Titans Of Trading Part 1: The Remarkable Journey Of Jesse Livermore

Jesse Livermore's trading strategies and his monumental rise and fall offer invaluable lessons for traders today.

Livermore was an early proponent of trend following.

In the vast tapestry of trading legends, few names shine as brightly as Jesse Lauriston Livermore. From his humble beginnings in Massachusetts to his meteoric rise as the "Great Bear of Wall Street," Livermore's journey is filled with lessons, strategies, and cautionary tales for modern traders.

Early Life And Foray Into Trading

Jesse Livermore, born in 1877, embarked on his trading journey at the tender age of 14. Employed as a board boy at the Boston Stock Exchange, he meticulously noted stock prices, a task that offered him a valuable vantage point to observe the stock market's ebbs and flows.

With an initial stake of just $5, Livermore exhibited a remarkable aptitude for numbers, swiftly turning it into $1,000 in the bucket shops (businesses that allow customers to gamble on stock prices) of Boston. By the time he reached 20, his prowess had earned him a fortune of around $10,000, equivalent to over $300,000 in today's money when adjusted for inflation. Livermore's success in the bucket shops was merely the beginning.

Jesse Livermore

Pioneering Strategies And Achievements

Livermore was ahead of his time in many ways. He was a strong proponent of "trend following," keenly observing stocks that demonstrated significant upward or downward momentum. This strategy, while common now, was groundbreaking during his era. As he transitioned to Wall Street, his fortunes multiplied. Leveraging his unique ability to read the market, he made a staggering profit of $100 million during the stock market crash of 1929. In today's terms, that profit equates to approximately $1.5 billion. His emphasis on setting a "stop" to limit potential losses showcased his profound understanding of risk management.

The Roller Coaster Of Fortunes

While he is renowned for his monumental gains, Livermore also faced significant financial setbacks. He declared bankruptcy several times throughout his career. However, his resilience was evident as he consistently rebounded, rebuilding his fortune each time. At the zenith of his success in the late 1920s, he was worth an impressive $100 million.

Challenges And Legacy

While Livermore's professional life was studded with successes, his personal life bore the brunt of his profession's pressures. Struggling with depression, he tragically took his own life in 1940. His story serves as a poignant reminder of the emotional toll trading can exact.

Despite the personal challenges he faced, Livermore's impact on the trading world is indelible. His book, "How to Trade in Stocks," remains a seminal work, offering invaluable insights into his trading philosophies. "Reminiscences of a Stock Operator," authored by Edwin Lefèvre, though fictional, is believed to be a reflection of Livermore's life and is a staple for anyone keen on understanding the stock market's intricacies.

Read the whole series:

  1. Titans Of Trading Part 1: The Remarkable Journey Of Jesse Livermore
  2. Titans of Trading Part 2: The Remarkable Journey Of George Soros
  3. Titans Of Trading Part 3: The Remarkable Journey Of Paul Tudor Jones

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