Some Important Insights From the Greatest Trader to Have Ever Walked The Earth

Jesse Livermore, one of the greatest traders to have ever lived, believed that the most important thing for speculators to control is their emotions. The driving force behind the market is not reasoning, logic, or pure economics. The real driving force is human nature, and human nature never changes.

"Unless you invest real money, you won't know if your judgment is correct, because you haven't really tested your emotions."

And I agree. It's human emotions that control the market, not reasoning. This is true for anything important in life: love, marriage, raising children, war, crime... rationality is rarely the driving force.

Of course, I'm not saying that factors such as sales, profits, world events, politics, and technology don't affect prices. These factors will ultimately have an impact, and the performance of the entire global market as well as individual performance will reflect the influence of these factors. However, the most powerful and extreme factor is still human emotion.

"I believe everything has cycles, just like life has cycles, and the market has cycles. These cycles often go to extremes and rarely have a chance to reach balance."

Cycles are like waves in the ocean. When things are good, the waves are high, but when the party is over, the low tide will emerge. These cycles always come and go unexpectedly, and there's no way to predict them. To withstand the challenges of the cycle, you must exercise restraint, remain calm, and always maintain patience—regardless of whether things are good or bad.

"Studying the market is actually studying cycles. If the trend changes, the momentum doesn't decrease, and the new trend will continue—objects in motion will continue to move. Remember, never go against the market, don't fight the trend!"

"If a person makes a mistake, the only thing he should do now is to correct the mistake and not make the same mistake again. Cut your losses quickly, don't hesitate."

"The performance of stocks often resembles that of a person, with different personalities: some are aggressive, some are conservative, some are very nervous, some are direct, some are logical, some follow the rules, and some are unpredictable. Studying the market is like studying people. After studying for a period of time, you will find that their performance in specific situations is predictable, which is very useful, and you can use it to grasp the timing of stock fluctuations."