Jesse Livermore Learned the Hard Way to be a Trend Follower

Few books have been as influential to the mindset of the tactical trader than Reminiscences of a Stock Operator, a 1923 roman à clef by American author Edwin Lefèvre.

Reminiscences of a Stock Operator is told in the first person by a character inspired by the life of stock trader Jesse Livermore.  

One of the best quotes shows us how Livermore learned the hard way to become a trend follower: 

“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.”

 — Edwin Lefèvre, Reminiscences of a Stock Operator

Similarly, British Political Economist David Riccardo said;

“Cut short your losses and let your profits run."

Riccardo means let go and get out of your losses, and hold on to your profits, and it has become the mantra for trend following. 

Always sell what shows you a loss and keep what shows you a profit.

Mike Shell