It wasn’t just the data collection and chart analysis and random market thinking that was much different in the “old days” from what it is today.
“Your broker then was critical to your trading operation,” Williams says. “You needed a broker who fit you emotionally and mentally. Brokers were like family; one even became godparent for my children. That is just not going to happen now.”
Williams says that traders then often did not know if they had been filled on a position until the end of the day. Much of trading was based on trust, and traders learned to be men of their word or they were toast.
“I saw lots of guys try to renege on bad trades,” Williams recalls. “I also saw brokers who would help you a little. If you had been down and they had a profitable trade, they would allocate some of it to you or any client that was hurting. Those were profits they could have knocked down for themselves.”
Today, with online trading in electronic markets, there isn’t much personal interaction any more – no one to hold their hand or feel sorry for them – so traders must take responsibility to trade on their own. Williams thinks that’s a great improvement.
Of course, Williams points out, there were only a handful of traders in his early days – maybe less than 50,000 active futures traders. Now there are millions, making the competition tougher and the markets a lot more volatile.
“Everyone with a computer is now an expert,” Williams observes. “The big emphasis has swung from natural resource markets (“real” things like soybeans, gold, cattle and wheat) to abstract ones (man-made instruments like Swiss francs, T-bonds and stock futures), which has changed the game a great deal with more arbitrage trading and computer-driven programs.”
Old truths still stand
Despite all of the changes that have taken place in his half century of trading, Williams says the big take-away lessons for today’s traders are the old ones:
- Don’t bet big on any trade.
- Use money management. “Ralph Vince opened my eyes to this; it is the most critical factor of all. Nothing is more important to survival.”
- Fade the advisors and public; they are most often wrong while the commercials are most often correct.
- Don’t let your emotions run your trading game.
- Trade what you see, not what someone tells you that you should be seeing. Forget the news; trade what you see.
“Above all, fundamentals matter,” Williams concludes. “As I see it, price goes up or down, from point A to point B, due to fundamental conditions. That means we must understand fundamentals. However, the path price takes is not direct; it is a path driven by the news and emotions of the day. That’s where technical analysis shines.”
Williams says that what has been especially rewarding about his career is seeing people that started with his material go on to greatness.
“Bill Cruz, the founder of TradeStation, began with me. I vividly recall Tim Mather, founder of CQG, in my classes, along with Glen Larson of Genesis,” Williams recalls. “To know that I had a small part of so many careers is immensely rewarding.
“It is not over yet,” he adds. “I still have some new trading ideas (that he shares on his web site www.ireallytrade.com and in Larry Williams University trading courses). That’s what I love the most about this business – there’s always something to learn!”