Jesse Livermore's Methods of Trading in Stocks

Disregard all of the nonsense day-trading and scalping books out there. You are basically providing liquidity for all of the big fish. Jesse Livermore figured this out the hard way and developed a stupidly simplistic system of cash management and trade timing. I though to myself: "Why couldn't have I figured this out on my own! It's too easy to understand". That's the catch though. It's easy to understand but INSANELY hard to follow and practice. You want to jump in and out of trades thinking that your $300 profit is enough? You will jump back in after this false confidence and get crushed by the big operators. After blowing up account after account, you will then quit and never learn that the basic advice contained in the above book is the ONLY way to trade and become profitable against the large operators and traders. I personally, after losing many thousands day trading and scalping random "hot" stocks of the week or day, began to make money consistently (let your winners ride) after reverting back to the simple trading rules in this book. More importantly, I began to lose money AT A CONSISTENT dollar amount (cut your losses ruthlessly) instead of blindly "hoping" a trade would work out. The cash management aspect was key to my growing as a small retail trader. Purchase this book and any others on Livermore...you will NOT be disappointed!

When I first opened the package that contained this "book" (It more resembles a pamphlet)I was disappointed by its paper cover and brief 32 pages. However I was not disappointed by its content. This book contains articles written by the legendary trader Richard Wyckoff for his Magazine of Wall Street from interviews with Jesse Livermore. Written around 1921 it a treasure because of the knowledge presented by these two legends. This book covers all the most important principles of successful stock trading quickly and clearly:1. Only trade the strongest stocks in the strongest industries.2. Stocks have seasons and know which ones are currently in fashion.3. Anticipate future trends.4. Get plenty of sleep.5. Have a full understanding of the current economic situation.6. Stay away from other people and influences to keep your mind clear.7. The big money is in the long swings.8. He let the ticker tape tell him what was really going on accumulation or distribution.9. Only trade a stock with a potential 10 point swing coming with a reasonable time.10. Get out of a stock if it moves against you 3 or 4 points.11. Pyramid buy your wins not your losses. Adding to winning positions for the first few points,12.Sell stocks that are not moving up and buy the current best prospect, keep your capital liquid and working.You will also get details on Livermore's office set up and personal tendencies. Who better to learn from than a man you made millions several times from nothing?

The contents of this 32 page book were first published in serial form in The Magazine of Wall Street and Business Analyst between (roughly) 1921 and 1923. Installment No. 6 of the story is partially available and free on Google Books. Richard D. Wycoff, author of the contents of this book, was the editor and publisher of that fascinating magazine.Wycoff's interviews with Jesse L. Livermore, as described in this book, are the most comprehensive analysis of Livermore's trading methods that I have seen. They reveal that the aspects of Livermore's trading described in Edwin LeFevre's "Reminiscences of a Stock Operator" and Livermore's own "How to Trade in Stocks" only partially reveal his approach. The former is a lively story of his development as a trader filled with trading wisdom. The latter reveals his technical method and trading rules. This book, in contrast, shows a stock operator (a synonym for professional trader) who pays attention to economics, business conditions, company fundamentals, market psychology, personal health and fitness and his own weaknesses.There are quite a few direct quotes from Livermore's own lips. For example, he says "There is no magic. Investigate before you invest; look before you leap; stick to the fundamentals and disregard everything else." Wycoff emphasizes how Livermore is a master skeptic when it comes to news and tips. "Headlines are for the public" he says. "The real news is buried in the back pages." He is "a keen student of human nature" and, Wycoff says in astonishment, "he has even taken a course in psychology."Wycoff spent time in Livermore's unmarked private offices on Wall Street. He describes how Livermore has a "stand-up office" where the ticker tape machines are on tall pedestals, the phones are high, and a huge chalkboard fills the wall, all of which enable Livermore to spend all day on his feet. The detailed descriptions of place and conversations and Livermore's revelations lend credibility that Wycoff's writings are the real deal, not the imagination of a journalist jinning up a story.That leads to the most surprising and important revelation in this book. Wycoff says, "If the methods of Jesse Livermore were to be told in two words, they would be these: He anticipates." This comment is worth a book of its own. In the chapter entitled "How Livermore Reads the Tape" Wycoff lists 33 indicators, both technical and subjective, Livermore uses to connect the dots that reveal the state of the trend for a stock, group and the market as a whole. Those indicators gave Livermore a feeling for the market that enabled him to interpret the "pivotal points" that he describes in "How to Trade in Stocks. Pivotal points are turning points where trends reverse. Livermore would wait for weeks or even months for the right "psychological moment" to enter a trade, then quickly pyramid on success or exit if wrong. He used both price and time stops to keep his capital working and to always have dry powder for the next opportunity.The print in this book is tiny - perhaps 8 point type - and the line spacing is tight, making it a bit hard to read. There is a tremendous amount of information packed into those 32 pages. My handwritten notes span 24 pages of their own.I highly recommend this book to anyone serious about trading. The book rates 4 stars with one knocked off for the micro-print typography.

I’m 100% satisfied with this book and it’s a permanent part of my trading library now. There are some nuts and bolts here that explained details that “reminisces of a stock operator” do not include. And I love ‘Reminisces and have re read it . While ‘Reminisces is a beautiful and awesome story that is a de facto autobiography by JL (changing his name and others in the book from the real life counterparts), this book includes details regarding HOW Jesse did it... such as how he recognized the near bottoms of market declines and so forth. Also includes things he did not do which are common trader mistakes.The one star criticisms to me are misleading because I found none of the accusations true.It’s a short read that keeps your attention and if you are a Livermore fan you will want to have apparel and pencil handy OR a highlighter.