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Lords of the markets: Jesse Livermore

Sunday´s

is here and today you will be introduced to one of the most important traders of all time.

We have already talked about several important people of the financial markets. We have mentioned Jim Simons , Alexander Elder or probably the best-known investor of all time, Warren Buffett. But we have not yet mentioned a person, who is considered to be the best trader. That person is Jesse Livermore, who will be introduced in this article.

10 points you need to know about Livermore

Jesse Livermore was born in 1877 and started trading as soon as he was 14. He was a self-taught trader who learnt most of his life lessons the hard way.

At the peak of his career (around the year 1929) he was worth around 100 million dollars. In today´s world this would be between 1.5 and 14 billion dollars depending on the measuring techniques.

Jesse Livermore was able to do this by solely trading and managing his own money and funds.

Jesse Livermore was one of the traders to ever have a clear trading plan. Many of his trading rules are still applicable today and are key for many trading systems.

Most of these rules are fairly simple such as:

Trade with a stop, which you know before you enter to the position.

Do not follow too many stocks.

Let your profits run and close your losing trades.

Jesse Livermore was not only able to get extremely rich, but also lose all of his wealth. He himself said that losing his wealth was mostly due to his mistakes and him not following his trading plans. By this claim he only highlighted the need for following of the strategy that the trader chooses.

The shift was not only visible with his fortune, but also in his trading path. Jesse Livermore started as a day trader, however he then switched to swing trading, so that he could later continue as a long-term trader.

Jesse Livermore traded mostly stocks. His rules were to trade mostly trending stocks and the biggest stocks in any given industry.

His incredibly interesting story brought attention of publishers and writers. For instance, Edvin Lefevre wrote a biography about Jesse Livermore in 1923 called “Reminiscences of a Stock Operator, ” which is highly recommended book by many market experts. Livermore himself wrote a book in 1940 (which is also a year he died) called “How to Trade in Stocks.

By the end of his life, Livermore has not only lost his entire wealth (yet again), but he was also forced to live off his family.

3 quotes of Livermore

The fact that Livermore was extremely smart is also proven by his quotes, which are often cited between traders or investors. Here are just few of the most interesting ones.

“There is nothing new in Wall Street. There cannot be, because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”

“The point is not so much to buy as cheap as possible or go short at top price, but to buy or sell at the right time.”

“There are times when money can be made investing and speculating in stocks, but money cannot consistently be made trading every day or every week during the year. Only the foolhardy will try it. It just is not in the cards and cannot be done.”

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