Jesse Livermore's 15 Key Trading Rules

Jesse Livermore's Key Trading Rules

1. Buy rising stocks and sell falling stocks.
Don’t go against the trend; trade in the direction of strength.


2. Do not trade every day of every year.
Only trade when the market presents clear opportunities.


3. Trade only when the market is clearly bullish or bearish.
Avoid trading in unclear or choppy conditions.


4. Only enter a trade after the action of the market confirms your opinion.
Let the market prove you right before you commit fully.


5. End trades when it is clear that the trend you are profiting from is over.
Don’t hope; get out when the reason for being in the trade disappears.


6. In any sector, trade the leading stock – the one showing the strongest trend.


7. Never average down a losing position.
Adding to a losing trade compounds your mistake.


8. Never meet a margin call – sell your position instead.


9. Keep cash in reserve at all times.
Be ready to take advantage of new opportunities.


10. Don’t be influenced by others' opinions.
Stick to your strategy and analysis.


11. Study your mistakes.
They are your best teachers in becoming a better trader.


12. Markets are never wrong; opinions often are.


13. Let profits ride and cut losses quickly.
Protect your capital at all costs.


14. Be patient.
Great trades take time to develop.


15. Don’t try to guess tops and bottoms.
Trade the middle part of a trend – that’s where the money is.