1. Watch the market leaders, the stocks that have led the charge upward in a bull
market.
2. They say you never go broke taking profits. No, you don’t. But neither do you grow
rich taking a four-point profit in a bull market.
3. Successful trading is always an emotional battle for the speculator, not an intelligent
battle.
4. Remember that stocks are never too high for you to begin buying or too low to begin
selling.
5. Losing money is the least of my troubles. A loss never troubles me after I take it. I
forget it overnight. But being wrong – not taking the loss – that is what does the
damage to the pocket book and to the soul.
THE TOP 17 TRADING RULES OF JESSE LIVERMORE
6. When I’m bearish and I sell a stock, each sale must be at a lower level than the
previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I
don’t buy long stocks on a scale down, I buy on a scale up.
7. 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 person of inferior emotional balance,
or the get rich-quick adventurer. They will die poor.
8. Successful traders always follow the line of least resistance. Follow the trend. The
trend is your friend.
9. Don’t worry about catching tops or bottoms, that’s fools play. Keep the number of
stocks you own to a controllable number. It’s hard to herd cats, and it’s hard to track a
lot of securities.
10. I believe that having the discipline to follow your rules is essential. Without specific,
clear, and tested rules, speculators do not have any real chance of success.
11. I absolutely believe that price movement patterns are being repeated. They are
recurring patterns that appear over and over, with slight variations. This is because
markets are driven by humans — and human nature never changes.
12. Markets are never wrong, but opinions often are. Remember, the market is designed
to fool most of the people most of the time.
13. After spending many years in Wall Street and after making and losing millions of
dollars I want to tell you this: It never was my thinking that made the big money for
me. It always was my sitting.
14. There are many times when I have been completely in cash, especially when I was
unsure of the direction of the market and waiting for a confirmation of the next move.
15. It is foolhardy to make a second trade, if your first trade shows you a loss. Never
average losses. Let this thought be written indelibly upon your mind.
16. Don’t take action with a trade until the market, itself, confirms your opinion. Being a
little late in a trade is insurance that your opinion is correct. In other words, don’t be
an impatient trader.
17. When you make a trade, “you should have a clear target where to sell if the market
moves against you. And you must obey your rules! Never sustain a loss of more than
10% of your capital. Losses are twice as expensive to make up. I always established a
stop before making a trade.