Livermore and me, first notes

Some notes started when it was a fine sunny afternoon in NYC, sitting in shade with a coffee, a gentle breeze, and no positions on, as I reboot and consider what to do.

Let’s begin again with the basics.

Chapter 10:

The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots–your pocketbook and your vanity.

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.

The trend has been established before the news is published, and in bull markets bear items are ignored and bull news exaggerated, and vice versa.

It sounds very easy to say that all you have to do is watch the tape, establish your resistance points and be ready to trade along the line of least resistance as soon as you have determined it. But in actual practice a man has to guard against many things, and most of all himself- that is, against human nature. That is the reason why I say that the man who is right always has two forces working in his favor–basic conditions and the men who are wrong.

Chapter 14:

A trader, in addition, to studying basic conditions, remembering market precedents and keeping in mind the psychology of the outside public as well as the limitations of his brokers, must know himself and provide against his own weaknesses. There is no need to feel anger over being human. I have come to feel that it is as necessary to know how to read myself as to know how to read the tape.


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