Jesse Livermore was one of the most successful stock traders of all time, making over $100 million shorting the stock market in 1929 - equivalent to close to $2 billion in today's money🤯
Here are 21 timeless principles he applied to markets to generate large profits 💰🧵👇
"Nothing new ever occurs in the business of speculating or investing in securities and commodities."
This is because human nature is still the same as it was 100 years ago, so patterns that worked then still work now!
"Money cannot consistently be made trading every day or every week during the year."
There are times to press the gas and there are times to sit on your hands. These are arguably the most profitable skills for a trader to learn, but also the hardest.
Richard Dennis, also known as the "Prince of the Pit" was a very successful commodities trader.
In the 1970s, Dennis borrowed $1,600 and turned it into over $200 million in 10 years.
Below are 11 of our favorite Richard Dennis quotes 👇🧵
"It is misleading to focus on short-term results."
Our results are best measured over 100s or even 1000s of trades to avoid short-term variability!
"You have to minimize your losses & try to preserve capital for those very few instances where you can make a lot in a very short period of time. What you can’t afford to do is throw away your capital on suboptimal trades."
Momentum trading is one of the most lucrative wealth building tools in the world of investing. Imagine being able to find $NVDA BEFORE the big move.
It's possible if you pay attention during a correction because these leaders leave clues 🔎
A thread on what to look for:
Corrections are feared by most because people associate the lower prices with losing money, which makes sense because most people do lose money during a correction.
But corrections are what create opportunities for the astute momentum trader looking for the next big winners 🧐
However, the first priority during a correction is to protect capital. We are looking for clues to spot the next big winners but you WILL get chopped up if you trade too much before the correction runs it's course.
We want to be in a position of strength when the time is right💪
One of the most powerful chart patterns is the Volatility Contraction Pattern (VCP), made famous by Market Wizard @MarkMinervini.
If you want to be an expert in technical analysis, this pattern is a MUST KNOW.
Here are the crucial elements (so you can spot it in seconds):
@markminervini The most important traits of a valid VCP pattern are the following:
1. Tightening from left to right within the base 2. Relative strength and accumulation signs 3. Volume dry ups & lack of sellers 4. A very tight final contraction
Let's dive deeper with a real world example ↓
@markminervini Characteristic #1: Tightening Within The Base
Proper VCP patterns show volatility contracting as time goes on.
This is characterized by a set of higher lows, with highs staying relatively equal throughout the base.