Jesse L. Livermore

Jesse L. Livermore (1877–1940) was a self-taught, early-20th-century stock trader who became a Wall Street legend for his market timing, speculative boldness, and the repeated making and losing of fortunes. His trading life—captured fictionally in Edwin Lefèvre’s Reminiscences of a Stock Operator and in Livermore’s own writings—continues to influence traders today.

Key takeaways

• Rose from a board boy copying ticker tape to one of the era’s most famous speculators.
• Made and lost multiple fortunes by following momentum and taking large, leveraged positions.
• Noted for major short trades during the Panic of 1907 and the 1929 crash.
• His experiences and trading rules remain widely studied in trading literature.

Early life and start in trading

Born in Shrewsbury, Massachusetts, Livermore left formal schooling early and began working at 14 as a board boy at Paine Webber in Boston, transcribing prices from the ticker. He placed his first small profitable trade at 15 and was trading independently by 16. Much of his early activity took place in bucket shops—gambling-style outfits that allowed highly leveraged bets on price movements—which shaped his instincts for momentum and position building.

Trading style and methods

Livermore’s approach blended discipline and intuition:
* Traded with large positions and significant leverage when he believed a trend was established.
Followed market momentum rather than detailed company fundamentals—trading the tape, not the balance sheet.
Used probing small trades to detect shifts in market sentiment before committing fully.
* Emphasized cutting losses and letting profits run, though his own career showed the difficulty of executing discipline consistently under stress.

Notable episodes

1906–1907: During a speculative bubble, Livermore followed the long trend but reversed when his instincts warned of a turn. He shorted Union Pacific and reportedly netted about $300,000 in two days after an earthquake spurred a market drop. In the Panic of 1907 he made large short gains; J.P. Morgan reportedly asked him to close shorts for the public good, a request Livermore honored and then profited further when the market rebounded.

Post–World War I cotton position: Livermore amassed a dominant position in the U.S. cotton market. Concerned about its economic impact, President Woodrow Wilson reportedly asked him to reduce the position, which he did.

1929 Crash: As the 1920s bubble peaked, Livermore probed the market with short positions, initially losing on small probes before building a decisive short. On Black Tuesday (October 29, 1929) he is reported to have made roughly $100 million from shorting the market—figures vary by source—but his fortunes would later reverse again.

Regulation, decline, and death

The creation of the Securities and Exchange Commission in 1934 and broader regulatory changes reduced some of the unregulated opportunities that had favored large, concentrated speculative positions. Livermore made and lost fortunes several times over his career; by 1940 he was bankrupt. He died by suicide on November 28, 1940.

Influence and legacy

Livermore’s life is a template of both the power and peril of speculative trading. Edwin Lefèvre’s Reminiscences of a Stock Operator, based on Livermore’s experiences, is frequently cited by traders and investors as an essential study of market psychology and tactics. Prominent market figures have recommended the book for its enduring lessons on trend-following, risk management, and trader psychology.

Lessons for traders

• Respect market trends but probe for early signs of change.
• Position size and leverage determine outcomes as much as market insight; manage them carefully.
• Cut losses quickly; let winners run—but also be prepared for psychological pressure when managing large positions.
• Market structure and regulation change opportunity sets; adaptability matters.

Further reading

• Reminiscences of a Stock Operator — Edwin Lefèvre (based on Livermore)
• How to Trade Stocks — Jesse L. Livermore
• My Life in Wall Street and How I Made Three Fortunes in the Stock Market — Jesse L. Livermore