking their first small loss. (Page 21)
On holding and hoping:
If my stock does not act as I anticipated, I immediate determine that the time is not yet ripe - so I close out my commitment. (Page 22)
On so-called 'blue chips' (Livermore was pointing out the danger in the commonly held market belief, at the time he wrote the book, that it was safer to invest in railroad stocks then to have the money in the bank:
New York, New Haven and Hartford Railroad
* Price on April 28, 1902 - $255. Price in January 2, 1940 - $0.50.
Chicago, Milwaukee & St. Paul Railroad
* Price in December 1906 - $199.62. Price January 5, 1940 - $0.25.
Chicago Northwestern
* Price in January 1906 - $240. Price January 2, 1940 - $0.31.
Great Northern Railway
* Price in February 9, 1906 - $348. Price on January 2, 1940 - $26.63.
(Page 24)
On 'buy and hold' investing:
Speculators in stock markets have lost money. But I believe that it is a safe statement that the money lost by speculators alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride. (Page 25)
From my point of view, the investors are the big gamblers. They make a bet, stay with it, and if all goes wrong, they lose it all. (Page 25)
On history repeating, and learning from the past:
The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. (Page 51)
On tips:
Beware of inside information· all inside information. (Page 58)
·and if there was any easy money lying around, no one would be forcing it in your pocket. (Page 58)
The chart tells the entire story:
The only reason an investor or speculator should ever want to have pointed out to him is the action of the market itself. Whenever the market does not act right or in the way it should - that is reason enough for you to change your opinion and change it immediately· Remember, there is always a reason for a stock acting the way it does. But also remember: the chances are that you will not become acquainted with that reason until some time in the future, when it is too late to act on it profitably. (Page 71)
Reminiscences of a Stock Operator
This trading and investment classic, supposedly written by Edwin Lefevre in 1923, is arguably the most popular book ever written about speculation.
Lefevre was a financial journalist, and the book was dedicated to Jesse Livermore. It is supposedly a novel about a fictional trader called Larry Livingston.
In reality, Livermore almost certainly wrote the book himself, with Lefevre being the editor. The book is a thinly disguised account of Livermore's life.
Despite the book being one of the most enjoyable books on trading ever written, Reminiscences of a Stock Operator contains market truths from cover to cover. A few examples include:
To learn that a man can make foolish plays for no reason whatever was a valuable lesson. [Pages 155 and 156]
In fact, I always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game - that is, to play the market only when I was satisfied that precedents favored my play. [Page 14]
The speculator's chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. [Page 129]
· after a while, I heard a lot of calamity howling and the old stagers said everybody - except themselves - had gone crazy. [Page 34]
· and the only thing to do when a man is wrong is to be right by ceasing to be wrong. [Page 103]
But in actual practice a man has to guard against many things, and most of all against himself. [Page 122]
No trading library should be without a copy of Reminiscences of a Stock Operator. It is no wonder that many authors today regularly quote passages from this book.
Martin Zweig once stated that Reminiscences of a Stock Operator was "The best book I've read. I keep a supply for people who come to work for me".
Jack Schwager, author of Market Wizards and New Market Wizards says of the book:
In my interviews with over 30 of the best traders of our time, there were some questions that I raised in each conversation. One of these was: "Are there any books that you find particularly valuable and would recommend to aspiring traders?" By far, the most frequent response was 'Reminiscences of a Stock Operator'.
Jesse Livermore's third legacy to the world was his life story. On the one hand he was an honourable man who paid debts that he was not legally required to pay. On the other hand, he was a big time trader who would use any legal tactic to enhance his chances of making money.
The one thing his supporters and his critics agree on is that he was a true market master.
[This article was first published in the Australian Technical Analysts' Association Journal, May/June 2000. It is republished here with the permission of the Association.]
DISCLAIMER:
Every effort has been made to ensure that the content and conclusions presented in The New W. D. Gann Technical Review are complete and accurate.
No part of The New W. D. Gann Technical Review contains trading advice - stated or implied, nor is an invitation to trade. The directors and associates of Lambert-Gann Educators, Inc. are NOT licensed trading or investment advisors. Lambert-Gann Educators, Inc. is an organization designed to assist traders and investors to become more knowledgeable and independent.
The giving of advice is therefore contrary to the very objectives of Lambert-Gann Educators, Inc.
Traders requiring trading or investment advice should contact a licensed advisor.
Stockbrokers and futures brokers are licensed advisors.
Neither Lambert-Gann Educators, Inc., nor anyone else involved in the production of The New W. D. Gann Technical Review, will be liable for any liability, loss or damage directly or indirectly caused, or believed to be caused, by The New W. D. Gann Technical Review.
Traders, to be successful, must take full responsibility for their own actions.
With respect to trading results, past performance is not necessarily an indication of future performance.
By maintaining your subscription to The New W. D. Gann Technical Review, you acknowledge that you understand and accept the contents of this disclaimer.
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Reminiscences of a Stock Operator was originally written in 1922 as a first-person fictional account, but is now generally accepted as the biography of stock market whiz Jesse Livermore. The book is recommended to traders and value investors alike, for the lessons it teaches the reader in human behaviour as it pertains to securities trading and investing.
Livermore describes his successful speculative trades that led to his being "king for a day" and making his first million in the market. Livermore had been bearish on the market for some time, due to many economic factors that he studied that showed liquidity to be at a premium. The rest of the market was bullish, however. Rather than do what he normally would have done, which is plow into the market because he believed himself to be right, he waited for the right opportunity, using the techniques described in the previous chapter.
When the bear market finally it came, it was so devastating to the market that extraordinary support from key banking officials was needed to keep the market from flat-lining completely. Livermore's legend grew as his net worth expanded, with traders around the country discussing his prowess. As the bear market continued and Livermore's gains continued to grow, Livermore was eventually asked by a key official to stop his selling out of patriotic duty, for the economy as a whole was likely to suffer if Livermore kept punishing the market. By that time, Livermore had already resumed covering his shares; but had he not, Livermore believes he singlehandedly could have destroyed the market (by continuing to short).
At this point, Livermore believed that he finally learned to trade properly. He had advanced from bucket shop trading to trading on the real market, whereby study of macroeconomic issues went hand-in-hand with "reading the tape" (studying past prices).
Livermore also discusses "resistance levels" and how he uses them in his trades. Often, a security will trade within a range, because as it rises, selling pressure increases, and as it falls, buying increases. But when a security breaks through a resistance point, it often continues to move in the same direction, according to Livermore. As such, he will take an initial position as the price moves through a resistance level and build on it as it continues in the same direction.
But Livermore finishes the chapter with an ominous note:
"The conclusion that I have reached after nearly thirty years of constant trading, both on a shoestring and with millions of dollars back of me, is this: A man may beat a stock or a group at a certain time, but no man living can beat the stock market! A man may make money out of individual deals in cotton or grain, but no man can beat the cotton market or the grain market. It's like the track. A man may beat a horse race, but he cannot beat horse racing. If I knew how to make these statements stronger or more emphatic I certainly would."
A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does damage to the pocketbook and to the soul.
Jesse Livermore
It isn't as important to buy as cheap as possible as it is to buy at the right time.
Jesse Livermore
There is only one side of the market and it is not the bull side or the bear side, but the right side.
Jesse Livermore
Will do J,cherish your lady my friend as i do mine :)
bonne nuit..
wheel of life ... ill be honored to trade by your side buddy
take care ill read some more pages waiting the lady to come home
Cheers
Joel
I will eventually,taking care of a sick parent for now which will take a few more months..
merci .. time for the good execution now ..
was curios tho .. why aint u with us in the room ?
PS : really like your siggy
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There may be a few out there who will listen to some advice from a speculator who was trading in the markets before most of our parents were born.His name was Jesse Livermore and his advice is timeless, and is as true today as it was then because the essential game remains unchanged.The markets were driven by human emotion then, and they are driven by those same emotions now.I am thankful that two books were written that contain his wisdom.They put me on the road to profitability where before them, I had only lost money.
The titles are:
Reminiscences of a Stock Operator by Edwin Lefevre
How to Trade in Stocks by Jesse Livermore
Jesse Livermore worlds greatest stock trader Richard Smitten
RIP Mr Livermore,your legacy lives on
www.jesse-livermore.com
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