[1] He is considered a pioneer of day trading[2] and was the basis for the main character of Reminiscences of a Stock Operator, a best-selling book by Edwin Lefèvre.

[3] In a time when accurate financial statements were rarely published, getting current stock quotes required a large operation, and market manipulation was rampant, Livermore used what is now known as technical analysis as the basis for his trades.

Some of Livermore's trades, such as taking short positions before the 1906 San Francisco earthquake and just before the Wall Street Crash of 1929, are legendary within investing circles.

In 1892, at the age of 15, Livermore made his first trade when he bet on five shares of the Chicago, Burlington and Quincy Railroad for $5[7][8]at a bucket shop, a type of establishment that did not buy or sell the stock, but instead took bets on whether a particular stock's prices would rise or fall[1] — essentially, a gambling parlor — a gamble that returned a profit of three dollars and twelve cents.

However, Haight & Freese gradually widened the bid-ask spread and imposed restrictive margin requirements which made it much more difficult and risky for Livermore to make money.

[6] While on vacation, at the direction of Thomas W. Lawson, he took a massive short position in Union Pacific Railroad the day before the 1906 San Francisco earthquake, leading to a $250,000 profit.

[6] However, his mentor, J. P. Morgan, who had bailed out the entire New York Stock Exchange during the crash, requested him to refrain from further short selling.

It was only intervention by President Woodrow Wilson, prompted by a call from the United States Secretary of Agriculture, who asked him to the White House for a discussion that stopped his move.

"[13] In 1924–1925, he engaged in market manipulation, making $10 million trading wheat and corn in a battle with Arthur W. Cutten[6] and engineering a short squeeze on the stock of Piggly Wiggly.

[6] Following a series of newspaper articles declaring him the "Great Bear of Wall Street", he was blamed for the crash by the public and received death threats, leading him to hire an armed bodyguard.

[10] His second divorce in 1932, the non-fatal shooting of his son by his wife in 1935,[14] and a lawsuit from his Russian mistress led to a decline in his mental health, while the creation of the U.S. Securities and Exchange Commission in 1934 imposed new rules that affected his trading.

Although it is unknown exactly how it happened,[13] he eventually lost his fortune and filed bankruptcy for the third time in 1934, listing assets of $84,000 and debts of $2.5 million.

[10] One of Livermore's favorite books was Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, first published in 1841.

[6] The relationship became strained by Dorothy's drinking habits, Livermore's affairs with other Ziegfeld girls, and their lavish spending.

[6] In 1931, Dorothy Livermore filed for divorce and took up temporary residence in Reno, Nevada, with her new lover, James Walter Longcope.

The book did not sell well as World War II was underway and the general interest in the stock market was low.

[13] On Thanksgiving day, November 28, 1940, just after 5:30 pm, Livermore fatally shot himself with a Colt automatic pistol in the cloakroom of The Sherry-Netherland hotel in Manhattan, where he usually had cocktails.

Police found a suicide note of eight small handwritten pages in Livermore's personal, leather-bound notebook.