A couple of months ago I was listening to a recording of one of David Bowden’s old Incubator seminars, and I heard him say that all traders should read Reminiscences of a Stock Operator, and then re-read it every three months! I’ve read it a few times and taken a lot from it each time because the lessons contained are timeless.
Honestly, it’s a book that I think every trader would both enjoy and relate to. Written by Edwin Lefevre, it is actually a fictionalized biography of Jesse Livermore, one of the biggest and most famous traders of all time. To give you an idea of both his trading size and his notoriety, large market moves were often attributed to Livermore by the public, especially if they were on the bearish side!
When Jack Schwager was interviewing top traders for his book Market Wizards, he always asked them if there were any books they would recommend to new, aspiring traders. The most frequent response by far was Reminiscences of a Stock Operator, with one trader liking it so much, he always kept a stack of copies on hand, to give to new employees of his firm.
So what makes this book so popular? It is entertaining and easy to read, but chock of full of valuable lessons and experience for traders. It’s as though you’re sitting across the table from Livermore, listening to him tell you not only the gold nuggets he discovered over the years but HOW he was able to work things out. He tells you of successes and he tells you of the times he was wiped out, and how he was able to pick himself up, dust himself off, and figure out what he had done wrong so he could improve for next time. There are lessons on trading psychology, and position sizing, and patience, and of course one of my favourite quotes: “Men who can both be right and sit tight are uncommon”.
The bottom line is that this is a no-nonsense book that tells the truth about trading, and gives you loads of practical suggestions and tips for growing and improving as a trader. I’ve never met a trader who didn’t both enjoy AND value the contents of this book. It’s a few hundred pages long, however, you can find a good abridged audio version online which runs for only a couple of hours, and is great to play in the car or while you’re going for a walk if you want to refresh the lessons every few months.
If you enjoy Reminiscences of a Stock Operator, you’ll also enjoy How I Trade in Stocks by Jesse Livermore, which details his trading methods and theories. There’s a key distinction between what we do (or try to do) as Gann traders and the way that Livermore trades. David always said that “Gann didn’t have a monopoly on trading wisdom”; that is, he wasn’t the only one with good ideas we could take on, and I think there are several things we can take from Livermore’s writing. For example, Livermore discusses the idea of not trying to trade the first or last ‘eighth’ of a move. That is, rather than trying to get in right at the bottom of a big move, wait for some confirmation that the move is underway, and enter with more confidence that the move is going to unfold. It’s an interesting idea and one that can remove stress from your trading.
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Happy Reading!
Mat
Reminiscences of a Stock Operator – Paperback
How I Trade in Stocks – Paperback