The Ink and Pencil Dynamic in Jesse Livermore's Pivot Point System

Jesse Livermore’s pivot point system, a revered trading strategy, is not just about numbers and movements. It’s also about the medium used to record these numbers. The choice between ink and pencil is deliberate and meaningful, offering insights into the stock’s behavior and trajectory.

In the dance of numbers and trends, Livermore’s system uses ink and pencil as silent narrators, telling tales of market highs and lows with every stroke.

This article delves into the significance of this ink/pencil dynamic and its role in the pivot point system.

1. The Significance of Ink

In the intricate world of stock trading, every detail matters, and nothing is left to chance. Among these details, the choice of ink in Jesse Livermore’s pivot point system stands out as a particularly poignant symbol. It’s not merely about recording numbers; it’s about capturing the essence of market movements. The use of specific ink colors—black and red—serves as a visual representation of the stock’s behavior, providing traders with immediate insights into its momentum and direction. This deliberate choice of ink transcends aesthetics; it’s a strategic decision that communicates the stock’s current state and potential trajectory. In this system, ink becomes more than just a medium; it becomes a message.

a. Upward Trend Column

Black ink in the Upward Trend column is more than just a color choice. It signifies the strength and positivity of a stock’s momentum, indicating a bullish phase.

b. Downward Trend Column

Red ink, on the other hand, is used for the Downward Trend column. This color choice is symbolic of a bearish phase, where the stock is experiencing a decline.

2. The Role of Pencil: Capturing Transitions

The use of pencil for recording prices in the Natural Rally and Natural Reaction columns is deliberate. Unlike the definitive nature of ink, pencil suggests something temporary, changeable, and in flux.

a. Natural Rally Column

Prices in the Natural Rally column, recorded in pencil, capture the stock’s attempts to rally after a downward trend. The use of pencil here underscores the uncertainty and volatility of this phase.

b. Natural Reaction Column

Similarly, the Natural Reaction column, also recorded in pencil, tracks the stock’s reactions or pullbacks after an upward trend. Again, the choice of pencil emphasizes the transitory nature of this phase.

3. Drawing Lines: The Intersection of Ink and Pencil

While ink and pencil are used to record prices, the act of drawing lines beneath these prices brings another layer of meaning. These lines, whether in black or red, serve as visual cues, marking significant shifts and transitions in the stock’s movement.

Decoding the Medium Livermore’s Pivot Point System

In Jesse Livermore’s pivot point system, the medium truly is the message. The choice between ink and pencil is not arbitrary. It’s a calculated decision that offers traders a deeper understanding of the stock’s journey. By paying attention to this ink/pencil dynamic, traders can gain valuable insights into the stock’s current phase and its potential future trajectory.