Jesse Livermore's strategy
Financier Jesse Livermore is known to many thanks to Edwin Lefebvre's book “Memoirs of a Stock Operator,” which is very popular among traders.
It is in this book that the financier shares the principles of his trading, and he does not have a clear trading plan, which is given to us when describing trading strategies.
In reality, there was no clear strategy, but rather general principles through which it was possible to make money.
Perhaps the reason for this was that Jesse mainly used fundamental analysis and market patterns in his trading, and also manipulated the market himself with the help of rumors.
And so the basic trading principles on which Livermore based his strategy were:
2. Before a transaction, independently assess the real value of shares or other assets, since the price on the market does not always correspond to the real value.
3. Having information, you own the exchange - if you know the reason for the rise or fall of the price, you can safely make transactions; it is knowledge that makes it possible to earn money.
4. Hold profitable trades while they are profitable; this is the rule that allows you to earn the maximum.
5. In case of mistakes, leave the market as cheaply as possible, that is, if you see that the deal is starting
bring a loss, and there is also confirmation of your mistake, close the position immediately.
6. When dealing with large transactions, act gradually so as not to attract the market’s attention, otherwise it will react to large volumes, and you will not be able to close positions at the desired price.
7. News affects the market only if it is supported by big money, that is, if after the news was released, large players entered the market and the volume of transactions began to grow.
To be frank, we can say that Jesse Livermore's strategy is more suitable for a large investor who has the opportunity to influence the market through large volumes of transactions.
His trading experience is practically impossible to apply to Forex. Therefore, most of the strategies that are published on sites are nothing more than the imagination of their authors. To verify this yourself, read the book “ Memoirs of a Stock Speculator. ”
Perhaps thanks to the book, you will really be able to understand how the market functions and, based on the knowledge gained, create your own effective strategy.