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
