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Date Posted: 03:13:54 06/28/03 Sat
Author: peter wong
Subject: Re: notes on Jessy Livermore's Trading Guidelines
In reply to: peter wong 's message, "notes on Jessy Livermore's Trading Guidelines" on 03:11:29 06/28/03 Sat

Appendix of Jesse Livermore: World¡¦s Greatest Stock Trader

Livermore¡¦s Laws and Trading Secrets Revealed


A SUCCESSFUL SPECULATOR REMAINS A CONSTANT STUDENT OF THREE THINGS:

* Market Timing.
You must learn when to enter and when to exit a market trade ¡V when to hold and when to fold, as Ed Bradley used to say.

* Money Management.
Don¡¦t lose money. Don¡¦t lose your stake. A speculator without cash is like a storeowner with no inventory. Cash is a speculator¡¦s inventory, lifeline, and best friend. Without it you are out of business. Don¡¦t lose your line!

* Emotional Control.
Before you can successfully play the market, you must have a clear, concise strategy and stick to it. All speculators must design intelligent battle plans, customized to suit their emotional makeup, before speculating in the stock market. The biggest thing speculators have to control is their emotions. Remember, reason, logic, and pure economics do not drive the stock market. It is driven by human nature, which never changes. How can it change? It¡¦s out nature.

You can¡¦t tell if your judgment about the market is right until you place a bet, purchase a stock.

If you don¡¦t put your money on the table, you can never test your judgment, because you can never test your emotions. Livermore believed that emotion, not reason, dictates the direction of the stock market, Justas in most important things in life: love, marriage, children, war, sex, crime, passion, religion. It is rarely reason that derives people.

This is not to say that things like sales, profits, world conditions, politics, and technology do not play a part in the ultimate price of a stock. These factors eventually come to bear, and the price of the stock market and the individual stocks may reflect these factors, but it is always emotion that carries the extremes.

Livermore believed in cycles, life cycles and market cycles. They are often extreme, rarely balanced. Cycles come like a series of ocean waves, bringing the high tide when things are good, and the low tide as conditions recede. These cycles come unexpectedly, unpredictably. Good or bad, they have to be weathered with temperance and patience. Remember, the skillful speculator knows that money can he make no matter what the market conditions, if a speculator is willing to play both sides of the market.

Livermore realized early on that the stock market is never obvious. It¡¦s designed to fool most of the people most of the time.

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  • Re: notes on Jessy Livermore's Trading Guidelines -- peter wong, 03:17:23 06/28/03 Sat
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