Trading & Risk · Lessons from the greats
Jesse Livermore: trend, pivots, and the cost of breaking your rules
Watch Patrick Boyle's 54-min documentary (works as audio), then pull out the rules: trade with the trend, cut losses fast, add only to winners, and respect your own system.
Step 1 of 5 · Practice70 min read ·
✏️ Practice problems
1. Your rules: cut losses at −8%, add only to winners. You're down 9% on a position. Action?
Show step-by-step solution
- The stop rule is breached.
Answer: Exit now: no averaging down
2. Win rate 35%, average win 3R, average loss 1R. Expectancy?
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- 0.35 × 3 − 0.65 × 1.
- = 1.05 − 0.65.
Answer: +0.40R per trade
3. Why did Livermore go broke several times despite great skill?
Show step-by-step solution
- Broke his own rules: overleverage, ignoring stops, trading on others' views.
Answer: Discipline failures and leverage, not lack of insight
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