Jesse Livermore Rules“Money is made by sitting, not trading.”

21 Trading Rules By Jesse Livermore

Jesse Livermore also known as the Boy Plunger and the Great Bear of Wall Street had a very fascinating yet tumultuous life. He was famous for short selling and made a fortune in the stock market crash of 1907, then lost that fortune. Luckily he made another fortune shorting the market during the Great Depression. Unfortunately, it was never disclosed to anyone what happened to the great fortune he had made in the crash of 1929, but for all intense and purposes, he lost that fortune too.  Ironically his loses were mainly due to breaking his rules he set up for himself over his stock trading career.  If you are a day trader, swing trader or investor all of his rules still hold true today. Hopefully we can learn from Jesse Livermore and strengthen our trading behavior because the only thing worse than losing a fortune once is losing a fortune twice.

21 Trading Rules By Jesse Livermore

  1. Never sell a stock because it seems high-priced.
  2. Nothing new ever occurs in the business of speculating or investing in securities and commodities.
  3. Markets are never wrong – opinions often are.
  4. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion.
  5. Money cannot consistently be made trading every day or every week during the year.
  6. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits.
  7. Wishful thinking must be banished.
  8. The money lost by speculation alone is small compared with the gigantic sums lost by so-called investors who have let their investments ride.
  9. Never buy a stock because it has had a big decline from its previous high.
  10. The real money made in speculating has been in commitments showing in profit right from the start.
  11. I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.
  12. Never average losses.
  13. The human side of every person is the greatest enemy of the average investor or speculator.
  14. One should never permit speculative ventures to run into investments.
  15. Few people ever make money on tips. Beware of inside information. If there was easy money lying around, no one would be forcing it into your pocket.
  16. It is not good to be too curious about all the reasons behind price movements.
  17. The leaders of today may not be the leaders of two years from now.
  18. If you cannot make money out of the leading active issues, you are not going to make money out of the stock market as a whole.
  19. It is much easier to watch a few than many.
  20. Do not become completely bearish or bullish on the whole market because one stock in some particular group has plainly reversed its course from the general trend.
  21. Big movements take time to develop.

To learn more about Jesse Livermore click here.

To check out a fictionalized account of the life of Jesse Livermore, click here to read Reminiscences Of A Stock Operator by Edwin Lefevr.

Important Resources

  • Read my frequently asked questions or if you need personal 1 on 1 guidance from me on how to fully prepare as well as protect yourself from the misrepresentation please click here.
  • Every month I update this post here for my personal "Millionaire Challenge". I suggest you read the entire post and when you reach the bottom you can see my updated progress.
  • I highly recommend the Simple Path to Wealth book to grow Your wealth simply and steadily. It will educate you beyond your financial imagination. This is my review of the book.
  • If you are new to stock trading test your knowledge here with a basic stock market quiz.
  • There are a lot of secrets in trading stocks and I reveal 20 of them in this popular post.
  • If you are confused about short selling stocks then read this simple explanation that will clear it all up.
  • This free stock research tool will give you all the necessary information on any stock you type into the search bar.
  • Do your best to avoid day trading distractions. Especially the 10 I list here.