Stock Operations, The Livermore Method

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Spennato, Joseph
The stock market behavior we often see is not well understood even for disciplined traders. Stock market speculation often seems to be an arena for the financially suicidal. The work of Jesse Livermore brings some order and understanding to this area of investing. He has outlined the principles for market speculation and I believe these rules are highly effective when strictly practiced. In the course of testing Livermore, I have employed my own funds in a real money account. These trades I have closely tracked and annotated with Excel. If any trade were retrospectively analyzed with regard to Livermore's principles one will find that adherence to these principles will show a gain and any departure will show a loss. A brief discussion is given on options and stocks including common elements and how their price may change with time. Information on the mechanics, terminology and other associated elements, such as the computer programming and networking that are associated with operating and manifesting the "physical" marketplace exchanges, such as NYSE is also included. Some consideration of the theoretical pricing of options is provided, and the mathematics that underlie this pricing.