Jesse Livermore started young. Most prodigy’s do. Very early in the book Edwin Lefevre (the author) sets the stage for his obsession.
It begins with a fascination with price action. The interesting thing to me is how frank he is about why prices move. He made it clear he didn’t care.
How often do we review trades and try to “figure out” why a stock did what it did. Livermore was right, it doesn’t matter.
“But a busy market did not keep me from thinking about the work. Those quotations did not represent prices of stocks to me, so many dollars per share. They were numbers. Of course, they meant something. They were always changing. It was all I had to be interested in-the changes.”
Why did they change? I don’t know. I didn’t know. I didn’t care. I didn’t think about that. I simply saw that they changed. That was all I had to think about five hours every day and two on Saturdays; that they were always changing.
This is how I first came to be interested in the behavior of prices. I had a very good memory for figures. I could remember in detail how the prices had acted on the previous day, just before they went up or down. My fondness for mental arithmetic came in very handy.
How many wasted hours do we spend trying to figure out why prices move? Great traders set up probabilities and manage risk.
We should work on the odds not the reasons. T Harv Eker says it best: “You can have results or you can have reasons but you can’t have both.” How obsessed are you with trading? Jesse Livermore makes it clear it’s his life. If you want to achieve massive success as a trader you need it to consume your every waking moment.
What if you work hard but don’t get results?
This means you aren’t paying attention. You must document your actions so you can make adjustments. Continuing to make the same mistakes and hoping something changes is insanity.
I should know I did this early in my career. It took me longer to succeed than it should have because I wasn’t diligent in my assessments of my plans.
You can speed up the learning process by being brutally honest with your results. Lying about where you are is the single biggest reason for failure in trading.
Until next time.