VOObyM

Reminiscences of a Stock Operator
least resistance.
What I have told you gives you the essence of my trading system as based on studying
the tape. I merely learn the way prices are most probably going to move. I check up my
own trading by additional tests, to determine the psychological moment. I do that by
watching the way the price acts after I begin.
It is surprising how many experienced traders there are who look incredulous when I tell
them that when I buy stocks for a rise I like to pay top prices and when I sell I must sell
low or not at all. It would not be so difficult to make money if a trader always stuck to
his speculative guns that is, waited for the line of least resistance to define itself and
began buying only when the tape said up or selling only when it said down. He should
accumulate his line on the way up. Let him buy one-fifth of his full line. If that does not
show him a profit he must not increase his holdings because he has obviously begun
wrong; he is wrong temporarily and there is no profit in being wrong at any time. The
same tape that said UP did not necessarily lie merely because it is now saying NOT
YET.
In cotton I was very successful in my trading for a long time. I had my theory about it
and I absolutely lived up to it. Suppose I had decided that my line would be forty to fifty
thousand bales. Well, I would study the tape as I told you, watching for an opportunity
either to buy or to sell. Suppose the line of least resistance indicated a bull movement.
Well, I would buy ten thousand bales. After I got through buying that, if the market went
up ten points over my initial purchase price, I would take on another ten thousand bales.
Same thing. Then, if I could get twenty points' profit, or one dollar a bale, I would buy
twenty thousand more. That would give me my line my basis for my trading. But if after
buying the first ten or twenty thousand bales, it showed me a loss, out I'd go. I was
wrong. It might be I was only temporarily wrong. But as I have said before it doesn't pay
to start wrong in anything.
What I accomplished by sticking to my system was that I always had a line of cotton in
every real movement. In the course of accumulating my full line I might chip out fifty or
sixty thousand dollars in these feeling-out plays of mine. This looks like a very
expensive testing, but it wasn't. After the real movement started, how long would it take
me to make up the fifty thousand dollars I had dropped in order to make sure that I
began to load up at exactly the right time? No time at all! It always pays a man to be
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