HOW TO TRADE IN STOCKS by Jesse Livermore

Author:Jesse Livermore
Language: eng
Format: epub
Tags: 经济·管理
Publisher: epub掌上书苑
Published: 2013-01-05T16:00:00+00:00

Ⅵ.THE MILLION DOLLAR BLUNDER

It is my purpose in these chapters to lay down some general trading principles. Later on there will be specific explanation of my formula for combining time element and price.

In consideration of these general trading principles it should be said that too many speculators buy or sell impulsively, acquiring their entire line at almost one price. That is wrong and dangerous.

Let us suppose that you want to buy 500 shares of a stock. Start by buying 100 shares. Then if the market advances buy another 100 shares and so on. But each succeeding purchase must be at a higher price than the previous one.

That same rule should be applied in selling short. Never make an additional sale unless it is at a lower price than the previous sale. By following this rule you will come nearer being on the right side than by any other method with which I am familiar. The reason for this procedure is that your trades have at all times shown you a profit. The fact that your trades do show you a profit is proof you are right.

Under my trading practice you first would size up the situation in regard to a particular stock. Next it is important to determine at what price you should allow yourself to enter the market. Study your book of price records, study carefully the movements of the past few weeks. When your chosen stock reaches the point you had previously decided it should reach if the move is going to start in earnest, that is the time to make your first commitment.

Having made that commitment, decide definitely the amount of money you are willing to risk should your calculations be wrong. You may make one or two commitments on this theory and lose. But by being consistent and never failing to re-enter the market again whenever your Pivotal Point is reached, you cannot help but be in when the real move does occur. You simply cannot be out of it.

But careful timing is essential. . . impatience costly.

Let me tell you how I once missed a million dollar profit through impatience and careless timing. I almost want to turn my face away in embarrassment when I tell this.

Many years ago I became strongly bullish on Cotton. I had formed a definite opinion that Cotton was in for a big rise. But as frequently happens the market itself was not ready to start. No sooner had I reached my conclusion, however, than I had to poke my nose into Cotton.

My initial play was for 20,000 bales, purchased at the market. This order ran the dull market up fifteen points. Then, after my last 100 bales had been bought, the market proceeded to slip back in twenty-four hours to the price at which it had been selling when I started buying. There it slept for a number of days. Finally, in disgust, I sold out, taking a loss of around $30,000, including commissions. Naturally my last 100 bales were sold at the lowest price of the reaction.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.