Trading Tenets That Span Five Decades

08/06/2012 10:20 am EST


Larry Williams


The skills that have guided Larry Williams in his 50-year career are ones even rookies can copy, he says, sharing easy-to-follow advice for maintaining simplicity and sound money management.

Today, we get wisdom from a trader who’s been in the markets for 50 years.  Larry Williams will tell us what he’s learned, and I know we have only a few minutes, so you’ll have to really encapsulate it.

Well, the first thing would be that the markets can be predicted and they can be forecasted.  They’re not just total randomness.  If they were total randomness, we should walk away from the market.  So they can be predicted.  That’s important. 

The really critical thing is money management.  I don’t care if you have a system or don’t have a system. If you don’t have money management, you’re going to lose most all of your money.  So to me, money management is absolutely a critical ingredient to what I’ve learned in the market over the last 50 years.

What were some of the hardest lessons you learned?  The most painful? 

To stop being stupid!  To get out of losing trades in a hurry.  That’s so hard to learn, because you want to hold onto it and you don’t want to get hurt, but the more you hold onto it, the more you get hurt.  So you have to learn to get out of your losing trades in a hurry, and stay with your winning trades.

And I think also to realize that there are so many relationships in this business. It’s been a phenomenal business from that respect of knowing people that walk around the exposition hall here, and see people all over the world, and become dear friends.  So there’s a lot of richness to this business as well.

Oh, that’s great to hear.  Now, obviously trading has changed a lot in fifty years in terms of the technology available to the at-home trader today. Is there any way that people are perhaps using these new technologies correctly or incorrectly? 

Well, I think they’re using them both correctly and incorrectly.  The big incorrect thing that I see is they have 1000 indicators on their chart.  That’s an overstatement, 20 indicators.  They complicate it. 

In the old days, when we had to keep charts by hand on paper, we couldn’t keep 20 indicators so we had one or two indicators.  I think it’s good to go back to that, and now it’s too easy to have so many indicators on your chart.  So really, I think success comes from keeping things real simple, and it’s easy to get overcomplicated with computers.

And what are some of the advantages that traders have today that you didn’t have when you started out?

Well, when I started trading, we got the Wall Street Journal two days after it was published if we were lucky, and now news is boom, instant, it’s right there.  I used to pay $45 to $50 for one side of a commission. 

Now, I pay $5 for a round turn.  So my costs are a lot less.  I have more liquidity.  I have more volume.  I have more people trading now than ever before.  So there are a lot of advantages now versus then.  The cost of the business is much better now.

Well, fascinating look at how it’s all changed.  Thank you so much, Larry.

Thank you so much.

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