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This post opens with Larry Williams—the World Cup Trading Champion whose audited 11,000% year has loomed large over markets for decades—sitting down for a candid YouTube interview about how he really trades and why most traders fail. He matters because he blends six decades of battlefield experience with a data-driven lens on cycles, seasonality, COT positioning, open interest, and the psychology behind price—cutting through internet noise to show what actually compounds.
Read on to learn the core of Williams’ edge: start with market conditions (who’s positioned and why), then time entries with simple technical triggers—no crystal balls, just probabilities and patience. You’ll see how he builds a weekend shortlist, uses trend and time to capture the big chunk, sizes risk realistically (not obsessing over win rate), and keeps emotions level so the strategy—not ego—drives decisions.
Larry Williams Playbook & Strategy: How He Actually Trades
Market Regime & Seasonality First
Before any trade, get the backdrop right. Larry looks for repeating market behaviors through seasonality and calendar effects, then trades the direction that aligns with those tendencies. This matters because even solid setups struggle when they fight the larger tide.
- Map a 20+ year seasonal for your market; only buy when the next 10 trading days show a positive average return and the current year isn’t diverging by >1.5 standard deviations.
- Favor long setups in indices during the last 2–3 trading days of the month and the first 3 days of the new month; stand down on trend-fighting shorts in that window.
- In commodities, only trade with the dominant harvest/production bias (e.g., pre-harvest weakness, post-harvest strength) unless your stop is ≤0.75R and you have a second, independent edge.
- If the day-of-week tendency is strongly negative for your direction (ranked bottom 20% over the last 5 years), cut position size by half rather than forcing conviction.
Positioning & COT as Your “Who’s Who”
He checks who’s actually buying and selling. The Commitment of Traders (COT) report and open interest shifts reveal whether pros or hedgers are leaning one way. You want to ride with the strong hands, not against them.
- Go long only if “Commercials” net position is in the top 30% of its 3-year range and rising for ≥2 consecutive weeks.
- Avoid fresh shorts if “Large Specs” are already in the top 10% long; crowded longs unwind violently—size small or wait for a break-and-fail.
- Require open interest to expand on breakouts and contract on pullbacks; if the opposite happens, downgrade the setup and trade half size.
- Add 0.25R only after a weekly COT improvement (Commercials add, Specs reduce) confirms your initial read—never add if COT moves against you.
Signal Stack: Price + Time, Not Crystal Balls
He times entries with simple, testable triggers—short-term patterns layered on top of the regime. The goal is to catch “the meat” of the move, not bottoms or tops.
- Trigger long when price pulls back 2–4 days into a rising 20-day moving average and posts a bullish close above the prior day’s high (“stop-in” at that high).
- Take the classic OOPS long: prior day gaps below yesterday’s low at the open, then reclaims that low within the first 60 minutes—enter on the reclaim, stop 1 tick below the session’s swing low.
- Use Williams %R: buy only if %R crosses up through −80 after a pullback; sell only if %R crosses down through −20 after a rally.
- Time stop: if the trade hasn’t moved +0.5R in 3 bars (days for swing, minutes for intraday), exit at market—your timing was off.
Risk & Position Sizing the Larry Way
He’s ruthless about risk. Small, fixed risk lets the probabilities do their work and keeps you in the game when the next fat pitch arrives.
- Risk a fixed 0.5–1.0% of equity per trade; never more than 3 correlated positions at once.
- Initial stop: 1.5× ATR(14) beyond the entry’s invalidation (below the signal bar for longs, above for shorts); for gaps, use 1.0× ATR plus the gap low/high.
- If volatility (ATR) expands by 30%+ post-entry, cut size by one-third on the next bounce/flush—don’t let a normal move become portfolio risk.
- Hard rule: no adding to losers; adds are allowed only after price moves +1R in your favor and then pulls back without violating the 10-period EMA.
Trade Management: Pyramid, Trail, and Go Golfing
He scales into strength and trails objectively so winners can “pay for the cluster of small losses.” Your job is to let the math—not emotions—run the position.
- Scale plan for swings: +1R add ½ of initial size; +2R add ½ again; never exceed 2× the initial position.
- Trail with a two-step: switch from initial stop to an ATR(10) chandelier once the trade hits +1R; at +2R, tighten to ATR(7).
- Partial profit: take off ⅓ at +2R only if the market is in a historically choppy seasonal window; otherwise, let it run and trail.
- Exit on time or structure: close by day 8–10 of the move if price hasn’t made a higher high (longs) or lower low (shorts) in 3 sessions.
Pattern Toolbox He Actually Uses
Larry keeps the pattern list tight and testable. Fewer patterns, more reps—that’s how you build real confidence and consistency.
- First Pullback after Breakout (FPB): wait for a close above a 20-day high, then buy the first 2–3 day dip that holds the breakout day’s midpoint.
- Inside Day Continuation: after a trend day, take the inside day break in the trend direction; invalidate if it breaks both sides.
- 3-Day Cycle Turn: after three down closes in an uptrend, buy a stop at the high of day 3; reverse logic for shorts.
- Open Range Bias: define first 30-minute range; trade only in the direction of the first break if it aligns with the daily trend and seasonality.
Weekly Game Plan (Saturday/Sunday Routine)
He prepares on weekends, so weekday execution is boring and mechanical. The plan narrows focus, sets alerts, and pre-commits risk before the bell.
- Screen 20–40 markets, keeping only those with aligned seasonality, supportive COT, and clean trend structure; cap watchlist at 8.
- Pre-set alerts at the stop-in levels (prior high/low, pattern break); if an alert triggers outside preferred hours (e.g., last 15 minutes), defer to next session.
- Pre-calculate size for each candidate using the current ATR; record entry, stop, adds, and trail rules in your sheet before Monday.
- If Monday opens with a large gap against your planned direction (>0.75× ATR), skip the trade entirely—don’t “make it work.”
Intraday Execution Rules (If You Trade the Open)
Even swing traders can use Larry’s open tactics for better entries. The first hour is an information firehose—use it, don’t chase it.
- Take only one open-drive trade per day per instrument; if the first loses, you’re done for that instrument.
- Enter only on reclaim/failure of key levels (prior day high/low, ORB), not mid-bar impulses; place stops 1 tick beyond the invalidated extreme.
- If spread or slippage exceeds 20% of your planned stop distance, cancel the trade—bad microstructure kills edges.
- Stand aside from the first 3 minutes in indices and first 5 minutes in thin commodities; let algos exhaust.
Money Management & Drawdown Protocol
Longevity beats hero trades. Larry’s rules protect capital and mindset so you can keep executing the plan.
- Equity curve rule: if you drop 6% from the equity peak, cut risk per trade to 0.25% until you recover; at 10% drawdown, pause new positions for 3 trading days.
- Daily stop: stop trading for the day after 2R realized loss or three consecutive losers—review, don’t revenge trade.
- Correlation cap: max 2 positions in the same sector/driver (e.g., energy complex, USD pairs); if the driver flips, you don’t want a portfolio-wide hit.
- Slippage audit every Friday: if average slippage exceeds 0.15R for the week, reduce use of market orders and switch to stop-limit with a tight limit offset.
Journal, Review, and Continuous Testing
He treats trading like a craft. Quick notes, consistent tags, and simple stats make the edge obvious—and fixable.
- Tag every trade with regime (seasonal up/down/flat), pattern (FPB, Inside Day, OOPS, 3-Day Turn), and catalyst (COT shift, calendar effect).
- Track two KPIs per pattern monthly: expectancy (R/trade) and win rate; cull or re-test any pattern with negative expectancy over 30 trades.
- Post-trade 60-second note: “What did I see, what did I miss, what’s the one rule I could have skipped or tightened?”
- Re-opt ATR lengths and time stops quarterly, not weekly; keep parameters stable enough to learn from them.
Size Risk First: Fixed R, ATR Stops, No Adding Losers
Larry Williams keeps it simple: decide your loss before you even think about the win. Pick a fixed R—like 0.5% of equity per trade—so one idea can’t wreck your month. Then anchor the initial stop with ATR, not vibes, so it adjusts to current volatility instead of your hopes. This turns every setup into a math problem you can actually pass.
The second rule is just as blunt: never, ever add to a loser. If price proves you wrong by hitting the stop, take the paper cut and move on—no “averaging down,” no “just a little more room.” Larry’s edge comes from many small, controlled losses and a few clean runs, not from hero rescues. Size small, place the ATR stop, refuse to add, and let the next valid setup do the heavy lifting.
Trade What’s Probable: Let Mechanics Beat Predictions Every Single Day
Larry Williams doesn’t try to be the smartest person in the room—he tries to be the most mechanical. Instead of guessing where the market “should” go, he stacks simple, testable conditions: trend, seasonality, and a clean trigger. When those boxes line up, he takes the trade; when they don’t, he passes without drama. The point isn’t to be right; it’s to repeat a process that pays over a series of bets.
Predictions feel great in the moment, but they don’t pay the bills like rules do. Larry Williams treats each setup like a coin with a known bias—small edge, consistent size, next hand. If the trigger doesn’t fire, he doesn’t “nudge it”; if it stops out, he logs it and moves on. Over time, that boring discipline beats hot takes, fancy narratives, and one-off hero calls.
Volatility-Based Allocation: Scale Exposure Up Only When Variance Shrinks
Larry Williams treats volatility like a dimmer switch for risk, not a guessing game. When realized volatility drops and ranges compress, he’ll allow more size because stops can be tighter and the distribution is friendlier. When volatility spikes, he automatically dials back—same setup, smaller size—so a normal swing doesn’t become a portfolio event. It’s not fear; it’s physics: the wider the daily range, the less you should be riding.
In practice, Larry Williams frames everything around the current ATR or realized variance. If ATR rises materially after entry, he trims; if ATR contracts and price behaves, he permits a measured add. He caps the total portfolio heat, so two correlated names can’t both explode just because markets are lively. The message is simple but powerful: let volatility set your exposure, and your exposure will stop setting your emotions.
Diversify Smart: Mix Underlyings, Strategies, and Holding Durations On Purpose
Larry Williams spreads risk where it actually matters: across what moves, how you trade it, and how long you hold it. He doesn’t call it “diversification” just because there are many tickers—if they share the same driver, it’s one bet in disguise. By mixing uncorrelated underlyings (index, commodity, currency), he lets a cold patch in one lane be offset by strength in another without diluting the edge.
He also diversifies by playbook and time: trend-follow in one market, mean-revert in another, swing a setup here, hold a swing-to-position there. Larry Williams keeps each strategy’s rules separate so signals don’t blur, and he caps overlap so two trades triggered by the same macro pulse don’t double his risk. When correlations spike, he cuts total exposure first and asks questions later. The result is simple math: steadier equity curve, fewer emotional decisions, and more chances for winners to show up while losers stay contained.
Write Rules, Follow Rules: Entries, Adds, Trails, and Time Stops
Larry Williams turns discretion into a checklist so execution is boring and consistent. He defines the exact entry—breakout stop, pullback reclaim, or open-range bias—before the session starts, then waits for the price to prove it. If the entry doesn’t trigger cleanly, he doesn’t massage it; the missed trade is a win for discipline. The goal is to capture the repeatable edge, not to improvise.
Once in, Larry Williams scripts the whole journey: where to add, how to trail, and when time alone kills the trade. Adds only happen after a measured gain (like +1R) and a non-violating pullback; no averaging down, ever. Trails switch from fixed stops to ATR-based as the trade matures, protecting open profits without choking the move. And if the price goes nowhere—no higher high or lower low within the time box—the exit is automatic. Rules written. Rules followed. Results less random.
Larry Williams’ bottom line is disarmingly simple: stop overthinking, prove ideas with repeatable results, and trade what’s actually set up today. He dismisses theory worship unless it’s backed by real performance, and he keeps his process grounded in conditions that give markets a reason to move—cycles, seasonals, positioning—before layering in straightforward execution triggers. The “best market” is the one setting up right now, not the one you’re emotionally attached to, and that weekly routine of scanning, shortlisting, and then timing is the engine behind his consistency.
He also insists on aligning with reality: markets are imperfect, math is perfect, and confusion comes from forcing the latter onto the former. That’s why he emphasizes risk first, trend plus time over prediction, and the humility to accept that not every “perfect play” will score—your job is to size, execute, and move on. Don’t chase status or rivals; focus on doing the work, letting time and trend pay you, and building a life outside the scoreboard. That mindset—pragmatic, testable, disciplined—is the real edge he’s still teaching after six decades.
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