How to Trade In Stocks [Englisch] [Taschenbuch]

The antidotes on Jesse's life are very entertaining but not much use to refining a traders technique. If he had died a few years sooner he would have been a hero. As it is people confuse this personal life with that of a great trader who just got tired.

The included "Livermore Secret Market Key," reprint contains a wealth of information from Livermore's own hand. If I did not already have it, Smitten's book might have been useful.

Cycles!
Jesse mentions market swings from 5 to 20 points that take from a week to a month. It seems like Jesse is talking about what we now call cycles when he refers to the time element. Trading into the future.

Trends!
He talks about this idea that the best trades are those that show a profit right from the start. Therefore, by definition if a trade dips into a loss and violates your definition of what a trailing trend is, Speculators lose no sleep jettising it off right away.

Never permit speculative ventures to turn into investments. Involuntary Investors ... make a bet, stay with it, and if it goes wrong, they lose it all, "they buy a stock that goes down, and they refuse to sell and take their loss."

Trends work automatically, and consistently along certain lines. If you recognize a trend and wait to get in at the precise time, drawdowns should be at a minimum. The drawdown itself should flash a danger signal.

Pyramiding!
When your security is acting right you can safely add to your line from then forward.

One of the unique ideas that I may have overlooked in Reminiscences is that entering a trade a little late is a bit of added insurance.

There is a psychological value in drawing money out of your winnings. Something I just love to do.

Pivot Point!
There is allot in here about his Pivotal Point entry. However, unless you can get it out of the "Livermore Secret Market Key," reprint contained in the book you will not find it in the "Smitten," part.

Anyone can see where pivot points were, the psychological entry point can be determined when groups of other securities confirm the change in trend.

Double bottoms!
Jessie gets into what we now call a double bottom. The first bottom is the primary pivotal point the second bottom (or top) is what he calls the "Continuation Pivotal Point."

CPR's!
Jesse did early work on what we now call CPR's. Closing Price Reversals. CPR's often occur at the Pivotal Point.

He teaches us to only trade on pivot points. But then goes on to explain the benefits of Box-break outs, trading on new highs and new lows.

Livermore's system of Sister Stocks is clearly explained and is a welcomed addition to Reminiscences. I wonder why Smitten did not show these as a spread?

Money Management!
Your position is defined as the percentage of your portfolio you will invest in any single situation.

Find your Pivotal Points and trade in the direction of the momentum. It is the big swing that makes the big money for you.

Jessie suggests averaging up, "within the pivot point range," without defining what a "pivot point range," is. It may be the center reaction in the W of a double bottom.

The final time to pyramid is a break out (of the pivot point range?) on heavy volume. It is riskier to enter a pyramiding action when the stock is far from the base.

My take on this is that Reminiscences of a Stock Operator by Edwin Lefèvre is more helpful to a trader than "how to trade in Stocks."

The bottom line on Livermore's money management still remains something I learned from Stanley Kroll. To Quote Jessie Livermore in "How to Trade in Stocks."

Shoot the Works!
"The only area I may have differed from most speculators, was when I felt I was truly right, dead right, for-damn-sure right-then I would go all the way, shoot the works."