Lane Mendelsohn: When did you start trading and what got you hooked?
Larry Williams: I first began watching the markets in 1962 and by 1966 was actively trading. I initially started because it looked like it might be easy money, and it is when you are right. When you lose, though, it is not so easy. I was in college getting a degree in journalism when the markets first caught my eye. I started out, however, as an art major. I’ve always thought that my early art training has helped me in my trading. At an early age, I was shown how to look – really look – at things, such as texture, hues and colors in blades of grass. That type of study was just great for looking at charts.
Lane Mendelsohn: How would you describe your basic trading approach?
Larry Williams: I describe myself as a “conditional trader.” By that I mean I look for conditions that cause markets to move, what the big money is doing, what interest rates are doing, etc., then I put technical analysis on top of that. But, it all begins with the conditions. I am not wild about technical stuff. I believe that most of it is not useful and some of it actually fraud. I like to keep things simple and have a handful of indicators that I have proven – with real money – to work consistently.
Lane Mendelsohn: What are some of your key market concepts or trading ideas that you rely on?
Larry Williams: I follow the commercial traders. They are the super powers, or those that use and produce commodities. I really like to be a buyer when they are buying. These guys have the money and the inside information so I track their every move. I also like to know if a market is over or under valued. I have a formula that tells me if the currencies, or corn, cattle or cocoa or copper or gold are below or above real value, not the cost of production. It is very helpful in finding markets that are about to have major up and down moves. I also look at specific price patterns and trend change tools for actual entry points.
Lane Mendelsohn: You are known for developing highly effective indicators for short term trading. I’ve worked with your new Williams Professional Index indicator and I can see its value. Can you explain for listeners what this indicator is and how its used?
Larry Williams: This indicator measures the sentiment of professional traders. When at high levels, as a group, they are bullish and rallies take place, at low levels bearish, and declines usually unfold. One thing to be aware of is that they may be bullish at high or low price levels; this is not like an oscillator but an attempt to measure professional bullish sentiment.
Lane Mendelsohn: Could you give an example of how a trader would use this in a real trading situation?
Larry Williams: When the index is high I want to look at my other VantagePoint indicators and trade to the long side. On the flip side, you can use the Williams Professional Sentiment Index to identify when professionals are bearish and if VantagePoint indicators are in sync a short position should be considered. An example is shown here in Silver. I went long 10 contracts on the evening of 7/21 in part because I noticed the index was telling me that the professionals were getting aggressive in their buying.
Lane Mendelsohn: Many traders are familiar with you Williams’ Accumulation/ Distribution indicator how is the newly released Williams Electronic Market Accumulation Index different?
Larry Williams: The Electronic Market Accumulation Index measures professional accumulation and distribution along the lines of On Balance Volume. It is designed for the new electronic markets that are trading just about 24 hours a day. Accumulation and Distribution need to be looked at differently than in the old days. Look for divergences between price and Professional A/D. A new high in price not supported by this tool is bearish, a new low in price that does not occur in this index is bullish.
Lane Mendelsohn: That makes a lot of sense Larry. Could you give an example of how a trader would use this indicator to base decisions from?
Larry Williams: Notice the price rallies leading to declines because the institutional buyers began selling into the rallies. This caused the market tops that formed shortly thereafter. The low in July 2010 was just the reverse. Despite a massive sell off accumulation was taking place on the decline which is why the index withstood the battering that the price took. This proves that the stock was in strong hands with VantagePoint indicators confirming, a long position would be the best position at that time.
Lane Mendelsohn: Do you find that these indicators work best for a specific market segment like futures vs. stocks or forex?
Larry Williams: I have tested them across the board in my real time trading. Obviously they don’t work all the time – not 100% accurate – but they are very good at giving indications regardless of the market being traded.
Lane Mendelsohn: Based on the fact that these indicators will only be made available in VantagePoint and for use by VantagePoint customers, you’ve obviously used these indicators in conjunction with the VantagePoint forecasts. Do you find that they work well in concert together?
Larry Williams: Yes, if I can get everything pointing in the same direction and from multiple perspectives, this increases the odds that the trade I am considering will be a winner for me. Trading is like going to a party; the more the merrier. I want several real reasons to trade. The VantagePoint indicators are completely different from mine so the combination of them and when they are in sync is very powerful.
Lane Mendelsohn: Could you explain to listeners why you’ve chosen to only release these indicators to VantagePoint customers?
Larry Williams: These indicators are unique and unlike other indicators that I have developed that have become widely used in the field of technical analysis. You can consider these indicators my “secret weapon”. This is my private stock and distribution of these indicators will be very limited allowing me and those who have them to reap the benefits. I have decided to keep these indicators from becoming over-used by the masses of traders.
Lane Mendelsohn: Thanks for sharing this valuable information with us Larry.
Larry Williams: My pleasure.
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