- Jesse Livermore is known for both colossal gains and losses. He made $million in 1929, and by 1934 he had lost all of it (an example that confirms the huge risk involved in stock trading).
- George Soros is one of history’s most successful stock and forex traders. He gained the nickname “the man who broke the bank of England” when he made $1 billion profit from selling $10 billion worth of pounds. He is the chairman of Soros Fund Management.
- Richard Dennis is a successful commodity trader based in Chicago. He made an estimated $200 million over a period of ten years from market speculating.
- Paul Tudor Jones became famous after the market crash of 1987 to make a whopping $100 million from shorting stocks. He is the founder of Tudor Investment Corporation.
- William Delbert Gann is known for developing technical indicators like Gann Angles and the Square of 9. He was a trader who used market forecasting techniques based on astrology, geometry, and mathematics.
- Bill Lipschutz turned $12000 investment in the stock market to $25000 in a few months but lost all of it. He then moved to forex trading, where he has made over $300 million.
- John R. Taylor Jr started as a political analyst for a chemical bank before becoming their forex analyst. He is the owner of FX Concepts, which is a currency managing firm.
- Stanley Druckenmiller is a successful trader who started as an oil analyst for the Pittsburgh National Bank. He was a part of a deal while working at George Soros that raked in $1 billion.
- Andrew Krieger is one of the best trader in the world. He sold kiwi, a New Zealand currency, a trade valued more than the total currency supply. He got revenue of $300 million from the trade.
- Michael Marcus is one of the best and most successful forex traders in the world. Legend Ed Seykota trained him. During the presidency of Ronald Reagan, Marcus held positions of almost $300 million in German marks.
Archives of “Jesse Lauriston Livermore” tag
rssMust Read Quotes For Traders
“Good investing is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.“-Michael Steinhardt
Do not stay bullish or bearish. Go with the current flow of the market. Be on the team that is making the money.
“There is only one side of the market and it is not the bull side or the bear side, but the right side.” -Jesse Livermore
When putting it all together, it is more than just numbers. Successful traders trade in three dimensions.
“Successful trading depends on the 3M`s – Mind, Method and Money. Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology their own feelings and the mass psychology of the markets. Each trader needs to have a method for choosing specific stocks, options or futures as well as firm rules for pulling the trigger – deciding when to buy and sell. Money refers to how you manage your trading capital.” – Alexander Elder
The money is in the primary market trend, not jumping in and out.
“I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling other customers, “Well, you know this is a bull market!” he really meant to tell them that the big money was not in the individual fluctuations but in the main movements-that is, not in reading the tape but in sizing up the entire market and its trend.” – Jesse Livermore (more…)
The 8 Downfalls of Jesse Livermore
Jesse Livermore was a pioneer in the trading world. He was one of the very first trend traders, rule based discretionary traders, and traders of pure price action. He was a trail blazer. It was not his methodology that was his undoing, it was other short comings. After reading books about the life of this trading legend along with his own, here are my eight observations that I believe was his ultimate undoing.
- Letting losers run: Many times he did not cut his losses. “I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculative blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit.”– Jesse Livermore
- Over Trading: “What beat me was not having brains enough to stick to my own game – that is, to play the market only when I was satisfied that precedents favored my play.” – Jesse Livermore
- Following tips: “Gradually, as I began to accept his facts and figures, I began to fear I had been basing my previous position on misinformation. Of course I could not feel that way and not cover. And once I had covered because Thomas made me think I was wrong, I simply had to go long. It is the way my mind works.” “It cost me millions to learn that another dangerous enemy to a trader is his susceptibility to the urgings of a magnetic personality when plausibly expressed by a brilliant mind.” – Jesse Livermore
- Risk of ruin: From the quantity of his account blow ups and personal bankruptcies it appears that he did not understand the mathematical risk of ruin based on winning percentage and the loss of capital per trade.
- Position sizing: The sheer size of his astounding wins at key times shows that he did not really have a position sizing model to limit his exposure to risk, he was likely all in with leverage on his biggest wins. Which results in inevitable account blow ups.
- Discipline: In his writings he seems to always hint that he had trouble following his own rules and advice and lost money when he didn’t follow his own plan.
- Lavish lifestyle: Livermore spent money lavishly on his lifestyle with mansions, vacations, and the best things money could buy. He had no number that allowed him to ever really retire and enjoy his wealth. He continued to trade with full size and aggressively through his career.
- Mental risk of ruin: In the end, for whatever reason he ended his life. The stress and strain of trading, finances, and his personal life probably took its toll.
Book Review : Jesse Livermore: Boy Plunger
This is a story of triumph and tragedy. Jesse Livermore is notable as one of the few people who ever made it into the richest tiers of society by speculating — by trading stocks and commodities — betting on price movements.
This is three stories in one. Story one is the clever trader with an intuitive knack who learned to adapt when conditions changed, until the day came when it got too hard. Story two is the man who lacked financial risk control, and took big chances, a few of which worked out spectacularly, and a few of ruined him financially. Story three is how too much success, if not properly handled, can ruin a man, with lust, greed and pride leading to his death.
The author spends most of his time on story one, next most on story two, then the least on story three. The three stories flow naturally from the narrative that is largely chronological. By the end of the book, you see Jesse Livermore — a guy who did amazing things, but ultimately failed in money and life.
Let me briefly summarize those three aspects of his life so that you can get a feel for what you will run into in the book:
The Clever Trader
Jesse Livermore came to the stock market in Boston at age 14, and was a very quick study. He showed intuition on market affairs that impressed the most of the older men who came to trade at the brokerage where he worked. It wasn’t too long before he wanted to invest for himself, but he didn’t have enough money to open a brokerage account, so he went to a bucket shop. Bucket shops were gambling parlors where small players gambled on stock prices. He showed a knack for the game and made a lot of money. Like someone who beats the casinos in Vegas, the proprietors forced him to leave.
He then had more than enough money to meet his current needs, and set up a brokerage account. But the stock market did not behave like a bucket shop, and so he lost money while he learned to adapt. Eventually, he succeeded at speculating on both stocks and commodities, leading to his greatest successes in being short the stock market prior to the panic of 1907, and the crash in 1929. During the 1920s, he started his own firm to try to institutionalize his gifts, and it worked for much of the era. (more…)
WISDOM FROM BERNARD BARUCH -Evergreen
From the SAME AS IT EVER WAS file: Bernard Baruch, a colleague and friend of Jesse Livermore’s, who made a fortune shorting the 1929 crash, and then who later advised presidents Woodrow Wilson and Franklin D. Roosevelt on economic matters, listed the following investment rules in his autobiography published in 1958 entitled Baruch: My Own Story. These rules are still as applicable today.
1. Don’t speculate unless you can make it a full-time job.
2. Beware of barbers, beauticians, waiters–of anyone–bringing gifts of “inside” information or “tips.”
3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth.
4. Don’t try to buy at the bottom and sell at the top. This can’t be done–except by liars.
5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.
6. Don’t buy too many different securities. Better have only a few investments which can be watched.
7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
8. Study your tax position to know when you can sell to greatest advantage.
9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.
10. Don’t try to be a jack of all investments. Stick to the field you know best.
WISDOM FROM BERNARD BARUCH – For Traders & Investors
From the SAME AS IT EVER WAS file: Bernard Baruch, a colleague and friend of Jesse Livermore’s, who made a fortune shorting the 1929 crash, and then who later advised presidents Woodrow Wilson and Franklin D. Roosevelt on economic matters, listed the following investment rules in his autobiography published in 1958 entitled Baruch: My Own Story. These rules are still as applicable today.
1. Don’t speculate unless you can make it a full-time job.
2. Beware of barbers, beauticians, waiters–of anyone–bringing gifts of “inside” information or “tips.”(Avoid Blue channels )
3. Before you buy a security, find out everything you can about the company, its management and competitors, its earnings and possibilities for growth. (Don’t Trust Indian Management )
4. Don’t try to buy at the bottom and sell at the top. This can’t be done–except by liars.
5. Learn how to take your losses quickly and cleanly. Don’t expect to be right all the time. If you have made a mistake, cut your losses as quickly as possible.
6. Don’t buy too many different securities. Better have only a few investments which can be watched.
7. Make a periodic reappraisal of all your investments to see whether changing developments have altered their prospects.
8. Study your tax position to know when you can sell to greatest advantage.
9. Always keep a good part of your capital in a cash reserve. Never invest all your funds.
10. Don’t try to be a jack of all investments. Stick to the field you know best.
Jesse Livermore’s Best 10 Quotes & Free Link to His Book
Here is a list of the ten most powerful quotes from Jesse Livermore’s book “How to Trade in Stocks.” Livermore was one of the greatest stock market operators of our time and his quotes stand the test of time. No one made more money in the markets or came back from more bankruptcies than Jesse Livermore. He successfully shorted the Great Depression crash for one of the biggest trading wins in history. While his weakness was not managing his risk of ruin his strength was he could become a millionaire trading during a trending market over and over starting with a small stake. While in the end he decided to take his own life he lived his life as the world’s greatest trader for half a century.
“Do not anticipate and move without market confirmation—being a little late in your trade is your insurance that you are right or wrong.” -Jesse Livermore
“The good speculators always wait and have patience, waiting for the market to confirm their judgment.” -Jesse Livermore
“{Limit} interest in too many stocks at one time. It is much easier to watch a few than many.” -Jesse Livermore
“Experience has proved to me that the real money made in speculating has been: “IN COMMITMENTS IN A STOCK OR COMMODITY SHOWING A PROFIT RIGHT FROM THE START. ” -Jesse Livermore
“As long as a stock is acting right, and the market is right, do not be in a hurry to take a profit. You know you are right, because if you were not, you would have no profit at all. Let it ride and ride along with it. It may grow into a very large profit, and as long as the “action of the market does not give you any cause to worry,” have the courage of your convictions and stay with it.” -Jesse Livermore
“It is foolhardy to make a second trade, if your first trade shows you a loss. ” “Never average losses. ” Let that thought be written indelibly upon your mind.” -Jesse Livermore
“One should never sell a stock, because it seems high-priced.” -Jesse Livermore
“Profits always take care of themselves but losses never do. ” The speculator has to insure himself against considerable losses by taking the first small loss. In so doing, he keeps his account in order so that at some future time, when he has a constructive idea, he will be in a position to go into another deal, taking on the same amount of stock as he had when he was wrong.” -Jesse Livermore
“It is significant that a large part of a market movement occurs in the last forty-eight hours of a play, and that is the most important time to be in it.” -Jesse Livermore
“A speculator should make it a rule each time he closes out a successful deal to take one-half of his profits and lock this sum up in a safe deposit box. The only money that is ever taken out of Wall Street by speculators is the money they draw out of their accounts after closing a successful deal.” -Jesse Livermore
Link to Jesse Livermore’s Book “How to Trade in Stocks”
Reminiscences of Marty Zweig: What I Learned From a Market Great
The early years
After degrees from Wharton, University of Miami and Michigan State, Marty started his career in academia but ultimately became one of the most respected stock market “gurus” in the modern era. I have years’ worth of memories of Marty, and hope readers will indulge me as I reminisce and share some of the most important market lessons I learned from one of the greats.
But first, the personal stuff. Marty was brilliant, there’s no doubt; but he was also quirky, goofy and affable. He was the consummate worrier… but he was also the ultimate warrior. He lived, ate and breathed the markets and perpetually (and tirelessly) strived to “figure it out.”
One of my greatest memories is getting to see first-hand his now-famous memorabilia collection—to which there are no comparables. Among them, there was the dress Marilyn Monroe wore while singing Happy Birthday to John F. Kennedy in 1962; the suits worn by the Beatles on the Ed Sullivan Show in 1964; the 1992 Olympics’ US “Dream Team” basketball jerseys; the booking sheet from one of Al Capone’s arrests; a letter from Madonna to Michigan State declining acceptance so she could pursue a music career; guitars of many rock stars, including Bruce Springsteen and Jimi Hendrix; the fedora worn by Humphrey Bogart in Casablanca; the original Terminator costume worn by Arnold Schwarzenegger; and multiple boxing championship belts, Super Bowl rings and Heisman Trophies. (more…)
The tape does not concern itself with the why and wherefore. – Jesse Livermore
12 Things said by Jesse Livermore
1. “An investor looks for safety… The speculator looks for a quick profit.” Livermore is saying that what differentiated him and other speculators from investors was: (1) a willingness to make bets with short duration and (2) not seeking safety. Anyone reading about Livermore must remember that he was not a person who often/always followed his own advice. He eventually shot himself leaving a suicide note which included the sentence: “I am a failure.”
2. “A professional gambler is not looking for long shots, but for sure money…Since suckers always lose money when they gamble in stocks – they never really speculate…” Livermore believed he was not a gambler since he only speculated when the odds were substantially in his favor (“sure money”). Livermore’s statement reminds me of a quotation from Peter Lynch: “An investment is simply a [bet] in which you’ve managed to tilt the odds in your favor.” Livermore’s statement also reminds me of the poker player Puggy Pearson who famously talked about need to know “the 60/40 end of a proposition.” When the odds are substantially in your favor you are not a gambler; when the odds are not substantially in your favor, you are a sucker.
3. “I trade in accordance to my means and always leave myself an ample margin of safety. …After I paid off my debts in full I put a pretty fair amount into annuities. I made up my mind I wasn’t going to be strapped and uncomfortable and minus a stake ever again.” Livermore is not referring here to seeking a Benjamin Graham style “margin of safety” on each bet but rather to this: once you establish a big financial stake as a speculator, setting aside enough money so you don’t need to “return to go” financially is wise. Livermore wanted a margin of safety in terms of safe assets so that he would always have a grubstake to start over in his chosen profession of speculation. On this point and others, he failed to follow his own advice.
4. “Keep the number of stocks you own to a controllable number. It’s hard to herd cats, and it’s hard to track a lot of securities.” There is only so much information a single person can track in terms of stocks whether you are in investor or a speculator. By focusing on a smaller number of stocks you are more likely to (1) know what you are doing (which lowers risk) and (2) find an informational advantage you can arbitrage.
5. “Only make a big move, a real big plunge, when a majority of factors are in your favor.” Only bet when the odds are substantially in your favor. And when that happens, bet in a big way. The rest of the time, don’t do anything. (more…)