Control in Trading

Source: http://www.tradeciety.com/the-11-trading-rules-and-principles-of-a-market-wizard-marty-schwartz/

Jesse Livermore

Jesse Livermore

Stock Operator Extraordinaire

Born in 1877 and died in 1940, Jesse Livermore is the greatest trader / speculator who ever lived.  At his peak in 1929, Jesse Livermore was worth more than $100 millions.  He would have been richer than Bill Gates in today's money.  An unseen feat for a self-taugh / self-made stock and commodities trader who ONLY TRADED HIS OWN MONEY, not Other People Money like today investment's superstars who heads investment banks and hedge funds..  With Bernard Baruch, he was one of the original trend followers.

Loner, individualist, suffering from severe episodes of depression, probably bipolar disorders who eventually took his life, Jesse Livermore made and lost four colossal fortunes during his lifetime.  Make two of his fortunes during stock market crashes periods, in 1907 and 1929, short-selling stocks.  Which earned him $3 millions in 1907 and $100 millions in 1929.  While everyone was losing their shirt, the astute Jesse Livermore was on top of the world!

Unlike the miser Warren Buffett, Livermore was living the life.  At his peak, he owned a series of mansions in several countries, each fully staffed with about 20 or 25 servants year-round, a fleet of limousines and several Rolls Royce cars (my favorites), lot of chauffeurs, yatchs, and regularly threw lavish parties.

The second best book you can get! 

Jesse Livermore also had a ticker tape in every home that he owned, on his railway cars, on his yachts.

Jesse Livermore the womanizer

His affinity for hot gals cost him a lot of money.

The favorite book of Jesse Livermore 

and Bernard Baruch, another legendary trader.

Another one of Livermore's favorite book.

The 3 things that made him an extraordinary trader

- His love of numbers
- Determination to educate himself 
- Being a keen observer.

Now, here are some investment wisdoms from Jesse Livermore. 

- Emotional control (crucial and vital for any trader and gambler)

- Knowledge of economics and fondamentals
- Trade with the trends (Buy in a bull market and short in a bear market)
- Don't trade when there is no clear opportunities.
- Patience.  Let your profits run.
- Trade the leading stocks in each sector.
- Don't average down a losing position.
- Add to winning positions.
And in my view, the most important...
- CUT YOUR LOSSES SHORT (ALWAYS USE A STOP-LOSS POSITION losing no more than 10%.
- Experience.  Learn from your mistakes.

"Wall Street never changes, the pockets change, the suckers change, the stocks change, but Wall Street never changes, because human nature never changes."  - Jesse Livermore

"Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend." - Jesse Livermore

"It never was my thinking that made the big money for me. It always was my sitting." - Jesse Livermore