There are only very few traders who have a reputation like Jesse Livermore. In his book – Reminiscences of a stock operator – he talks about his extraordinary life and how he went from working in an old-school bucket broker shop after school, to earning and losing millions of Dollars trading and speculating. Several times Livermore lost everything he had and then fought his way back to the top.
It’s impressive to read his story, but his approach and his story kind of range between mad gambling genius and brilliant financial speculator. His passion for trading comes through at all times. We have compiled the most memorable Jesse Livermore quotes here:
Respect your trading rules
Losing all you have can teach you many lessons, but only if you can fight your way back, have you shown that you actually learned from your mistakes. Jesse Livermore talks a lot about the importance of respecting your rules and learning from failures:
1 – What beat me was not having brains enough to stick to my own game. […] there is the Wall Street fool, who thinks he must trade all the time.
2 – The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street among the professionals who feel that they must take home some money every day, as though they were working for a regular wage.
3 – It never was my thinking that made me the big money for me. It always was my sitting.
4 – It is almost as important to know what not to do as to know what should be done.
Rules are important, but if you don’t have the courage and confidence to act on them, you won’t get far. However, there is a fine line between confidence and arrogance. As a trader you have to make trading decisions autonomously and be willing to take full responsibility in order to grow:
5 – A man must believe in himself and his judgment if he expects to make a living at this game. That’s why I don’t believe in tips.
6 – Without faith in his own judgment no man can go very far in this game.
7 – Courage in a speculator is merely confidence to act on the decision of his mind.
Learning and paying tuitions
You can’t learn how to trade in school or in a college class; learning by doing is the approach most people chose when it comes to trading. However, the amount of tuitions traders spend in the form of losses can be significant. Some of Jesse Livermore’s most valuable lessons he learned the expensive way:
8 – A man can excuse his mistakes only by capitalizing them to his subsequent profit.
9 – The game taught me the game. And it didn’t spare the rod while teaching.
10 – If I hadn’t made money some of the time I might have acquired market wisdom quicker.
[bctt tweet=”If I hadn’t made money some of the time I might have acquired market wisdom quicker.”]
11 – I had been studying trying to locate the exact trouble with my system that had been responsible for my defeat.
12 – There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win.
13 – A man will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile.
Losses and risk
What comes across throughout the whole book is that Livermore can deal with losing money exceptionally well. Often, it seems as if he doesn’t even care about the money involved:
14 – I was convinced whatever was wrong was wrong with me and not with the market.
[bctt tweet=” I was convinced whatever was wrong was wrong with me and not with the market.”]
15 – I never argue with the tape. Getting sore at the market does not get you anywhere.
16 – A loss never bothers me after I take it. I forget it overnight. But being wrong – not taking the loss, that is what does the damage to the pocketbook and to the soul.
17 – Stocks are never too high to buy or too low to sell.
18 – One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These are the two most expensive eighths in the world.
Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss must develop into a much bigger loss, and hope that his profit may become a big profit.
Although I believe that Marty Schwartz’s “Pitbull: Lessons from a Wall Street champion trader” or Jim Paul’s books “What I learned losing a million Dollars” offer better tips when it comes to making actual trading decisions, Jesse Livermore makes for an interesting read if you have already read all the conventional trading books.