ZF Capital

The speculator is not an investor. His object is not to secure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in. Therefore the thing to determine is the speculative line of least resistance at the moment of trading; and what he should wait for is the moment when that line defines itself, because that is the signal to get busy.

– Jesse Livermore, Reminiscences of a Stock Operator

It is my conclusion that playing the market is partly an art form, it is not just pure reason. If it were pure reason, then somebody would have figured it out long ago. That is why I believe every speculator must analyze his own emotions to find out just what stress level he can endure. Every speculator is different, every human psyche is unique, every personality exclusive to that person. Learn your own emotional limits before attempting to speculate-that is my advice to any one who has ever asked me what makes a successful speculator. If you can’t sleep at night because of your stock market position then you have gone too far; if this is the case, then sell your position down to the sleeping level.

– Jesse Livermore, Reminiscences of a Stock Operator

It was not that all I needed to learn was not to take tips but follow my own inclination. It was that I gained confidence in myself and I was able finally to shake off the old method of trading. That Saratoga experience was my last haphazard, hit-or-miss operation. From then on I began to think of basic conditions instead of individual stocks. I promoted my self to a higher grade in the hard school of speculation.

– Jesse Livermore, Reminiscences of a Stock Operator

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.

– Jesse Livermore, Reminiscences of a Stock Operator

When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.

– Jesse Livermore, Reminiscences of a Stock Operator

You watch the market that is, the course of prices as recorded by the tape– with one object: to determine the direction– that is, the price tendency. Prices, we know, will move either up or down according to the resistance they encounter. For purposes of easy explanation we will say that prices, like everything else, move along the line of least resistance. They will do whatever comes easiest, therefore they will go up if there is less resistance to an advance than to a decline; and vice versa.

Nobody should be puzzled as to whether a market is a bull market or a bear market after it fairly starts. The trend is evident to a man who has an open mind and reasonably clear sight, for it is never wise for a speculator to fit his facts to his theories. Such a man will, or ought to, know whether it is a bull or a bear market, and if he knows that, he knows whether to buy or sell. It is therefore at the very inception of the movement that a men needs to know whether to buy or sell.

– Jesse Livermore, Reminiscences of a Stock Operator

A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don’t believe in tips. If I buy stocks on Smith’s tip I must sell those same stocks on Smith’s tip. I am depending on him. Suppose Smith is away on a holiday when the selling time comes around? No, sir, nobody can make big money on what someone else tells him to do. I know from experience that nobody can give me a tip or a series of tips that will make more money for me than my own judgment.

– Jesse Livermore, Reminiscences of a Stock Operator