Crude's 'Irrationalistiscm'...

Crude was also on the watch list of this trade observer, but this 15 minute chart from Crude in today's market is one example of market's 'irrationalistiscm'. I place a trade within the pointed arrow and put a stop price within the 50% retracement from the green long bar (horizontal arrow), but got stopped out. It drops so hard and got hit hard (like a falling knife). My mistake is putting a late trade, I could have place an overnight trade (which I usually do), but this one is a product of my own irrationalistic behavior/action from the irrationalistic market behavior, it so happen I acted at the wrong time at the wrong side of the market.

Tip Alert: Stopped Out

Long trade entry got stopped out.

Tip Alert: Long Gold

Entry: 1255
Stop: 1251
Target: 1262
Note: First alert for 2014 trades. Holiday by tomorrow, but putting a long entry at 1255, let's see how it goes.

Nine Surprising Things Jesse Livermore Said

• Joshua M Brown
• December 24th, 2013

There are those who would convince you that it is somehow smart or in your best interest to be manically switching your investments around, back and forth, long and short, on a daily basis. To pay attention to this kind of overstimulation is the height of madness, even for professional traders.

The most storied and important trader who ever lived, Jesse Livermore, would be tuning these daily buy and sell calls out were he alive and operating today. Because while he was a trader, he was not of the mindset that there was always some kind of action to be taking.

Jesse Livermore’s legacy is a bit of a double-edged sword…

On the one hand, he was the first to codify the ancient language of supply and demand that is every bit as relevant 100 years later as it was when he first relayed it to biographer Edwin Lefèvre.

Livermore himself sums it up thusly: “I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.”

On the other hand, Livermore’s undoing came at precisely the moments in which he ignored his own advice. After repeated admonitions about tipsters, for example, Jesse allowed a tip on cotton to lead to a massive loss which grew even larger as he sat on it – violating yet another of his own cardinal rules.

And of course, other than for a few moments of temporary triumph in the trading pits and bucket shops of the era, Jesse Livermore was not a happy man. “Things haven’t gone well with me,” he informed one of his many wives by handwritten note, before putting a bullet through his own head in the cloakroom of the Sherry-Netherland Hotel.

But he did leave behind a wealth of knowledge about the art of speculation. His exploits (and cautionary tales of woe) have educated, influenced and inspired every generation of trader since Reminiscences was first published in 1923.

In my opinion, some of the most useful bits of knowledge we get from the book concern Jesse’s discussion of timeframes and patience. Many traders, particularly rookies, approach the game with the idea that they’re supposed to be constantly doing something - in and out, with a trembling finger poised to click the mouse again and again.  Consequently, they get on the treadmill of booking wins and losses without ever really moving the needle. They end up with tons of brokerage commissions and taxes to show for their efforts, but not much else.

Being a trader doesn’t mean one must always be executing a trade, just as being a house painter doesn’t mean that every surface needs an endless series of coats.

Many rookies are surprised to learn that Livermore, the idol of so
many great traders, advocated a lower maintenance, higher patience approach as he matured. In his early days, Livermore was dependent on the short-term funding and scalping activity of the bucket shops. Once he graduated and had his own capital, he was able to lengthen position holding times and could even afford to do nothing for extended periods.

Here are nine surprising things Jesse Livermore said regarding excessive trading:

1. “Money is made by sitting, not trading.”

2. “It takes time to make money.”

3. “It was never my thinking that made the big money for me, it always was sitting.”

4. “Nobody can catch all the fluctuations.”

5. “The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

6. “Buy right, sit tight.”

7. “Men who can both be right and sit tight are uncommon.”

8. “Don’t give me timing, give me time.”
and finally, the most important thing:

9. “There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. Not many can always have adequate reasons for buying and selling stocks daily – or sufficient knowledge to make his play an intelligent play.”

Jesse was a trader but he knew the value of staying with positions and sometimes not trading at all. Once he began to follow tips from others or trade when he should have abstained, all of his progress had come undone, and with it, his sanity.

We are fortunate to be able to learn from his mistakes and to sidestep the errors that eventually cost him everything.

2013 Trading

Much to narrate about trading for the year 2013 for this self-taught independent market observer and hard trying 'would be' trader, except that the market for this humble participant is really a shot in the air. But it's better to shoot in the air than shooting at something else, isn't it? Well, what that means, I mean participating in the market is really hard work, understanding yourself, have discipline at all times, and most of all be an 'observer'.

Be adaptable too, have your own understanding about the market, and be an independent thinker, ready to act on your own, not being influence by anybody. Though you can entertain other (lots) ideas regarding the market, but at the end of the day, when trading time, it's all yours, no one can help you in trading except yourself. Who else going to help you 'real time' to make you money? Nobody!

In (my) trading, you need to have your own idea to participate, that's what I learned and what I do believe. Make your own way of trading to say the least. For the coming 2014, we hope we can have a better way of participating in the market, and I wish all fellow traders a very fruitful trading this coming 2014...

Tip Alert: Successful

Exited at 1242...

Tip Alert: Long Gold

Entry: 1234
Stop: 1228
Target: 1240