Interview with Larry Williams - Better System Trader

Larry Williams has been trading futures and stocks for over 50 years.

In 1987 he won the World Cup Championship of Futures Trading ®*, turning $10,000 in to over $1.1 million in 12 months, that’s a cool 11,000% return and the highest return to ever be achieved in that competition. 10 years later his daughter won the same competition with a 1000% return and his students have won the competition in many other years too.

He is a published author, with a long list of best-selling books and has also created a number of market indicators including Williams %R, Ultimate Oscillator, the Williams Accumulation/Distribution Indicator, COT indices, cycle forecasts, market sentiment and value measures.

In this weeks episode we discuss conditional trading, understanding what drives prices, the misuse of indicators and how to apply them correctly. We also discuss cycles, forecasting markets, what to look for in market tops plus loads of listener questions where Larry shares tips and insights from 50 years of trading.

I look for a condition and then build a trading approach from that condition

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Topics discussed

What it means to be a conditional trader
Why buy and sell signals need to be analysed in the context of market conditions
Fundamental factors that drives markets
Interpreting the COT reports correctly
The buying differences between retail and commercial traders and how it can indicate future market direction
Why you should approach trading like a combination lock
Coming up with unique indicator ideas
The mis-use of indicators and how to use them correctly
Trading styles of successful traders
Forecasting markets based on technical factors
Characteristics of stock market tops and bottoms
The fundamentals to watch during market tops

Listener questions

Issues with the Forex market
Trading prices patterns, do they still work and are they scalable
Why short term price patterns work
What happened in 2002 and why you need to consider that when backtesting
Will trend trading always be effective?
How many positions to trade at one time
Money management tips for those who aren’t into heavy maths
Choosing the best markets to trade
Favourite Larry Williams indicator
What keeps Larry motivated to trade after 50 years
What drives peak performance (it’s not money…)
The key component that really drove Larry to becoming a consistently successful trader
How Larry lasted so long in the industry
How to overcome emotions when entering or holding trades
Larry’s biggest contribution to the trading industry
Why Larrys strategies have lasted the test of time
Common traits against the most successful traders
The trading model that’s worked for Larry for over 50 years

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Resources

You can find out more about Larry on his website www.ireallytrade.com
Recommended Books:

Quotes

I use indicators that all look at the market from a different viewpoint

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Ultimately you don’t trade the market you trade your personality

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Price charts and patterns are a reflection of human emotions

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Charts don’t move the markets, conditions drive prices

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Peak performance is not driven by money, its driven by passion to get better, to be the best

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Top tips from this episode

Here are 2 of my favourite takeaways from my chat with Larry:

Conditional trader – Larry likes to call himself a ‘conditional trader’, he looks at conditions in the market using various tools, including COT reports, seasonality, cycles etc first, then he overlays entry and exit conditions based on those conditions. Charts don’t move the markets, conditions drive prices, so the underlying condition needs to be determined first.
Trading should be like a combination lock – Larry likes to see 3 or 4 conditions to really get trades to work, like a combination lock where you get one number first, then you look for the 2^nd number, until they are all lined, that’s when the lock opens. Larry does the same with his trading, he likes to see a number of conditions all line up to really get the trades to work.

Transcript

*Trading futures and forex involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results. The World Cup Championship of Futures Trading and the World Cup Championship of Forex Trading are registered marks of Robbins Trading Company’s affiliate Robbins Financial Group. Accounts trading in the World Cup Trading Championships (WCC) do not necessarily represent all the WCC accounts controlled by the competitor and may produce results different than the results achieved in other WCC accounts of the competitor.