#1
Never Average Down
"Never average losses. A losing position means your analysis was wrong. Cut it and move on."
Averaging down is the cardinal sin of speculation.
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Jesse Livermore🛡 Risk Management
Jesse Livermore's Risk Management Rules
Jesse Lauriston Livermore (July 26, 1877 – November 28, 1940) was an American stock trader considered one of the greatest traders in history. He made and lost several fortunes during his career, including famous profits during the 1907 and 1929 market crashes. Livermore began trading at age 14 in Boston bucket shops and developed his own methods for reading market...
3 principles·Risk Management
3 Key Risk Management Principles
#2
Risk-First Approach
"Before considering how much you can make, consider how much you can lose. Risk management is not about avoiding risk entirely, but about understanding and controlling it."
Consider the downside before the upside.
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Position Sizing Discipline
"The size of your position should reflect your conviction and the risk involved. Never bet so large that a single mistake can wipe out your portfolio."
Size positions based on conviction and risk.
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What are Jesse Livermore's key risk management principles?
Jesse Livermore has 3 key principles on risk management. The most important one is "Never Average Down" — Never average losses.
How does Jesse Livermore apply risk management in practice?
Jesse Livermore applies risk management through several key principles including "Never Average Down" and "Risk-First Approach". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Jesse Livermore's approach to risk management unique?
Jesse Livermore's approach to risk management is distinguished by a focus on long-term thinking and fundamental analysis. With 3 specific principles in this area, Jesse Livermore provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
