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Jessie Lauriston Livermore

JL Livermore

Jesse Lauriston Livermore, also known as the Boy Plunger and "Great Bear of Wall Street", was an early 20th century stock trader famed for making and losing several multi-million dollar fortunes and short selling during the stock market crashes in 1907 and 1929.

Livermore left home in 1891 at the age of 14 with nothing more than 5 dollars in his pocket, but soon after would be hired as a board boy in the offices of Paine Webber. While working, he would write down certain hunches he had about future market prices and then check them for accuracy later. A friend convinced him to put his first actual money on the market by making a bet at a type of gambling establishment called a bucket shop that took bets on stock prices but did not actually buy or sell the stock.

At fifteen, he had earned profits of over $1,000 (which equates to about $25,000 today). Over the next several years, he continued betting at the bucket shops, but would eventually be banned from most of these shops for winning too much money. He then moved to New York City and devoted his energy towards trading in legitimate markets. This change would lead him to devise a new set of rules to trade the market.

Livermore first became famous in the Wall Street crash of 1907. He made 3 million dollars in one day during the panic, but would only to lose it soon after. During his lifetime, Livermore gained and lost several multi-million dollar fortunes. Most notably, he was worth over $100 million after the 1907 and 1929 market crashes, respectively. Unfortunately, he would lose both fortunes.

Apart from his success at the bucket shops and securities specualtor, Livermore left traders a working philosophy for trading securities that emphasizes increasing the size of one's position as it goes in the right direction and cutting losses quickly. Although, Livermore sometimes did not follow his own rules strictly. He claimed that his lack of adherence to his own rules was the main reason for his losses after making his 1907 and 1929 fortunes.