Jesse Livermore: Emotions and Mind of a Gambler/Trader, Lessons From A Legendary Trader 👍

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Well in brief its because his book 'Reminiscences of a Stock Operator' shows clear understanding of the market. It is also well written and witty and Jesse goes into detail on his mistakes and downfalls.

What we can learn from Jesse Livermore; let's look at his downfalls. (reading Reminiscences of a Stock Operator):

This is a famous trader of long ago that people like to read about and in a number of ways he was a great trader for the time. He went about sharing his downfalls as a trader with the public at large.
1) Letting losers run - Jesse used to let losers run a number of times; these were his demons and this tends to creep up in modern trader as well.
2) Overtrading - he had a tendency to trade for the sake of trading. Trading for the sake of trading or keeping on looking for inexistent market opportunities won't work.
3) Following tips - if you follow the tips of someone else you're unlikely to have the same conviction so its unlikely to work out in the long term.
4) Risk of ruin - so many times he was worth billions in money of the present day and then going down to zero!
5) Position Sizing - You need to protect your mental capital and financial capital at all times.
6) Discipline - trading discipline; I cannot emphasise this enough.
7) Mental risk of ruin - this is probably the most important one. His ups and downs were probably so challenging that he ended destroying himself. Trading can exaggerate both your positive and negative emotions.

We recommend the following books about Jesse Livermore:
- Reminiscences of a Stock Operator by Edwin Lefèvre
- How to Trade in Stocks by Jesse Livermore
- Jesse Livermore: World's Greatest Stock Trader by Richard Smitten
- Jesse Livermore Boy Plunger by Tom Rubython

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[jezzermeii]

The thing with tips is this: If the tip is so good, why would anyone choose to share it? I am almost convinced that the media and institutions provide 'tips' in order to guide the masses in their favour, and not ours. Avoid it at all costs!

[TrailBlazer]

He truly was a gambler. Not in the way stocks are a bet on the market but in his mentality. Just like professional gambers of today, total experts yet they lose and win millions over and over, never stopping to build that rainy day fund. But by all means one of the best there was, his attitude and approach to investing were like few others, to the point, unconcerned with the crowd or influence of others (mostly) hard work and lots of skill.

[wongcheukkwan]

Livermore's book was not written by him, but another guy who interviewed him. The rules in his book seems rational but Livermore himself did not follow the rules of discipline and cutting losses to protect his capital. He had gone bankrupt several times and rose up again. But he did not know when to get out of the market and retire. His book said that portions of the cash should be withdrawn for the family and his retirement. Did he do that? If he had gone thro' several times of bankruptcies and recoveries, his mental capital should have been ruined. A rational man should look for opportunities to retire from the casino but he did not. Also his marriage was full of sadness. His second wife shot his son badly with a gun, which made Livermore very depressed. The lessons learned from him are control of emotions, risk management and avoidance of being a gambler.

[mwil]

His main skill was tape reading, something akin to order flow in modern times, but because of the way exchanges break up orders that edge is gone. Chart reading however can give you that flow feel today. Mental capital is akin to emotional regulation, and attachment issues bring in the spiritual components of the nature of the universe.

[floriandohrmann]

the mental capital point is the decisive one!

whatever size you bet, you get used to it! but keeping the mental side is the most difficult thing to do!

[SeanTheDon]

Great emphasis on the MENTAL Health. Mind over matter is a fundamental principle in any activity, especially in trading. When real money is attached, we have the endowment effect and risk aversion biases which cause even small losses to FEEL like large ones. Staying aware of our mental trading health is a priority # 1!

[RetailTraderDGM]

I don't believe that livermore really did commit suicide, his third wife was only about 30 and had been married and widowed 5 times previously, all 5 previous husbands all committed suicide. i think its sad that for 100 years no one thought that this seemed suspicious. if you read his 'suicide note' with the above information in mind it puts that note in a whole new light.

[phillipprestontrading]

Great video. You made some great points on trading. This game is 99.9% mental Pychology! Anyone, who says otherwise is probably a newbie trader, who's been seduced by all the marketing Crap by oil snake salesman ( how I turned 100 dollars into a million dollars in 6 months etc) Any traders who still to do with mental head stuff! Simple answer= Look at you LOSSES. That is your answer. say Trading is simple ( but to actually do what you NEED to do) we'll MOST people will Never make it as a Trader. The stats back me up on this fact! You need a paradym shift in one's thinking, to crack this elusive NUT!

[stroggwars]

JL as he loved to be called, was a great trader, but he never tell his trading secrets he just highlighted some of his tactics but not in details in his second book how to trade stocks, but i find his trading mentality is like mine, by the way his discovries today's technical analysis that every body use, he talks about volume is the number one thing for him, JL discovers all technical analysis of now, he had his own style own unique style and rules purely made by his mental philosophy, he's a legend, he talked about all rules that a trader seeking now, he was manupliator of the market and used tactics that big money do it now like testing the market and pyrmaiding, testing the market will causes u to lose some money just to know the feel of the market and its underlying force, he's a legend, Richard whykoff was in his same era he also was a legend in tape reading

[ajoflow]

Very good book. Hard to believe it was written 100 years ago!

[hccoxze]

Livermore is a colourful character, but we learn more about what not to do in terms of money management. He’s a reckless trader.

[satyamraj]

He was a great trader . He turned 10k to 100 million dollar and without better understanding of market no one can do that but due to his bad relationship with his wife and some other problem he started to take trade when he wasn't even feeling mentally strong.

[joshuadsa]

The mental capital really hit me hard. Thanks 🙏 so much for this video

[garythornbury]

this is why im a investor and not a trader.- there is a difference

[kikowhitney]

mental capital, yes, indeed....very important. Good video, very helpful thanks

[SarkisKlinik]

Hi, Is NVIDIA now in pullback or is it already in stage 3 or stage 4 market cycle?Thanks

[believeurhappy]

Love the channel mate! Awesome videos! More like this! Keep it up

[stroggwars]

Percy Thomas and followed his tip then he lost every thing i remember that was in Cotton and he got out of his winning trade of wheat he blown away with that tip it was one of his blown away made him go back to bucket shops agin

[rdtradecraft]

I have long thought that Livermore's biggest problem was that he was always all-in. If he'd managed his equity risk and position sizing better, he might have worked his way out of his long slump, but he just couldn't do it, it seems.