25 Best Jesse Livermore Quotes on Trading Rules

Jesse Lauriston Livermore, an American stockbroker, was better known as Jesse Livermore. Jesse was once the richest man in the world, and that's why Wall St. adores him.

In this guide, we'll look at one of the greatest traders to live with and how Jesse Livermore's quotes can inspire you as a trader.

Introduction about Jesse Livermore and his related expertise in stock market trading

First, let's tell you about the man.

Jesse Livermore was born in 1877. By the age of fifteen, he worked in Paine Webber's Boston brokerage office, responsible for posting stock and commodity values on the chalkboard.

He examined the price movements of equities on the stock exchanges and soon began trading on their swings.

Jesse Livermore relocated to New York City to work full-time in the stock and commodities markets in his twenties.

Jesse's net worth was approximately $100 million at the height of his riches in 1929. It's difficult to determine, but that would be worth between $1 and $14 billion in today's money.

He was a self-made guy who traded with his own money and achieved profits that would be unthinkable in today's markets.

Jesse was dubbed "Boy Wonder," "Boy Plunger," and "The Great Bear of Wall Street," and his narrative is one of the most captivating ever recounted on Wall Street.

Jesse's trading strategy

Jesse lacked the ease of modern-day charts for charting his pricing trends. Instead, the patterns were merely prices, which he recorded in a ledger.

He preferred trading equities that were moving in a trend, and he avoided investing in range markets. When prices reached a critical juncture, he waited to observe how they reacted.

For example, if a stock hit a low of $50, rallied up to $60, and was now moving back down to $50, Jesse's principles required waiting until the key point was in play.

If the same stock rose to $48, he would launch a short trade. If it bounced off the $50 level, he'd go long at $52, keeping an eye on the $60 level, which is also a "pivotal point."

Jesse's trading guidelines are straightforward and have been included in many traders' trading programs since its inception almost a century ago.

Reminiscences of a Stock Operator

Edwin Lefevre's 1923 book Reminiscences of a Stock Operator concentrated on a stock trader's mentality and trading skills named "Larry Livingstone.

The book was an instant hit and is still considered a trading bible by many today. But, not likely inspired by its success, Livermore published How to Trade in Stocks 17 years later, noting his 21 Rules of Trading, the foundations on which he had built a success worth over a billion dollars in today's money.

25 best Jesse Livermore quotes

Here are the 25 best Jesse Livermore quotes:

1. "The human side of every person is the greatest enemy of the average investor or speculator. Fear keeps you from making as much money as you ought to. Wishful thinking must be banished."

Cutting losses and letting successful trades run is the hardest difficulty for traders to overcome.

It is the psychological lesson taught by Jesse Livermore's trading principles, and it is one that all traders must learn.

Fear prevents you from cutting your losses early and causes you to accept your rewards too quickly. When you understand this, you will be well on your way to effective trend trading and aligning yourself with the natural cycle of the markets.

2. "I think it was a long step forward in my trading education when I realized that the big money was not in the individual fluctuations but in the main movements that is, not in reading the tape but in sizing up the entire market and its trend."

Jesse Livermore wrote in Reminiscences of a Stock Operator of an old and intelligent trader in the office named Mr. Partridge, who they also dubbed Old Turkey.

Old Turkey never exchanged tips and never gave them out, but other traders frequently asked him for advice. But his response was always the same: this is a bull market or a bear market.

In other words, you must constantly trade with the current trend. It is impossible to capture all of the variations. You'll go broke if you do.

3. "Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money."

It is impossible to make money trading every day or every week of the year. So, if you're having a difficult time, don't be too hard on yourself; they'll come back.

When you have a winning deal, the wisest choice is typically to do nothing and just sit tight.

Do not hurry to collect profits as long as the stock functions correctly and the market is right. By the way, that's another straight quotation. Sitting tight and waiting for the trade to develop most of the time will net you far more money.

4. "It is literally true that millions come easier to a trader after he knows how to trade, than hundreds did in the days of his ignorance."

The odd thing about trading is that the classic figure that 95% of all traders lose money is usually referenced. While this statement is true, it does not fully depict the reality.

Because the vast majority of that 95% are not trading, but rather gambling, and, if you exclude the fraction of intelligent traders who are well-capitalized and have learned the discipline and skills required to trade, this figure begins to shift.

5. "It takes a man a long time to learn all the lessons of his mistakes. There is only one side to the stock market; and it is not the bull side or the bear side, but the right side."

Jesse Livermore knew a thing or two about making errors because he made many of them. He was a self-made man who made a fortune by trading his own money, but he also lost many. As a result, he had to learn every lesson the hard way.

As a result, bullish or bearish doesn't matter all that much. Instead, you must pay attention to what the market is telling you. And the right side is where the market is heading.

6. "If you can't sleep at night because of your stock market position, then you have gone too far. If this is the case, then sell your position down to the sleeping level."

Reminiscences of a Stock Operator Jesse Livermore recounts a chat between two acquaintances. One of them cannot sleep at night because of the amount of cotton he is carrying.

He had a significant position in cotton futures that was too great for him to handle, and it was causing him undue tension and concern, so much so that he couldn't sleep at night.

If you trade too extensively, any small fluctuation in the security causes you unnecessary tension. That it wouldn't ordinarily do.

You risk blowing up your account and losing all of your trading cash if you trade too aggressively. And if you trade on leverage with no stop losses, you risk losing much more than you have in your account.

7. "To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate."

Jesse Livermore mentioned a professional gambler named Pat Hearne in the book.

Pat would approach the markets as if they were a roulette or blackjack table, placing a series of calculated wagers searching for tiny, guaranteed winnings. He would sell every time the stock fell by only one penny.

Jessie realized, in essence, that you can't appraise a market until you're in it. It is why Jesse would initially acquire a small portion of the market to test the waters. If the trade felt good and the stock went the way he wanted it to, he'd add a little more, eventually building up a greater and bigger line.

8. "I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market, all stocks go down, and in a bull market, they go up."

It is another issue that many traders face. Specifically, they aim to short stocks during a bull market and purchase stocks during a bad market. And they forget that the most crucial factor is the market's general trend.

9. "The thing to do is to watch the market, read the tape to determine the limits of the get nowhere prices, and make up your mind that you will not take an interest until the prices break through the limit in either direction."

Markets can occasionally consolidate and go sideways for extended periods. The market range may narrow during these periods, and price movement may become bumpy. The best course of action is simply sitting back and observing when this occurs.

10. "I don't know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn't get you anywhere. Markets are never wrong; opinions often are."

If you are stopped out of a trade and incur a loss, or if the market does not behave as predicted, it is not the market's responsibility. The market is not incorrect. The market is never incorrect; only views can be wrong.

11. "Instead of hoping, he must fear, and instead of fear, he must hope. He must fear that his loss may develop into a much bigger loss and hope that his profit may become a big profit."

If there is one guideline essential for following market patterns, it is this. It's the same as reducing losses and letting successful transactions run. That is how you allow trends to emerge and create large, lucrative positions.

12. "When you are doing nothing, those speculators who feel they must trade day in and day out are laying the foundation for your next venture. You will reap benefits from their mistakes."

When you understand the cost of trading and the advantages of sitting tight in a market, you will have learned an important lesson.

13. "If I buy stocks on Smith's tip I must sell those same stocks on Smith's tip. I am depending on him. Suppose Smith is away on a holiday when the selling time comes around? A man must believe in himself and his judgement if he expects to make a living at this game. That is why I don't believe in tips."

Jesse Livermore didn't believe in tips, and you shouldn't either. For a range of causes. You should do your research and analysis and only trade by your strategy.

14. "There is time to go long, time to go short, and time to go fishing."

Traders frequently get snobbish. They believe they understand the market and know what it will do next. Perhaps they've done a few hours of study and are confident the market is poised to surge. Then they proceed to trade right immediately.

There is, however, a time to enter the trade and a time not to enter the trade.

15. "Never buy at the bottom, and always sell too soon."

There are a lot of traders out there attempting to pick all the tops and bottoms. They want to purchase, sell, and then repeat the process.

But no one alive can time the market like that, and attempting to do so would just result in you spending more and more money on fees and trading charges.

16. "At long as a stock is acting right, and the market is right, do not be in a hurry to take profits. One should never permit speculative ventures to run into investments."

When you have a winning trade, the wisest choice is to do nothing and just sit tight. Do not hurry to collect profits as long as the stock functions correctly and the market is correct.

17. "There is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."

Jesse refers to the fact that the same market moves and patterns repeat themselves. Because individuals manage markets, the same patterns will always emerge.

18. "It is foolhardy to make a second trade, if your first trade shows you a loss. Never average losses. Let this thought be written indelibly upon your mind."

We've previously discussed the importance of cutting losses short and letting profits run, as well as never being scared to incur losses.

But it's also critical to emphasize that you should never average your losses. Averaging losses are simply adding to a losing trade.

19. "I began to realize that the big money must necessarily be in the big swing."

You shouldn't get caught up trying to figure out why a market is acting the way it is. When trading, you should remain adaptable. Because if you think too deeply about the fundamental causes, you will either stay in a trade too long or get out too soon.

20. "A man must study general conditions, to seize them to be able to anticipate probabilities."

When you have a winning trade, the wisest choice is to do nothing and just sit tight. Do not hurry to collect profits as long as the stock functions correctly and the market is right.

So here, Jesse suggests that we must study the general conditions of the market, like how a certain stock is acting before jumping into the trade.  

21. "People who look for easy money invariable pay for the privilege of proving that it cannot be found on this earth."

Jesse Livermore recognized early on that a fool and his money are easily separated, particularly during boom years and bull markets. People become selfish and complacent because they are curious about getting money.

22. "The only thing to do when a man is wrong is to be right by ceasing to be wrong."

Stops do hit, traders reverse positions, and suddenly there is a lot of momentum. Traders will then latch on to this momentum, and the trend will go even further; in the meantime, traders on the wrong side of the best will reduce their losses, magnifying the trend even further.

23. "I never argue with the tape. To be angry at the market because it unexpectedly or even illogically goes against you is like getting mad at your lungs because you have pneumonia."

It is most likely an essential guideline for every trader to understand. Because it significantly simplifies the trading procedure. It means don't think too deeply about the market and overthink things. The market will go wherever it wants, and your best bet is to attempt to follow it.

24. "Most people, whether bull or bear, when they are right, are right for the wrong reason, in my opinion."

Trading stock is always a war between the bulls and the bears, so regardless of your opinion of the market if there aren't enough buyers, the market will fall, and if there aren't enough selling, the market will rise.

25. "No one ever went broke by taking a profit."

Livermore's skill was in watching the market for long enough to have a sense of where it might move next. What Jesse means here is you need to identify where the market is heading, and only then can you take profit.

Conclusion

Jesse Livermore gained $100 million during the Great Depression by shorting stocks during the 1929 Stock Market Crash.

Once you understand how to identify patterns and manage risk, your power to control your emotions will determine whether or not you can outperform the market.