The greatest stock market operator
Jesse Livermore is widely considered the greatest stock market operator of all time. Livermore was actively involved in the stock market from 1892 to 1940. There were many ups and downs, but also incredible wealth attained by this great master. In this article, I will cover some of the key reasons why Jesse Livermore is the Babe Ruth of the stock market. It is important to note, all of Livermore’s principles, strategies, and methods are just as valid today as ever.
Early lesson of patience
Livermore, like all traders, made a lot of mistakes early in his trading career. After a while, he certainly realized trading wasn’t easy at all. This caused Livermore to analyze the mistakes he made that caused his losses. A key lesson he learned was patience. Often he would become impatient, and felt he had to trade no matter what. This lead to impulse trading, which rarely leads to successful trading. He learned its crucial to have as many pertinent factors as possible in your favor, before taking a position in the market. You want the odds strongly in your favor on each and every trade you make. Learning this early lesson was a real springboard to success for Jesse Livermore.
The skills and traits of a winning trader
There are certain skills and traits required if a trader is to be successful in the long run. You must have reasonable intelligence, and can not be mentally lazy. Livermore considered trading a full-time business, and would always be looking to improve himself. The following are areas he believed were essential for success.
1. Understand and controlling the psychological part of trading. You can not allow greed, fear, hope, or other emotions influence your decision making. You must trade objectively.
2. A solid knowledge of economics, and business conditions. You need to understand crucial elements, such as the interest rate cycle, and how it can have an impact on the various trading markets.
3. Observation. It is important to stay focused on factual data only. Do not get swayed by questionable information.
4. Memory and experience. Learn from your mistakes, so you don’t repeat them. This is a key in the overall learning process.
5. Mathematics. It is important to understand how numbers work, when applied to the stock market, and other trading venues.
A summary of winning strategies
Jesse Livermore was a true market master, and absolute genius when it came to trading the stock market. A main reason he attained vast fortunes is because he thought, and acted differently than most traders. Here is a summary of his successful strategies.
1. He always knew the general trend or direction of the stock market. You must go with the flow of the market. Don’t fight against it.
2. Only buy stocks hitting new highs as they move through key resistance areas, on much heavier than normal volume.
3. Keep all losses small. A good policy is to always sell a stock if it drops 10% below the purchase price.
4. Let your profits ride. Be patient with your winning stocks. The really big money is made in large price movements that go your direction.
5. Focus on leading stocks in the strongest industry groups. You will find most of the biggest winners there. Buy the best at the best possible time.
6. Never listen to, or follow, the tips and information from others, unless you are sure they know what they are doing. Do your own research and analysis. Be objective, and stick with the facts.
7. Avoid low-priced stocks. They are cheap for a good reason. Most cheap stocks will continue to go down in price.
The most successful stock trader ever
Jesse Livermore made hundreds of millions trading the stock market. He once made 3 million dollars in a single day, when he correctly called the crash of 1907. He made a hundred million dollars during the crash of 1929. Livermore was a master of price and volume analysis. This was a key to his overall success. If you want to become successful in the stock market, study and learn from Jesse Livermore. Read his books. He is the perfect blueprint to follow. You could make a fortune.