Jesse Liver was a famous American stock trader. Though he was a swing trader, he started his day trader career. In the past, when the financial statement was not published, he used his intelligence and work as a technical analyst. Most of the people were interested to know about him. Ok, in this article, we searched about the life of Jesse Livermore.
Who is Jesse Lauriston Livermore?
Jesse L.Livermore was the most successful stock trader in history. He was one of the wealthiest traders with a net worth of $100million(now equal the $1.5billion), but when he suicide, his debt was greater than his assets.
He made his strategy and worked on stock techniques day and night. His rules and principles are still valid.
Let’s check his growth and work.
Jesse Livermore was an American trader born on July 26, 1877, in a poor farmer family in Shrewsbury, Massachusetts. They moved to Acton in Massachusetts. His mother was determined to give him a proper environment, but his father ignored him.
He learned basics at the age of 3 and a half, and at the age of 5 he can read newspapers, including financial time. At Grammar school, he shows excellent performance in mental math and numbers and completes his math syllabus in one year that’s actual duration was three years.
He was pulled out of school by his father at the age of fourteen for work at the farm. His mother gave him money and helped him to run away from home. He reached Boston.
He started his career as a board boy, and his job is to write the share price on the board with chalk. In 1892 he took his first plunge betting $5 Chicago, Burlington, and Quincy Railroad on a bucket shop and earning $3.12. He was famous as a boy plunger.
At 16 he earned from a bucket shop and became a regular trader, always making a profit.
At the age of 22, he earned $10,000.
At the age of 23, he moved to New York, where a bull market was waiting for him. He turns$1000 into $50,000 just in five days. As a technical analyst, he makes the base for trade at Wall Street.
Later on, he received the title of Wolf of Wall Street.
In his whole career, especially early a half-century, he had thrice filed for bankruptcy and in the meantime, became the richest man in the world.
A book on his life written by Edwin Lefevre Reminiscence Of a Stock Operator, is impressive and provides a guideline for the trader.
Livermore was also the author of How To Trade In Stock(1940) was one of the greatest books for a trader. His other book is”My Life in Wall Street and How I Made Three Fortunes in the Stock Market.”
In 1929 Jesse Livermore was at the top and his net worth was $100 million. Today this money is equal to $1.5 billion.
Jesse L. Livermore Strategies and Style of Trading
There was a unique philosophy behind the great success of Livermore. He uses his own money, his system. and his ideas while trading. He made his capital with great struggle. During his time many changes took place in stocks trading and commodities. The market was thinly traded.
Jessy slides major stocks multiple points with the sale and purchase of 1,000 shares.
His rules are impressive and modern that can easily apply in today’s trade. His price patterns, timing indicators, and rules were his main success factors.
Despite making charts and graphs, he kept his record in a ledger. He disliked the ranging market but preferred stocks moving in the trend. When the price reached a pivot point, he waited to see how they would respond.
For example, the stock price fluctuates from $100 to $d110 then up to $120, low $90, and back to $100 Jessi’s rules prescribed waiting until a pivotal point was in directive to trade
If the price enters $88, he moves to the short side. If it jumps up to $110 he enters the long side and closely observed the pivot point
As the price of shares above $120 would initiate an addition to the position. It is Pyramiding.
At the $125 failure to infiltrate or hold above $120 would result in Liquidation of the Long Position. The buffer is $10 on a breakout in this example. This buffer may differ depending upon the market’s ups and downs. If someone wants a buffer between the actual breakout and entry to allow them to move initially will result in a more irregular false breakout
As described earlier, Jesse did not trade range, he did trade breakouts from the ranging markets. His strategy was simple, entering on new highs or lows but using buffers to reduce the possibility of a false breakout.
Volume analysis and price patterns determine if the trade would be kept open. For the right direction, Jessi uses the following criteria.
1- Expanded volume on the breakout
2- After some days of break, the price should move in the breakout direction.
3- A typical behavior can be observed when prices retrace somewhat against the trend, but volume is more down on retracements than it was in the trending approach.
4- As the response ends, volume grows once again in the direction of the trend.
Timing is an utmost important factor in the financial market. The price pattern itself indicates better timing. The pivot point in a person’s stocks and market indexes leads to a large position before entering.
Trading rule of Jesse Livermore
His rules are guidelines for the new and experienced trader even after 100 years of Jessi.
These rules are summarized here:
- Purchase in a bull market and short in a Bear market., Follow trends.
- Trade after observing pivot points.
- Don’t start until the benefits are clear.
- Patience fruit ‘’big money’’
- Good trades commonly show profit right away.
- When you enter you should know when to stop
- Exit trade where further profit is not possible
- Selects the best stock in each sector
- You should not average down a losing position
- Never touch the margin cell
- Not involved in too many stocks
Historical success of Livermore
His famous trade was shortening the Union Pacific Railway stock before the earthquake of San Francisco.
He also made several millions of dollars when the stock market was unregulated
In 1907 on the advice of J.P Morgan began buying stocks when the market was crashing
While others were busy selling, this gives him wonderful success.
During black, Tuesday, Jessi earned $100million going short in a market crash.
Livermore was married three times and had two kids. He married Nettie Jordan at the age of 23. in October 1900 and divorced in 1917.
On 2nd December 1918, he married 22years Dorothy, a former Ziegfeld girl in Ziegfeld Follies. She had two sons, JessLivermore11 and Paul Livermore. She divorced on September 16, 1932.
She got custody of her two sons and received a $10 million settlement
On March 28, 1933, he remarried 38 years old singer Harriet Metz Noble. they remained together until his suicide.
Jesse Livermore killed himself with an Automatic Colt pistol. He was in the cloakroom of Sherry -Netherland Hotel in Manhattan. He was sixty-three years old at the time of his death.
What was the net worth of Jesse Livermore when he was at the top?
Jesse Livermore was one of the greatest traders of all time. When he was at his peak in 1929, his worth was $100 million. He is the author of How to Trade in Stocks (1940), was in today’s dollars, roughly equates to $1.5 billion
Did Jesse Livermore be a day trader?
Jesse was a famous swing trader and long-term trader. But he started his career as a day trader. His first fortune was also a day trader
Was Jesse Livermore a trend follower?
Jesse was a perfect trend follower. He mentioned in his rules that always follow trends in the market. So we can say he traded as trend follower long before the term trending existed.
Some people have a very common origin, but later they get fame and money both. Livermore was born in a farmer’s house, but his wisdom makes him a legend.
After 100 years of his work, his rules still apply on the stock market. His strategy and timing also guided new traders to win the market. He was a trend follower and the richest trader of the time. His worth was $100million now roughly equal to 1.5billion.
In this article, we discuss his strategy, his rules, and all the factors that made him the billionaire of his time. His tragic death finishes the good fortune that he gained in 50 years, yet his success is no parallel. Don’t forget to share your thoughts in the comment section.
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