TheRiskBlog

What can I say about the book?
Jack Schwagers “Market Wizards” is without a doubt one of the most important books about markets, trading, traders and risk management and therefore   you should read it.

The reason is very simple.

This book from Van K. Tharp is another must-read for us. In „Trade your way to financial freedom“ you won’t find a certain trading system you can copy and trade - by the way, something you should never do, because it doesn’t work – but you find something really helpful: He shows how individual trading actually works.

Roger Lowenstein talks about the rise and fall of “long term capital management” in „When genius failed“. It’s about a hedge-fund that made huge profits over the years until it went down crashing big time in 1998.

Just imagine: a visionary trader at Salomon Brothers and future vice-president of the company, who knows how to forge teams and add a group of university math professors and financial experts to it (including two later noble price winners).

Like the title says, Jesse Livermore explains in the only book ever published under his name his philosophy about stock trading.
Published in 1940 you could say, that all information this guy could give us is way to old to be useful in the www-communication-era.
And maybe partly this is right. The way to purchase a stock has changed through upcoming online trading, and the flow of information is much faster and there is much more information available than back in the 1920´s.
But I strongly believe, that the psychology regarding the stock market and Traders didn’t change and won’t do so. And Jesse Livermore was pretty good to handle psychological traps that occur during trading.

Being a Trend-follower and high player at the stock market, Livermore is said to be one of the best traders ever. He doesn’t only explain under what circumstances he enters the stock market, but also, what I really liked about this book, he talks a lot about how to deal with risk and about the ability to change your opinion and getting out of losing positions.
He makes clear that you can never be sure what will happen the next day or the next minute in the stock market.
But he teaches, that through watching, thinking and having much patience (!) you “place many factors in your favour”. And that’s something you can work with.

More than half of the book contains material added by Robert Smitten, who wrote a Jesse Livermore Biography, like quotes about “emotional control” or “risk management” and a short explanation of Livermore’s trading system. Although I don’t use systems from books like these, it’s never wrong to learn about different trading styles for the process of evaluating your own style and philosophy.

This book won’t be useful for a beginner to actually learn how to trade stocks, but it gives you very good advice how to manage yourself, to handle risk and very often reminds you “that the good speculators always wait and have patience, waiting for the market to confirm your judgement”.

It’s a useful book to take off the shelf from time to time after you ve read it completely, and let Jesse Livermore give you some advice.
To close with his words: “Don’t ever lose your cash boys. Keep it close to your balls!”

The following link can only be used by buyers living in germany.