1 找出關鏈點
2 破位先入貨

Jesse Livermore wrote:

"Whenever I have had the patience to wait for the market to arrive at what I call a Pivotal Point before I started to trade; I have always made money in my operations."

Consider the chart on above. The price had been trending downwards before rallying from a low of 40c.The rally could not be maintained, however, and the stock has retreated to 40c again. 40c has become what Jesse Livermore called a pivotal point.Any significant move either upwards or downwards from the pivotal point would be traded by Livermore.

破位先入 順勢而行

當方向正確,不必賺盡每一個小波幅.

If the stock were to break below, say, 37c, Livermore would sell short. If it were to break above, say, 43c, Livermore would buy. He would observe the price action carefully after the buy because 49c - the high of the earlier rally - is another pivotal point. If the price failed to rally above 49c - again by 3c, say - Livermore would exit from the trade.

Livermore said:

"I never benefited much from a move if I did not get in at somewhere near the beginning of the move. And the reason is that I missed the backlog of profit which is very necessary to provide the courage and patience to sit thourgh a move until the end comes - and to stay through any minor reactions or rallies which were bound to occur from time to time before the movement had completed its course."

The Normal Reaction


tradingrangebreakdown1.gif

何謂Normal Reaction(死貓彈) 呢?
1 突破時有大成交
2 持續單方向數日
3 死貓彈出現,成交收縮,(相對突破時)
有時與大勢反向.
4 過一兩日後,死貓彈完結.單邊繼續

Once a stock had broken out of a trading range - such as the stock above, which has broken downwards - Livermore would begin trading. In this case the breakout is downwards and so Livermore would sell the stock short.

He would look for signs that the new trend was behaving normally and that
it would be safe to stick with the trade.

Jesse Livermore would look for the following signs:

    * At the beginning of the move there should be an unusually large volume
of shares traded.
    * Prices should move generally in one direction (upwards or downwards)
for a few days.
    * A normal reaction should be observed - volume will decrease compared
with the volumes observed during the initial trend, and the price may move
against the trend somewhat.
    * Within a day or two of the normal reaction, volume should increase
again and the price trend should be resumed.

Provided this pattern is repeated, it is safe to stick with a trade. If
there should be a deviation from the pattern, it is a warning sign. If the
pattern fails and the price moves against the trend by more than a little,
it is a sign to exit your trade and preserve your profit.