Financial markets are full of surprises, letting some get enormously rich while others (who are in majority unfortunately) lose all their capitals. But being patient and striving to perfect their skills many of those who lost in the very beginning still have their chance to become lucky millionaires someday.
On the other hand those who got rich in the beginning thus becoming all too confident and stubbornly righteous may someday turn into complete failures complaining about the injustice of financial markets. The stories of those failures are dull and monotonous and you can read them on any forum dedicated to trading, while the stories of those who succeeded and falling from the top climbed their again without losing their confidence are inspiring. Earning a lot of money dealing in volatility arbitrage is not rocket science. To keep one’s earnings augmenting the capital is a more tricky business. Many great traders and financiers became famous only after they managed to find their way in trading after a series of failures.
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Jesse Livermore is an example of such trader. He was a genius of trading who made millions only to lose them and to make them again. The press nicknamed him the Great Bear of Wall Street as his trading had its impact on the market, while the lad even had no secondary education! His trading career began at the age of 14, when a son of a simple farmer mastered a three-year course of math just in a year.
Having done so he decided to look for any other trade except farming and left his home. His initial capital amounted to $5 and the clothes he had on. He ran off to come to Boston. The stagecoach he rode stopped in front of a bookmaker’s office. This coincidence gave birth to a great career in trading. The year was 1891 and the bookmaker’s office hired him to write down on the board the quotes cabled from the stock exchange. The office profited from the bets for price changes.
The office gained from the losses of the betters. Having a mathematical mind and good memory Jesse noticed the repeating figures and started to record them. Grasping certain regularity in the repetitions Jesse understood that he can forecast changes in the figures sometimes. His first winning bet amounted to $3. Improving his skills he soon managed to become more accurate in his forecasts, achieving great excellence.
His abilities made his colleagues call him Boy Plunger and Wonder Boy. Having earned his first capital he repaid $5 to his mother adding $300 for her help in his escape. Soon he became popular all over the city and in a month his bets became banned in every betting office in the city, as he almost never lost in betting. This was unbearable, as bookmakers make their revenue from losing betters.
Betting on shares Jesse managed to improve his mathematical skills and to develop his own method of forecasting which was based on technical analysis. As Boston grew too small for him, Jesse went to New York to earn more money on real stock exchange
He came to New York having $ 2000 in his pocket. He became a stock trader having no idea of real stock trading. With no skills in long-term forecasting he managed to earn his first $ 50 000 by 1906 only to lose the amount for trading on a stock exchange is very different from betting with bookmakers. Ill luck did not break him down.
He understood his mistakes and took measures to prepare himself for the next try. He returned to his first employer and started studying new analysis and forecasting methods to discover the news analysis. His inborn abilities, good judgment and persistence help him develop a new strategy within a very short time.
He turned back to trading during that same year to recover his losses and to earn much more. His success did not go unnoticed on the stock exchange where he was nicknamed a “Millionaire for a day”.
It did not take much time for the nickname to be justified. Jesse preferred bear-style trading often running down the prices for many assets. In 1907 his professional trading operations caused a crisis on the stock exchange when his bear-style trading made the whole US stock market collapse.
The owners of the New York Stock Exchange even had to ask him to suspend his trading operations in order for the stock market to recover. The collapse of the national stock market made Jesse a real millionaire.
During the twenties he was the most influential and wealthy trader with an office of his own staffed with six clerks writing the quotes down for him on a large board in absolute silence. He began living on a grand scale, buying expensive cars and yachts and making expensive gifts to his wife and mistresses. He also became a celebrity with the press. He lost his fortune four times and each time he earned even more, getting back triumphantly and repaying all his debts and losses
