Jesse Livermore Trading Strategy, Quotes, Net Worth, & Bio
Jesse Livermore was one of the most legendary and influential stock traders in history. He was known for his spectacular gains and losses, his bold and contrarian bets, and his mastery of technical analysis.
In this article, we will explore his life story, his trading strategy, his famous quotes, and his net worth.
Who is Jesse Livermore
Jesse Lauriston Livermore was born on July 26, 1877, in Shrewsbury, Massachusetts. He was a precocious child who learned to read and write at the age of three-and-a-half.
Livermore had a keen interest in mathematics and numbers, but he hated school and farm work. At the age of 14, he ran away from home and got a job as a board boy at the Paine Webber brokerage in Boston.
There, he posted stock quotes on a chalkboard and observed the movements of the market.
Jesse Livermore Timeline of Events
July 26, 1877: Jesse Livermore was born in West Acton, Massachusetts.
1891: At the age of 14, he began working in Paine Weber & Co’s Boston stockbroking offices, transferring prices from ticker-tape to quotation board.
1893: At the age of 16, he quit his job and began trading full-time.
1897: By this time, he had made around $10,000 in trading profits.
September 14, 1900: At the age of 23, he moved to New York to trade on the NYSE through legitimate stockbrokers, turning $10,000 into $50,000 in five days.
1901: He turned $10k to $500,000, buying stock in Northern Pacific Railway.
1906: He shorted Union Pacific Railroad before the San Francisco earthquake and made $250,000. However, he then went long on the same stock and ended up losing $40,000.
1907: In the panic of 1907, Livermore’s short positions made him $1 million in a single day. His mentor J.P. Morgan convinced him to stop shorting after he bailed out the entire NYSE. Livermore then went long and increased his net worth to $3 million.
1908: He filed bankruptcy for the first time.
1915: He filed bankruptcy for the second time.
Post World War 1: He engaged in market manipulation in cotton and then made $10 million trading wheat and corn.
1929: Livermore went massively short on the market, using multiple brokers to hide what he was doing. He made $100 million with this short and was blamed by the public for the crash.
1932: He went through his second divorce, his wife shot his son non-fatally and was sued by his Russian mistress, which led to a decline in his mental health.
1934: He filed bankruptcy for the third time.
November 28, 1940: On Thanksgiving day in 1940, he shot himself.
Jesse Livermore’s Career
Livermore soon discovered that he had a natural talent for trading. He started making small bets on stock prices at bucket shops, which were establishments that allowed customers to speculate on stock prices without actually buying or selling shares.
Bucket shops were similar to how people trade futures and options today. Livermore was so successful that he was banned from most bucket shops in Boston. He then moved to New York and traded at the New York Stock Exchange.
Livermore made and lost several fortunes in his trading career. He used a lot of margin and leverage, which enhanced his returns but also greatly increased his risk. He was famous for his market timing and his ability to spot trends and pivot points.
He used price action and patterns to make informed decisions. He was not afraid to go against the crowd, even when it meant taking huge risks.
Jesse Livermore’s Famous Trades
Making millions by shorting the market before the 1906 San Francisco earthquake
Making $1 million in a single day by shorting the market during the Panic of 1907
Making $100 million by shorting the market before the 1929 crash
Making $10 million by trading wheat and corn after World War I
Jesse Livermore’s Bankruptcy Filings
The first time he filed for bankruptcy was in 1908 when he listened to Teddy Price, who told him to buy cotton while Price was secretly selling
The second time was in 1915 when he lost money in various trades
The third time was in 1934 when the Securities and Exchange Commission imposed new rules that interfered with his trading style
Livermore also had a turbulent personal life. He was married four times and had two sons. He struggled with depression and alcoholism.
On November 28, 1940, he committed suicide by shooting himself in a hotel room.
He left a note for his wife that said: “My dear Nina: Can’t help it. Things have been bad with me. I am tired of fighting. Can’t carry on any longer. This is the only way out. I am unworthy of your love. I am a failure. I am truly sorry, but this is the only way out for me. Love Laurie”
Jesse Livermore Trading Strategy
Livermore’s trading strategy was based on the concept of market trend analysis. He believed that stock prices moved in trends and that it was possible to identify and profit from these trends. He used technical analysis to find new trends and rode them to huge profits.
Some of the key elements of his trading strategy were:
Price action: Livermore used price patterns and movements to determine the direction and strength of the market trend. He looked for pivotal points, which were levels where the price changed its direction or momentum. He waited for confirmation before entering or exiting a trade.
Market psychology: Livermore understood that human emotions played a big role in market movements. He studied crowd behavior and sentiment indicators to anticipate market reactions. He also controlled his own emotions and avoided being influenced by others.
Risk management: Livermore used stop-loss orders to protect his capital and lock in profits. He also diversified his portfolio and avoided overtrading or overleveraging.
Applying Jesse Livermore’s Trading Strategy Today
While Livermore made some extremely risky bets and ended up dying with a negative net worth, there are many valuable lessons we can apply to our own trading strategies.
Follow the trend: Livermore believed that the market trend was the most important factor in trading. He said: “The trend is your friend”. He advised traders to identify the direction and strength of the market trend and trade accordingly. A great way to identify market trend is by using the Ichimoku cloud indicator. He also warned against trying to predict the market or going against the trend.
Use technical analysis: Livermore used technical analysis, which is the study of price patterns and movements, to make informed trading decisions. He looked for pivotal points, which were levels where the price changed its direction or momentum.
If you want to learn more about technical analysis, you should join the HaiKhuu Trading community. HaiKhuu is a community of thousands of experienced traders and investors to help you learn about identifying trends and becoming a profitable trader.
Jesse Livermore Quotes
Livermore left behind many valuable insights and wisdom on trading and investing. Here are some of his most famous quotes:
“There is only one side of the market and it is not the bull side or the bear side, but the right side.”
“Markets are never wrong, opinions often are.”
“Money is made by sitting, not trading.”
“The stock market is never obvious. It is designed to fool most of the people, most of the time.”
“To anticipate the market is to gamble. To be patient and react only when the market gives the signal is to speculate.”
“Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.”
“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.”
“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear. In speculation when the market goes against you you hope that every day will be the last day and you lose more than you should had you not listened to hope to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little.”
“Remember this: When you are doing nothing, those speculators who feel they must trade day in and day out, are laying the foundation for your next venture. You will reap benefits from their mistakes.”
“There is time to go long, time to go short and time to go fishing.”
“A loss never bothers me after I take it. I forget it overnight. But being wrong - not taking the loss - that is what does damage to the pocketbook and to the soul.”
Jesse Livermore’s Kids
Unfortunately, Jesse Livermore’s family suffered from mental health issues as well. Jesse Jr. and Jesse III both committed suicide.
Jesse Livermore Jr. (Son) - Jesse Livermore Jr., also known as Jesse Livermore II, was born on September 13, 1919. He committed suicide in 1976 by taking pills and laying his head in a gas oven. He was wanted for the attempted murder of a police officer at the time of his death.
Paul Livermore (Son) - Paul Livermore was born on April 3, 1923 in New York. He died of natural causes on May 2, 2022, in Las Vegas at 79 years old. He was an actor himself who appeared in several movies and TV shows in the 1950s, such as Tripoli and At War with the Army.
Jesse Livermore’s Grandson
Jesse Livermore III (Grandson) - Jesse Livermore III was born on December 7, 1939, in New York. He was a journalist and an author who wrote several articles and books about his grandfather’s legacy and trading philosophy. According to his obituary, he was 66 years old when he died. He was survived by his wife Carol, his children David, Tracey, Ron, and Jamie, and his eight grandchildren. The cause of his death was not specified, but some sources suggest that he also committed suicide by natural gas.
Jesse Livermore’s Great Granddaughter
Tracey Lynn Livermore “Brandi Love” (Granddaughter) - Tracey Livermore, better known by her professional name Brandi Love, was born on March 29, 1973. She is a pornographic actress and is married to Chris Potoski.
Jesse Livermore's Net Worth
Livermore’s net worth fluctuated greatly throughout his career. At his peak in 1929, he was worth $100 million, which in today’s dollars roughly equates to $1.5 billion. However, he also lost most of his fortune several times and died with debts of $2.5 million.
Livermore’s net worth at the time of his death is estimated to be -$2 million.
Conclusion
Jesse Livermore was a legendary stock trader who made and lost millions of dollars in the stock market. He was known for his spectacular gains and losses, his bold and contrarian bets, and his mastery of technical analysis.
He left behind many valuable insights and wisdom on trading and investing that are still relevant today. He also had a turbulent personal life that ended tragically with his suicide.
Livermore’s life story is a fascinating and cautionary tale of the highs and lows of trading and speculation. He is widely regarded as one of the greatest traders of all time and a pioneer of modern technical analysis. He is an inspiration for many traders and investors who aspire to follow his footsteps and achieve success in the market.
