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. Here Livermore discusses why in trading it’s best to be a loner.
Play A Lone Hand
“I didn’t have a following. ( within the brokerage houses ) I kept my business to myself. It was a one-man business, anyhow. It was my head, wasn’t it? Prices either were going the way I doped them out, without any help from friends or partners, or they were going the other way, and nobody could stop them out of kindness to me. I couldn’t see where I needed to tell my business to anybody else. I’ve got friends, of course, but my business has always been the same—a one-man affair. That is why I have always played a lone hand.”
Reminiscences of a Stock Operator
Chapter 1; page 7; paragraph 2
The Lesson
Humans are social animals. They enjoy interacting with other people. That is the reason why Facebook can go from an idea in 2003 to 1.2B users in 2016. The recent political season brought tribalism into the spotlight. Are you a Republican or a Democrat? Mainstream centrists need not enter the conversation.
What does this have to do with trading? Quite a bit actually. Look at the popularity of StockTwits, Seeking Alpha, and other investing websites that have a heavy dose of social integrated into them. Trading chat rooms and Twitter add a whole new dimension. Lots of traders spend a lot of time on these sites and in the chat rooms. Are you a Bull or a Bear? blah blah blah. I wont condemn these sites universally because there are kernels of good information to be found, but there are many traps.
It is so easy to be sucked into endless debates that neither prove anything nor gain anything either. Its also very easy to be sucked into group think. I discussed in an earlier post how I got sucked into the bear camp earlier this year. It caused me not to trust my bullish charts; It was an expensive lesson.
I could go on and on about the evils of spending a lot of time in these places, but I will jump directly to Livermore’s conclusion. Trading is a one-man business. Your trades wont be helped by the opinion of others, but your mindset may well become polluted by them. And, does anyone really care if you are long $FB or $GPRO?
Use the web to seek true knowledge; it can be a useful tool for you. Just remember that trading isnt a social club. Can you imagine a Market Wizard logging into StockTwits to post their latest trade? Can you imagine them wasting even 5 minutes debating their trade with a 43 year old, nameless person that is likely trading a paper account from their Mom’s basement? Its silly when you think of it that way.
Action Ideas
- If you are a technical trader, as I am, all you need is your charts and a trading plan that you own.
- Review how much time you are spending on social sites. Take a hard look at it. Are you learning new things that are helping you improve as a trader or is the time spend on mindless banter that in the end may confuse and frustrate you more often than not.
- Consider distilling your social network down to 5 – 10 traders / authors / sites that truly benefit you. Let the the rest of the garbage go. You may experience, as I did, a new calmness and clarity of thought wash over you. You will see it present itself in crisper trades and better results.
- Move toward playing a lone hand. I have coaxed a few traders that I work with in this direction. To a person they have each dialed back their “social presence” and have seen tangible benefits. Try it for 60 days; what have you got to lose?
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
Get inspired, empowered and prepared.
Join us!
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.
Our group of aspiring traders are into active swing trading using technical analysis to find objective, high-probability, low-risk trades. Using these processes we’ve been fortunate to be winning; not perfect but winning. If that is appealing to you, join us! I’d like to think you’d benefit from the work. You’ll get premium content 6 times a week including a copy of my Daily Profit Compass, Weekend Profit Navigator,along with other actionable content delivered directly to your mailbox. You’ll even get an invite to our new trading room on SLACK.
Registration is simple and FREE Visit our homepage HERE
