(Reminiscences of a Stock Operator) Chapter three mainly discusses Jesse Livermore (pseudonym Larry Livingston in the book) facing his first significant setback after leaving the betting houses and transitioning to the New York Stock Exchange, along with the key trading lessons he learned from it. The following is a summary of the core content:
---
### 1. Challenges from Betting Houses to Formal Markets
- Environmental differences: Livermore quickly profited from price fluctuations in betting houses, but the actual trading rules of the New York Stock Exchange are completely different from those of betting houses. He realized that **market depth** and **order execution delays** could lead to discrepancies between the transaction price and expectations, especially in volatile markets.
- First loss: He continued using the short-term trading strategy from the betting houses but frequently incurred losses due to delayed quotes and liquidity issues in actual trading, ultimately losing all his capital.
---
### 2. Key Lessons: Understanding Market Mechanisms
- Separation of price and transaction: In betting houses, price fluctuations directly determine profits and losses; whereas in formal markets, **the actual execution price of buy and sell orders** may deviate from the quoted price due to market depth, especially in large transactions.
- The importance of time factors: Livermore recognized that short-term trading in real markets must consider the time lag in order execution, while long-term trend analysis is more reliable than intraday fluctuations.
---
### 3. Reflections on Psychology and Strategy
- Emotional management: Losses forced him to confront the impacts of greed and arrogance, realizing that calm judgment is more important than frequent trading.
- Adjusting strategy: He began to shift towards **trend following**, learning to wait for the market to clarify its direction before acting, rather than predicting short-term fluctuations.
- Capital management: The first realization that funds must be allocated reasonably and stop-losses set, rather than going all in.
---
### 4. The Emergence of Trading Philosophy
- The principle of 'going with the trend': Market trends are a trader's friend; operating against the trend carries high risks.
- The importance of validating judgments: Before committing real money, one should verify their judgments through observation and simulated trading, rather than blindly trusting oneself.
---
### Core Significance of this Chapter
Chapter three marks Livermore's transition from relying on instinct as a speculator to becoming a systematic trader. He learned through failure that **adapting to market rules, controlling emotions, and respecting trends** are key to long-term success. The lessons from this phase laid the foundation for him to become the 'Great Bear of Wall Street' later.
Last night Pnut took a bite of big meat#加密市场反弹 $BNB
#