Jesse Livermore

Jesse Livermore – a great trader early 20 century. One of the earliest trend traders. Among traders and investors Jesse Livermore was known by the nickname “Junior grip” (Boy Plunger) and “Miracle child” (Wonder Boy). He became famous for winning and losing fortunes at the time of exchange crisis of 1907 and 1929.

Jesse Livermore was born in Massachusetts, the son of farmers, and at fifteen left home to later become a great trader (according to legend, the coach, where he had left, stopped by the brokerage, defining the profession of boys). He supported his mother, who did not want her son, a year has passed three-year course in mathematics, the fate of the farmer, his father was against. At his first job in Boston, Jesse Livermore wrote down on the board quotes the brokerage firm Paine Webber.

He recorded his observations on the movement of prices in the future, and then tested them. On the advice of a friend, Jesse Livermore for the first time dared to participate in the auction. After investing $ 5, he received a 3.12 dollar profit. Having earned a considerable sum for those times in 1000 dollars, Jesse Livermore started playing in the underground OTC offices. Participants have bet against the house, and most of the play due to the instability of quotations. Livermore, by contrast, regularly won and was soon banished from this community. Then he bent his steps to the stock exchange and has developed a system of rules that generate profits. Jesse Livermore got on the New York Stock Exchange (NYSE). In fact, his whole life he never had not visited the trading floor or the NYSE, or any other exchange of those with whom he worked – conducting all their transactions through brokers. In the 20th years he was the most luxurious offices throughout New York: Jesse Livermore has built its own trading floor, where a huge board, six clerks wrote out quotes for him alone – the great traders prefer to work in complete silence. Posh’s country residence, the giant yacht, many Rolls-Royces, “jewelry for the wives and girlfriends, go mad, the audience – he lived in a big way and paying for any errors, respectively. In 1907, he earned $ 3 million to market failures, and in 1929 – as many as 100. In consequence of all this money Jesse Livermore lost. Based on its successful experience of trade debt securities, Livermore left the practical philosophy, the main principles of which – an increase position until it matches the trend and the rapid closure of its order to reduce losses.

Ironically, even the great trader did not follow this system, because of what and lost fortune. Now many experts believe Jesse Livermore the greatest trader in history.

Many episodes of his career came in the popular book by Edwin Lefevre, Reminiscences of a Stock speculator “(” Reminiscences of a Stock Operator “Edwin Lefevre). Lefevre wrote “Memoirs” on the basis of a long interview with Jesse Livermore, but in reality there is little doubt that most of the books he has written a great trader – too fine and precise details of this fascinating story, which has become a middle-aged belletrizovannym description of a Stock Operator. The narrative is a fictional character on behalf of Larry Livingston. In addition, Jesse Livermore wrote a less known book “How to trade shares. Formula combination of price and time of Livermore. The first edition was published in 1940, and in the same year Jesse Livermore committed suicide. He shot himself with a Colt 32-caliber. Eight-page suicide letter was found by police in his notebook. Among the reasons for his death – long-term depression and self-doubt after the failure.

I must say that the personal life of Jesse Livermore has developed not too successfully. The first wife of the financier became a kind Nettie Jordan, with whom he divorced in 1918. In the 40 years he married the beautiful Dorothy – actress from Zigfild Folly. Filing for divorce and she moved to his hometown along with her lover. In 1932, the divorce took place, and Dorothy got custody of his sons. A year later, Livermore married the 38-year-old Harriet Metz Noble. This was her fifth marriage and the honeymoon of the young declined. Four old men Harriet committed suicide. This was a bad omen. An unpleasant episode occurred in 35, when during a drunken quarrel former wife, Dorothy, Jesse Livermore shot at their son, Jesse Jr.. He survived, but the scandal was inevitable.

Below are some excerpts from the book Lefebvre:

“Another lesson that I learned earlier, lay in the fact that there is nothing new on Wall Street. Nothing new can not be because speculation is as old as the world. Whatever happens in the markets right now, it has happened and it will happen again.

I had 10 thousand dollars, when I was 20 years old and my margin on that Sugar deal was over 10 thousand. But I do not always won. My trading plan was good enough and won more often than losing. If I ever used it, I would have won 7 times out of 10. As a rule, I always made money when I was sure that I was right, before bidding. I was wrong that I did not have the brains permanently stick to my plan and play the market only when the previous events talked about successful trading. For each event one time, but I did not know. That is what caused the collapse of so many people on Wall Street, which were not Quiche Eaters. There is a simple fool, that everything, everywhere and always makes the wrong, and fool with Wall Street, who thinks he must trade all the time. No one can have adequate reasons for the day of purchase or sale of shares or enough knowledge to play the market intelligently.

It takes a long time to realize their mistakes. They say that there are two sides to everything, but at the market only one side. And this is not a bull or bear side, but the true side. The market is always right.

Nothing teaches you what not to do, as the loss of all that you have. And when you realize that you can not make or lose money, you begin to learn what to do to win. This study.

I think an important step in my education was a moment when I realized finally that old Mr. Partridge kept on repeating their clients: “Well, you know, it’s a bull market,” he really meant was that the big money is not in the individual fluctuations, and in one motion, it means that we should not follow the price and the market. The reason is that people can clearly see that the market is doing what, as planned, he should do, and yet this man becomes impatient and doubters. That’s why so many men in Wall Street lost money, but they were not school Quiche Eaters. They did not lose the market, they lost themselves, despite their mind, they could not fulfill their plans. The old Turk was damn right when he said that to do. But he could not remain patient and confident in their actions. The common man is not interested in bull or bear market, he wants to tell him what kind of action to buy or sell. He wants to get something without giving anything. He does not want to work, he does not even want to think. It’s so boring when you have to take money that is simply found. To tell about my first error on a million dollars, to return to a time when I first became a millionaire. This was immediately after the crash in October 1907. Since continued my trade, one million additional reserves are meant only for me. Money does not give the trader a sense of comfort, because he is rich or poor, it can make a mistake and always uncomfortable to be wrong. And when a millionaire right, money is only its servant. Loss of money I do not care. Losses never frustrates me, after I accepted it, I forget about it the next day. But do not follow their own plan, not to take a loss, as expected, that’s really detrimental to my soul and pocketbook.

What I tell you, is the basis of my trading plan, which is based on a study of price movements. I need to know about the possible direction of future price movements. I do further tests just to reassure myself. Usually, I look for prices, after I started.

Few have more than the worst mistakes for speculators than the average losses. My cotton deal is fully proved this. Always sell the unprofitable stocks, and always keep profitable. It is so obvious that I have always wondered to myself, where did all the exact opposite.

Losses do not bother me. When I lose my money, I regard it as tuition fees. Man must learn and must pay tuition. During booms, when the market a lot of the audience, do not show any or insight, there is no sense to waste time on what is happening during these booms. It’s like trying to find the difference between the raindrops falling on a neighboring roof. Sucker always trying to get something without paying, sending all of these booms is always the instinct to the player, based on greed and improve the welfare. People who are looking for easy money, always pay for the privilege to obtain evidence that they do not exist on this wretched and greedy land. In the beginning, when I listened to stories about the old deals, I thought that now people are less gullible. But now, reading in the newspapers about the pyramids and thieving brokers, I am sure that millions of dollars belonging to suckling, more will join the silent mass of the missing savings.

There are always people who go faster than the rest of the crowd. They are destined to lead others, and no matter how much this crowd has changed. ”

Books about Jesse Livermore:

* Reminiscences of a Stock Operator by Edwin Lefèvre (best-selling biography of Livermore, repeatedly reprinted, the last edition in 1994) ISBN0-471-05970-6
* Jesse Livermore – Speculator King, Paul Sarnoff, ISBN 0-934380-10-4
* Jesse Livermore: The World’s Greatest Stock Trader, Richard Smitten, ISBN 0-471-02326-4
* How To Trade In Stocks, Jesse Livermore, ISBN 0-934380-75-9 (first edition in 1940)
* Trade Like Jesse Livermore, Richard Smitten, ISBN 0-471-65585-6
* Lessons from the Greatest Stock Traders of All Time, John Boik
* How Legendary Traders Made Millions, John Boik

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