Lessons from a trading great - Jesse Livermore #2

 

Welcome to part 2 of Lessons from a trading great - Jesse Livermore. 

This is a continuation of lessons I picked from reading the book Reminiscences of a stock operator by Edwin Lefevre:

Lets dive in:

1. The speculator is not an investor. His object is not to secure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in. Therefore, the thing to determine is the speculative line of least resistance at the moment of trading; and what he should wait for is the moment when that line defines itself, because that is his signal to get busy.
   
   
2. Stocks are never too high to buy or too low to sell. The price, per se has nothing to do with establishing the line of least resistance.
   
   
3. In trading, a man has to guard against many things, and most of all against himself - that is, against human nature.
   
   
4. It is not wise to disregard the message of the tape, no matter what your opinion of the fundamentals is.
   
   
5. A trader must concern himself with making money out of the market, and not with insisting that the tape must agree with him.
   
   
6. Don't gamble blindly in the hope of getting a great big profit. Speculate intelligently and get a smaller but much more probable profit. This is all about position sizing. I have a video on this tailored for complete beginner: https://youtu.be/VwsIXV35xdk
   
   
7. A trader's chief enemy is always within. It is inseparable from human nature to hope and to fear. Fear keeps you from making as much money as you ought to. To be successful, you have to fight these two deep seated instincts. You have to reverse these natural impulses. Instead of hoping, fear that your loss might develop into a much bigger loss; instead of fearing hope that your winners may become a big profit.
   
   
8. The professional trader concerns himself with doing the right thing rather than with making money, knowing that the profit will take care of itself if the other things are attended to. Focus on your trading process.
   
   
9. A trading mistake is only excusable if you learn from it and capitalize it to your subsequent profit. Whenever you lose money, consider that you have learned something, you have gained experience. The loss went as a tuition fee. To get experience you have to pay for it. 
   
   
10. The market is a stern enforce that extracts harsh fines for all transgressions. You will not get away with making mistakes.
    
    
11. You don't have to marry one side of the market till death do you part. Always be guided by the charts and be ready to change your mind when presented with information that contradicts your initial analysis.
    
    
12. Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on. No profit should be counted safe until it is deposited in your account.
    
    
13. Stick to the facts before you and not what you think other people ought to do.
    
    
14. People who look for easy money pay for the privilege of proving conclusively that it cannot be found in the markets.
    
    
15. A wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect of influence the course of various markets.