How Jesse Livermore Made Fortunes in the Stock Market


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Jesse Livermore is widely regarded as the greatest stock trader of all time. Livermore was actively involved in the stock market from 1892 to 1940. There were many ups and downs, but also incredible wealth achieved by this great master. In this article, I'll cover some of the top reasons Jesse Livermore is the Babe Ruth of the stock market. It is important to note that all of Livermore's principles, strategies and methods are just as valid today as ever.

First lesson in patience

Livermore, like all traders, made many mistakes early in his trading career. After a while, he certainly realized that trading was not at all easy. This led Livermore to analyze the mistakes he made that caused his losses. A key lesson he learned was patience. Often times he would get impatient and feel like he had to trade no matter what. This leads to impulse trading, which rarely leads to successful trading. He learned that it is crucial to have as many relevant factors as possible in your favor, before taking a position in the market. You want the odds to be strongly in your favor on every trade you make. Learning that first lesson was a real stepping stone to success for Jesse Livermore.

The skills and traits of a successful trader

There are certain skills and characteristics required for a trader to be successful in the long run. You must have reasonable intelligence and cannot be mentally lazy. Livermore viewed the business as a full time business and would always look to improve. The following areas, he says, are critical to success.

1. Understand and control the psychological part of trading. You cannot let greed, fear, hope, or other emotions influence your decision making. You must negotiate objectively.

2. A solid knowledge of economics and business conditions. You need to understand the crucial elements, such as the interest rate cycle, and how it can impact different trading markets.

3. Observation. It is important to stay focused on factual data only. Don't be swayed by questionable information.

4. Memory and experience. Learn from your mistakes so you don't repeat them. This is a key to the overall learning process.

5. Mathematics. It's important to understand how the numbers work, when applied to the stock market and other trading venues.

A summary of winning strategies

Jesse Livermore was a true master of the market and an absolute genius when it came to stock trading. One of the main reasons he achieved vast fortunes is that he thought and acted differently than most traders. Here is a summary of his successful strategies.

1. He always knew the general trend or direction of the stock market. You have to follow the movement of the market. Don't fight against it.

2. Only buy stocks reaching new highs as they break through key resistance areas, on much heavier than normal volume.

3. Keep all losses low. A good policy is to always sell a stock if it falls 10% below the buy price.

4. Let your profits go up. Be patient with your winning actions. Really big money is made in big price movements that go in your direction.

5. Focus on the top stocks of the strongest industry groups. There you will find most of the biggest winners. Buy the best at the best possible time.

6. Don't listen to or follow the advice and information of others unless you are sure they know what they are doing. Do your own research and analysis. Be objective and stick to the facts.

7. Avoid cheap stocks. They're cheap for a good reason. Most cheap stocks will continue to fall.

The most successful stock trader of all time

Jesse Livermore has made hundreds of millions of transactions on the stock market. He once made $ 3 million in one day, when he correctly called the crash of 1907. He made a hundred million dollars in the crash of 1929. Livermore was a master of price analysis and volumes. This was the key to his overall success. If you want to be successful in the stock market, study and learn from Jesse Livermore. Read his books. He is the perfect role model to follow. You could make a fortune.

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