We hear a lot about the success of Jesse Livermore, one of the greatest stock market geniuses of all time. But we rarely know about his mistakes.

Thus his life is a tragedy.

Below are the mistakes of Jesse Livermore that we summarize and try to minimize making.

1. Not adhering to self-discipline

• Although he is famous for the principle of 'cut losses quickly, let profits run', he often failed to do so himself.

• At times he held onto losing positions for too long hoping the price would come back → turning small losses into disasters.

2. Overtrading

• Livermore once warned others not to trade continuously, but he fell into this trap himself.

• When he won big, he often became excited and increased the volume too high, leading to a loss of risk control.

3. Not preserving capital after winning big

• After the big win in 1929 (earning about 100 million USD, equivalent to over 1.5 billion USD today), he did not withdraw to preserve capital but continued to take risks.

• This caused his vast wealth to gradually evaporate as subsequent investments and speculations failed.

4. The illusion of the ability to 'read the market'

• Livermore once said, 'There is nothing new on Wall Street', but he was overly confident in his predictive abilities.

• There was a period when he bet everything on 'feeling the trend', but the market didn't go as predicted → leading to bankruptcy.

5. The impact of personal emotions

• Livermore had a tumultuous personal life: a fractured marriage, family conflicts.

• These stresses caused him to lose psychological balance, leading to irrational trading decisions.

6. No distinction between 'speculation' and 'gambling'

• The principle he left behind tends towards calculated speculation.

• But when discipline broke down, he fell into a gambling state – reckless, betting too big, hoping for luck instead of analysis.

7. Not preparing for failure

• He believed that he would always find a way back to the market.

• But as he got older, the financial and psychological pressure increased, and he could no longer recover after one failure → ending his life in tragedy.