The Livermore System
Jesse Livermore believed in always taking the path of least resistance. He believed in market trends and tried to actively ride the market trends using large leverage. The Livermore System evolves around Livermore’s concept of Pivotal Points. Pivotal Points are areas that need breaking in order to confirm a continuing market trend. A Pivotal Point can be a recent swing high/low or a range high/low. His vision was that these are areas that need breaking in order to see a trend continue. However, the market needs to take a breather before it can continue with the trend.
We have simplified the strategy and made it completely mechanical. For that reason, we are only focusing on swing high points in this particular example
Step 0: Access the Strategy Concept Template [1 Min]
Click the button to load the trading bot directly onto your canvas:
Templates are for educational purposes only.
This template runs on the Daily Timeframe
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Step 1: Export the Trading Bot [1 Min]
Before diving into customization, export the bot with the upper-right export button to download the file.
Step 2: Upload to MetaTrader 5 [4 Min]
Don’t know how? Refer to our help article "Exporting Your First Strategy".
Step 3: Understand the Logic [10 Min]
The other concept of the Livermore System is the Swing Filter. This is where we try to take in consideration a pullback before a potential trend continuation. After price makes a swing high, you don’t want to enter the market right away in anticipation of a continuing trend upwards. Livermore believed that it makes more sense to let the market breathe for a while before it can continue with the trend. In normal price action terms this breather is called a pullback.
With the swing filter, we try to capture this pullback by measuring the distance of the pullback and comparing it against the ATR with a multiplier. The goal is to only continue with the setup if the pullback is significant enough, thus bigger than the ATR (multiplied by x). This significance rule makes sure that we’ve actually seen a pullback before blindly entering the market.
Find and store the swing high. Use a Run at Time block and put the time at 01:05. Connect the first modify variable block. In this block, we store the highest price of candles 2-4 in a variable named Highestprice.
Find the range. Connect a formula block to measure the difference between the Highestprice variable and the low of candle id 1. Store this is in a variable called Distance.
Distance = Highestprice - low of candle ID 1
Calculate the ATR filter. Use another formula block to calculate the ATR value with a multiplier, and store this in a variable called Swingfilter.
Swingfilter = Indicator ATR Period 14 * Multiplier
Verify the pullback. Now you verify the pullback with a trade rule block that checks if:
Distance > Swingfilter
Place the trade. Now we can place a buy pending order on the variable value Highestprice and we add a POP SL and a % of stoploss-based target. We also check if there are any other trades open and delete them first if this is the case. This makes sure we are always considering the most recent valid setup.
This is what the strategy looks like on a chart.
Step 4: Make It Your Own [10 Min]
You can adjust and experiment:
Add more strategy rules or include the Jesse Livermore component in your own strategies
EXPORT and see the differences.
Play around with timeframes and assets
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Refine the rules to fit your own interpretation of the Jesse Livermore concept
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Templates are for educational purposes only.
Now it's your turn—apply the template, tweak the logic, and make it yours. 🚀
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