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Jesse Livermore’s Trading Method: How to Anticipate Coming Movements

Waiting for Pivotal Points:

One of the key aspects of Livermore’s trading method was his use of pivot points. A pivot point is a level of support or resistance that a stock is likely to bounce off of. Livermore would wait for the market to reach a pivot point before he would make a trade. This gave him a higher probability of success, as he was entering the trade at a point where the momentum was already in his favor.

Livermore emphasized the importance of exercising patience and waiting for the market to reach what he termed a “Pivotal Point” before initiating trades. This pivotal point represents a critical juncture where the market is poised to make a significant move. By waiting for this point, Livermore ensured that he entered trades near the beginning of a move, enabling him to capture the backlog of profit that would sustain him through the course of the movement.

The Backlog of Profit and Endurance:


Livermore’s trading method is still relevant today. It is a simple yet effective way to identify and profit from market movements. If you are looking to improve your trading skills, you should consider studying Livermore’s method.

key takeaways from Livermore’s trading method:

  • Anticipate coming movements. This is the most important aspect of Livermore’s method. You need to be able to identify the next move of importance in a given stock.
  • Use pivot points. Pivot points are levels of support and resistance that a stock is likely to bounce off of. Waiting for the market to reach a pivot point before you make a trade will give you a higher probability of success.
  • Be patient. Don’t enter a trade just because the market is moving in your favor. Wait until you are confident that the move is sustainable.

Some additional tips from Livermore’s trading method:

  • Trade only the strongest stocks in the strongest industries. Livermore believed that it was important to trade stocks that were in uptrends. He avoided trading stocks that were in downtrends or stocks that were not part of strong industries.
  • Use price patterns and volume analysis to confirm your trades. Livermore used price patterns and volume analysis to confirm his trades. He believed that these tools could help him to identify the most profitable trades.
  • Set stop losses and exit strategies. Livermore always set stop losses and exit strategies for his trades. This helped him to limit his losses and protect his profits.

By following these tips, you can increase your chances of success in the markets.