{"url":"https://etfiq.com/investment-committee/jesse-livermore/","section":"investment-committee","title":"Jesse Livermore's philosophy, applied to ETFs | ETFIQ","description":"Jesse Livermore on the IQ Investment Committee: 5 criteria, each with its source and its ETF measure. Version 1.3, Oct 21, 2026.","as_of":"Oct 21, 2026","structured_data":[{"@type":"TechArticle","headline":"Livermore-style Trend Following","version":"1.3","datePublished":"2026-10-21","dateModified":"2026-10-21","url":"https://etfiq.com/investment-committee/jesse-livermore/","citation":["Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940)","Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. 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Version 1.3, Oct 21, 2026.","url":"https://etfiq.com/investment-committee/jesse-livermore/","dateModified":"2026-10-21","isPartOf":{"@type":"WebSite","name":"ETFIQ","url":"https://etfiq.com"},"speakable":{"@type":"SpeakableSpecification","cssSelector":[".lede"]},"publisher":{"@id":"https://etfiq.com/#org"}}],"characters":33978,"truncated":false,"content":"ETFIQ / Investment Committee / Trend Following \n \n Version 1.3, published Oct 21, 2026: 5 criteria, 2 sources, 1 of the 5 measures backed by peer-reviewed research.\n Jesse Livermore's philosophy, applied to ETFs\n In the tradition of Jesse Livermore, this seat reads 5 criteria from ETFIQ data, version 1.3 of Oct 21, 2026. Is the trend with you or against you?\n 5 Criteria \n 2 Sources \n 1.3 Version \n\n Seat: Livermore-style Trend Following.\n No investor named is affiliated with or endorses ETFIQ. Not investment advice.\n Bio\n Jesse Lauriston Livermore was born in 1877. He was a speculator, not a fund manager. He traded his own money in stocks and commodities, long and short; his 1940 preface writer credits him with forty years of studying and trading markets. He left no audited record.\n The preface to his 1940 book, by Edward Jerome Dies, says he made his first stock-market money at 15, bringing his mother a thousand dollars in five-dollar bills, and that he had been working as a board marker in a brokerage office. The Associated Press reported at his death that he began by betting in bucket shops, offices where customers wagered on price changes without buying the stock.\n The same AP report said he went short at just the right moment in the panic of 1907, built and lost several fortunes, and went bankrupt four times. His name became attached to the trader's life through *Reminiscences of a Stock Operator*, a 1923 book by the journalist Edwin Lefevre. It is told in the first person by a fictional trader, Larry Livingston, and it is dedicated to Livermore. It is commonly read as Livermore's story, but it is a novelised account in Lefevre's words, not his.\n In 1940 Duell, Sloan & Pearce published Livermore's own book, *How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price*, the only book he wrote. It sets out his rules and his Livermore Market Key, a method of recording prices to judge trends.\n He died in New York on Nov 28, 1940.\n Philosophy\n Livermore treated speculation as a business to be learned, not a gamble. *How to Trade in Stocks* opens by saying that anyone inclined to speculate should treat it as a business, study it with the data available, and not regard it as a pure gamble.\n His first rule was to follow the market's trend rather than his own opinion of value. In the book he says that when his records show an upward trend in progress, he becomes a buyer as soon as a stock makes a new high on its move, after a normal reaction, and the same in reverse for selling short. He says he never buys on reactions or sells short on rallies. He warned against buying a stock just because it has fallen far from its high, since the fall probably has a good reason.\n His second rule concerned losses. The speculator, he wrote, has to be his own insurance broker: take the first small loss, keep his capital intact, and never let a loss grow large enough to cripple him later when his judgment is right. He forbade adding to a losing position, and called a second trade after a losing first one foolhardy.\n His third rule was patience. He wrote that when he had the patience to wait for the market to reach what he called a pivotal point before trading, he always made money, and that once a trade was working he would sit tight and let the market itself signal when to take profits. Hope and fear, he argued, push traders the wrong way: they snatch small profits out of fear and hold losses out of hope, when they should do the reverse.\n The *Reminiscences* carry the same ideas in Larry Livingston's voice: trading along the line of least resistance, buying strength, never averaging a loss, and the view that the big money came from sitting tight rather than from clever thinking. Because the narrator is Lefevre's creation, ETFIQ cites the 1923 book only for ideas that Livermore's own 1940 book also states.\n His 1940 book adds what the earlier book lacks, a formal system, the Market Key, for recording prices and reading trends, with rules and charts. What is common to both books is the order of priorities: cut losses, follow the trend, and wait.\n His rules use price action and new highs; neither his book nor Lefevre's mentions a moving average. ETFIQ's seat does not put a rule in his name that he did not use, such as a 200-day moving average.\n Key works\n - Jesse L. Livermore, *How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price* (Duell, Sloan & Pearce, 1940). His only book. - Related, not by him: Edwin Lefevre, *Reminiscences of a Stock Operator* (George H. Doran, 1923), a novelised first-person account dedicated to Livermore.\n What we cannot know\n Livermore kept no published or audited accounts, so the size of his fortunes and losses is known only from newspaper reports and from Lefevre's novelised account, and cannot be checked.\n Source quality\n Moderate. His own 1940 book, read in the 1966 reprint, is primary and unambiguous; everything about his career beyond it rests on contemporary wire reports and on a novel, so the biography is weaker than the method.\n Sources\n Library of Congress name heading \"Livermore, Jesse L. (Jesse Lauriston), 1877-1940,\" as carried in the catalog metadata of the archive.org scan of a 2017 reprint of How to Trade in Stocks . The heading gives the year only.\n Jesse L. Livermore, How to Trade in Stocks: The Livermore Formula for Combining Time Element and Price (New York: Duell, Sloan & Pearce, 1940), copyright 1940 by Jesse L. Livermore; contents including \"The Livermore Market Key,\" \"Explanatory Rules\" and \"Charts and Explanations.\" Every page cited here is of the Investors' Press reprint of 1966, which carries the 1940 copyright, the one edition ETFIQ cites; no lawful scan of the first edition was found. Chicago Daily Tribune issues of April and May 1940 that mention the book appear in archive.org full-text search; the month of publication was not confirmed.\n Same book, preface by Edward Jerome Dies: forty years of studying economic conditions and trading speculative markets; his first sensation at 15, a thousand dollars in five-dollar bills given to his mother; four years of mathematics in one year while a board marker in a brokerage house.\n Same book, chapter I, \"The Challenge of Speculation,\" from p. 15 of the 1966 reprint: speculation as a business (opening pages); markets are never wrong, opinions often are (p. 18); profits and losses, taking the first small loss, the speculator as his own insurance broker (p. 21); never buying a stock because it has fallen far from its high, buying as soon as a stock makes a new high after a normal reaction (p. 26), never buying on reactions or going short on rallies, the second losing trade as foolhardy, never averaging losses.\n Same book, chapter V, \"The Pivotal Point,\" opening sentence: whenever he had the patience to wait for a pivotal point before trading, he always made money; and his practice of sitting tight and letting the market signal when to take profits.\n Associated Press report from New York, Nov 28, 1940, as printed in The Cumberland News (Cumberland, Maryland) and The Edmonton Bulletin , Nov 29, 1940: his death that day at the Sherry-Netherland hotel; that he went bankrupt four times; that he began in bucket shops; that he went short at just the right moment in the 1907 panic; the \"Livermore market-key.\" The OCR is partly garbled; the age given (\"62\") does not match an 1877 birth year, so neither the exact birth date nor the age is stated in this profile.\n Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, 1923; copyright 1923), dedicated \"To Jesse Lauriston Livermore\"; narrator Larry Livingston; chapter V on sitting tight; chapter X and later on the line of least resistance. gutenberg.org \n Full-text search of the 1940 first edition of How to Trade in Stocks and of the Project Gutenberg text of Reminiscences of a Stock Operator , Oct 21, 2026: no occurrence of \"moving average\" or \"200-day\" in either. The 1923 book also never mentions the Market Key.\n In his words\n \u201cProfits always take care of themselves but losses never do.\u201d\n Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan & Pearce, 1940), chapter I, \"The Challenge of Speculation,\" p. 21 of the Investors' Press reprint of 1966 The Livermore-style Trend Following seat\n Livermore-style Trend Following is one seat of the IQ Investment Committee. It applies Jesse Livermore's own 1940 book, with Edwin Lefevre's 1923 novel as the second source to ETFIQ data.\n Scope\n Every ETF whose price moves: the seat does not apply to a fund whose daily returns over a year have an annualized volatility under 3%, as a T-bill, ultrashort, floating-rate or short Treasury fund's do, since its price rises as interest accrues rather than trending. The 3% is ETFIQ's line.\n Source strength: Thinner: interviews, speeches and writing about the investor, so the seat uses fewer criteria. Livermore's own 1940 book is the first source for every criterion, read in its 1966 reprint; Edwin Lefevre's 1923 Reminiscences of a Stock Operator, a novelised account dedicated to him and narrated by a fictional trader, is the second. The mechanics (windows, highs, volume) are ETFIQ's readings of both, not Livermore's numbers.\n Lenses apply publicly known investing principles to ETFIQ data. No investor named is affiliated with or endorses ETFIQ. Not investment advice.\n What the investor published\n In ETFIQ\u2019s words, with the source of each. Sourced to Jesse Livermore's own 1940 book, with Edwin Lefevre's 1923 novel as the second source.\n Prices move along the line of least resistance; a trader goes with that direction once the market shows it, and leaves alone a stock that does not act right. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter II, \"When Does a Stock Act Right?\", p. 27; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters V and X, pp. 121-127) \n A price making new high records, or crossing a round level for the first time, is the move confirming itself. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter I, p. 26; chapter V, \"The Pivotal Point\", pp. 43-46; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VI, IX and XIV, pp. 82, 104 and 178) \n His rule was to watch the leaders of a move, to let go of leaders that ceased to lead, and to be wary of a stock that would not follow its group's leader. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter III, \"Follow the Leaders\", pp. 33-37; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters XIV and XVII, pp. 182 and 219) \n The volume and character of the trading are part of reading a move, though the book tells this in stories, not as a rule. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter II, p. 27; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VI and XVII, pp. 82 and 219) \n His rules were never to average a losing position, to add only once the first position shows a profit, and to take a loss as soon as the trade proves wrong. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter I, pp. 18 and 21; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VII, XII and XIV, pp. 89-90, 154 and 185) \n Profits look after themselves but losses never do: the speculator protects himself by taking the first small loss. (Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter I, p. 21) \n Sources\n The published work each criterion is sourced to Source What the seat takes from it Edition Link \n Jesse L. Livermore, How to Trade in Stocks His own book, the seat's first source: a stock making a new high (chapter I, p. 26), markets never wrong and the first small loss (pp. 18 and 21), a stock acting right on volume (chapter II, \"When Does a Stock Act Right?\", p. 27), following the leaders (chapter III, pp. 33-37), and the pivotal point (chapter V, pp. 43-46) Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940 \u00b7 \n Edwin Lefevre, Reminiscences of a Stock Operator Trading along the line of least resistance, taking a position as a price breaks to new ground, following the leading stocks of a move, reading the tape's activity, and cutting a loss at once rather than averaging it George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923 source \n\n Research behind the measures\n Peer-reviewed research on how each measure is taken. It never adds a criterion, and where it weakens one the criterion says so.\n Tobias J. Moskowitz, Yao Hua Ooi and Lasse Heje Pedersen (2012), Time Series Momentum , Journal of Financial Economics 104(2), 228-250 ( doi:10.1016/j.jfineco.2011.11.003 ). Across 58 futures and forward markets, each instrument's own past 12-month excess return predicts its next return; the effect persists for 1 to 12 months and partly reverses after. The signal is the sign of the past return, not a pattern of highs and lows.\n Thomas J. George and Chuan-Yang Hwang (2004), The 52-Week High and Momentum Investing , The Journal of Finance 59(5), 2145-2176 ( doi:10.1111/j.1540-6261.2004.00695.x ). How close a stock's price is to its 52-week high explains much of the profit from momentum investing and predicts future returns better than past returns do; the gains do not reverse in the long run.\n Narasimhan Jegadeesh and Sheridan Titman (1993), Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency , The Journal of Finance 48(1), 65-91 ( doi:10.1111/j.1540-6261.1993.tb04702.x ). Stocks that rose most over the past 3 to 12 months keep beating those that rose least over the following 3 to 12 months; part of the gain unwinds over the next two years.\n Clifford S. Asness, Tobias J. Moskowitz and Lasse Heje Pedersen (2013), Value and Momentum Everywhere , The Journal of Finance 68(3), 929-985 ( doi:10.1111/jofi.12021 ). Value and momentum premia appear in eight markets and asset classes, ranked within each; momentum is the past 12-month return skipping the latest month. Global funding liquidity risk is a partial source of the premia, explaining a small part of them.\n Kent Daniel and Tobias J. Moskowitz (2016), Momentum Crashes , Journal of Financial Economics 122(2), 221-247 ( doi:10.1016/j.jfineco.2015.12.002 ). Momentum strategies suffer infrequent, persistent strings of large losses, in panic states after market declines and when volatility is high, as past losers rebound with the market.\n Simon Gervais, Ron Kaniel and Dan H. Mingelgrin (2001), The High-Volume Return Premium , The Journal of Finance 56(3), 877-919 ( doi:10.1111/0022-1082.00349 ). Stocks with unusually high trading volume over a day or a week tend to rise over the following month, and those with unusually low volume to fall.\n Charles M. C. Lee and Bhaskaran Swaminathan (2000), Price Momentum and Trading Volume , The Journal of Finance 55(5), 2017-2069 ( doi:10.1111/0022-1082.00280 ). Measured as turnover, heavy trading marks glamour stocks with lower future returns; past outperformers with high volume reverse sooner, and those with low volume beat those with high volume from the second year to the fifth. Favouring high-volume outperformers does not improve momentum returns.\n Definitions and method\n Each criterion reads one ETFIQ measure against two thresholds. Each criterion reads one measure against the seat's two thresholds: Supports where the supports condition holds, Challenges where the challenges condition holds, Mixed between them, Not enough data where the measure is missing. A criterion whose scope does not cover the subject is left out, and a seat whose scope does not cover it does not apply. The seat's score is the weighted mean of its readable criteria at +1, 0 and -1. A criterion marked veto that Challenges makes the seat Challenge, whatever the rest reads or could not read. Otherwise the seat reads Not enough data when the criteria it could read carry less than half of its weight, or when a criterion marked required cannot be read; it Supports at 0.5 or more and Challenges at -0.5 or less, and is Mixed between. A criterion that caps the seat keeps it from Supporting when it Challenges. A criterion the seat needs keeps it from Supporting unless it reads Supports itself. A seat that reads a fund's holdings states its own rule on its page.\n The weights. The trend itself carries the most (25%), since every rule in the book starts from it; the pivotal point, the leaders and a broken trend 20% each; volume 15%, the weakest and most ambiguous signal in the research. The weights are ETFIQ's and were not set to land any fund.\n Higher highs and higher lows (ETFIQ\u2019s measure) Is the price making higher highs and higher lows, the direction of least resistance? Measure: the swing structure. rising where, splitting the last 126 trading days into two 63-day halves, the later half's highest and lowest adjusted closes are both above the earlier half's (higher highs and higher lows); falling where both are below (lower highs and lower lows); mixed otherwise. Null under 126 trading days. Supports where the swing structure equal to rising. Challenges where the swing structure equal to falling. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. The book names the line of least resistance but no window. Two 63-day halves of the last 126 trading days, the later half's high and low both above the earlier half's (or both below), are ETFIQ's reading. The phrase \"line of least resistance\" is Lefevre's; Livermore's own book states the idea as a stock acting right. Weight: 25%; required. Sourced to: Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter II, \"When Does a Stock Act Right?\", p. 27; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapter X, pp. 121-127. Research, context, not a test of the measure: Tobias J. Moskowitz, Yao Hua Ooi and Lasse Heje Pedersen (2012), Time Series Momentum , Journal of Financial Economics 104(2), 228-250. A market's own past return predicts its next for up to a year, so a trend tends to persist; the paper signals trend by the sign of the past return, not by higher highs and higher lows, which it never tests. At a new high, or breaking out of its range (ETFIQ\u2019s measure) Is the price at a new high, or breaking above its recent range? Measure: the distance below the 52-week high. How far the last adjusted close sits below the highest adjusted close of the last 252 trading days, percent of that high; 0 at a new high. Null under 252 trading days. Supports where the distance below the 52-week high at or below 2% or (above its recent range equal to true and the distance below the 52-week high below 20%). Challenges where the distance below the 52-week high at or above 20% and above its recent range equal to false. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. Livermore's pivotal point is a move into new high ground after a normal reaction (How to Trade in Stocks, chapter I, p. 26; chapter V, \"The Pivotal Point\", pp. 43-46), not a bounce inside a long decline. So the seat Supports a fund within 2% of its 52-week high, or one that has broken above its last 63 days while less than 20% below that high; it Challenges a fund 20% or more below the high that has not broken out; and a fund breaking its recent range while still 20% or more below the high reads Mixed. The two sides can never both be true. The 2%, 20% and 63 days are ETFIQ's. Weight: 20%. Sourced to: Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter I, p. 26; chapter V, \"The Pivotal Point\", pp. 43-46; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VI, IX and XIV, pp. 82, 104 and 178. Research, context, not a test of the measure: Thomas J. George and Chuan-Yang Hwang (2004), The 52-Week High and Momentum Investing , The Journal of Finance 59(5), 2145-2176. Nearness to the 52-week high predicted returns better than past returns did, among individual stocks; the criterion reads a fund's distance below its own high, so the paper is context. Leading its group (ETFIQ\u2019s measure) Is the fund among the leaders of its group, or a laggard? Measure: six months against its category. The fund's 6-month total return minus the median 6-month total return of covered funds in the same category and segment, percentage points. Null without 6 months of prices or with fewer than 5 funds in the segment. Supports where six months against its category at or above 5 points. Challenges where six months against its category at or below -5 points. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. 5 points ahead of, or behind, its category's median over 6 months are ETFIQ's. Weight: 20%. Sourced to: Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter III, \"Follow the Leaders\", pp. 33-37; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters XIV and XVII, pp. 182 and 219. Research, context, not a test of the measure: Narasimhan Jegadeesh and Sheridan Titman (1993), Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency , The Journal of Finance 48(1), 65-91. Past outperformers among single stocks keep beating past underperformers over 3 to 12 months; stocks, not funds, so context for a fund's return against its segment. Research, supports the measure: Clifford S. Asness, Tobias J. Moskowitz and Lasse Heje Pedersen (2013), Value and Momentum Everywhere , The Journal of Finance 68(3), 929-985. Momentum ranked within each asset class holds in eight markets; the paper uses 12 months skipping the latest, where this measure uses 6, a shorter window the paper notes predicts less well. Research, weakens the measure: Kent Daniel and Tobias J. Moskowitz (2016), Momentum Crashes , Journal of Financial Economics 122(2), 221-247. Following recent leaders suffers rare, severe losses in panics after market falls, when past laggards rebound; the criterion carries that risk. Volume behind the move (ETFIQ\u2019s measure) Is more stock changing hands on the up days than on the down days? Measure: up-day against down-day volume. Total share volume on the up days of the last 50 trading days over total volume on the down days. Null until ETFIQ carries daily volume, and for a fund with fewer than 50 days. An ETF's share volume is driven by creations, redemptions and hedging as well as by conviction, so the figure is read as the book's volume idea at a remove, and the page says so when it is first computed. Supports where up-day against down-day volume at or above 1.2. Challenges where up-day against down-day volume at or below 0.8. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. Up-day volume 20% above down-day volume over 50 days, and 20% below, are ETFIQ's. Reads Not enough data until ETFIQ carries daily volume. ETFIQ does not yet carry daily volume, so this criterion is printed as pending and every fund reads it as not measured. Pending: its measure is not published yet, so the criterion is printed as pending and left out of what the seat must read. Weight: 15%. Sourced to: Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter II, p. 27; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VI and XVII, pp. 82 and 219. Research, context, not a test of the measure: Simon Gervais, Ron Kaniel and Dan H. Mingelgrin (2001), The High-Volume Return Premium , The Journal of Finance 56(3), 877-919. Unusually high volume preceded higher returns whatever the price did that day; the paper does not test volume on up days against down days, which is what this criterion reads. Research, weakens the measure: Charles M. C. Lee and Bhaskaran Swaminathan (2000), Price Momentum and Trading Volume , The Journal of Finance 55(5), 2017-2069. High-volume stocks behaved like glamour stocks and earned less over the following years; volume is a weak and ambiguous signal, which is why it weighs least. Trend broken: well below the last swing high (ETFIQ\u2019s measure) Has the price fallen far enough from its last high that, on these rules, the trend is broken? Measure: the distance below the recent high. How far the last adjusted close sits below the highest adjusted close of the last 63 trading days, the most recent swing high, percent of that high; 0 at a new high. Null under 63 trading days. Supports where the distance below the recent high at or below 3%. Challenges where the distance below the recent high at or above 10%. Mixed between. Threshold: ETFIQ\u2019s figure, because the investor published none. The book says to take a loss the moment the trader sees he is wrong, never to average it, and gives no percentage. 10% or more below the highest close of the last 63 days is ETFIQ's flag that the trend is broken; within 3% is ETFIQ's. Weight: 20%; a Challenge here makes the seat Challenge. Sourced to: Jesse L. Livermore, How to Trade in Stocks (Duell, Sloan and Pearce, Investors' Press reprint, 1966, carrying the 1940 copyright; every page cited is of this reprint, 1940), chapter I, pp. 18 and 21; Edwin Lefevre, Reminiscences of a Stock Operator (George H. Doran Company, first published 1923; pages from the Doubleday 1947 printing of the 1923 text (copyright 1923 by George H. Doran), 1923), chapters VII, XII and XIV, pp. 89-90, 154 and 185. Research, context, not a test of the measure: Tobias J. Moskowitz, Yao Hua Ooi and Lasse Heje Pedersen (2012), Time Series Momentum , Journal of Financial Economics 104(2), 228-250. Trend signals turn when the past return turns, which is the idea behind a broken-trend flag; the paper does not test distance below a recent high. Compare and model modes\n In compare mode funds are ordered by the seat\u2019s score, and ties break on the distance below the 52-week high, lowest first.\n In model mode: In each sleeve, the fund making higher highs and higher lows that sits closest to its 52-week high.\n How the seat is tested\n The cases this seat must pass before it ships, with the result each must give.\n A fund at new highs, leading its group, on rising volume : Supports. Higher highs and higher lows, a breakout to new ground, ahead of its group, and more volume on the up days.\n A fund making lower highs and lower lows : Challenges (Higher highs and higher lows: Challenges, Trend broken: well below the last swing high: Challenges). The line of least resistance points down, and the price is 14% under its last swing high: the trend is broken.\n Near its 52-week high, but 12% below the last swing high : Challenges (At a new high, or breaking out of its range: Supports, Trend broken: well below the last swing high: Challenges). The broken-trend flag decides: the book takes the loss the moment the move fails, whatever else looks good.\n A fund breaking its recent range while a third below its high (PLYY on 2026-10-08) : Mixed (At a new high, or breaking out of its range: Mixed). It closed above its last 63 days but 33% below its 52-week high: a bounce inside a decline, not the new high ground of Livermore's pivotal point, so that criterion reads Mixed rather than both sides at once.\n A fund rising and leading its group, a little off its high : Supports (Leading its group: Supports, At a new high, or breaking out of its range: Mixed). Higher highs and higher lows, ahead of its group: the leader of its move, though not yet at a new high.\n A fund rising on heavier up-day volume, level with its group : Supports (Volume behind the move: Supports, Leading its group: Mixed). Rising, close to its last swing high, with more volume on the up days.\n A fund with 40 days of prices : Not enough data. No swings to read yet, and the seat says so rather than guessing.\n A broken trend near its high against a rising one : in the order leading, broken. The broken trend scores higher on its other criteria, but the seat Challenges it, so the rising trend the seat Supports ranks first.\n FINA : Not enough data. First traded Jul 9, 2026: under 126 trading days, so it has no higher highs and higher lows to read, and that criterion is required.\n BIL : does not apply. A T-bill fund: its price rises a little every day as interest accrues, with almost no volatility, which is not a trend, so the seat does not apply.\n PLYY : any result but Challenges (At a new high, or breaking out of its range: Mixed). The fund whose reading had both sides of the pivotal point true on 2026-10-22.\n What this cannot tell you\n The time element and the pivotal points exactly as Livermore's own 1940 book defines them: no usable copy could be read.\n The tape through the day: ETFIQ has closing prices; volume arrives with daily volume data.\n Whether a holder added to a gaining position or averaged a losing one: that is how a position is managed, not a property of the fund.\n Whether to own the fund. The seat applies published principles to data and gives no advice.\n Changes to this seat\n Version 1.0, Oct 21, 2026: First version, on the 200-day average and the 52-week high.\n Version 1.1, Oct 21, 2026: Rebuilt on Livermore's own ideas as Lefevre's book records them. The 200-day moving average is gone from the seat: it is no idea of his, and becomes a plain fact on the fund's trading page.\n Version 1.2, Oct 21, 2026: Every price test reads adjusted closes, so distributions and reverse splits no longer read as broken trends; Gervais, Kaniel and Mingelgrin (2001) and Daniel and Moskowitz (2016) added; quote and loss-rule pages fixed (pp. 18 and 21 of the 1966 reprint); the mechanics listed for a ruling by name.\n Version 1.3, Oct 21, 2026: Every criterion cites Livermore's own book first, in its 1966 reprint, with Lefevre's novel second; volume is printed as pending until ETFIQ carries daily volume.\n Version 1.3, Oct 22, 2026: The published principles cite Livermore's own book first; cash and ultrashort funds are outside the seat.\n Version 1.3, Oct 22, 2026: The pivotal point's two sides are exclusive: a break above the recent range while 20% or more below the 52-week high reads Mixed, as a bounce inside a decline is not new high ground; volume is marked pending in the committee file.\n Version 1.3, Oct 22, 2026: The seat is out of scope for a fund whose price barely moves (volatility under 3% a year), read from its prices, not its label; the last imperative in its principles is gone.\n How to check any of this\n This seat\u2019s criteria, thresholds, weights and cases are in the committee file , the same file the committee reads.\n Where to next\n The Investment Committee Low Cost Margin of Safety Quality Growth at a Reasonable Price Global Contrarian All-Weather Cycles & Risk Macro & Liquidity Diversification Disruptive Innovation The Skeptic Every method \n Cite this page. ETFIQ, Jesse Livermore's philosophy, applied to ETFs, data as of Oct 21, 2026. https://etfiq.com/investment-committee/jesse-livermore/ Free to use with attribution for figures ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data .\n Other forms Plain ETFIQ, Jesse Livermore's philosophy, applied to ETFs, data as of Oct 21, 2026. https://etfiq.com/investment-committee/jesse-livermore/ APA ETFIQ. (Oct 21, 2026). Jesse Livermore's philosophy, applied to ETFs. Retrieved from https://etfiq.com/investment-committee/jesse-livermore/ Markdown [Jesse Livermore's philosophy, applied to ETFs (ETFIQ, Oct 21, 2026)](https://etfiq.com/investment-committee/jesse-livermore/)","source":"ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.","publisher":{"@id":"https://etfiq.com/#org","name":"ETFIQ","url":"https://etfiq.com"},"license":"https://etfiq.com/license/","license_text":"Figures ETFIQ computes are free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.","citation":"ETFIQ, Jesse Livermore's philosophy, applied to ETFs, data as of Oct 21, 2026. https://etfiq.com/investment-committee/jesse-livermore/"}