Jesse Livermore, a legend, and a true inspiration for many traders, even those who already accomplished extraordinary success, like Ed Sykota for example. He's a fascinating case in which an outsider to the trading world managed to thrive and amass vast personal wealth through trading experience. An embodiment of the "self-made man."

Let's look at who Jesse Livermore was and why he should be your trading inspiration.

Jesse L. Livermore was born in South Acton, Massachusetts, in 1877. As a teenager, he left home and moved to Boston. There he got his first job at Paine Webber's Boston brokerage. His role was to post the stocks and commodities prices on the brokerage's price quotations chalkboard. He began to study the prices and the movements of the market and shortly after he became a trader. He traded with the same brokerage company he worked for. By the age of fifteen, he amassed a fortune of $1,000, which is the equivalent of $30,000 in today's currency values. He earned money by betting against "bucket shops" investment houses which allowed customers to make wagers on the price of stocks without actually investing in those stocks. He did so well that all of the buckets shops in Boston banned him. That's why in his twenties, he moved to New York where he continued his speculative trading as an individual. He was speculating in trading of stocks and commodities, and over a period of forty years, he developed a real talent for it. He was hugely successful, although he did suffer significant losses at various points. However, despite losses he never gave up and continued his career as a trader up until his tragic death at the age of 63.

Many traders inspire themselves by following Livermore's investment philosophy and principles. His strategy was gleaned exclusively from the bets that he made and his reactions to the results, some of which were successful and others which were not. Throughout his career as a trader, Livermore began formulating principles by which he made his investment decisions, and due to their accuracy, they remain popular among investors up to date. If you'd think about it, these principles are very straightforward, and perhaps it is their simplicity that makes them so unique.

First of all, Livermore emphasised the importance of looking at a market as a whole, rather than individual stocks. He noted that greater success comes from determining the direction of the overall market rather than attempting to pick the course of a single stock. Another fundamental principle that Livermore always had in place was an exit strategy. Moreover, he adopted a buy-and-hold strategy in a bull market, selling the stock only when it lost momentum.  And it doesn't end there, Livermore spent a lot of time studying the fundamentals of the company, the market and the overall economy. He even separated successful investors from unsuccessful investors by the level of effort they put into investing. He was a long-time trader because he believed that short term traders eventually lose their capital. Another key principle that he followed was analysis. He never fell for insider trading, that's when an associate of a company would provide you with insider information, as he was convinced that the only way to succeed was to make your own independent analysis. That's why he was wary about where he got his information from and always recommended using multiple sources to verify the quality of the data.

If you're not applying these principles in your trading, you should consider it.  These points are essential to the world of stocks trading, but not only, as they proved to be relevant to the financial markets as a whole. Livermore's quotes are to live by, just like his noteworthy publications, such as "How To Trade in Stocks". Another lesson worthy of remembering is that times might change, but the markets tend to repeat themselves, and that's why Livermore's principles and quotes are still highly applicable today.

To finish, I would like to encourage everyone to look for influences among the legends of trading as their wisdom transcends decades of generations, and Jesse L. Livermore is the best example of it.

"There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again."