This Wall Street legend is perhaps one of the most talked about stock person in the trading community. Jesse Livermore made his fortune in the stock market during the early 1900’s. He is a featured character in the best selling book “Reminiscences of a Stock Operator” known as the character Larry Livingston.
What makes Jesse Livermore so interesting is that at the very young age he started trading stocks and observed how they “behaved”. His techniques and methodology of how to trade stocks is used by many traders today as a guideline to make money. The rules of trading, risk management, and analysis that he used, are still valid today despite it being over 100 years old.
Some of the legendary stories about Jesse include:
Jesse Livermore make his riches at a young age: At the young age of 15 years old, Jesse make his first trade while working as a quote boy for Paine Webber brokerage firm. His first trade make him $1000, which would equate to about $20,000 in today’s value. His strategy was to observe price action and took note of highs and lows of the day. He noticed that once stock traded into higher territory, he was able to determine when the beginning of a major trend was about to start.
He made millions shorting stocks: During the Crash 1909 there was a credit crunch in the financial market and there was a shortage of money to be lent to traders who where trading on margin. This caused many traders to sell out their holdings in stocks and commodities, which caused a cascade of selling on the stock exchanges. Jesse Livermore had the the insight to see this coming and took advantage of the opportunity to short sell many stocks which yielded him millions of dollars. From this point on, Jesse Livermore was called the “great bear” of Wall Street.
Jesse Livermore Reveals his Secret Methods: The million that he made in the stock market was so unbelievable that the public accused him of manipulating the stock market. People as well as the government accused him of causing the stock market crash. After awhile Jesse Livermore decided to tell people EXACTLY how he traded. He published a book called “How to Trade in Stock” which reveals the secrets of his success. Today’s top traders and investors claim that the methodology and rules of trading he published are still valid today. To get Jesse Livermore’s book click here.
He also did heavy short selling of the market crash of 1929 which led to the Great Depression. While most investors and traders lost their fortunes, Jessie made millions. Just to give you an idea of how much he made during crashes, the profits were said to 100 million dollars. In today’s value we should consider this to equate into the billions.
Jesse Livermore’s life was not without the hard times. There were moments when he did hit rock bottom. He was not perfect. Just as easily he made his fortune, he did lose big time, and even claimed bankruptcy at one point in his life. Jesse claimed that the reason he had lost money in the markets was because he did not stick to his trading rules. One of these rules was to trade only on his own advice and not listen to others. He claims that many of his losses was because he had taken advice from other regarding the direction of certain stocks. A major lesson he learned was to ALWAYS trade on one’s own research, and ignore the rumors and news reports. As soon as he started to stick to his “rules”, he was back in the game making millions again.
When learning to trade stocks, it’s best to emulate the masters. Jesse Livermore was a master trader and had much advice for people who wanted to learn to trade stocks. Below are some books that are a MUST READ to learn more about the philosophy and tactics used in trading stocks and commodities.