"The markets are always changing, and are always the same." The above Market Wizards quote makes sense and shows how Livermore's experiences hold true today.
This quote exemplifies the apparent paradox of trading, amongst a few other gems. The first is that the markets are always the same because change is constant. But more practical to trading is the apparent paradox. For example, if you look at trading as a probability game, you know that over many trials (or a large sample size of events) a system reflects statistically reliable results (regardless of if the expectation is for you or against you). In this sense, any market is the same over time period that includes enough trials. However, probability will not reveal when the sequence of our expectation will occur. It does not tell at what time, or in what order. So in this sense, it is prudent for any trader to look at the next trade with an expectation of COMPLETE uncertainty, knowing that the next trade is unrelated (independent) of the result of the current or previous trade. I believe two things happen when you resolve this paradox into an action habit. First, you learn how to follow a system better. Second, trading becomes rather boring and mundane. Alas, if the probabilites show a positive expectation, then boring and profitable.
I am currently reading a book called "How I Trade For A Living" by Gary Smith....In it, he mentions many of the books that he has read and collected over the many years....He has high praise for Livermore but does add this and I will quote... "As brilliant as Livermore was, he never mastered the psychological aspect of the game. As described by Benton Davis in "Dow 1000, Livermore's success was due to an innate brilliance with figures and a complete lack of the thing most of us are endowed with-----caution! Livermore was a boom-or-bust trader and at least four times in his career went completely broke. Once the Securities and Exchange Commission (SEC) was established in the early 1930's and outlawed various types of market manipulations, Livermore was rendered impotent as a trader. He ended his life in 1940 with a bullet to his brain. In his suicide note he said he considered his life a failure. His estate was valued at less than $10,000."
Slim, the Livermore book was an interesting read and he wasn't cautious at all. Thought it was funny how in 1907 the NYSE passed a rule that wouldn't allow traders to trade off news events due to one of the bear raids. Too funny.
Hum, I remember reading that after his greatest coup (the 1929 crash) he lost all his money because he invested - not judiciously, in real estate, inventions, etc. Livermore then concluded that one should always stick to his domain of expertise++