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Programming

The
“Livermore Market Key”

By KH Tang
96 *(1+2*ThresholdPercent)

100 *(1+2*ThresholdPercent)
Error with Simple Multiplication 120 120
method when calculating the Up and
Down Pivot Point. 115.2

96
100 100

120 *(1-2*ThresholdPercent)

Solution to handle the error: => UpTrendThreshold Calculation


=>
DownTrend*(1+2*ThresholdPercent)

DownTrendThreshold Calculation
=>
UpTrend/(1+2*ThresholdPercent)
Jesse Livermore Secret Market Key Flow Chart by KH Tang

Program Start

False First Bar


?

True

Initialization

StateNo False StateNo False StateNo False StateNo False StateNo False
=1? =2? =3? =4? =5?

True True True True True

Process Process Process Process Process Process


StateNo 1 StateNo 2 StateNo 3 StateNo 4 StateNo 5 StateNo 6
Routine Routine Routine Routine Routine Routine
UpTrend NatlRally SecRally SecReact NatlReact DnTrend

Conditional Reset of
NatRallyReset Flag
and
NatReactReset Flag Note: Short form used in the flow chart
PP = PivotPoint
Nat = Natural
Sec = Secondary
End Dn = Down
React = Reaction
Conditional Reset
Initialization
Parameters

StateNo=1;
InUpTrend AND
InUpTrend=True; False NatReact <
InDnTrend=False;
{UpTrend/
(1+2*ThresholdPct)}
UpTrend=C;
?
NatRally=C;
SecRally=C;
True
SecReact=C;
NatReact=C;
DnTrend=C;
NatReactReset=True
NatRallyReset=True;
NatReactReset=True

UpTrendPP=C;
NatRallyPP=C;
NatReactPP=C;
DnTrendPP=C;
InDnTrend AND
False NatRally >
{DnTrend*
(1+2*ThresholdPct)}
?
End
True

NatRallyReset=True

End
Process StateNo 1
(InUpTrend)

True Price >= False


LastPrice
?

False
Price > (InDnTrend AND
UpTrend Price <DnTrendPP)
? False
OR
InUpTrend AND
True Price < {UpTrend/
(1+2*ThresholdPct)}
?
Price <
(UpTrend/ False
True
(1 +ThresholdPct)
?

True

False
NatReactReset OR
Price<NatReactPP
? True

True

State No=1 (InUpTrend) State No = 6 (InDnTrend) StateNo= 5 (InNatReact) StateNo = 4 (InSecReact)


InUpTrend=True InDnTrend = True NatReactReset=False SecReact = Price
InDnTrend=False InUpTrend = False NatReact= Price UpTrendPP = UpTrend
UpTrend=Price DnTrend = Price UpTrendPP = UpTrend
UpTrendPP = UpTrend

End
Process StateNo 2
(InNatRally)

True Price >= False


LastPrice
?

(InUpTrend AND (InDnTrend AND


Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?
Price <
False Price > (NatRally/ False
True True
NatRally (1 +ThresholdPct)
? ?

True True

NatReactReset OR False
Price<NatReactPP
? True

True

StateNo = 2 (InNatRally) State No=1 (InUpTrend) State No = 6 (InDnTrend) StateNo= 5 (InNatReact) StateNo = 4 (InSecReact)
NatRally = Price InUpTrend=True InDnTrend = True NatReactReset=False SecReact = Price
InDnTrend=False InUpTrend = False NatReact= Price NatRallyPP = NatRally
UpTrend=Price DnTrend = Price NatRallyPP = NatRally
NatRallyPP = NatRally

End
Process StateNo 3
(InSecRally)

True Price >= False


LastPrice
?

(InUpTrend AND (InDnTrend AND


Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

Price <
False Price > True True SecRally/ False
NatRally (1+ThresholdPct)
? ?

True True

False Price > Price < False


SecRally NatReactPP
? ?

True True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo = 5 (InNatReact) StateNo = 4 (InSecReact)
SecRally = Price NatRally = Price InUpTrend = True InDnTrend = True NatReact = Price SecReact = Price
InDnTrend = False InUpTrend = False
UpTrend = Price DnTrend = Price

End
Process StateNo 4
(InSecReact)

True Price >= False


LastPrice
?

(InUpTrend AND (InDnTrend AND


Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

Price >
False SecReact* True True Price < False
(1+ThresholdPct) NatReact
? ?

True True

False Price > Price < False


NatRallyPP SecReact
? ?

True True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo = 5 (InNatReact) StateNo = 4 (InSecReact)
SecRally = Price NatRally = Price InUpTrend = True InDnTrend = True NatReact = Price SecReact = Price
InDnTrend = False InUpTrend = False
UpTrend = Price DnTrend = Price

End
Process StateNo 5
(InNatReact)

True Price >= False


LastPrice
?

(InUpTrend AND (InDnTrend AND


Price >UpTrendPP Price <DnTrendPP)
False False
OR OR
InUDnTrend AND InUpTrend AND
Price>DnTrend* Price < {UpTrend/
(1+2*ThresholdPct)} (1+2*ThresholdPct)}
? ?

False Price >


NatReact* Price < False
True True
(1+ThresholdPct) NatReact
? ?

True True

False NatRallyReset OR
Price>NatRallyPP
?

True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend) StateNo= 5 (InNatReact)
SecRally = Price NatRallyReset = False InUpTrend = True InDnTrend = False NatReact = Price
NatReactPP = NatReact NatRally = Price InDnTrend = False InUpTrend = True
NatReactPP = NatReact UpTrend = Price DnTrend = Price
NatReactPP = NatReact

End
Process StateNo 6
(InDnTrend)

True Price >= False


LastPrice
?

(InUpTrend AND Price < False


Price >UpTrendPP DownTrend
False
OR ?
InUDnTrend AND
Price>DnTrend*
(1+2*ThresholdPct)} True
?

False Price >


{DnTrend* True
(1+ThresholdPct)}
?

True

False NatRallyReset OR
Price>NatRallyPP
?

True

StateNo = 3 (InSecRally) StateNo = 2 (InNatRally) State No = 1 (InUpTrend) State No = 6 (InDnTrend)


SecRally = Price NatRallyReset = False InUpTrend = True InDnTrend = True
DnTrendPP = DnTrend NatRally = Price InDnTrend = False InUpTrend = False
DnTrendPP = DnTrend UpTrend = Price DnTrend = Price
DnTrendPP = DnTrend

End
Sample Chart
In late 1939, Livermore's son, Jesse Jr., suggested "La guerre! C’est une chose trop grave pour la
to his father that he write a book about his confier à des militaires."
experiences and techniques in trading in the stock "War is too important to be left to the
and commodity markets. The book was generals."
completed and published in March 1940. It was - Georges Clemenceau (1841-1929): A French
titled How To Trade In Stocks. ( Downloadable) journalist, physician and statesman. He served
as Prime Minister from 1906 to 1909 and from
In this short book, Jesse Livermore spent a great 1917 to 1920.
deal of effort, more than 1/3 of the book, in
explaining and illustrating this “Livermore Market
Key” technique in details. Later in November
1940, he passed away… With the same token, it is suggested that:-
Personal Finance matter is Too Important to be
May be… just may be that… Who Knows? left to the Financial Advisors!
May be he wanted to pass down this tool to the
public to avoid personal financial crash due to the Thus, it is so serious that individual Must spend
Stock Market Manipulation in the future? As it part of the time to learn and understand how
surely would help those who believe and follow economy works!
through his work. (See it for yourself from the
charts on the next link.)

The above flow-charts were proven to be


programmable as the result shown in my blog:
Stock Market Tools (6) - Livermore Market Key. Bless You
KH Tang
24 Jan 2010