The challenge of speculation
This game is not for the mentally lazy, stupid and inferior emotional balance and get-rich-quick adventure. The fruits of success are in direct ration of your honesty and effort you put in doing your own thinking, research and keeping records.
This book teaches you to take more money out of the market than you put into it.
Speculation should be treated as business and not like gamble, that’s what most people do.
There are times when money can be made in the market by speculation and there are times when money can’t be made by speculation. Speculation is anticipation of coming movements. Anticipation of the psychological impact of people’s mind.
Don’t trust your opinions until the action of the market confirms it. Markets are never wrong- opinions are.
You will loose money by acting to soon. Wait and watch for the market before confirming to act on it.
Everyone has human weakness. People want to make jackpots with trading. It’s the greatest enemy of speculator that will bring his downfall. Being hopeful and being fearful are some dangerous traits.
As long as the stocks is acting right, and the market is right, don’t hurry to make profit. Don’t take profit unless the market gives a signal to worry about.
Profits take care of themselves. But Losses never do.
The only way you can make money in stocks is buy guarding your capital.
Trading is merely a guess. And to be successful, you have to have rules to guide you.
If you study price movements, you should be able to develop a guide for future speculation.
Charts are confusing. Use records.
Keeping records with time element is consideration will improve the accuracy of forecast. It takes patience.
Never let your speculative ventures run into a investment ventures.
No one can tell how far the stock will go when its sliding forward. No one can tell how far the stock will go when it’s going up.
Don’t speculate on the basis of its past range. Study on the basis of your formula that combines timing and price.
It’s a fool’s game to make a second trade, if your first trade shows you a loss.
When does a stock act right?
Abnormal reaction: Something that hasn’t happened before. It signals danger sign. Might not be correct 100% of the time.
Normal reaction: Movements that are normal and predictable.
When you see a danger signal, don’t argue with it. Get out
You should get out of the wishful thinking.
When you do nothing, the traders who who feel they must trade day in and day out are laying the foundation for your venture. Their mistakes are your benefits.
The speculators who insist on taking profits from daily minor movements will never be in position to take advantage of important market changes. Real movements don’t end the day they start.
Follow the Leaders
There is a irresistible force behind every price movement. You have to learn to ride the tide. Don’t fight the tide.
As long as there is market, there will always be new leaders coming in positions to overtake the old ones. Remember: The leaders of today won’t stay the same after the next 2 years.
Patience and good judgement are the key traits of today’s speculator.
Money in the hand
Money remains in your hand only as long as you guard it. Faulty speculation is the quickest way to lose it. Don’t average losses. When you receive margin call, close your positions. Don’t put the good money behind bad.
Trying to enrich in a short time frame is a major mistake. You may do it once or twice but can’t keep it. This strategy is short-lived.
Take out small portion of the money you made in a successful trade and keep it safe. Money in your brokers office is not same as the money you have in your hand.
The Pivotal Point
Represent the market as upward trend and downward trend instead of assigning ‘bearish’ & ‘bullish’ market.
If the stock doesn’t perform as it should after pivot points, it is a danger sign.
Making your own discovery, trading your own way, exercising patience and watching for danger signals will develop a proper trend of thinking for yourself.
The Million Dollar Blunder
Many traders buy or sell impulsively. That’s not only wrong but also dangerous. Impatience is costly. Timing is essential. You have to wait till the buying point or selling point.
Don’t make excuses when you are wrong. Admit and profit by it. The market tells you that you are wrong when you are losing money. As soon as the market signals that, move out of the trade. Take losses and wait for another opportunity. Study the trade and what went wrong.
Millions of people speculate in the market, but a very few devote their time and energy in speculation.
The Livermore Market Key
Nothing new happens in the market. The price movement repeats in the market. A market in trend has numerous intermmediate oscillations.
Buy the strongest stock in bull market and short the weakest stock in a bear market.
