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“The market has only one aspect,

This aspect is neither a bull market nor a bear market.

This aspect is the right one.” — Jesse Livermore

Whenever I read those vague and dull market analyses and strategies that overly emphasize theory and neglect practical market realities,

I think back to this quote.

“I did indeed make a mistake.

My cotton trades showed I would suffer losses,

But I still held on.

My wheat trades showed I was profitable,

But I sold.

Among all speculative errors,

There is hardly any greater mistake than trying to hedge losses evenly.

Always remember to close losing positions and keep profitable ones.”

— Jesse Livermore

Please note this paragraph reflecting Livermore’s wisdom:

Having worked on Wall Street for so many years,

Having earned and lost millions of dollars,

I want to tell you: it’s not my various insights that made me a lot of money,

It’s my ability to endorse my own claims.

Correct operation in the market doesn’t require special skills or tricks.

You will always spot many long opportunities early in a bull market,

And the same applies in a bear market.

Many people I know made correct judgments about the market at just the right time,

They are able to buy or sell at the most profitable prices.

And their experience often rivals mine.

In other words,

They haven’t truly made money from it.

People who can correctly judge the market and stick to their opinions are not common.

I find this to be one of the hardest things to learn in the world.

But only market operators who master this skill,

Can make big money.

There is a saying that,

A trader who knows how to trade is more likely to earn millions of dollars,

Than those who know nothing about how to trade earning only a few hundred dollars,

And it’s true.

Below is Livermore’s discussion on suffering losses:

Suffering losses is the least of my difficulties.

I’ve never been troubled by losses after they happen.

What truly unsettles me,

Is making mistakes.

A few years ago, I had these thoughts,

And now, as I write them down today,

They are just as timely as before.

In fact,

Over the past 50 years or even 100 years, they have been important,

Just as they will remain important over the next 50 or 100 years.