Jesse Livermore – The World’s Most Legendary Trader? (Trading Strategy Insights and Quotes)

Jesse Livermore was a legendary trader and investor that ended his life by suicide after a boom and bust cycle throughout most of his life. One of the most legendary trading books is based on his life: Edwin LeFevre’s The Reminiscences Of A Stock Operator.

In this article, we take a short look at Jesse Livermore’s life and early career, and we end the article with some of his most famous trading quotes.

Jesse Livermore’s early life and career

Jesse Livermore was born on July 26, 1877, in Shrewsbury, Massachusetts. He was an American stock trader and investor and is considered the pioneer of day trading. He was the world’s richest man at one time, but upon his death, his liability surpassed his assets. The Reminiscence of a Stock Operator by Edwin Lefèvre was based on Livermore.

He learned how to read and write at the age of 3. By 14, he dropped out of school to work on his father’s farm. However, he ran away from home.

Livermore is the author of How to Trade Stock and was the most excellent trader of all time. He was worth $100 million at his peak in 1929; this is about $1.5 billion today. He was self-funded (traded with his own money), trading using a system developed by him, and did not trade for anyone else. Trend following was his forte, and he would usually pick trending stocks while staying away from the range-bound store. He used volume analysis together with price patterns to determine entry and also to decide if a position would be left to run. Although he lost his fortune several times, Livermore was highly successful.

At the age of 14, he was employed as a board boy, posting stock quotes at the MA branch of Paine Webber stock brokerage in Boston, earning $5 per week.

By the age of 15, he made $3.12 on a $5 bet he made on Chicago, Burlington, and Quincy Railroad in a bucket shop. He earned close to $200 per week, trading at the bucket shops in Boston, more than what he was paid at Paine Webber— he was nicknamed “The Boy Plunger.” In 1893, at age 16, Livermore resigned from his low-paying job and started trading full-time.

Between 1895 and 1897, he made a net profit of $10 000, a 1000% return in three years of trading. He was continuously suspended from trading by most bucket shops because of his consistent profits.

At the age of 23, he moved to New York, arriving when the bull market was strong. He turned $10000 to $50000 in five days in a long position at Harris, Hutton & Company Stockbroker. His first great win was in 1901 when he went long on Northern Pacific Railway, making $500000 from his initial $10000.

And on May 1901, he predicted retracement in price and opened a short position using a 400% margin, and lost his equity. Afterward, he took a loan of $2,000 from Ed Hutton and relocated to St. Louis, where he was not known, and went back to betting at bucket shops. Livermore has had his fair share of failures, filing for bankruptcy more than twice and rebounding back to success.

One of his favorite books was Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay. He enjoyed fishing; he caught a 436-pound swordfish in 1937.

Livermore died by suicide on November 28, 1940. He shot himself with an Automatic Colt pistol in the Sherry-Netherland hotel in Manhattan.

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Jesse Livermore trading strategy quotes

We end the article with some of Jesse Livermore’s most famous quotes, mostly taken from The Reminiscences Of A Stock Operator:

The speculator is not an investor. His object is not to ensure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in.

The speculator’s chief enemies