Adopting Jesse Livermore’s Advice on Forex Trading
Jesse Lauriston Livermore (more famous by the name Jesse Livermore only) was born in Massachusetts on July 26, 1877. He is known as a legendary trader to this day. Many “teachings” that are still considered relevant for the world of trading today. He started his trading career at the age of fourteen. He ran away from home to escape his father’s desire to manage his family’s plantation. He began his career as a stock price clerk at a brokerage firm in Boston. Although he is better known as a stock trader, traders in the forex trading world often use “advice” from Livermore when implementing their forex strategy .
Early career in forex trading
While working, he often writes some analysis of futures market prices and he will check the accuracy. A friend then convinced him to make transactions with real money by betting transactions on several shares in a dealer. Betting is a kind of transaction that allows a person to benefit from stock price movements without owning the shares.
At the age of fifteen, he had managed to pocket a profit of more than a thousand dollars. That number is currently equivalent to around 23 thousand dollars. In the next few years, he continued to bet and was finally blacklisted by the dealer because he won too much. He then moved to New York and devoted all his capabilities to the real market.
Jesse Livermore once said, “There is nothing new on Wall Street. There will be no speculation (activity) as old as the mountains. Whatever happens on the market today has happened before and will happen again. ”For technical analysts, Jesse Livermore’s words are in line with the principle of ” history repeats itself “ , a principle that is also used in the application of forex trading strategies .
Here are some “wise advice” from Jesse Livermore. This article tries to unravel the meaning of sentences that have been spoken by Jesse Livermode. Hopefully we can take useful lessons.
Tip # 1: Sit quietly
“ It’s not my way of thinking that makes a lot of money for me, but the way I sit quietly. Understand? The way I sit quietly! “
Making a lot of money is one thing, while staying consistent in gaining profits is another thing. Jesse Livermore indirectly said that finding the right momentum is just as important as knowledge doing analysis. Jesse only wants to make transactions if and only if the trading system he uses shows a valid signal. There are no valid signals, no transactions. That is the philosophy he adheres to.
And, to be able to comply with these rules, you must be patient and wait for the signal calmly. Not in a hurry.
Tip # 2: Don’t try to be perfect
“My trading plan is quite good and wins more than loses. If I hold on to the plan, I might be 7 times right out of 10 (transactions). “
Generating 7 transactions that bring profit from a total of 10 transactions is a pretty good thing. But there are still traders who want “perfection” to achieve 100% accuracy in every transaction he does in forex trading . In fact, a forex strategy that is “only” able to generate profits 7 times out of 10 attempts is good enough if supported by risk management and good capital management.
Such behavior causes them to often be “trapped” in protracted floating loss conditions. The losses suffered in such a way are swollen only because they are not “manly” enough to accept defeat. In fact, of course withstand an increasingly large loss of time, attention, energy, concentration, mind and in turn: stamina. When stamina deteriorates, it is impossible for a trader to make objective and effective decisions.
Tip # 3: Learn
“The game taught me how to play it.”
Adapting. Learn. Practice
Reading books and listening to experiences based on other forex trader trading strategies can indeed help to broaden your horizons. But actually “learning by doing” is the best way to learn trading. By feeling for yourself what is happening in the market, it will be easier for you to digest what is written in the book or what you hear from a senior trader.
Practice on a demo account first as a process to find the strategy that works best for you. Then, practice it on a real account, where the real lesson you will get when your money is truly “on the front line”.
Tip # 4: ATTACK RISK
“Losses have never bothered me. I immediately forgot about it the next day. But doing wrong – by not wasting loss – is what destroys the wallet and soul. “
Set risk limits. Put a stop-loss in every transaction you make, and be consistent with these limits.
Every transaction that you do must be based on the trading plan because the trading plan has been tested and has been proven to be able to provide consistent positive results, and limit the risks included in that matter.
If the risk approaches, immediately dispose of your losses according to the previous plan, then: move on.
Tip # 5: FOCUS ON THE PROCESS
“A professional concentrates on working on the right process, rather than (focusing on) generating profits, because he knows that profits will come alone if other things (the process) are done correctly.”
The goal of a trader should not be to print as much as possible. The right goal (maybe sounds weird) is to apply the trading plan as perfectly as possible. In forex trading , if you consistently carry out the strategy and trading plan that you have compiled and test the “strength”, profits will come automatically.
Bottom line for your forex strategy
Jesse Livermore has won the glory of the world of forex trading. But make no mistake, even though his name is so legendary, he also made a mistake in trading. He also suffered losses to bankruptcy, to the extent that he had asked his first wife to pawn his jewelry to cover his bankruptcy.
Jesse admitted that this extraordinary loss was caused by “trivial” things, namely violating the rules he had made himself. But Jesse learned from experience. He renewed and carried out the rules he made with discipline, among which were the five “tips” discussed in this article. In the end, he was able to rise and become one of the Wall Street millionaires.
Happy learning with Jesse. J