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Jesse Livermore Quotes - 10 Powerful Lessons and Trading Rules

Updated: May 16

Jesse Livermore is one of the most famous traders in the history of the world.


The story of Jesse Livermore in Reminiscences of a Stock Operator book is must-read information for all the traders.


He made several million dollars during the 1907 and 1929 market crashes. He was carrying a massive short position during the 1929 crash and made over 100 Million Dollars, which is equivalent to 1.5 Billion in today's dollars.


Unfortunately, his life takes a bad ending as he commits suicide after his third marriage.


There are many debates around this topic, but I would like to focus only on the powerful lessons that anyone can use as trading principles.


(Image Source - The Duomo Initiative on Medium)


Contents


1. A prudent speculator never argues with the tape. Markets are never wrong, but opinions often are.


2. The human side of every person is the greatest enemy of the average investor or speculator


3. It was never my thinking that made the big money for me. It was always my sitting


4. Wishful thinking must be banished


5. Do not trade every day of every year


6. Successful trading is always an emotional battle for the speculator, not an intelligent battle


7. Never buy a stock because it has had a big decline from its previous high


8. Not taking the loss, that is what does damage to the pocketbook and to the soul


9. Patterns repeat, because human nature hasn’t changed for thousands of years


10. Only enter a trade after the action of the market confirms your opinion and then enter promptly


Conclusion




1. A prudent speculator never argues with the tape. Markets are never wrong, but opinions often are.

Nowadays, I am quite active on Quora, and every day I get many questions like – “Why XYZ stock is falling despite good results?”, “Why is Nifty going upside in this pandemic situation?” and I feel helpless by looking at the mindset of such people.


They have a view (bullish or bearish) on a stock. Most people develop this view after reading a piece of information in a newspaper or watching a news channel.


Whenever the market moves in the opposite direction, they get these kinds of questions in their minds. Hence, they ask it on Quora or any other platform.


It indicates that they are not in a situation to accept their analysis has gone wrong, and they can’t tolerate the price movement in the opposite direction.


Jesse also has seen many such people in his trading days, and hence he insists on trusting the price. His point is straightforward – if the market is moving in your expected direction, you are right, and if it is moving in the opposite direction, you are wrong!


2. The human side of every person is the greatest enemy of the average investor or speculator

Recently one person approached me to seek my help to fix an issue with his trading style. His problem is quite simple and common among day traders.


He was losing money in intraday trading when he takes more trades in a day. I suggested him to reduce his number of trades to only 2 on any trading day. He said, “I know I will be on a profitable side if I restrict my trading activities to only 2 trades per day, but how do I achieve this?


It might look silly to others. But it’s a big issue with his personality. He knows he can make money if the total number on any trading day is restricted to only 2, but he cannot follow it in the live market! It’s because his mind likes the action in the market, and it encourages him to take more trades.


I suggested him to close the trading terminal after 2 trades on any day. Besides, I also recommended shutting down the system if he faces difficulty to control the urge to see the charts.


But did you notice all of us will have similar issues which take away the majority of our profits? It may be revenge trading, forcing a trade when there is no opportunity, fear of missing opportunity (FOMO), greed to make quick money.


Until you accept and acknowledge this issue, it is not easy to taste success in your trading.

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| Also Read: Top 10 Trading and Investment Books of All Time |


3. It was never my thinking that made the big money for me. It was always my sitting

It is one of the most frequently cited quotes in all the trading and investment circles. But there is a valid reason for it.