New Series: Lessons from Jesse Livermore

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The Lessons from Jesse Livermore Series explores the trading philosophy and trading rules of renowned trader, Jesse Livermore.  Although developed a century ago, Livermore’s ideas have great relevance for today’s traders.

A Fantastic Book for Aspiring Traders

Reminiscences of a Stock Operator” by Edwin Lefevre recounts the fabled trading life of Jesse Livermore who is widely regarded as belonging to the pantheon of great Wall Street traders.  The book has had and continues to have a profound impact on my trading.

In this series, I will go through the book, page by page, and unpack the lessons Livermore offers. Where applicable, I will offer examples from my own trading experiences.  I hope the effort reveals aspects of trading that help you move the ball in your own trading.

Trading: Not for the stupid or mentally lazy

The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, nor for the get-rich-quick adventurer. They will die poor.”

Jesse Livermore. “How to Trade in Stocks”  paragraph 1 page 1

Upon a first reading of the above, I would venture to say that 98% of all readers would say “That’s not me”.  They’d say I’m not stupid nor am I lazy.  I possess good emotional balance and I am not looking for a get rich quick scheme. In short, “I’m good to go”. Onto the next paragraph.

Juxtapose those thoughts with the fact that 90% of would- be traders fail.  People’s image of themselves and actions they take are often very different from one another. I include myself in that population.  When I began my trading journey I wanted to parlay my nest egg into a fortune and the faster the better.  Unfortunately I found that I was book smart but market stupid. I also wrestled with emotional demons as trades played out both for and against my position.  I never imagined trading would be as hard as it has turned out to be.   Most of you probably have had similar experiences. Additionally, deep down we crave and often seek a short cut.  My in-box is filled on a daily basis with promises of the secret sauce.  I know those ideas sell very well. They offer we traders a short cut. How many times do you secretly wish for a short cut?   Take a hard look at it.

Action Ideas

  • Take a deep hard look at your motivations for getting into trading in the first place.  Why are you trying to be a trader?
  • Examine your emotional balance when trading.  Are you striving to master markets or master yourself?  How’s it working for you?
  • How hard are you willing to work?  Review how you’ve spent your time over the past few weeks. When you have a choice do you often opt to review charts and trading performance or to watch the big game?   Look at it closely.

The answers to the above couldn’t be more important.  As Livermore points out, misguided traders die poor. Statistics tell us that the pile of dead trader bodies is quite large.  What makes you think you will be one of the 10% that make it out alive?

Till next time, Happy Hunting and Good Trading!

Like the Series? 

Here are links to additional installments

Part 2:  Stop asking why   HERE              Part 3: Play a Lone Hand  HERE

Part 4:  A Time for all Things  HERE     Part 5: Expensive Enemies  HERE

Part 6: Commissions Matter  HERE     Part 7: Blown up Accounts  HERE

Part 8: Imaginary Millions HERE            Part 9: Give it Time    HERE 

Part 10: Sit Tight    HERE            Part 11: How to Buy and Sell Stocks   HERE


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As the host of Trader’s Profit Compass, I work hard to inspire, empower, and prepare aspiring traders to face the markets with fortitude, quiet confidence and inner calm. It’s a protein-rich, sugar free environment without ego or judgement. While I can’t promise that joining our group will change your life, I’d like to think it will help your trading. Give it a spin!  Nothing to lose and potentially much to gain.

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