Jesse Lauriston Livermore

jesse livermore jr

However, his success wasn’t meant to last for long, and he went bust a few short years later. He moved to St. Louis and turned to bucket trading to build his fortune again. This was during a time of economic recession, and there were numerous runs on banks and trust companies.


He made his first when he bought five shares of Burlington for $5. While working, he would write down certain hunches he had about future market prices, which he would check for accuracy later. He risked $5 and made $3.12 in profit from his first trade from Burlington stock.

There is no question that times have changed since Mr. Livermore traded stocks and commodities. Markets were thinly traded, compared to today, and the moves volatile. Jesse speaks of sliding major stocks multiple points with the purchase or sale of 1,000 shares. In the Panic of 1907, Livermore’s huge short positions made him $1 million in a single day. P. Morgan, who had bailed out the entire New York Stock Exchange during the crash, requested him to refrain from further short selling.

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His conservatism combined with his inconsistent history of wins of the stock market made him question his long-term ability to trade stock. So he decided to take a break at Palm Beach — it turned out to be a turning point in his life. Livermore had returned to Wall Street to a roaring bull market in 1901. Then 24, he would make $50,000 — and lose it trading cotton.

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He was an expert at sensing the nature and scope of mass hysteria, the threshold levels at which different men began to panic. When everyone else lost money in the crash of 1929, Livermore became still richer. One would have thought that the Depression would have made him even richer. The Great Bear of Wall Street – or the Boy Plunger – was a master at short selling stocks. He made his first millions shorting stocks on the eve of the Panic of 1907 when share prices tumbled over 50% as liquidity was sucked out of the system after a failed attempt by the United Copper Company to corner the market.

No record exists of what happened to the $100 million he made during the 1929 crash, but it was clear from his own personal records that it had all completely gone. Bernie Madoff was an American financier who ran a multibillion-dollar Ponzi scheme that is considered the largest financial fraud of all time. Benjamin Graham was an influential investor who is regarded as the father of value investing. His two noted trades occurred during the Panic of 1907 and at the start of the Great Depression.

Jesse Livermore’s Methods of Trading in Stocks

He went to New York and married a woman he had known for a few weeks. In 1934, he declared bankruptcy for the second time and his membership at Chicago Board of Trade was suspended. Although he believed he could make a comeback, it never happened. After his death, liquidators valued his estate at over $5 million, which in today’s terms is approximately $86 million.

stock traders

The $2 buffer on the breakout in this example is not exact; the buffer will differ based on stock price and volatility. One wants a buffer between actual breakout and entry that allows them to get into the move early but will result in fewer false breakouts. “Why Wall Street traders are obsessed with Jesse Livermore”. Following the end of World War I, Livermore secretly cornered the market in cotton.

Further reading

For every story starring an investor who struck it rich, there are countless others of poor souls who lost everything but the shirt off their back. And then there was Jesse Lauriston Livermore who made and lost a fortune on Wall Street several times over. In April 1906, by the age of 28, Livermore took a short position against Union Pacific railroad stock.


In September 1929, the stocks started to level off and Jesse felt like the market was in trouble and the bubble in the market was going to burst anytime. So he shorted the market with his pyramiding technique, a play that was risky and dangerous. By the end of the day, Livermore at the age of 52, emerged with a fortune of over $100 million ($1.5 billion in 2021) when everyone else lost hundreds of millions. Today’s stock traders look to Livermore as the quintessential, indomitable do it yourself millionaire who did not invest in costly courses or college educations, but instead learned stock trading on the job. As odd as his frequent wins and losses may sound, modern stock traders embrace the fact that hard work, intuition, and also a labor intensive study of the market can give virtually anyone the chance to realize a profit. The next step in Jesse Lauriston Livermore’s career was something that would be extremely frowned upon today, and the very word that describes these institutions has become an industry taboo.

The 1907 eventually spread throughout the nation when many state and local banks and businesses entered bankruptcy. In 1929, Livermore was well-positioned in the stock market but looked for the first signs of weakness as another market bubble loomed. In several small trades, Livermore sold his long positions by probing short bets into the market. Livermore, however, continued to build a short position, and on Black Tuesday, Oct. 29, 1929, Livermore reportedly made $100 million on his Great Depression short. Curiously enough, the crisis was exacerbated by the growth of unregulated bucket shops where investors could place bets on the movements of stocks without actually buying them – choking liquidity even further. It was precisely at these shops that Jesse Livermore started trading at age 14.

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His mental health continued to decline after his second divorce, the 1935 non-fatal shooting of his son by his wife, and a lawsuit by his Russian mistress. In 1908, he went bankrupt but was able to recover his losses. Jordan Kessler, son of trader Glenn Kessler, uses his father’s mobile phone and badge on the floor of the New York Stock Exchange, November 28, 2014.

Livermore’s experiences are recounted in the book, Reminiscences of a Stock Operator by Edwin Lefevre. Thomas J Catalano is a CFP and Registered Investment Adviser with the state of South Carolina, where he launched his own financial advisory firm in 2018. Thomas’ experience gives him expertise in a variety of areas including investments, retirement, insurance, and financial planning. Rectangles are a technical trading pattern in which an asset’s price ranges between two horizontal price points, creating a rectangle pattern. An ascending triangle is a chart pattern used in technical analysis created by a horizontal and rising trendline.

Precisely how he squandered his is still one of Wall Street’s enduring mysteries. By March 1934, Jesse was declared bankrupt and suspended from trading. On November 28, 1940, at the age of 63, Jesse Livermore dies by his own hand, via a revolver bullet through the brain. He had been suffering from clinical depression and in his suicide note he describes his life as a “failure”. He went almost bankrupt however, he was able to make this money back to eventually break even at the end of the trade of cotton.

  • But shortly, he was offered a trading facility of 500 shares, which he used judiciously and by 1917, he was back on the Wall Street.
  • In 1891, at the age of 14, he secured employment, as a board boy, posting stock quotes at a Boston, Massachusetts branch of Paine Webber stockbrokerage, at the rate of $5 per week.
  • He also purchased a fleet of limousines and a yacht for trips to Europe.
  • Whatever happens in the stock market today has happened before and will happen again.

The main character of Edwin Lefèvre’s book, “Reminiscences of a Stock Operator,” a wall street classic, is the avid short-seller swing technical trader Jesse Livermore. The book results from a number of Lefèvre’s interviews with Jesse Livermore. The one thing in common among all traders is that they want to make informed decisions. Every trader has a different requirement for information, simply because their trading strategies, portfolio of assets, preferred time of trading, experience level, financial goals, risk appetite, and trading mindset are different.

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