Trading FX Like Jesse Livermore Traded Stocks
This article written by Jamie Saettele was originally published in the March 2009 issue of SFO Magazine.
* Jamie Saettele is senior currency strategist at Forex Capital Markets LLC in New York and author of Sentiment in the Forex Market. His technical strategy is published daily at DailyFX.com. Saettele is an active currency trader employing a discretionary approach to the FX market.
Jesse Livermore is widely considered to be one of the greatest stock traders of all time. On more than a few occasions, he traded a shoestring into at least a $1 million fortune. It is said that the 1929 stock market crash was the pinnacle of his career, when he shorted stocks and made more than $100 million. Somehow though, he ended up broke and committing suicide in 1940. His demise is most likely because he did not follow his own trading rules. Still, when Livermore followed those rules, his trading success was unparalleled. The keys to his trading are not limited to the stock market. Foreign exchange traders can apply Livermore’s techniques to gain an edge in their trading as well.
Some Bac kground
In modern trading jargon, Livermore would be classified as a swing or position trader. In Edwin Lefevre’s 1923 classic trading book Reminiscences of a Stock Operator, Livermore explains that the common thought of the day is “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.” He would build his position gradually, putting himself in place to catch the meat of the trend. ( www.fxstreet.com)