Jesse Livermore - Market Key

Quote from Dackster:

Livermores 'market genius' was out of control, he had almost everything, in fact he had everything at certain points in his 'career'.

He toyed with his own insight, he took his insight to the very edge and came out on top, a dangerous game.

Livermore is a 'great', it's just a shame there was a slight kink in his armour,....his ego.
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Dackster,

Thanks for posting.

Good points . . . well taken.

I hate it when I have holes exposed in my armour . . . that can make for a bad day on the field of battle.

I think Mr. Livermore had an uncanny ability to read the tape. I believe if he had lived in the era of computers where he could automate his trades . . . and take out more or the human element . . . he would have fared much better.
 
Quote from Compulsive:

Here we go agaiin...LIVERMORE the great trader....divorced three times. bankrupt 4 times and "dies" (sounds better than suicide) flat broke.....sounds like a winer to me :cool:
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Compulsive,

Thanks for posting.

Given your line of reason on both on a personal level and professional level - one could come to exactly your same conclusions.

I respect your opinion.

Thanks again.
 
Quote from NeoRio1:

How to trade stocks by Jesse Livermore was the only stock market book I ever read.

Livermore never looked at charts. Instead he would record the price of stocks in a journal and would base his long term trades off of these recorded prices.

He would only trade the market at the most 5 times in one year. You could call Livemore a weekly swing trader to a monthly trend trader.

I interpret everything Livermore has ever said in that book to the ability of trading trends.

If livermore was alive today he most likely would have gone short a year ago and would probably still be short.
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He started off as a daytrader in the bucket shops and became more long term later in life.
 
Quote from Cygnus Atratus:

Looks like 2000 years later, the hunt for The HOLY GRAIL continues, boy l love this business :D
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Cygnus Atratus,

Thank you for your post.

How right you are.

There is nothing new in Wall Street - speculating is as old as the hills - whatever has happened in the stock market today has happened before and will happen again.

And 2000 years from now there will continue to be those who hunt for the proverbial HOLY GRAILS.

Thanks again.
 
I want to extend a handshake through space and time and thank you - Hook N Sinker" for your response.

I believe to it to be the correct direction to the question I originally posted regarding "daily price value" in Mr. Livermore's - Market Key.

Now for my next questions for you or any one else who would care to comment.

Background:

Mr. Livermore concluded . . . "a stock selling around $30 or higher would have to rally or react from an extreme point to the extent of approximately six (06) points before he would recognize that a Natural Rally or Natural Reaction was in the making."

My two questions would be as follows:

1. I know Mr. Livermore only traded market leaders . . . but . . . for stocks trading for under $30 - should that value of six (06) points be lowered to something less and if so what value?

2. If we wished to look at an Index that traded in the 800 range (SP 500) or 8000 range (dow jones) - what should be the corresponding adjustments to his formula?

Any takers? Thank you for any input you may have.
 
Quote from Dackster:

This is all based on your perspective and not how the market works.....totally different worlds.
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yup, aside from political posts.....gnome is worthless

The game isn't always 50/50. That's the WORST assumption anyone could ever make in the market.

You think the market is like flipping a coin?

Comon. Get real.

I even attempted to match a roulette wheel to this game. Doesn't work the same. I'll get my ass handed to me by the wheel. Not the case in stocks.
 
Quote from pjones2012:

Mr. Livermore concluded . . . "a stock selling around $30 or higher would have to rally or react from an extreme point to the extent of approximately six (06) points before he would recognize that a Natural Rally or Natural Reaction was in the making."

My two questions would be as follows:

1. I know Mr. Livermore only traded market leaders . . . but . . . for stocks trading for under $30 - should that value of six (06) points be lowered to something less and if so what value?

2. If we wished to look at an Index that traded in the 800 range (SP 500) or 8000 range (dow jones) - what should be the corresponding adjustments to his formula?
More...

I notice on Chapter 8, page 67 in my copy of "How To Trade In Stocks" Mr Livermore writes:

"I wanted to find out what constituted the beginning of a natural reaction or natural rally. So I began checking the distances of price movements. First I based my calculations on one point. That was no good. Then two points, and so on, until finally I arrived at a point that represented what I thought should constitute the beginning of a Natural Reaction or Natural Rally."

I interpret this as a vague description of how Mr. Livermore optimizes his method.

I name the $ 6 / share parameter the "fluctuation parameter" and the $ 3 / share parameter the "reversal parameter".

If a stock is trading at $ 60 / share then the $ 6 / share fluctuation parameter is 6 / 60 = 0.1 or 10 % of the stock price.

If a stock is trading at $ 30 / share then the $ 6 / share fluctuation parameter is 6 / 30 = 0.2 or 20 % of the stock price.

If a stock is trading at $ 60 / share then the $ 3 / share reversal parameter is 3 / 60 = 0.05 or 5 % of the stock price.

If a stock is trading at $ 30 / share then the $ 3 / share reversal parameter is 3 / 30 = 0.1 or 10 % of the stock price.

I might use percentage values to determine pivotal points for securities trading at price values outside the $ 30 / share to $ 60 / share range.

So for the Dow Jones Industrial Average I might use (yesterdays closing index value 8519.69) 8519 x 0.1 = 851.9 for the reversal parameter. I might round it off to 900. 8519 x 0.2 = 1703.8 for the fluctuation parameter. I might round if off to 1700.

I might test different values of fluctuation and reversal parameters to optimize the system.
 
Quote from pjones2012:

...

Then I notice a voice in my mind saying "it is the extreme price value"!

..
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you just had a 'Clinton's session' getting advice directly from Mr. Jesse Livermore :)
 
Quote from Hook N. Sinker:

I notice on Chapter 8, page 67 in my copy of "How To Trade In Stocks" Mr Livermore writes:

"I wanted to find out what constituted the beginning of a natural reaction or natural rally. So I began checking the distances of price movements. First I based my calculations on one point. That was no good. Then two points, and so on, until finally I arrived at a point that represented what I thought should constitute the beginning of a Natural Reaction or Natural Rally."

I interpret this as a vague description of how Mr. Livermore optimizes his method.

I name the $ 6 / share parameter the "fluctuation parameter" and the $ 3 / share parameter the "reversal parameter".

If a stock is trading at $ 60 / share then the $ 6 / share fluctuation parameter is 6 / 60 = 0.1 or 10 % of the stock price.

If a stock is trading at $ 30 / share then the $ 6 / share fluctuation parameter is 6 / 30 = 0.2 or 20 % of the stock price.

If a stock is trading at $ 60 / share then the $ 3 / share reversal parameter is 3 / 60 = 0.05 or 5 % of the stock price.

If a stock is trading at $ 30 / share then the $ 3 / share reversal parameter is 3 / 30 = 0.1 or 10 % of the stock price.

I might use percentage values to determine pivotal points for securities trading at price values outside the $ 30 / share to $ 60 / share range.

So for the Dow Jones Industrial Average I might use (yesterdays closing index value 8519.69) 8519 x 0.1 = 851.9 for the reversal parameter. I might round it off to 900. 8519 x 0.2 = 1703.8 for the fluctuation parameter. I might round if off to 1700.

I might test different values of fluctuation and reversal parameters to optimize the system.
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Hook N. Sinker,

WOWA!!!!!!!!!!!!!!!!!!!!!

LOL - Nice!!!!!!!!

Nice Job!!!

What can I say?

I think it is safe for me to say you understand this material hook, line and sinker . . . so to speak.

Not only did you answer the question I posted what you define as a "fluctuation parameter", you also answered the question I neglected to post, namely what you refer to as a "reversal parameter".

Thank you very much for the insight.

I like your "set percent" approach. Taking your approach a little further with the index calculations - for example the dow trading in the 8500 range - I would probable test (as you suggest) as follows:

Test A
1. fluctuation parameter = 20%
2. reversal parameter = 10%

Test B
1. fluctuation parameter = 10%
2. reversal parameter = 5%

Test C
Record the price records of approximately five (05) sets of sister stocks of five (05) industries (or sectors) of the dow.

As these stock records go through their respective "fluctuations" and "reversal" come up with a percentage calculation to apply for the dow in this case based upon the corresponding move within the dow.

I am very excited to have come up with very comfortable solutions for the question I have had and you have answered and provided.

Thank you very much for your help.

ET what an incredible place. . . LOL :)
 
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