In 1907, he correctly predicted the stock market crash and made $3 million in a single day. Financial mogul J.P. Morgan sent a special envoy to ask him to stop short - selling, and he agreed. In 1921, during a period of economic depression and stock market slump, he went long. In 1929, he accurately short - sold before the crash and made $100 million, reaching his peak. He is Jesse Livermore, the legendary figure on Wall Street and the king of speculators.

He said that everything has two sides, but the stock market only has one side. It is not the side of the bulls or the bears, but the side of the facts. It took me much longer to deeply imprint this general rule in my mind than most of the more technical aspects of the stock - speculation game.

Key Point One: Wall Street Never Changes, and Human Nature Never Changes

The market is regular, and the regularity of the market is due to the unchanging human nature.

One of the lessons I learned early in the stock market is that there is nothing new on Wall Street because speculation is as old as the hills. What happens in the stock market today has happened before and will happen again. I think what I really can't remember is when and how it happens. The way I remember these facts is the way I use my experience.

Wall Street will never change because human nature never changes.

I think that the inability to control one's emotions is the real enemy of speculators. Fear and greed are always there, and they are hidden in our hearts. They wait outside the market to jump into the market to perform and wait for the opportunity to make a big profit. Fundamentally, because of greed and fear, ignorance and hope, people always behave in the same way - this is why those numerical patterns and trends always repeat themselves unchanged.

Key Point Two: Making Big Money Requires Patience to "Wait"

Patiently wait for the market to truly have a perfect trend. Do not make predictive interventions. Timing is everything. You have to buy at the right time and sell at the right time.

Trading is not something you do every day. People who think they have to trade all the time ignore one condition, which is that trading needs a reason, and it has to be an objective and appropriate reason.

In addition to trying to figure out how to make money, traders must also try to avoid losing money. Knowing what to do is almost as important as knowing what not to do.

A stock operator must fight many expensive enemies in his heart. Making big money requires waiting, not thinking. You have to wait until all the factors are in your favor.

The reason why predicting the market is so difficult is human nature. Taming and conquering human nature is the most difficult task. Choosing the right time carefully is very important. If you rush, you will pay the price.

My losses were entirely due to lack of patience. I didn't patiently wait for the right time to support the views and plans I had already formed. I didn't know that 15 years later, some things would let me wait for two whole weeks and watch the stock I was very bullish on rise 30 points before I felt it was safe to buy.

You have to be patient and wait for the right key point to appear and the right trading opportunity. Patience, patience, and more patience. This is his secret to grasping the opportunity and achieving success. He often said, "It's not thinking that makes money, but waiting."

All a person has to do is observe what the market is telling him and react to it. The answer is in the market itself. The challenge is to correctly interpret the presented facts.

"Timing is everything." The most important thing before entering a trade is to determine whether the line of least resistance is consistent with your trading direction.

My experience is that if I don't enter the market near the starting point of a trend, I will never make much profit from that trend. The reason is that I miss the profit cushion.

With this kind of courage and patience, he can calmly watch the market change and hold his position in the face of the small declines or rebounds that are bound to occur before the end of this trend.

The market will timely send you a signal of when to enter the market. It is equally certain that the market will also timely send you a signal to exit - if you wait patiently.

"Rome was not built in a day." Truly significant trends do not end in a day or a week. It takes time to go through their logical process.

At many times, Livermore was holding cash and waiting until the right market situation appeared. Many of his successes were due to his ability to hold cash and wait patiently until the right market situation appeared before him.

When the market situation appeared and there were many opportunities favorable to him, it was only at this time, and only at this time, that he struck out like a cobra.

A key to my later trading theory is: only trade at key points. As long as I am patient and trade at key points, I can always make money. I also think that the largest part of a stock's market situation often occurs in the last two weeks or longer of this market situation.

Key Point Three: Winning Success Through Hard Work and Clear Thinking

Right is right, and wrong is wrong. Only do the right thing and don't add to the mistakes.

A very talented speculator once told me: When I see a danger signal, I don't argue with it. I get out of the way! A few days later, if everything still looks good, I come back. I think of it this way. If I'm walking along the railroad track and see a train coming at me at 60 miles an hour, I'll jump off the track and let the train pass, instead of foolishly standing there. After it passes, I can always get back on the track if I want to.

This vividly represents a speculative wisdom that I will never forget.

Strangely, the trouble most speculators encounter is something inside themselves that prevents them from having the courage to close their positions when they should.

They hesitate and, in their hesitation, watch the market move many points in a direction unfavorable to them.

It is obvious that one should be bullish in a bull market and bearish in a bear market. It sounds funny, but I had to deeply understand this general principle before I could put it into practice. It took me a long time to learn to trade according to these principles.

Reading the market is an important part of this game. It is also important to start at the right time, and it is equally important to stick to your position. However, my biggest discovery is that one must study and evaluate the overall situation in order to predict future possibilities.

I no longer gamble blindly and no longer care about how to master the skills of operation. Instead, I care about winning my own success through hard work and clear thinking.

I also found that no one is immune from the danger of making foolish operations. If a person operates foolishly, he will pay the price for his foolishness.

Key Point Four: Inability to Control One's Emotions Is the Greatest Enemy of Speculators

Trading is a confrontation between rationality and emotion. Trading requires a rational plan.

I realized a long time ago that the stock market is never dull. It is designed to fool most people most of the time.

The two main emotions in the stock market are hope and fear - hope is often caused by greed, and fear is often caused by ignorance.

I think that the inability to control one's emotions is the real enemy of speculators. Fear and greed are always there, and they are hidden in our hearts. They wait outside the market to jump into the market to perform and wait for the opportunity to make a big profit.

Hope is essential for human survival, but hope is the same as its cousins on the stock market - ignorance, greed, fear, and distorted reason. Hope covers up the facts, but the stock market only recognizes the facts. The result is objective and final, just like nature, and it will not change.

The main enemy of a speculator always comes from within. Human nature cannot be separated from hope and fear. When speculating, if the market goes against you, you hope that every day is the last day - and if you don't follow hope, you will lose more than you should - strong enough to be comparable to the great contributors and heroes who have opened up the country and expanded the territory.

When the market goes your way, you are afraid that tomorrow will take away all your profits, so you exit - too quickly. Fear makes you not make as much money as you should.

Successful traders must overcome these two deep - rooted instincts. He must change what you can call natural impulses. When he is hopeful, he should actually be afraid, and when he is afraid, he should be hopeful. He must be afraid that his losses may turn into greater losses and hope that his profits may turn into greater profits. Gambling in stocks in the usual way is absolutely wrong.

Remember, if an investor has no self - discipline, no clear strategy, and no simple and feasible plan, he will fall into the trap of emotions. Because a speculator without a plan is like a general without a strategy, and therefore has no feasible plan of action.

Key Point Five: Never Let Losses Exceed 10% of Capital

Control your trades and manage your capital.

Never engage in a trade unless you are certain that it is financially secure.

The predicament that inexperienced speculators often find themselves in is overcommitting to each position. Why? Because everyone feels the urge to trade. It goes against human nature to allocate too much to a single trade. People always hope to buy at the very bottom and sell at the very top. Maintain a calm mindset; do not argue with the facts, do not cling to hope when there is none, and do not dispute with the ticker tape, because the ticker tape is always right—there is no room for hope, guesswork, fear, greed, or emotion in speculation.

Finally, speculators should buy stocks in several installments, and each time only a certain proportion should be purchased.

If, under certain circumstances, I buy a stock that I am bullish on but it does not perform as I had hoped, this is sufficient evidence for me to sell the stock.

I have proposed my 10% rule—if my loss in a trade exceeds 10%, I immediately liquidate.

I act on instinct. In reality, it is not instinct but a subconscious accumulation of years of battling in the stock market. You must adhere to the rules you set for yourself—do not deceive yourself, do not delay, do not wait! My fundamental principle is never to let losses exceed 10% of capital.