Reminiscences of a Stock Operator

One of the first books I read was Edwin Lefrevre’s ‘Reminiscences of a Stock Operator’; it is still one of my most thumbed books. Every 18 months or so, I re-read it and always seem to find some nugget of information I had previously  overlooked.

Now Wiley Press has come out with an Annotated Edition that provides historical comment alongside the story. It brings to life in a way I had not thought possible. How often have I read the name ‘A. R. Fullerton’ without realizing that it was E. F. Hutton. For those not trading in the 1980’s, E F Hutton and Co itself makes a rollicking good yarn (see http://en.wikipedia.org/wiki/E._F._Hutton_&_Co.)

So that’s one reason to read this version: the added information makes it an even better story to read.

But that’s not the main reason I love Reminiscences of a Stock Operator; the main reason  I keep going back to it, is because it is a refresher on what is needed to be a successful trader.

For example, on page 3 (annotated version), Lefevre writes: “…It was rather a sort of record of my hits and misses, and next to the determination of probable movements I was most interested in verifying whether I had observed correctly;…”

You could not have a better explanation of one reason why traders ought to keep quantitative journals with a qualitative explanation for our trades.

Then there is the quote I used to have in front of me when I traded. Like most novices, when I first started trading, I tended to hold fast to losing positions; had I understood much sooner, the implications of this quote, I’d have saved tons of money.

“It takes a man a long time to learn all the lessons of all his mistakes…..there is only one side to the stock market; and it is not the bull side or the bear side, but the right side…”

Measure your opinion of what the market ought to do with what it is doing: are you on the right side? The key is to define the ‘right side for your trader’s timeframe’.

This edition of Reminiscences comes with a foreword and interview of legendary trader, Paul Tudor Jones. The interview is a must read, so even if you don’ buy the book, take a few moments to read the interview from a library copy.