21 Trading Rules by Jesse Livermore That Have Stood The Test of Time

His life was unofficially documented in Edwin Lefevre’s 1923 book Reminiscences of a Stock Operator, which focused on the philosophy and trading techniques of a stock trader by the name of “Larry Livingstone”, which left nobody in doubt as to who it was really about.

The book became an instant hit, and remains a go-to trading bible for many today. No doubt inspired by its success, Livermore himself released his own book 17 years later, How to Trade In Stocks and noted his 21 Rules of Trading.

In this blog post we highlight the 21 Trading Rules by Jesse Livermore.

1. Nothing new ever occurs in the business of speculating or investing in securities and commodities. – Jesse Livermore

Rule 1 Jesse Livermore Trading Rules

2. Money cannot consistently be made trading every day or every week during the year. – Jesse Livermore

Rule 2 Jesse Livermore Trading Rules

3. Don’t trust your own opinion and back your judgment until the action of the market itself confirms your opinion. – Jesse Livermore

Rule 3 Jesse Livermore Trading Rules

4. Markets are never wrong – opinions often are. – Jesse Livermore

Rule 4 Jesse Livermore Trading Rules

5. The real money made in speculating has been in commitments showing in profit right from the start. – Jesse Livermore

Rule 5 Jesse Livermore Trading Rules

6. As long as a stock is acting right, and the market is right, do not be in a hurry to take profits. – Jesse Livermore

Rule 6 Jesse Livermore Trading Rules

7. One should never permit speculative ventures to run into investments. – Jesse Livermore

Rule 7 Jesse Livermore Trading Rules

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.

– Jesse Livermore

Rule 8 Jesse Livermore Trading Rules

9. Never buy a stock because it has had a big decline from its previous high. – Jesse Livermore

Rule 9 Jesse Livermore Trading Rules

10. Never sell a stock because it seems high-priced. – Jesse Livermore

Rule 10 Jesse Livermore Trading Rules

11. I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.

– Jesse Livermore

Rule 11 Jesse Livermore Trading Rules

12. Never average losses. – Jesse Livermore

Rule 12 Jesse Livermore Trading Rules

13. The human side of every person is the greatest enemy of the average investor or speculator. – Jesse Livermore

Rule 13 Jesse Livermore Trading Rules

14. Wishful thinking must be banished. – Jesse Livermore

Rule 14 Jesse Livermore Trading Rules

15. Big movements take time to develop. – Jesse Livermore

Rule 15 Jesse Livermore Trading Rules

16. It is not good to be too curious about all the reasons behind price movements.

– Jesse Livermore

Rule 16 Jesse Livermore Trading Rules

17. It is much easier to watch a few than many. – Jesse Livermore

Rule 17 Jesse Livermore Trading Rules

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.

– Jesse Livermore

Rule 18 Jesse Livermore Trading Rules

19. The leaders of today may not be the leaders of two years from now. – Jesse Livermore

Rule 19 Jesse Livermore Trading Rules

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. – Jesse Livermore

Rule 20 Jesse Livermore Trading Rules

21. 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. – Jesse Livermore

Rule 21 Jesse Livermore Trading Rules
March 15, 2020