The Greatest Trader of All-Time: Jesse Livermore
Imagine taking $5 and turning it into $100 million. Sounds impossible, right? Well, this is what Jesse Livermore was able to accomplish in his life. Jesse Livermore is considered one of the greatest traders of all time. He made his first trade of $5 in 1892 and eventually was able to turn that into $100 million by 1929. Using the price of Gold, that would be equivalent of turning $450 into about $9 billion over 37 years.
On his route to becoming one of the richest men in the world, he had lost his fortune several times. He was not afraid to admit when he made a mistake though. When trading, mistakes will be made. Admitting when you made a mistake, even if you end up making money, is very important. Honesty with yourself is key to success. Livermore claimed when he lost money, it came down to two issues:
1. His rules for trading were not fully formulated (i.e. he was still inexperienced)
2. He did not follow his rules.
The 2nd issue is important. This is where emotions come to play. A great quote by Livermore, “The human side of every person is the greatest enemy of the average investor or speculator.” We are human beings. It’s hard not to get caught up in the moment. When the price is mooning or dumping, it’s hard to remain rationale. To remain disciplined. To keep to the rules that you have for yourself. The more you can detach yourself from FOMO or FUD, the better you will be.
A book I recommend to all aspiring traders is “Reminiscences of a Stock Operator,” which was written by Edwin LeFevre about Jesse Livermore. It has great lessons and deals more with emotions than most other investment books. I also enjoy the lessons learned about the stock and commodity markets of the early 20th century. It has a lot of similarities to the wild west of the crypto markets.