Lessons from Jesse Livermore part 9: Give it Time

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 points out that success in the market can take a long time.

Reminiscences of a Stock Operator  Ch 3 pg 28  top of page

It took me five years to learn to play the game intelligently enough to make big money when I was right.

The Lesson
Trading and the game of speculating is a unique beast. Its seems that most people entering the fray are somehow under the impression that success will come relatively quickly and that the process will be closer to a walk on the beach than back-to-back tours in Vietnam.

That’s how I thought.  Trading shouldn’t be a huge problem for a well-educated businessman who’d seen success in most areas of endeavor should it?  I got this.  Little did i know that “well-educated” and “prior successes” were liabilities, not assets in the game of speculation.  I also entered with goals which were closer to delusional fantasy than reachable and realistic.  I don’t think I am alone.

By his own words, it took Livermore 5 years “to play the game intelligently” .  If it took a Market Wizard 5 years, how long will it take us to play smart?
Sidebar: I will add here that although Livermore was a great trader and made many millions in the market, he went broke at least 4 times in his career.  I say that because risk management is a part of playing the game intelligently…

Actionable Ideas

  • Redefine “Successful Trading” in your mind
    • Disassociate from money and outcomes
    • Aim toward “executional excellence” of my narrowly defined trading process
    • Well executed trading plans will generally produce positive outcomes over time.
  • Re-examine your goals and expectations
    • Are they delusional?   Are your goals tied to making a certain amount of Dollars?
    • Set your goals on things you can actually control  Examples:
      • Write something in your Trading Journal everyday; even if its one sentence
      • Fill out a trade plan prior to every trade
      • I am going to start getting up at 5am so I can review charts for 2 hours prior to getting ready for my “real job”
      • I am going to follow a very specific risk management program because I know if I lose my trading capital ” I am out”
  • Re-set your Timeline
    • Trading is a craft.  Universal Law: You have to be an apprentice before you can be a craftsman 
    • Measure what is important to you. Benchmark your Improvement
      • Document your trades and learn from them
      • Over time, you will be able see tangible improvement if you measure what is important.  ie. executing your plan
    • Toss out your Calendar.
      • If your goal is Trading Craftsmanship, it will take a lifetime of learning and you’ll never be done.

Don’t get frustrated with unrealistic expectations. Re-align your thinking, set process-oriented goals, then measure against them.  You will see yourself grow and you’ll feel a well-spring of  confidence as you pass milestones.

Thanks for reading!

Like the Series so far?  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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