๐ The Pivotal Point: Livermore's Game-Changing Trading Method
TL;DR: Jesse Livermore's pivotal point strategy from 1940 created the blueprint for modern breakout trading. Wait for predetermined price levels, enter with confirmation, scale positions, and exit fast when wrong. ๐ฐ The Million-Dollar Quote "Whenever I have had the patience to wait for the market to arrive at what I call a 'Pivotal Point' before I started to trade, I have always made money in my operations." This single principle became the foundation for CANSLIM, momentum trading, and modern breakout strategies. ๐ฏ What Are Pivotal Points? Definition: Predetermined price levels where major moves begin. Three Types: 1. Psychological: Round numbers ($50, $100, $200) 2. Technical: 52-week highs/lows 3. Structure: Support/resistance zones Key Insight: These aren't random - they're where supply/demand shifts decisively. ๐ The Trading Rules Entry Method โข Never buy in anticipation โข Always wait for confirmation โข Example: Stock expected to rise from $25 to $50? Don't buy at $25. Wait for $28. Position Sizing (Pyramiding) For 500 shares: โข 300 shares at $100 (initial) โข 100 shares at $105 (scale up) โข 100 shares at $110 (complete) โ ๏ธ The 3-Point Rule Stock moves 3 points against your pivotal point = EXIT IMMEDIATELY No exceptions. No hope. No averaging down. ๐ Real Examples Bethlehem Steel (1915) โ
โข Waited 3 weeks for pivotal point at 100 โข Bought 99-99ยพ โข Sold at 155 within 5 days Failed Anaconda Trade โ โข Pivotal point: 300 โข Only reached 302ยพ (weak action) โข Immediate exit avoided crash to 225 ๐ Modern Applications Direct Descendants: โข William O'Neil's CANSLIM โข Mark Minervini's Trend Template โข Algorithmic breakout systems Works Across: โข Stocks & ETFs โข Crypto markets โข Options strategies โข DeFi tokens โก The System in Action Step 1: Identify pivotal points through price study Step 2: Wait patiently for price to reach the level Step 3: Enter partially when crossed with volume Step 4: Scale up if price continues favorably Step 5: Exit immediately at danger signals