Book Review: Jesse Livermore’s Methods of Trading in Stocks
This masterpiece contains articles written and compiled by my favorite trader Richard Wyckoff for his Magazine taken from interviews which he had with Jesse Livermore. Written in the year 1921, it a gold mine as it showcased the trading knowledge of these two trading legends.
The book starts with a quick introduction about the great Jesse Livermore. His two traits were Knowledge and Patience. He believed that Patience can outrun Knowledge in Stock markets in long runs.
This book covers all the most vital standards of fruitful stock trading rapidly and unmistakably:
How Jesse Livermore used to trade?
- Which kind of stocks did Livermore use to trade? Prefer to trade the Leading stocks of the strongest sectors and generally the market leaders?
- He believed that Stocks have seasons and you need to know which ones are currently in their trending season.
- His greatest strength was that he could easily anticipate future trends.
- He focussed on Getting plenty of sleep so that he could start fresh in the morning, He used to analyze news, study economics and stocks daily early morning.
- He believed in fundamentals and had a full comprehension of the current financial circumstance.
- He used to avoid disturbances from the outer world like telephones and replied very few emails. He used to Stay far from other individuals and impacts to keep his mind clear.
- He hated Tips and believed that to make big profits you have to hold stocks for longer price swings.
- He would give the ticker a chance to tape disclose to him what was truly going on gathering or appropriation. Beforehand he did his homework every morning and if his pre-market analysis varied from the price action on the ticker. He would simply admit his mistake and accordingly take the trading position.
- He used to trade only a stock with a possible 10 point swing trade coming with in the desired time.
- Cutting losing trades early. He used to cut out his position from the stock if it moves against his position 3 or 4 points.
- Averaged or Pyramid bought his wins, not his misfortunes. Adding to winning positions for the initial couple of focuses
- Remove stocks that are not climbing and purchase the present best prospect, kept his capital fluid and working.
His methods were simple but at the same time are most difficult to practice. In Short, Letting your profits run and cutting your losers early is what Jesse Livermore’s trading was all about.