Customer Reviews

How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price

5 star:		(8)
4 star:		(3)
3 star:		(1)
2 star:		(2)
1 star:		(2)

 

 

Jesse Livermore's book, in my opinion, is the single all time best book ever written on trading stocks.

I have read many books on trading, 7 out of 10 ordinary books are written by people who are good at writing textbooks. They are good at talking theory, but when it comes to combat in the trading battlefield, they come short and leaves you unsatisfied.

Jesse walks you through important trading principles which he learned through mistakes himself. He walks you through the emotions, the struggles, the mistakes, together with the success. This is no textbook, but you will learn important principles from a man who has been through the trenches himself.

THis book is not for ordinary investors, but for traders with a bit of experience. For those who are full time traders, this book is a must read. It leaves the ordinary trading textbooks in the dust.

The only draw back is Richard Smitten bought the copyright to the original book (from what I know), and he removed 3 chapters at the end of the original book, and he replaced it with his own materials. I went through great troubles to get hold of the orignal book with the final 3 chapters intact(the juicy stuff).

Overall, a must read for traders. If you can find the original edition, buy it and forget the new edition by Smitten.

This book's trading techniques apply even today. Jesse Livermore made and cashed in 100 million dollars during the October 29, 1929 crash, which shows you how effective his methods are. I have been using his methods for the past three years and am amazed at the results.

Using his system, I picked up Puma Technology (PUMA) last year at $10 in September 1999. By early March 2000, it went to $205 before it split 2:1. Again, using the same method, I picked up Digital Lightwave (DIGL) at $11 in October 1999. By early March 2000, it went to $150. I agree it was not a normal year last year but again using his method this year I selected FuelCell (FCEL) at $80 in August 2000. It went to $188 or so by September 2000 before it split 2:1.

I reread his book every few months so that I don't forget the important points. Jesse Livermore went from $25,000 to $150,000 in three weeks! and his method works even today.

He lost all of his fortune and declared himself bankrupt by 1934. I think he lost his fortune because of his personal life and not because of his trading. The other book on Jesse Livermore called 'Amazing Life of Jesse Livermore' by Richard Smitten that was published in September 1999 describes his life in great detail and also is an excellent read.

People that say that this book is not as useful in today's markets, I think, basically do not know how to interpret Jesse Livermore's guidance and trading methods. He says to buy a stock early, right before it starts in an uptrend and in the right sector, and hold on to it as long as it behaves normally. He said to get rid of it as soon as it started behaving abnormally. FCEL peaked at a volume of almost 7 million shares on September 12, 2000, which was the time to get rid of it the next day. As he said in the book, the last 48 hours of a stock's move is the most profitable and also the most dangerous.

In order to do full justice to his methods, you have to read all three of his books: Reminescences of a Stock Operator - by Edwin Lefevre, How to Trade in Stocks - by Jesse Livermore, and Amazing Life of Jesse Livermore - by Richard Smitten

I have a really fragile copy of a reprint of the this book printed in 1966. I purchased this edition so I could have a newer copy which would not have pages falling out of it. Unfortunately the editors have already removed three chapters of Livermore material and replaced them with original material by Richard Smitten. The Smitten material is ok, but it should have been added to the original book as an appendix not as a substitute for the last three chapters written by Livermore.

The original book was only 112 pages long and the material from that book stops at page 56 in this new edition leaving you with around 122 pages of new material not written by Livermore. For that sin I can only give this book two stars.

Like many of the readers who bought this book, I was at a loss to understand why Richard Smitten would remove some of the original work written by Jesse Livermore. Now we know the reason. He just published another book apparently putting back what he took out the first time. Don't buy this particular edition or you will be disappointed.

In this book, Livermore shows some of his experiences and the lessons he learned from them. From these experiences and his compilation of data he was continuously saving throughout his trading career, he developed a "Livermore Key" system that you enter the prices on a piece of paper, or, perhaps a computer to spot intermediate trend changes or an actual trend changes. Most of his theory is set on breakouts or breakdowns. Currently, as of 1/07/00, most stocks that make good money never go through a consolidation before large movements that Livermore describes. Winning stocks just keep going up without going down dramatically ever. Sometimes if you use Livermore's methods you would be selling at short-term lows. I tried his method on some leading stocks and you would have done better by just holding them. But then, there are stocks going up 500%+ a year right now, some as much as 3,000% in a year so it would be hard to beat that.

When the market loses some of it's momentum and leading stocks begin to go back and forth out of trading ranges, and there are less false breakouts, this book may be helpful.

But currently, using this method would put you in laggard stocks and/or sell during short-term corrections.

Aside from the Livermore Key, I found the book enjoyable and there were some good rules and points made that are still applicable today.

This is the best book I have ever read on trading, period! And i have read at least 20 of them. Even though this book was written more than 50 years ago (written in 1940!), it is still quite relevant today. (Which goes to show that nothing new ever happens in the stock market) It never ceases to amaze me how much wisdom Jesse Livermore has packed into almost every page of this book. I like to re-read this book every 6 months or so; to remind myself of the simple but un-intuitive rules of trading. Buy this book, read it several times and see the difference in your trading results. No kidding.

--Olu Emuleomo

I had a hard time finding the original version with the last three chapters intact even I am willing to pay more. It seems to be a great book based on reviews I read in various places, otherwise there will not be 20 buyers waiting in the queue for the used version.

As many people know, Jesse Livermore was the most successful trader early this century. Unfortunately, even the master couldn't hold on to his success. "JL" reportedly made $10 million during the beginning of the 1929 crash, only to lose EVERYTHING in the early 1930s. How did he lose his fortune? Unfortunately, his book does not say. Nevertheless, Jesse does reveal his system that served him well for many years. And even if it went kaput in the early 1930s, I think one can profit from his experiences. The book shows that Jesse often used "pivot points" to time his trades. Basically, "JL" was a mental technician. What has worked in the past may not work in the future. As George Soros had said, "The rules change." That phrase is especially important as we come ever closer to the end of the greatest bull market of this century, the type which wiped out JL himself. So, don't blindly follow JL's methods. Despite JL's subsequent failure, he did write a good book. I recommend it.

Excellent book! After reading this book I now know where all of today's great traders got most of their sayings and information from. For example, I heard Gary B Smith talk about his trading account like a store and that you need to turn over your inventory to make money and treat trading like a business. Well JL wrote about that way back in 1940. The same goes with following groups and only buying the leaders in the top groups. (just like William O Neil). I bet alot of people back then tried to pick bottoms when buying a stock. Not JL he used pivotal points and bought at new highs. Now it is common today for individual investors to buy at new highs.

The only thing I don't like is Smitten took out chapters from the original book. Why take out this material? Why not just update the book with recent charts?

Other than that this is a book you need to buy and keep.

With some additional material added for this edition, How To Trade In Stocks is an invaluable, "reader friendly" presentation by Jesse Livermore on his successful approaches and formulas for the timing of stock transactions, money management, and keeping in emotional control during volatile and unexpected market behaviors. Jesse Livermore is something of a Wall Street legend who cornered entire commodity markets, was able to call market tops, even to the point of selling short the infamous 1929 stock market crash resulting in his having made a hundred million dollar profit during that unprecedentedly severe economic debacle. Simply stated, Jesse Livermore's How To Trade In Stocks should be required reading by every amateur and professional investor in the market today.