Without further ado, here are the 10 lessons, with supporting lines/quotes, which I thought are worth sharing.
1. Plan your trade and trade the plan. You won't earn a single penny if you keep on doing your analysis but don't execute it.
"I always made money when when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game -- that is, to play the market only when I was satisfied that precedents favored my play."
"Without faith in his own judgment no man can go very far in this game. That is about all I have learned -- to study general conditions, to take a position and stick to it. I can wait without a twinge of impatience. I can see a setback without being shaken, knowing that it is only temporary.
"The way to make big money is to make it. The way to make big money is to be right at exactly the right time. In this business a man has to think of both theory and practice. A speculator must not be merely a student, he must be a student and a speculator."
"I naturally think that if it is wrong to be bearish it must be right to be a bull. And if it is right to be a bull it is imperative to buy. As my old Palm Beach friend said Pat Hearne used to say, "You can't tell till you bet!" I must prove whether I am right on the market or not; and the proofs are to be read only in my brokers' statements at the end of the month."
2. You'll never learn enough unless you lose enough. Losing big money is part of the learning process in stock trading.
"There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!"
3. Avoid stocks with no definitive pattern.
"If a stock doesn't act right, don't touch it; because, by being unable to tell precisely what is wrong, you cannot tell which way it is going. No diagnosis, no prognosis. No prognosis, no profit."
4. In a bull market, the game plan is to buy and hold.
"I often took profits and waited for a reaction that never came. And I saw my stock go kiting up ten points or more and I sitting there with my four-point profit safe in my conservative pocket. They say you never grow poor taking profits. No, you don't. But neither do you grow rich taking a four-point profit in a bull market."
"Disregarding the big swing and trying to jump in and out was fatal to me. Nobody can catch all the fluctuations. In a bull market your game is to buy and hold until you believe that the bull market is near its end. To do this you must study general conditions and not tips or special factors affecting individual stocks."
5. Be patient. Buy, sit and hold tight. Haphazard trades will, more often than not, just burn your portfolio.
"After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It was always my sitting. Got that? My sittting tight!"
"I was too eager to prove to myself that I had seen real dollars and not a mirage. I saw, and knew that I saw. Thinking about the reward for my excellent sight kept me from considering the distance to the dollar-heap. I should have walked and not sprinted."
6. Keep abreast of local and international news to know the general market condition.
"If there is a solid bull foundation, for instance, whether or not what the papers call bull manipulation is going on at the same time, certain news items fail to have the effect they would if the Street was bearish. It is all in the state of sentiment at the time."
"But my greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities."
"Like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect or influence the course of the various markets. After years at the game it becomes a habit to keep posted. He acts almost automatically. He acquires the invaluable professional attitude and that enables him to beat the game -- at times!"
7. Buy in tranches when building up volume. It's also a way to test your analysis.
"But in starting a movement it is unwise to take on your full line unless you are convinced that conditions are exactly right. Remember that stocks are never too high for you to begin buying or too low to begin selling. But after the initial transaction, don't make a second unless the first shows you a profit. Wait and watch."
"He should accumulate his line on the way up. Let him buy one-fifth of his full line. If that does not show him a profit he must not increase his holdings because he has obviously begun wrong; he is wrong temporarily and there is no profit in being wrong at any time."
8. Admit you're wrong and move on.
"The only thing to do when a man is wrong is to be right by ceasing to be wrong."
"A loss never bothers me after I take it. I forget it overnight. But being wrong -- not taking the loss -- that is what does the damage to the pocketbook and to the soul."
"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 it for reasons or explanations. Stockmarket post-mortems don't pay dividends."
9. Speculate intelligently instead of trading blindly, ergo, gambling on tips
"The one game of all games that really requires study before making a play is the one he goes into without his usual highly intelligent preliminary and precautionary doubts. He will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile."
"Do you wish to gamble blindly in the hope of getting a great big profit or do you wish to speculate intelligently and get a smaller but much more probable profit?"
"How is the public protected against the danger of buying stocks above their real value? Who punishes the distributor of unjustified bullish news items? Nobody; and yet, the public loses more money buying stocks on anonymous inside advice when they are too high than it does selling out stocks below their value as a consequence of bearish advice during socalled "raids.""
10. No one can consistently and continuously beat the market. So if there's a guru or mentor selling you a foolproof system, he's just trying to fool you.
"I have said many times and cannot say it too often that the experience of years as a stock operator has convinced me that no man can consistently and continuously beat the stock market though he may make money in individual stocks on certain occasions. No matter how experienced a trader is the possibility of his making losing plays is always present because speculation cannot be made 100 percent safe."
These are just few of the many lessons you'll learn from the book, the rest, I'll leave it up to you to find out. :)
Trivia: In the book, Larry Livingston was used as pseudonym for Jesse Livermore. Stocks Notes
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