But it is not a game for the stupid, the mentally lazy, the man of inferior … Trade the trends and wait for the opportunities. Because all too often, the market will inch right up to the breakout point and then it will fall back. So if you do trade a breakout and it pulls back, and you find that you’re waiting around, then that’s probably the first sign that you might have to cut your losses.The curious thing about trading is the old statistic that is always being mentioned about 95% of all traders losing money. This is a weekly chart:And you can see that once price breaks through an important level it will just go and go and go. Unless you can gain access to the complete order book that shows how traders are buying and selling and even then it is not easy because of dark pools.Just remember that the market will always take the path of least resistance, so don’t think too deeply about why it is doing what it’s doing. Jim Rogers had been bearish on the market since around 2004, so it took years before the market finally proved that he was right.


The market is never wrong, only opinions can be wrong.Some traders might think that we have hit a short-term top in the stock market, some might think that oil is far too low at this price. Because that is the gambling mindset. She wants you to keep trading in and out because that’s how she earns her commission.So, the ideal customer for a broker is someone who trades all the time but doesn’t go broke. There is always an opportunity around the corner.First of all, you don’t want to take a tip from a broker, because a broker might have a conflict of interest. Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940) was an American stock trader. But it won’t always be like that, because every situation is different. Then they go ahead and trade straight away. He focused on finding and buying the strongest stocks in a bull market, and shorting the weakest stocks in a bear market. Jesse Livermore paved the way, winning and losing many millions and he learnt the hard way that the human mind is your greatest asset and greatest enemy.But you can teach yourself discipline and learn to ignore your human impulses.

There are plenty of days when an opportunity just doesn’t present itself.Maybe it’s a public holiday or maybe there just isn’t any news on the calendar. And one way to do that would be study the effects of behavioural finance, amongst other things.In the book, Jesse Livermore spoke a bit about a professional gambler called Pat Hearne.Pat would treat the markets like a roulette or blackjack game and make a series of calculated bets looking for small, sure wins. And if you can’t make money on these leading stocks, then chances are the overall market might be deteriorating, and if that’s the case you should probably reduce your exposure and size.Having said that though, Jesse would say that you should never become completely bearish or bullish on the whole market just because one stock – in some particular – has plainly reversed. While the cotton kept dropping and the loss just got larger and larger.So it’s clear.

It’s waiting for the price action to confirm the trade that will lead to the biggest trends and the biggest profits.We have spoken already that it’s important to cut losses short and let profits run and to never be afraid to take losses.But it’s equally important to drill home the point that you should never average losses either.Averaging losses simply means adding to a losing trade.So, for example, say you bought $1000 worth of stock at a price of $10 a share and that stock then falls to $8. But of course, it did the opposite.The wheat kept on going in the right direction and would have made an even bigger profit. Because, most of those 95% are not trading they are gambling. Here’s the stock on a monthly chart which shows the extent of the price rise:If you thought the stock was too high in 2010, you’d have been kicking yourself in 2011. Or even take the day off completely. The quotes are taken directly from the original book by Edwin Lefèvre.Jesse Livermore was born in Massachusetts, in 1877. As humans, By trading too much, you spend too much on commissions and you lose money. But his reply would always be the same : This is a bull market, or, this is a bear market.In other words, you have to always trade with the prevailing trend. If you were short when the key $90 level broke your position would have moved more or less straight into profit and it would have just kept moving down and down.The best trades will often move straight into profit. That way they’re going to get into the trend a couple of points early and that will save them money.Of course, this strategy is the wrong one.
Finding a strategic way to follow these trends is perhaps the most useful path to take.So, you should never avoid a stock because the price looks too high or too low.

So let’s say you buy another $1000 worth at $8. Data errors and mistakes do occur. Plus, if your broker was that good at trading, she would be a professional trader instead of being a middle-man/woman.Second of all, if you get a tip from someone, you have no idea what their intentions are. If you think the market will fall, then wait for a signal first.

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