Forex Strategy of Larry Williams

Posted on June 17th, 2008 by admin, under online forex trading.

Forex Strategy of Larry Williams

Larry Williams is perhaps a symbol of short-term trading. The man who every year proves that the trade exchange can earn hundreds and thousands per annum.

Once he increased his capital from 10 000 to 1 170 000 dollars for one year!

I suggest you to familiarize with one of his strategies.

The Forex strategy is to buy at the price of 3-bar sliding average of minima, if according to technique of identifying the trend by turn points, trend is positive, and to close a position on 3-bar sliding average of maxima.

The signals on sale are exactly the opposite.

This means that you will take short positions on 3-bar sliding average of maxima, and close them to 3-bar sliding average of minima. It would be silly to do so without having a reason to take only signals for short sales.

A major reason for this could be fact that our system of turn on points of fluctuations had prompted us that the trend will go downwards. Then, and only then, you should sell on a maximum and close on a minimum.

Now we will try to put all this into some order. Figure 9.5 shows the imposing 3-bar sliding averages on the line of fluctuations. I noted the point where the trend changes its direction, so we switch from buying on minima to enter short positions on maxima, following the trend turns.

Entry points on 3-bar maxima and minima are shown also. The game goes as follows: trend unfolds upwards, therefore we buy on line of 3-bar minimum, we take profit on a 3-bar maximum and we wait for rollback to a 3-bar minimum.

If, however, the 3-bar minimum creates a turn of a trend for the sale, it is necessary toskip the deal. Short sales are made in exactly the opposite way: it is necessary to wait for a trend turning downward, and then sell at all 3-bar maximum and take profits on 3-bar minima.

Example of timetable is shown on picture below.

Treasury bonds

Turns of every trend are marked on the image, so you can start a paper trade, seeking inputs and outputs for buying and selling. I propose to walk on this schedule, to get a sense of how to trade using the approach with a very short-term actions. Note this are hour bars, but the concept will work in other time scales: from 5 - minute up to 240 - minute bars.

Another way that Larry Williams offers is usage shock days and finding a market that marks time.

“Then I mark shock-day and acts accordingly, as soon as the breakthrough maximum or minimum shock of the day comes through. I recognize the fact that we are likely to see a breakthrough field of congestion of the prices (breakout of the congestion), if the shock-day immediately deploy. Such reminds
of market, which moved there where all the stops were, and covered all “babies ofbreakthrough” who arranged their warrants there.”

I noted examples of the figures shock of the day in trading ranges.

The breakthrough is a signal for traders to take up the case, and they do it. What kills them is an immediate turn that happens the next day. They can not not believe in such “good luck” and decide to stay despite the
turn: a few days later they leave their positions, adding energy movement, which we caught through the day of shock figure.

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