Nuggets of Wisdom from Jesse Livermore, Greatest Trader Ever

[fudgestain]

What other way is there to trade?

Simple: take out the major gyration or variation each day. On the Dow index (YM or cash) you can take out 50 points almost every day and 80+ points on many days. Why dick around with day to day or week to week trends?

I say 'simple'. The hard part is the research and testing to set up your predictive model and know your market back-to-front. All so-called traders aren't serious enough to do that; they can dick around for years rather than do the 2 years dedication needed to put together a model that works. Then again most traders aren't problem solvers.

 

[Satori]

Simple: take out the major gyration or variation each day. On the Dow index (YM or cash) you can take out 50 points almost every day and 80+ points on many days.

But you're still trading with the trend, even if it's a shorter term one. Your exit points and profit targets will be based on how long you think the underlying trend is going to run your way, whether it's a few minutes or a few months.

Why dick around with day to day or week to week trends?

Because some people prefer to trade that way. One is more likely to have success with a style of trading that suits them.

I say 'simple'. The hard part is the research and testing to set up your predictive model and know your market back-to-front.

Well that's a matter of opinion. Personally I don't think the hard part is the modeling or the technicals or, in fact, anything much to do with the 'how' of trading; I think the hard part is the discipline, the emotion and the psychology involved in actually doing it.

All so-called traders aren't serious enough to do that; they can dick around for years rather than do the 2 years dedication needed to put together a model that works. Then again most traders aren't problem solvers.

Maybe.

 

[Simon Gordon]

Reminiscences of a Stock Operator - Abridged Edition (Audio CD) By: Lefevre, Edwin

I came across this yesterday and I thought it might be of interest:

http://www.traderslibrary.com/morei...&SID=WFVTPHXXIYU4F0E07463729999794BD3#3166990

 

[fudgestain]

Well that's a matter of opinion. Personally I don't think the hard part is the modeling or the technicals or, in fact, anything much to do with the 'how' of trading; I think the hard part is the discipline, the emotion and the psychology involved in actually doing it.

Sweet.
You don't have much to do with knowing how to make money.

 

[Satori]

Sweet.
You don't have much to do with knowing how to make money.

Okay, I'll rephrase what I said: I personally have made more money from trading by addressing the psychological aspects of it ahead of the technical aspects.

It takes all sorts. There are many ways to trade and many different personalities in the game, and neither yours nor mine are the only successful ways.

 

[Denny]

Reminiscences of a Stock Operator

I have read this book twice and it is an excellent book with many useful anecdotes which are as relevant today as they were all those years ago.
However I certainly cannot subscribe to the view that he was the greatest speculator ever.
Don't forget he earned vast sums even in those days and lost the lot twice, doesn't sound that great or he didn't follow his own advice.

How many times has George Soros gone bankrupt?

I feel that he was more of a gambler than a speculator or is there perhaps no difference between the two !!!

I can recommend the book to anyone though.

Denny

 

[sp1]

Hello RUDEBOY, re you post No 15 and 16.

I'm must take exception, and I'm surprissed Others have not done so already (Socrates).

Or maybe I have mistaken the meaning of your words.

Read together those two posts seem to suggest that you are telling people that to develop understanding understanding of the markets from people who have been contrarians will not be of benefit. And you seem to advocate being in the market before the newcommer tests his/her present understanding to see if it holds water.

On the point of learning from contraians I would like to add that there are many who have made alot in the markets can you point me to a grand list of profitable market participants who were not contrarians or went with the crowd?

Do you work for a brokerage or in the industry Rudeboy?

 

[Ras1974]

Simple: take out the major gyration or variation each day. On the Dow index (YM or cash) you can take out 50 points almost every day and 80+ points on many days. Why dick around with day to day or week to week trends?

Fudgestain, I agree with your, however, the amount of skills required to trade a daily "trend" are much greater.....v. difficult particular with all that noise!

I say 'simple'. The hard part is the research and testing to set up your predictive model and know your market back-to-front.

In order to recognise when your market is trading outside its range right? Mean reverting by any chance? Many trend followers actually trade the daily, weekly gyrations along the trend......basic stuff really.........

All so-called traders aren't serious enough to do that; they can dick around for years rather than do the 2 years dedication needed to put together a model that works. Then again most traders aren't problem solvers.

Please explain how your predictive model(s) works - what I don't understand is how you manage to predict something without extrapolating the past in some way......ie trend following (in broad terms).....

 

[Phenyo]

Great post, I enjoed the book and will need to re-read it again. I always find lessons in the presented journal.

 

[Yamato]

He could have been the greatest trader if it hadn't been for his mistakes in money management (no diversification). If you reinvest everything at all times, with the greatest leverage, you could win 9 times out of 10 and still lose everything. So maybe he was the greatest trader in terms of % of wins, but not in terms of overall (final) profit.

 

[xtf]

Livermore liked to pyramid- in other words, sell a bit, then keep selling more as it went down. He also said that when his opinion was right, he liked to be paid for it. The guy liked to leverage up massively when the time came. There is no getting away from the fact that huge risks have to be taken even whenb all the little safety tips have been ticked off!

 

[london_lad]

Sweet.
You don't have much to do with knowing how to make money.

Fudgestain, instead of talking riddles. Why dont you give any pointers? Camarilla / Gann / PDC percentages / etc. Where do you suggest one should start.

What do you do when the market opens. Chase a particular level with trade in that direction? and when do you cut your losses when it doesnt end there?

In essence you are talking about predicting the short-term / intraday trend, so you dont end up standing or worse running infront of a freight train.

 

[sandpiper]

Fudgestain, instead of talking riddles. Why dont you give any pointers? Camarilla / Gann / PDC percentages / etc. Where do you suggest one should start.

What do you do when the market opens. Chase a particular level with trade in that direction? and when do you cut your losses when it doesnt end there?

In essence you are talking about predicting the short-term / intraday trend, so you dont end up standing or worse running infront of a freight train.

ll,

I think you request for clarification is a tadge optimistic, given that he posted that in 2005.

Perhaps an enevitable downside of these old threads getting re-gurgitated (and people certainly seem to pick some strange ones to re-gurgitate).

 

[westernforce]

london_lad, you do realise that fudge wrote that comment 4 years ago right?

 

[TheBramble]

westernforce, you do realise sandpiper made a similar response 2 days ago right?

LOL.

 

[westernforce]

Bramble, you do realise that I wrote that 2 days after sandpiper -

 

[shadowninja]

Reading a few posts, it's interesting to see that I'm not the only one to think he isn't that great a trader... unless trading excludes managing risk, money management and psychology...

 

[TheBramble]

Reading a few posts, it's interesting to see that I'm not the only one to think he isn't that great a trader... unless trading excludes managing risk, money management and psychology...

There's a lot less risk, money management and psychology than I thought there was.

Most of it seems to be getting the timing and the direction right…oh, and the exits too…