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Fifteen investment lessons from Jesse Livermore and John Paulson
The post below comes courtesy of my friend Blain Reinkensmeyer who runs the very popular Stock Trading To Go blog. To be a great trader you must be disciplined. Following a set of rules can make the difference between successful story telling versus ruminating on last week’s losses. Jesse Livermore, one of the best traders of all time, and John Paulson, one of the best traders of the last few years, both have a set of rules they follow religiously. Their success serves as your opportunity to enhance your investment savviness. Below are the rules of both Livermore and Paulson alongside a bit more background information on who they are (hat tip Minyanville and WSJ).
1. Cut your losses quickly. 2. Confirm your judgments before going all in. 3. Watch leading stocks for the best action. 4. Let profits ride until price action dictates otherwise. 5. Buy all-time new highs. 6. Use pivot points to determine trends. 7. Control your emotions. For those investors wondering whether they are emotional, we suggest reading our post “50 Ways You Know You Are An Emotional Investor“.
Here are his eight investment lessons: 1. Don’t rely on experts, be skeptical. 2. Always have an exit strategy. 3. Debt markets can do a better job predicting problems than stock markets. 4. Always educate yourself on new investment vehicles. 5. Don’t underestimate insurance (such as put options). 6. Experience counts. 7. Don’t fall in love with any single investment, keep emotions aside. 8. Don’t risk too much on any single trade, diversify risk. By applying any of the above fifteen lessons you can become a better trader. Success takes time, and these rules will lead you in the right direction. For further reading, look through our stock education archives that house more than 100 articles on a variety of investment topics. Source: StockTradingToGo, November 18, 2009. 2 comments to Fifteen investment lessons from Jesse Livermore and John PaulsonLeave a Reply | |||||||||||
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>>>During the course of his life he made and >>>lost millions, going broke several times >>>before committing suicide in 1940. These >>>are his seven greatest trading lessons
Why is then considered a great investor?
i’d like to know how paulson made twenty billion on the housing collapse without putting too much in any one investment and having an exit strategy.