10 10 2007


This chapter focuses again on the human side of trading. While in the poor-house, Larry is offered assistance by a brokerage firm with special needs. While working within this firm, Livingstone lets his feelings win over his judgement again and makes a mistake that he regretted more than any other he made on Wall St. One can repay money with money, kindness and favours must be paid back in kind. This is where Larry undid himself, by allowing himself, unknowingly, to be used by a brilliant and cold-blooded businessman.

An interesting theme in this book is repeated in the way the character reacts once he realizes that he has been used. Even though he was hurt and angry, he simple thanked his sponsor and left. He was as angry at himself for the markets were trading well and he was reading it accurately, but he let his own gratitude tie his hands. Following this involvement, the markets went flat – no profit to be made – for five years where Larry lived again in the poor-house. But worse, he was not only broke, but now he was greatly in debt.


This was a great chapter for me to read at this time in my life. It focuses on the importance of self-study. One must work out internal conflict to be able to trade the market effecively.


Coffee example – a trader must be prepared for the unexpected and the unexpectable!


It is the way a man looks at things

2 10 2007


“It is the way a man looks at things that makes or loses money for him in the speculative markets”, states Livermore. It is the habitual attitude that sets the experienced professional apart from the beginner. The ego driven thought patterns, not unlike the thinking of crowds, tends to be shallow and superficial.

Three different examples of successful large-scale trading campaigns are given to illustrate the thinking and the attitudes behind the trade. The first case study relates the correlation between activity in different ag markets. The second is an example where Addison Cammack uses the information from a tipster as a means of playing for position in the general market. The third campaign centers around a repeating theme: the opportunity needed to liquidate a large, profitable position. Often, the large trader must liquidate when the market is there to absorb a large line. Days of high liquidity and high volume are opportunities that must be watched for and acted upon quickly. In each example, the thinking of the crowd (and that of the tipster) is contrasted by the correct assessment of the large trader – this is one of the most important themes that is repeated in every chapter.

It occurred to me that Larry always has a reference to where he learned his lessons. That is, he always has a story or an example of the actions of other traders to support the rational of his actions. I only just realized that he must have done the very same thing I am doing now… researching and learning all he could from others.