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JESSE LIVERMORE’s 21 TRADING RULES
Back in early 2013, Raymond James strategist Jeff Saut
reflected on Livermore in his weekly commentary, writing that, "Years ago
I studied the tactics of Jesse Livermore, along with a number of other stock
market operators, and have found many of those strategies to be as valid today
as they were decades ago."
In that commentary Saut included Livermore's 21 trading rules, written in
1940.
More than 70 years later, these are rules every trader
needs to keep in mind:
1) Nothing new ever occurs in the
business of speculating or investing in securities and commodities.
2) Money cannot consistently be made
trading every day or every week during the year.
3) Don't trust your own opinion and back
your judgment until the action of the market itself confirms your opinion.
4) Markets are never wrong - opinions
often are.
5) The real money made in speculating has
been in commitments showing in profit right from the start.
6) At long as a stock is acting right,
and the market is right, do not be in a hurry to take profits.
7) One should never permit speculative
ventures to run into investments.
8) The money lost by speculation alone is
small compared with the gigantic sums lost by so-called investors who have let
their investments ride.
9) Never buy a stock because it has had a
big decline from its previous high.
10) Never sell a stock because it seems
high-priced.
11) I become a buyer as soon as a stock makes a new
high on its
movement
after having had a normal reaction.
12) Never average
losses.
13) The human side of every person is the greatest enemy of
the average investor or speculator.
14) Wishful thinking must be banished.
15) Big movements take time to develop.
16) It is not good to be too curious
about all the reasons behind price movements.
17) It is much easier to watch a few than many.
18)
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.
19) The leaders of today may not be the leaders of two years from
now.
20) 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.
21) 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.
