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Jesse Livermore's Trading Rules—Relevant as Ever
06/25/2014 6:00 am EST
With over 17 years of trading, Joe Fahmy of JoeFahmy.com shares the trading rules that Jesse Livermore-considered one of the greatest traders of all time-first published in 1940. Many rules have stood the test of time and should still be followed while trading in 2014.
Jesse Livermore was one of the greatest traders who ever lived. Here are his trading rules written in 1940. You will find that many of them still apply today, proving that very little changes in the market over time.
- Nothing new ever occurs in the business of
speculating or investing in securities and commodities.
- Money cannot consistently be made trading every day
or every week during the year.
- Don't trust your own opinion and back your judgment
until the action of the market itself confirms your opinion.
- Markets are never wrong-opinions often are.
- The real money made in speculating has been in commitments showing in profit right from the
- As long as a stock is acting right, and the market is
right, do not be in a hurry to take profits.
- One should never permit speculative ventures to run
- The money lost by speculation alone is small compared
with the gigantic sums lost by so-called investors who have let their
- Never buy a stock because it has had a big decline
from its previous high.
- Never sell a stock because it seems high-priced.
- I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.
- Never average losses.
- The human side of every person is the greatest enemy
of the average investor or speculator.
- Wishful thinking must be banished.
- Big movements take time to develop.
- It is not good to be too curious about all the
reasons behind price movements.
- It is much easier to watch a few than many.
- If you cannot make money out of the leading active
issues, you are not going to make money out of the stock market as a whole.
- The leaders of today may not be the leaders of two
years from now.
- Do not become completely bearish or bullish on the
whole market because one stock in some particular group has plainly reversed
its course from the general trend.
- Few people ever make money on tips. Beware of inside
information. If there was easy money lying around, no one would be forcing it
into your pocket.
By Joe Fahmy, Trader and Blogger, JoeFahmy.com
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