The Livermore System
by JESSE H. THOMPSON/Technical Analysis staff writer
Livermore is one of those names you might hear floating around among the chatter and ticks inside the
local brokerage office. Or maybe you will catch a reference to him in some obscure article or book. Just
as the markets of the various exchanges are often mystifying, so too are many of the historical characters
surrounding the markets.
Jesse L. Livermore was one of those characters, passing in and out around the Wall Street of the
l890-1940 period. The classic "rags to riches" stereotype of this period. Humble beginnings as a New
England "dirt farmer", impoverished, uneducated, but gifted with a natural ability for numbers and
mathematics and possessing an acute memory of figures. He died in 1940, impoverished, depressed, but
hopefully greatly humbled and a lot wiser. In between were 30-40 years of spectacular trading in the
stock, cotton and grain markets pulsating out of Wall Street. He amassed millions and lost millions
several times. His name appeared often in the pages of the major newspapers and magazines of the time.
Idolized and despised. "Livermore Heads Bear Raid!" shouts one article and among the folks back home
sitting around the standup radio conversing it wasn't uncommon to overhear someone swoon: "If I only
had Livemmore's money!"
His story is an educational one, for his ability to amass great fortunes in the market place was testimony
to his understanding of the markets, while his ability to lose the same also testifies to the susceptibility of
the trader to the human element.