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Larry Williams Strategy

Larry Williams Strategy

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by May 22, 2019 Forex Strategy

Larry Williams is one of the clearest examples of stable and successful trading activity. The annual profits of this trader are often hundreds of%. And once he managed to increase the size of start-up capital over 1 year from $ 10,000 to $ 1,170,000 (!). These days, Williams can be called one of the most respected financial experts. In one of his many books, Long-Term Short-Term Trading Strategies, Forex trading strategy is considered, which allows you to trade without a break. Larry Williams’ strategy is surprisingly simple: there are no complicated rules for opening and closing deals, as well as complex indicators.

Larry Williams, a trader, began his path as a trader in the late 1960s of the last century, initially exclusively on the stock market. After 10 years, he was able to boast a million dollars earned on the stock exchange. Most of all Williams liked to trade in the commodity market, in particular, commodity futures. The main part of the analytical methods used now in the foreign exchange market is borrowed from other financial markets. In addition to the overall brilliant career of a trader, Williams gained fame thanks to two episodes:

a) at the competition, traders were able to “disperse” their deposit from $ 10 thousand to more than $ 1 million over 1 year;

b) when the Dow Jones index collapsed in 1987. and many traders suffered huge losses, Williams earned more than 23% within 1 day.

In the future, clever Larry engaged in training traders, by the way, his approaches are relevant now. In Williams’ trading strategy lies an understanding of the basic principles of market functioning, the specifics of changes in the charts. This approach practically does not need a set of indicators, but allows the analysis of candles in their “original” form.

Larry Williams Trading Secrets

To work on the L. Williams system, you need only one indicator – the Moving Average (moving average), but it is formed in the form of two options, differing in different settings. The period “3” is set on one, drawn by the minimum points “Low” of candles or bars. The other one also has a period of “3”, but it is already built on the maximum points of candles or bars. Both MAs are initially set to the “Simple” method.

strategy larry williams detail

You can choose the colors of the lines that are pleasant for your eyes. After setting up the indicators, it remains to find out the main question: the order of opening and closing deals.

Both the first and the second MA will follow the price, and the price sometimes gets out of this corridor. But it is important to pay attention to two other features: our moving averages signal the direction of price; in combination with the data from candles / bars, they allow you to identify pivot points with a high degree of probability.

The huge advantage of the strategy of Larry Williams is the simplicity and accessibility of the application, although at first this can be overlooked. But if you hone the skills of working on it, you can easily apply it on a variety of graphs.

larry williams trading strategy

Trading by Larry Williams

Before entering into a deal, one should look not only at the MA, but also at the method of forming the candles. As a rule, the end of the trend is observed when the moving average stops touching High or Low (depending on the trend) on the points of the candles / bars. As soon as you see this situation, take it as a signal to open a deal.

Trading strategy transactions are based on the channel concept. Trade is carried out from the borders of one side of the channel to the other. Thus, the entrance to the sale is carried out from the line that is formed by the maximum of the candles, and the entrance to the bullish position, subject to the corresponding trend, is performed from the lower border of the channel.

In the graph below, the moving average of the minima is displayed in red, and the moving average of the maximum values ​​is highlighted in green. If both slidings are pointing down and there is a visible downtrend, you should enter the Sell position from the upper limits of the channel. In the example, such entry points are indicated by a red arrow. The deals will be closed on the back of the channel, which in the example is indicated by a green oval. Transactions in Buy are carried out in the presence of a visible and confirmed trend SS position. In the example, such entry points are indicated by a blue arrow, and moments in which it was necessary to close a position are also a green oval.

strategy medium max and min larry williams

Timeframes

The most popular timeframes for this strategy, M5 and M15, sometimes create a significant problem: with a significant spread, the profit may be small, and your deposit will grow very slowly. Therefore, you need to adhere to assets with a minimum spread. Is it possible to risk on higher time schedules? According to the author of the strategy, it should work well on the charts from M5 to H1 inclusive!

Stop loss

It is interesting that Larry Williams does not speak specifically about the principle of placing a protective order, although such a need is mentioned repeatedly in the book, and the narration ends with the phrase: ” Stop loss must always be . 

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