Larry Williams: Introducing a Trading Legend (Update 2022)

In 1987, Larry Williams won the World Cup Trading Championship with a return of 11,376 percent. This outstanding performance earned him the title of the world’s best trader. No one else has ever come close to achieving the same performance.

Who is Larry Williams?

Larry Williams was born in Miles City, Montana, on October 6, 1942.

He is of Norwegian, German, and English descent and holds a journalism degree from the University of Oregon, Eugene.

Larry Williams’ trading career

Larry Williams started following the futures markets in 1962. However, it wasn’t until 1966 that he began trading actively – after four years of intense observation.

He initially worked with moving averages, trendlines, and chart formations, taking a purely technical approach.

However, after losing half of his capital, he stopped using what he’d read in books and carried out his own studies.

Larry Williams Book cover

It took him three years to be consistently profitable and several more years to get really good.

That’s important to understand: he needed a total of seven years to become a consistently profitable trader. After all, he had previously spent four years just watching the market.

Many people think they can learn to trade successfully in three months’ or a year’s time. Larry Williams shows that this isn’t true.

By his own account, winning the Robbins World Cup Championship was his big break in trading. He turned $10,000 into more than $1,000,000 in a single year.

It was also a milestone for him as an internationally known trader, as it enabled him to generate excellent income through seminars and books.

His trading approach

Many traders are probably eager to learn more about his successful trading approach, and I’m going to describe it here. 

He uses a technically and fundamentally based swing trading strategy. In other words, his approach is based on a combination of fundamental and technical analysis.

He uses fundamental analysis to determine what he trades, and technical analysis to define when he enters and exits a trade.

He also takes the “Commercials” into account when trading. He refers to these professional market participants as the market’s superpowers.

Commercials are the best-capitalized players in the market. Thanks to their networks, they’re also among the best informed.

You can learn how the Commercials have positioned themselves by reading the COT report, published every Friday. It lists the positions that are open in the different futures markets on the previous Tuesday after the close of trading.

The COT report is compiled and published by the Commodity Futures Trading Commission (CFTC).

Larry Williams buys and sells when the Commercials are buying and selling.

He thus combines fundamental factors with chart analysis, and considers the Commercials’ positioning as an additional element.

He usually holds his positions two to three days, but occasionally longer.

He uses the same trading platform we’ve been using for years: the Trade Navigator from Genesis FT.

He’s also developed many of his own technical indicators:

  • Williams %R
  • Williams Ultimate Oscillator
  • Williams VIX FIX
  • Williams Cycle Forecast
  • Williams True Seasonal
  • Williams Volatility Trend Stop
  • Williams Advance-Decline Line
  • Williams Sentiment Index
  • Williams POIV & WillCo
  • Williams Insider Accumulation
  • Williams COT Commercials,
  • COT LrgSpec, & SmallSpec Indexes
  • Williams COT Net Positions OI
  • Williams Dollar Risk
  • Williams FND (First Notice Day)
  • Williams Cycle Forecast
  • Williams Cycle Searcher
  • Immediately Know the Trading Day of Year or Month
  • Williams True Seasonal

Click here for a detailed description of his indicators and how they work.

His best-known indicator is probably Williams %R, developed in 1966. Many traders continue to use this indicator in short-term trading today.

The holy grail of trading?

Many of you are surely wondering whether Larry Williams’ trading approach can be considered the holy grail of trading.

The answer is a definite no because there is no such thing. However, Larry Williams has come up with a good, proven way to beat the market (with a relatively small investment of time). Despite its effectiveness, though, his performance in 1987 was a one-time affair.

I can prove this quite simply:

  1. Larry Williams is now 78 years old and has a fortune estimated at $20 million. In 1987, the year he went down in the history of trading with a return of 11,376 percent, he was already worth $1,137,600. If he had come close to beating the market ever since, he would be swimming in money today. In addition, Williams has probably made at least half his money by coaching and selling trading books and software. This means that his trading earnings amount to $10 million, of which one million was generated in 1987. That’s not as much as most people think. To be fair, not every strategy can be scaled up. The greater the assets, the more difficult it is to significantly outperform the market each year.
  2. His daughter Michelle Williams (widow of Heath Ledger) has made her fortune as an actress.
  3. Larry Williams’ hedge fund has reportedly achieved an average annual performance of 18 percent (itself nothing to sneeze at).

Nevertheless, Larry Williams is a trading legend and a fascinating personality with impressive achievements. He’s become a multimillionaire through trading alone – how many other traders can say that of themselves?

It’s been proven that traders can beat the market using his approach.

The most famous example is his own daughter, Michelle, who won the 1997 World Cup Trading Championship with a return of 1,000 percent – the third-best performance in the history of the WCTC.

Many other trading champions or highly ranked traders have been students of his and traded according to his method.

There are many good traders who haven’t adopted his strategy on a one-to-one basis, but who have drawn inspiration from it and added their own ideas.

My point is to show that things aren’t always as simple as people think.

Criticism of Larry Williams

Larry Williams also has a lot of critics. In my opinion, much of their criticism is justified.

His return of 11,376 percent at the 1987 WCTC has never been proven by account statements. You can’t even find evidence of it on his website.

If you’ve achieved such an incredible return, why not disclose it and use it as a powerful marketing tool?

He hasn’t participated in the WCTC ever since.

If he’s really such an outstanding trader, why has he made most of his fortune coaching and selling his products?

It’s also interesting to note that he was taken to court for tax evasion. This was related to income from coaching and product sales, though, not to his trading income.

Trading legend Larry Williams: conclusion

My own opinion is that Larry Williams developed a system that gave him an edge in the market, but this edge was never big enough to get really rich from trading.

So he’s done what all other trading coaches and teachers do: sell their knowledge and earn money with it.

Of the traders ranked among the top 1 percent in the world, I don’t know any who are willing to sell or share their knowledge with others.

After all, if you really have such a big edge in the market, why would you want to give it away?

Generally, in the long run, a good trader will always earn more with his own trading than through coaching.

In addition, a trader doesn’t have the time for all the marketing and business activities.

I think that the return he allegedly achieved at the WCTC was just a marketing ploy – not only for Larry Williams, but of course for the WCTC.

Nevertheless, his approach has long been proven to beat the market.

Larry Williams quotes

“Cut losses short. Profits never hurt you. It’s the losses that are so critical and traders must learn to control them. Trading is a business of damage control. If you can’t master that, you will be damaged.”

“The three traits speculators must learn to manage within themselves are confidence, fear, and aggressiveness.”

“People who make their living looking into crystal balls are destined to eat a lot of broken glass.”

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