Jesse Livermore

Trading and Masterful Inactivity

Learning to be masterfully inactive doesn’t come easily, but it pays.

The master himself said:

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.”

The Difference between
“Masterful Inactivity” and “Inactivity”

Inactivity means putting your feet up on some tropical island and wondering how the ocean got to be that beautiful shade of green-blue.

Masterful inactivity means that you’re not acting like a headless chicken, wasting your time and energy on dozens of trades. (Not unless you’ve got a computer program executing them.) If you take on too many trades, there’s a danger that you won’t see the forest for the trees.

Masterfully inactive traders listen, read, research and learn. As an M.I.T., you should be on the look out for the sort of trades I mentioned last time – trades where a trend is getting underway and where there’s a story that can help drive a significant price change. Masterful inactivity used to be easier than it is today. The Internet has made it all too easy to enter a big trade with as much thought as you’d give to choosing a pair of socks.

Above all, masterful inactivity means only taking trades where the risk-reward ratio is strongly in your favor.

Advertisements

Pages

  • Home
  • Start Trading
  • Bucket Shop Trading
  • Stockbroker Woes
  • Price Patterns
  • Suckers and Lessons
  • The Complete Trader
  • Beating the Market
  • Stocks or Commodities?
  • Training a Stock Trader
  • Stock Trading Rules
  • Trading Errors
  • Speculation
  • Fundamental Analysis
  • Learning Stock Trading
  • Understanding Stock Trading
  • Average Down or Not?
  • Stock Timing
  • Market Manipulation
  • Trading Signals
  • Trading vs Investing
  • How Rich Was Livermore?
  • Losing Money
  • Career Timeline

From the Livermore Blog

  • The Stock Market Sucker Test
  • Gut Feel For Pigs - Counter Intuitive Examples
  • Accurate Stock Picks vs Precise Stock Picks
  • Five Reasons to Think Twice Before Shorting Stocks
  • Pyramiding, Locking in Profits, or Enjoying the Ride
  • Stock Trading - Wait for the Reason and Miss the Opportunity
  • Stock Market Ripples and Trading Tactics
  • Practice, Luck and Mistakes in Trading
  • Why Continue Holding Overvalued Stocks?
  • Why Continue Holding Overvalued Stocks?
  • List

Return to top of page

Jesse Livermore - Privacy - © 2025