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Larry Williams sits down for a candid interview about the year he turned a single account into a world-record return—while surviving the 1987 crash and an audit that proved every trade was real. He talks about the focus it took, the pit-session edges that no longer exist, and what it felt like to juggle massive winners, painful losers, and public disbelief. If you’ve heard rumors about “11,000%,” this is the story behind it—told by Larry himself, with zero mythmaking and plenty of hard lessons from the World Cup Trading Championship.
In this piece, you’ll learn the practical risk math Larry leans on (why ~4% per trade is a sweet spot for most traders), how he handled strings of losses without emotionally imploding, and why he sometimes refuses to cut size as fast as “the textbook” says during a drawdown. You’ll also see how he thinks about conviction (“don’t be wrong” when you size up), recovering after setbacks, and keeping your identity tied to execution—not to a single P&L swing. If you’re new to the game, this is a blueprint for sizing, resilience, and edge that you can actually apply to your next trade.
Larry Williams Playbook & Strategy: How He Actually Trades
Risk & Position Sizing (the backbone)
Larry Williams stresses that most traders blow up from sizing, not signals. His sweet spot for everyday trading risk is around 4% per trade—high enough to move the needle, low enough to live through losing streaks without mentally imploding. In his words, if you’re swinging harder than that, you’d better be nearly certain you’re right.
- Risk ~4% of account equity per trade in normal conditions; avoid creeping above 5–6% unless the edge is extraordinary.
- Size by stop distance: Position = (Account × 0.04) ÷ Stop (in $). Recompute after each closed trade to keep risk fixed-fractional.
- Never cut size linearly during drawdowns to the point recovery becomes mathematically glacial; trim, but keep recovery feasible.
- Pre-commit a max open risk cap (e.g., 8–12% of equity across all positions) so multiple setups don’t stack you into ruin.
Handling Drawdowns (how he keeps coming back)
Larry doesn’t panic-shrink to tiny bet sizes the moment equity dips; he reduces more slowly because he believes in his process and expects to recover. That confidence is earned by decades of tested edges and a clear plan for when streaks hit.
- Define a “soft brake” (e.g., cut risk per trade by 25%) after −10% equity, and a “hard brake” (50%) after −20%; restore only after new equity highs.
- During losing streaks, keep frequency but improve selectivity: trade only A-setups that align with seasonality/COT/context (see below).
- Journal every loss with three tags: “setup quality,” “execution error,” “market context.” Fix the tag with the highest frequency first.
Edge Stack: Seasonality, COT, and Momentum Triggers
Williams is known for blending seasonal tendencies, Commitments of Traders (COT) positioning, and simple momentum/mean-reversion tools to time entries. Seasonality cues the “when,” COT hints at “who is leaning where,” and momentum tools refine the “now.”
- Seasonality: Track monthly/weekly tendencies per market; only act when price action confirms. Favor seasons with multi-decade bias.
- COT: Look for commercial hedgers at extremes against trend as an early reversal tell; avoid fighting when commercials aren’t at an extreme.
- Momentum trigger: Use Williams %R (e.g., 10–14 period) to time entries from oversold/overbought back toward the mean; confirm with price structure.
- Stack rule: Take trades only when at least two of three align (Seasonality + COT, or Seasonality + %R, etc.). Stand down if they diverge.
Classic Pattern: The OOPS Setup (gap-fade play)
His “OOPS” is a gap-reversal concept born in pit-era markets: price opens beyond the prior day’s range, then snaps back through that range, trapping late players. Modern markets are more continuous, but the logic remains useful for stocks and futures with clear opens.
- Long OOPS: If today opens below yesterday’s low, place a buy stop at yesterday’s low; stop below today’s open or intraday swing low.
- Short OOPS: If today opens above yesterday’s high, place a sell stop at yesterday’s high; stop above today’s open or intraday swing high.
- Exit: Scale out into prior day’s midpoint and close remainder at prior day’s close or an ATR-based target; time-stop by end of session if unfilled.
- Filter: Prefer OOPS when seasonality/COT favors mean-reversion and a news gap stretched price into an extreme.
Execution Protocol (what to do trade-by-trade)
At peak aggression—like his championship run—Larry said the only way to survive big size was to be “not wrong,” meaning high conviction plus immediate invalidation points. For day-to-day trading, he dials back to systematic risk rules and fast exits when thesis breaks.
- Before entry: Write the specific invalidation level that proves you wrong; if touched, exit without negotiation.
- After entry: Move to breakeven only after structural progress (e.g., higher low for longs) to avoid being wicked out.
- Take-profits: Pre-plan two targets (structure and volatility-based); never let winners round-trip below breakeven once the first target hits.
- News: No new positions within 15 minutes before major releases on the instrument you’re trading (roll to the next liquid market instead).
Championship Mode vs. Normal Mode (context matters)
Larry has publicly discussed risking nearly 30% during his World Cup year—paired with an edge he says no longer exists in today’s electronic markets. Treat that level as a historical case, not a template. Every day trading reverts to the 4% framework.
- Normal mode: 1–4% risk, diversified across uncorrelated markets, with an equity and per-trade risk cap.
- Championship mode: Allowed only when (a) you have a unique, tested edge with time-decay risk, and (b) you can exit instantly at invalidation. Expect deeper drawdowns and faster equity swings.
- Post-shock rule: If a crash or outsized gap slams equity, stop trading for one session, then restart at normal-mode risk.
Indicator Rules: Williams %R for Timing
Williams %R is his namesake oscillator that locates where price sits within its recent range; Larry’s classic usage is to buy strength emerging from oversold or sell weakness from overbought, especially when seasonality/COT agree. Keep it simple and rules-based.
- Settings: 10–14 period %R; oversold below −80, overbought above −20.
- Long trigger: %R crosses up through −85/−80 after printing at/near −100 within the last five sessions; stop below recent swing.
- Short trigger: %R crosses down through −15/−20 after hitting 0 within five sessions; stop above recent swing.
- Context: In strong trends, use %R pullbacks only in trend direction; countertrend uses require seasonality/COT alignment.
Markets & Timeframes (where this shines)
Williams comes from futures, where seasonality and COT are richest, but the principles port to indices, FX, and liquid stocks. The key is picking instruments with clean opens (for OOPS) and deep data history (for seasonal studies).
- Futures first: Indices, energies, grains, softs, rates—anything with long seasonal records and weekly COT reports.
- Daily/Weekly swing: Build seasonal/COT context on weekly; execute with daily signals like %R or OOPS for timing.
- Session structure: Prefer markets with clear open/close dynamics if you plan to run OOPS consistently.
Psychology & Identity (how he thinks)
Larry’s advantage is equal parts math and mindset: confidence rooted in tested edges and the refusal to let a bad streak define him. He trims risk less aggressively than “the textbook,” trusting his process to grind back to highs.
- Identity rule: Tie your self-image to executing the plan, not to P&L swings; measure success by rule adherence each week.
- Conviction gate: If you can’t articulate the exact edge stack (Seasonality/COT/%R or OOPS), you don’t have the trade—skip it.
- Recovery mindset: After any −10% week, run a structured debrief (what, why, fix) and resume with pre-defined soft brake sizing.
Size It Right: Fixed-Fraction Risk That Survives Losing Streaks
Larry Williams keeps it simple: protect the account first, grow it second. He treats risk like a fixed bill you pay every trade—no haggling, no “gut feel” discounts. Pick a small, repeatable percentage of equity to risk and let the position size float with your stop distance. When equity dips, size shrinks automatically; when equity rises, size scales up without you doing anything clever.
This approach turns scary drawdowns into manageable setbacks because the damage per trade is capped and recovery math stays sane. Set your dollar risk first, then back into contracts or shares using the distance to your invalidation. If a setup forces you to risk more than your fixed fraction, pass or find a tighter, defensible stop. Larry Williams would call that discipline—not fear—because survival is the only way compounding gets a chance.
Trade Mechanics Over Prediction: Rules First, Opinions Last
Larry Williams doesn’t try to out-guess the market; he out-executes it. He starts with a checklist—entry trigger, stop location, size formula, and exit path—then follows it even when the tape gets noisy. The point is consistency: if the rules are clear, your outcomes reflect the edge, not your mood. Williams keeps forecasts in the background, letting price confirm or cancel the idea before a single dollar is risked.
When the setup appears, he trades it; when it doesn’t, he waits. That’s the whole game—mechanics that fire or don’t, like a light switch, instead of a debate about tomorrow’s headline. Larry Williams also reviews each trade against the rulebook, not against the P&L, so the feedback loop improves execution quality. Opinions might make good stories, but the rules keep the account alive.
Volatility-Based Positioning: ATR Stops, Dynamic Targets, Smarter Sizing
Larry Williams sizes positions to the market’s mood, not his own. He anchors stops to recent volatility—think a multiple of ATR—so noisy days don’t kick him out, and quiet days don’t give risk away for free. Position size follows the stop: wider stop, smaller size; tighter stop, larger size, while keeping the dollar risk constant. That keeps expectancy stable across choppy and calm regimes.
Targets flex too. When ATR expands, he takes profits farther from entry; when it contracts, he tightens expectations and banks sooner. Larry Williams treats volatility shifts like a weather report for risk: when the storm picks up, he reefs the sails; when winds calm, he lets them out. The result is smarter sizing, fewer death-by-a-thousand-cuts exits, and a process that adapts before emotions do.
Diversify By Market, Strategy, And Timeframe To Smooth Equity
Larry Williams spreads risk so no single bet, market, or idea can wreck the month. He mixes uncorrelated markets—index futures, commodities, FX—so a slump in one corner can be offset elsewhere. Then he stacks different strategy types, like mean-reversion entries alongside trend-following holds, to avoid being hostage to one regime. The goal is simple: reduce equity volatility without strangling upside.
He also staggers timeframes so entries and exits aren’t all clustered on the same day. A daily swing trade can co-exist with a shorter tactical fade and a longer seasonal position, each sized to the same risk rules. That way, Larry Williams doesn’t rely on a single timing lens to pay all the bills. The result is a steadier equity curve that keeps your head clear enough to execute the next trade.
Define Risk Upfront: OOPS Entries, %R Timing, Fast Exits.
Larry Williams is adamant: the trade is defined before it begins. For his OOPS idea, you plan the entry at the prior day’s extreme, mark the invalidation just beyond the open or swing, and calculate size from that distance—no freelancing. Williams %R then helps with timing, confirming strength from oversold or weakness from overbought, so you’re not just catching a falling knife.
Once in, he moves fast. First scale-out goes near obvious structure (prior day’s midpoint or ATR target), and if momentum stalls, he takes the hint rather than marrying the trade. If the stop is hit, he’s out instantly—no “give it room” improvisation. Larry Williams treats time as risk too, so if the setup fails to progress within the session plan, he time-stops and resets for the next clean shot.
Larry Williams’ core message lands hard: protect your ability to keep trading. He argues that roughly 4% risk per trade sits in the sweet spot—large enough to compound meaningfully, small enough that three losses only dent you ~12%, which most traders can stomach and then step back up to bat. He also warns that pushing risk above ~5–6% accelerates blow-up math when losses cluster, so the “optimal” everyday risk is where emotional durability meets growth. When drawdowns arrive, he trims risk, but not mechanically or too fast—because recovery becomes painfully slow if you shrink to a tiny size; confidence in a tested process matters.
He’s equally blunt about context: the famous championship run used much higher risk (near 30% on many trades) paired with a unique pit-era advantage—conditions he says don’t exist today, and a mode that demanded one brutal rule: “don’t be wrong.” That year also included wild swings—from a peak near $2.2M before the 1987 crash knocked the account down to ~$750k, followed by a grind back to ~$1.1M—proof that even record years carry heavy drawdowns and that resilience, not perfection, wins. His final mindset cue is pure Williams: losses happen, but they don’t get to own you—reset, refocus, and make new money instead of obsessing over old losses.
