Legendary options trader

Jesse Livermore is an icon in trading.

That equates to more than a billion dollars today, and he wasn't a hedge fund or trading other people's money. Jesse Livermore ultimately became a swing trader and longer-term trader, but he started out as a day trader , and this is where he made his first fortunes. Here's five tips day traders can use; advice that's almost a years old but is as relevant as the day it was conceived.

Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills.

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Only buy strong stocks in a bull market, and only short weak stocks in a bear market. Bull and bear markets are when stock prices are rising or falling overall, respectively.

When the index is in a downtrend , focus on taking short trades in stocks that are the weakest. These trades aren't made arbitrarily, they should be based on a strategy. The above just helps us figure out which stocks to trade.

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Developing a strategy and a trading plan takes time and work, but once in place all we need to do is follow it. If the market isn't providing trade setups based on our trading plan, then we shouldn't trade. Trade with stop loss orders, and know what that level is before you take a trade.

Any trade could be a loser, no matter how good it looks at the outset. Always use a stop loss order , and make sure that it gets you out of the trade if the stop loss level is hit. Successful day traders don't waffle about when they should exit.

They know when, where and how they're going to get out before the trade is placed. Averaging down is when you add to a losing a position.

If you already have a full position the maximum size position your trading plan allows then adding to that position when it's losing money is a significant lapse in discipline. Averaging down can deplete capital very quickly, especially if done multiple times and the price keeps going against you. Great numbers of people will buy a stock, let us say at 50, and two or three days later if they can buy it at 47 they are seized with the urge to average down by buying another hundred shares, making a price of Having bought at 50 and being concerned over a three-point loss on a hundred shares, what rhyme or reason is there in adding another hundred shares and having the worry double when the price hits 44?

Don't follow too many stocks. This limits the number of stocks you trade to a handful see What to Focus On As a New Trader video. Any more than that and it becomes hard to track them all and trade them adequately.

The more stocks being watched the more likely it is you'll miss the important moves you're waiting for. Search the site GO.

Greatest Trades In Wall Street History - Business Insider

Day Trading Trading Systems Basics Trading Psychology Trading Strategies Stock Markets Risk Management Forex Technical Indicators Options Glossary. Updated August 09, Get Daily Money Tips to Your Inbox Email Address Sign Up.

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