In this article, we will share the life of Jesse Livermore and the lessons learned from his trading career. Jesse Livermore is one of the best stock traders and investors of all time, and his story continues to inspire today's traders and investors. Livermore was born in Massachusetts in 1877 on a farm owned by his parents. It was through effort, passion and a deep understanding of numbers that he became one of the preeminent and successful traders of all time in the stock and commodities markets. By the age of twenty-five, he had accumulated a large profit, an amount that would take the average person a lifetime to realize. Jesse was not a media person, he was very shy and preferred solitude to fame. He blamed poor performance on ignorance and overconfidence, not on misfortune or market forces.
This article is about a market participant who made his fortune by controlling his emotions and knowing how the markets work. During his trading career, he was able to acquire many luxurious items such as limousines, yachts and several mansions, but due to depression, he committed suicide. While it was a sad end, it shouldn't detract from the lessons he taught us in his best time. When Jesse finished elementary school, he got a job as a boy at the stock exchange in the stock exchange office. He was very good at mathematics, which was useful to him in his new job. Prior to the technological advances associated with the introduction of electronic systems, price quotes were hand-delivered to participants, and that was Jesse's job. Livermore worked in a crowded environment filled with traders, but he could focus on his work.
As he worked with numbers every day, he realized that they were constantly changing and took it upon himself to study and understand their behavior. In trying to understand their behavior, he realized that they were repeating patterns of behavior over and over again. It didn't take him long to correctly predict future prices using their historical performance. His interest in predicting future price movements grew and he began using the book to write down his observations and his results, which was his way of capitalizing on the experience. Jesse didn't really care about what was driving the market, but he was interested in price action, he was mainly a technical analyst. The reason he became a technician was because sometimes the market is driven by a catalyst that only becomes known after a few days or weeks.
When Livermore realized that he was making more money trading than his job, he became a full-time stock trader. His parents were against his decision, but eventually came to the party when they realized how much money he was making. When Jesse was fifteen, he made his first thousand dollars and showed it to his mother. His mother advised him to keep the money so that he would not be tempted to use it. At the age of fifteen, he made a living in the stock market, working in office stores. Brokerage houses was the place where traders met to place their bets and get quotes.
Brokerage houses profited heavily from the losses incurred by traders, which pushed them to impose conditions that would make it difficult for traders to profit. But Livermore made a profit most of the time, and brokerage houses forbade him to trade, which forced him to change brokerage houses frequently. On some specific occasions, he intentionally lost so they wouldn't know about his win rate. Almost all offices banned Jesse and the only option was to go and trade on the stock exchange, where he could comfortably run his business for months, they also tried to get rid of him, but to no avail. He made his first ten thousand when he was twenty years old. When he realized that the brokerage he was using was plotting to ruin him, he decided to move to New York. Jesse was an absolute winner in trading, but sometimes he also made common mistakes that most traders fall prey to.
He was afraid to miss the action and sometimes made trades that did not match the goals of his strategy. He advises traders to be patient so that the right skills appear. Another message from Jesse to traders is that they should never trade out of anger, greed or desperation and should always keep their emotions in check as well as their prejudices. In most cases, novice traders have to lose a lot of money to understand that the markets require patience. Livermore realized this at a younger age, which contributed to his success as a market speculator. In New York, it took him several months before he went bankrupt, as he had no experience of trading on stock exchanges, which were different from brokerage houses. Brokerage houses had more liquidity than exchanges and were best suited for people who move in and out of trades quickly in a short amount of time. He realized that he still had a lot to learn about the market environment of exchanges. After losing all his money, he went to borrow five hundred dollars from the owner of the facility where he worked.
So he decided to go and collect money from the offices. Since he was banned from those located in his hometown, and there were few in New York, he decided to try his hand at those located in St. Louis, but he had to be careful, because rumors in the brokerage business are spreading fast. He made a lot of money and was soon banned from the St. Louis offices. He returned to New York and paid back the money he borrowed. Since many brokerage houses were turning away from his business, he decided to find someone to trade on his behalf and he was able to make a big profit. Jesse was a well trained scalper and that was his experience. For this reason, he could not consistently make a profit on the exchanges. If he could have known, he would first have learned to look at speculation from a different angle. He lost a lot of money to realize that he needed to explore new ways to enter the market.
All brokerage houses had to be closed, and people began to flock to the exchanges. This led to a lot of defeats for Jesse. After several days of losing, he decided to change his trading style. He started making money and made friends, it was a good time for him. His story is very inspiring and we can learn a lot from him. We traders usually learn the hard way unnecessarily. If we combined what we know with the advice of those who came before us, we would greatly reduce the learning curve.