Jesse Livermore and the danger of day trading

Of all the books about trading there is one that, in my humble opinion, soars above the rest. That book is “Reminiscences of a stock operator” by Edwin Lefevre.

The book is about the life of the legendary Jesse Livermore.

Jesse Livermore day trader

This is one of the best trading books out there, but one of the most dangerous at the same time. But, why is it dangerous? Well, it is because reading it we may conclude that day trading success is easy to achieve. But, nothing could be further from the truth.

Years ago, when I was young and bold, I read the book a couple of times.

I did not need too much to notice that in the first part of the book Livermore did day trading very actively.

As for his experiences in his beginnings at the bucket shops, it seemed that he doubled and tripled his account easily in a few days. That is why he was so feared by bucket shops.

Because of that seemingly facility to win in the intra-day moves I decided that if Livermore could do it, I could do it too. I just needed to find the way to do so. And, today we have the bucket shops available 24 hours a day from everywhere.

Jesse Livermore day trading system ?

The fact is that by reading those first chapters of the book, I got enthusiastic about day trading.

The result was a complete disaster and the loss of quite a lot of money and countless hours in front of the computer.

It was a very expensive lesson.

I had to be ruined to realize that it was not the proper way to confront the world of trading. And, the fact is that there are a lot of people making a living out of day trading, but almost all of them are brokers and vendors.

There is another way of doing trading, and that is by doing “week” or “month” trading, which is a way of calling swing or trend trading. Doing that sort of trading our chance of winning by the end of the year is increased significantly.

We will not make 500% per year – like many who do day trading believe they will make – but we can have a better return than that offered by bank deposits. Let´s say that if we can make from 10 to 20% yearly, we should be very happy. Those who try day trading? 99,99% will end up losing all.

From bucket shops to the real market

In the book, Livermore tells us that his initial operation in the bucket shops did not work when he went to the real stock market.


He had to change his style to the new conditions.

From then on, is when Livermore gave us his best advices: the long known secrets of letting your profits run and cutting your losses short. That is obviously not day trading.

Perhaps Livermore had an infallible day trading method in the bucket shops, and maybe it should be studied if there is a way of trading the most volatile stocks like that. But, I think it is more sensible to forget about the dreams of day trading and concentrate other ways of trading like trend trading.

Livermore´s book has some of the best hints we can find in the whole literature about the stock markets and trading.


Thanks for reading and sharing.