Profile of the Stock Market Legendary Jesse Lauriston Livermore

Jesse Lauriston Livermore (1877-1940) was a stock market legend, known as ‘King of Speculators‘ (Speculator King) and the ‘great bear of Wall Street’ for making huge profits when the Wall Street market was bearish during the crashes of 1907 and 1929. However, Livermore was not a speculator like gamblers. He is full of calculations in determining timing and money management, as well as proficient in controlling his emotions. At that time technical analysis was not as broad and sophisticated as it is now, but Livermore has applied price pattern formation analysis, techniques for maximizing profits by pyramiding and trend analysis of price movements with the rules of ‘cut losses, let profits run‘.

Born in Massachusetts, Jesse Livermore, known as a mysterious trader, got to know the stock market at the age of 14 when he ran away from home with only US$5 in his pocket. He then worked as an operator and courier at the stock broker Paine Webber in Boston. Livermore often wins bets in guessing the ups and downs of blue chip stock prices until a friend trusts him to manage a number of funds in the stock market. At the age of 15 he had made a net profit of US $ 1,000 (or the equivalent of US $ 23,000 now) and after continuously making profits, a few years later Livermore moved to New York City to seriously trade with his own capital at one of the brokers on Wall Street. . This is where he found effective ways of trading in the stock market as written in his book ‘How to Trade in Stocks’.

When the Wall Street market crash in 1907, Livermore managed to make a profit of US $ 3 million in a day just because the market was panicking. “There’s nothing new on Wall Street. Traders or speculators are still the same, nothing new. Speculation is as old as the mountains and hills. What is happening in the stock market now has happened before and will happen again tomorrow. Nothing new. Enter the market only when the market is trending, if it is bullish you have to buy, if it is bearish enter a short position. That’s the only way that can generate real profits…” said Livermore, who was nicknamed the mysterious trader because his trading activities were carried out in secret in his private office on Fifth Avenue, New York.

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However, Livermore also often suffer losses. He claimed that all the losses suffered were the result of his non-compliance with the agreed trading rules and plans. However, according to Livermore, it can’t be avoided unless you can trade with no emotion at all.

Some of Livermore’s trading rules that are widely used up to now include: not entering the market when the market conditions are sideways or the direction of the trend is not clear, applying daily pivot points to determine the direction of price movement, always waiting for confirmation both from a technical and fundamental perspective before actually placing an order. buy or sell, always use a stop loss (determine risk), and exit only when the trend reverses direction (reverse). Also, in a bull market you should trade on the very strong stocks, and in a bear market you should enter the weakest stocks, avoid ‘indecisive’ or ambiguous stocks. Never do the averaging down technique in a position that is at a loss.

Again, during a crash in the market Wall Street In 1929 due to a prolonged recession, Livermore managed to make a profit of US $ 100 million in cash, this time with the right timing and momentum plus good money management. According to Jesse Livermore, the 3 main things that cause losses are the trader’s lack of maturity in knowledge of market instruments, trading rules (methods and strategies) that are not firm and violations of agreed rules.

Like his mysterious way of trading, the personal lifestyle of Jesse Livermore, who is 3 times married and tends to be luxurious, is also full of mystery. For no apparent reason Livermore committed suicide in a Manhattan hotel, leaving behind $5 million in 1940.


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