MORE from Jesse Livermore: Observation, experience, memory and mathematics; these are what the successful trader must depend on. He must not only observe accurately but remember at all times what he has observed.

He cannot bet on the unreasonable or on the unexpected, however strong his convictions may be about man’s unreasonableness, or however certain he is that the unexpected happens frequently. He must bet on probabilities, try to anticipate them. Years of practice, constant study, always remembering, enable the trader to act when the unexpected happens, as well as when the expected comes to pass.

A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory. Like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments that can affect or influence the course of the markets. It becomes a habit to keep posted.

He acts almost automatically. He acquires the invaluable professional attitude that enables him to beat the game at times! This difference between the professional and the amateur or occasional trader cannot be overemphasised. I find, for instance, that memory and mathematics help me very much. Wall Street makes its money on a mathematical basis, it makes its money by dealing with facts and figures.

Do not use the words "bullish" or "bearish". They fix a market-direction in the mind. Use "upward trend" and "downward trend" when asked the direction you think the market is headed. Simply say: "The line of least resistance is either upward or downward at this time." Remember, don’t fight the tape!

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