Jesse Livermore Quotes and Trading Philosophy Explained

Jesse Livermore was a legendary trader who lived by a set of principles that still influence traders today. He believed that a trader's edge comes from being able to read the market's psychology, not just from technical analysis.

Livermore's philosophy was centered around the idea of following the money. He believed that the smart money, or the large institutional investors, always had an edge over individual traders. This led him to focus on trading with the trend, rather than trying to pick tops or bottoms.

Livermore's most famous quote is "It was not until 1906 that I began to understand the true nature of the market." He realized that the market is driven by human emotions, particularly fear and greed, which can lead to irrational price movements. This understanding helped him to develop a more nuanced approach to trading.

In his book "Reminiscences of a Stock Operator", Livermore wrote about the importance of discipline and risk management in trading. He believed that a trader must be willing to cut their losses quickly and let their profits run, in order to avoid getting caught up in the emotional rollercoaster of trading.

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Jesse Livermore was known for his bold and often contrarian approach to trading. He believed in cutting losses quickly and letting profits run.

A key quote from Livermore is "It was inevitable that I would wake up some morning to find that they had changed the rules." This highlights his awareness of the unpredictable nature of markets.

Livermore's approach to trading was centered around his own emotions and psychology. He believed that a trader's emotions were their greatest enemy.

He once said, "The public can become emotional and make decisions based on fear and greed." This quote emphasizes the importance of emotional control in trading.

Livermore's most famous quote is perhaps "It doesn't pay to do what the crowd does, it pays to do what the crowd doesn't do." This quote encapsulates his contrarian approach to trading.

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Jesse Livermore's trading philosophy is built around discipline, emotional control, and a deep understanding of market behavior. He believed that successful trading is an emotional battle, not an intelligent one.

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Discipline is key to executing a trading strategy consistently. Livermore emphasized the importance of following your rules and taking 100% ownership of your trades.

Livermore's approach to trading is centered around buying stocks in an uptrend, not a downtrend. He believed in buying high and selling higher, but acknowledged that stocks in an uptrend can continue in the same direction for 3-12 months.

It's essential to understand that market conditions are always changing, and a trading strategy only works when the market is favorable to it. Livermore's strategy, Trend Following, works best in trending markets, but can lose money in range-bound markets.

One of Livermore's most famous quotes is "I never argue with the tape." This means that he never went against the market, and instead, let the market dictate his trades. He also emphasized the importance of knowing where you're getting out of a trade before getting in, and getting out of the trade when the time comes.

Here are some key takeaways from Livermore's trading philosophy:

Jesse Livermore's trading strategy isn't explicitly outlined in any books, but you can get a good idea of how he trades by reading his biography, Reminiscences of a Stock Operator.

Livermore's life and trading philosophy were famously captured in Edwin Lefevre's classic book Reminiscences of a Stock Operator.

You can also learn from his own trading insights shared in How to Trade in Stocks, which offer observations on market behavior, strategy, and psychology that are still relevant today.

Reading Livermore's quotes and the book Reminiscences of a Stock Operator will give you a good idea on how he trades the market.

Livermore's quotes and lessons continue to resonate with traders today, making them just as relevant now as they were in the early 20th century.

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Trading is an emotional battle, and Jesse Livermore knew it all too well. He once said, "Successful trading is always an emotional battle for the speculator, not an intelligent battle." It's a century-old truth that still rings true today.

To succeed in trading, you need discipline and the ability to follow your rules consistently. Jesse Livermore emphasized the importance of discipline in his trading strategy, which is why it's essential to stick to your plan even when the market gets tough.

The problem with relying on signal services is that you'll never become a better trader. You'll always blame the signals when they fail, rather than taking ownership of your trading decisions. As Jesse Livermore put it, "You don't see business owners asking for tips from some 3 party vendors on how to run their business — and it's the same for trading."

Here are some common pitfalls that can lead to emotional trading:

These mistakes can lead to impulsive decisions and a lack of discipline, which can ultimately ruin your trading career. Jesse Livermore's own experiences with over-attachment to money and fundamental analysis are a testament to the importance of staying grounded in your trading decisions.