Reminiscences Of A Must Read Book

If you haven't read it, Edwin Lefevre's Reminiscences of a Stock Operator is a classic book for active investors & traders. Although written in 1923, it is filled with useful thoughts, ideas and stories for anyone interested in trading, sentiment, charting, as well as general trade money management.
It details the fictional speculator Larry Livingstone, who is widely believed to be a pseudonym for fabled trader Jesse Livermore. Livermore/Livingstone utilized the ticker tape and chalk boards in the "bucket shops" to determine how a security would move in the short-term, without much regard to the fundamentals. The often used phrase (quoted in different ways) from this book is "The Tape Tells All" .... meaning the Chart (in modern terms) tells you what you need to know about the stock .... fundamental news, sentiment, etc are all shown in one way or another on the chart.Jack Schwager interviewed 30 of the greatest traders of all time (in his famous book Market Wizards) and asked them what book they found most valuable and would recommend to aspiring traders -- the most frequent response by far was Reminiscences.
Here is a sample of some of the many quotes from this timeless book that will certainly make you think and can help set the proper mindset of a successful investor:
But if after a long steady rise a stock turns and gradually begins to go down, with only occasionally small rallies, it is obvious that the line of least resistance has changed from upward to downward. Such being the case why should anyone ask for explanations? There are probably very good reasons why it should go down.
The speculator's deadly enemies are: Ignorance, greed, fear and hope. All the statue books in the world and all the rule books on all the Exchanges of the earth cannot eliminate these from the human animal.
At the same time I realise that the best of all tipsters, the most persuasive of all salesmen, is the tape.
I trade on my own information and follow my own methods.
Among the hazards of speculation the happening of the unexpected - I might even say of the unexpectable - ranks high.
The game does not change and neither does human nature.
A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.
It sounds very easy to say that all you have to do is to watch the tape, establish your resistance points and be ready to trade along the line of least resistance as soon as you have determined it. But in actual practice a man has to guard against many things, and most of all against himself - that is, against human nature.
He will risk half his fortune in the stock market with less reflection that he devotes to the selection of a medium-priced automobile.
"I can't sleep" answered the nervous one."Why not?" asked the friend."I am carrying so much cotton that I can't sleep thinking about. It is wearing me out. What can I do?""Sell down to the sleeping point", answered the friend.
When I am long of stocks it is because my reading of conditions has made me bullish. But you find many people, reputed to be intelligent, who are bullish because they have stocks. I do not allow my possessions - or my prepossessions either - to do any thinking for me. That is why I repeat that I never argue with the tape.
Remember that stocks are never too high for you to begin buying or too low to begin selling.
I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit.These are just a few of the pearls of wisdom found in this entertaining book that has held the test of time. Livermore was certainly a proponent of trend following ("the trend is your friend" is often attributed to him) and letting winners run while cutting losers short.