World Cup Advisor

7/27/2019 World Cup Advisor

1/27

Huge Wins, MonuMental

losses, ansWering tHe CritiCs,and alWays trading

A Conversation with Larry Williams

An Exclusive Look Inside Secrets

of the World Cup Advisors

F Chp dw

Order Secrets of the World Cup Advisors

ONLY $9.99

www.traderslibrary.com

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Contents

A Word About the World Cup Trading Championships 5

Introduction (Joel Robbins) 7

Part 1 The Learning Curve 13

Chapter1 Losses, Lessons, and Leading the Pack in

Trading( John Holsinger) 17

Chapter2 What Losing $20,000 Taught Me About

Winning(David P. Cash) 33

Part 2 The Systematic Trader 51

Chapter3 Rules of the Trade: Developing a Winning

Trading System (Neil Peplinski) 55

Chapter4 Successful Stock Index Trading: Using a Timing

Approach for Consistent Returns (Chuck Hughes) 79

Chapter5 Seasonal Trading System (Kurt Sakaeda) 101


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Part 3 Championship Tools for

Technical Trading 117

Chapter6 Trading with an Equity Graph (John Mills) 121

Chapter7 The Triple Crossover Oscillator (Robert Bloch) 137

Part 4 Winning Strategies from A

World Cup Advisor 161

Chapter8 Swing Trading for Success (Austin Passamonte) 163

Part 5 Looking Back at Larry WilliamsLegendary Performance 189

Chapter9 Huge Wins, Monumental Losses, Answering

the Critics, and Always Trading

A Conversation with Larry Williams

(Interview with Chuck Frank) 193

Appendix:

World Cup Championship of Futures Trading Highlights 209

Who are the World Cup Advisors? 211

Recommended Reading 215


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A Word About the World CupTrading Championships

In baseball, its the World Series In football, its the Super Bowl Intrading, its the World Cup Trading Championships. In a recent featurestory, National Public Radio referred to Wold Cup comptition asT Oscas of Tading.

The World Cup Trading Championships, with separate divisions for

futures, forex and stock traders, have provided the pmi ana focomptitiv tading sinc 1984. Each World Cup event brings togetherserious traders in real-time, real-money competition with national brag-ging rights on the line

Contestants vie on a level playing field for prizes, unique World Cup

Bull and Bear trophies, and a possible spot on the advisory team at wwwWorldCupAdvisorcom

The concept is simple: Traders showing the highest percentageincreases win the top prizes Entrants can even elect to compete in a vol-untary cash prize pool, featuring 100% payoutsAt t nd of t day,t bst tads pvail. Winning performances have run the gamut,

from a modest 53% futures division return in 2001 to the historic11,376% by Larry Williams in turbulent 1987

The World Cup Trading Championships are products of Robbins Trading

Company and Robbins Securities, Inc

7


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Introduction

When you manage a brokerage firm, as I do, you quicklylearn your clients priorities Prompt, reliable service isNo 1 A reasonable commission structure is No 2 Access

to attractive investment alternatives and ongoing education runs a closethird And, from day one, clients have clamored for my firm, RobbinsTrading Company, to identify talented money managers and promisingnew trading models from which they could study and learn new tech-

niques In our fascinating and fickle industry, this last priority can be thetallest of all orders to fill

One summer afternoon in 1983, some of my key employees and Iwere enjoying a day of sailing on Lake Michigan and found ourselvesdiscussing this very issue Although our firm had grown quickly andwe were already offering a wide range of trading products and services,our clients wanted more alternatives and more methods that would help

them become better traders We were trying to think outside of conven-tional approaches when someone suggested that we entice private tradersand potential managers to compete against one another From that tinyseed a giant plan evolved We would create a controlled environmentin which top traders would compete head-to-head, utilizing their ownfunds, in an ultimate trading gut-check and acid test This competi-tion would separate the real producers from the pretenders and crowna champion who would truly be the best of the best Or, as we dubbed

the ultimate victor, a World Cup ChampionAs our mission took shape, we resolved to do it right Ours would

be a real-time, real-money trading competition, one that would attractupper-echelon contestants and identify the best futures traders If wecould develop a format that would accurately identify the top tradingtalent amateur or professional we could offer fund managementand model development opportunities to the winners And, using theinput and ideas of the various champions, we could provide our clients

with the new trading paradigms, strategies and alternative investmentvehicles they had been asking for

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It sounded easy We would publish the format, promote the event,keep track of the results, hand out trophies and publicize the resultsHow difficult could it all be?

We soon found out There were rules and regulations, sponsors andexpenses, logos and graphics, spreadsheets and newsletters, lawyers, gov-ernment agencies, trophy molds, advertisements, account forms, docu-ments and disclaimers We learned quickly that conducting a big-leagueevent of this nature requires an enormous commitment of resources but Ive never once regretted the decision For me personally, the WorldCup Trading Championshipshave been a constant source of both satisfac-tion and fascination Over the years, Ive learned many new conceptsand valuable lessons from the talented contestants And now finally I get to share these interesting stories, strategies and lessons with awide audience in this book

Since the first World Cup Championship commenced on February-15,1984, this glorious experiment in competitive trading has spawned closefriendships with world-class traders like the incomparable Larry Wil-liams, Chuck Hughes, John Mills and Robert Bloch, to name a few

Ive followed the progress of each years competition on a daily basis andmarveled at the displays of skill, patience, resiliency and in some cases reckless abandon

Looking back over the years, the inaugural competition in 84 hardlyresembles the competition as we know it today There were fewer com-petitors back then and less hoopla surrounding the event Todays compe-tition is big business with a large cash prize pool at stake and the makingof careers in the balance The initial event was four and a half months in

duration; todays championships extend a full calendar year, with traderstesting their mettle through seasonal ups and downs

I remember being duly impressed when our first winner, Ralph Cas-sazone, generated a 264% return, and I wondered if that kind of perfor-mance could be duplicated year after year When Ralph came back thenext year to post an amazing 1,283% return, I wondered if we wouldever see a performance of that caliber again Then just two yearslater Larry Williams did the unthinkable, recording an astounding11,376% profit, making us all realize that in futures trading, there sim-ply are no boundaries

I watched with admiration and fascination as Larrys account grew byleaps and bounds in 87 When I noticed that it had crossed the seven-

Losses, Lessons and Leading the Pack in Trading 10


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digit threshold at the end of August, I did something I would not nor-mally do

Until then, I had never seen a client accomplish such a feat Larrys

account had grown by more than 10,000% And, though the second-place competitor was not even remotely close, Larry was still trading upto 1,000 bonds in a single day At this point, I went against my ownfinancial interests and called Larry to suggest he throttle back his trad-ing I told him that it was crazy for him to continue to jeopardize hisamazing accomplishment He was paying me a tremendous amount incommissions every day and if he just sat on the account until NewYears he would still have a landmark finish and achieve notoriety bothfor himself and the World Cup

Larry replied calmly Joel, he said, I cant quit now Im up over amillion I have to see how far we can take this thing I could not arguemuch after that He is a trader And traders trade Its as simple as that

Sure enough, over the next several weeks in September Larry doubledhis account He was up over $2 million when the stock market crashedin October 1987 Larrys account came tumbling down with it Remark-

ably though, his account dipped below $1 million for only a few daysHe made a nice recovery and finished with an astonishing $11-milliondollars In this book, Larry discusses the 87 victory for the first timein detail I think youll be fascinated to explore the emotional side ofthat wild ride with him None of us will ever forget 87 Thanks for thememories, Larry

Although no one has ever come close to accomplishing what Larrydid, I have seen some remarkable traders follow in his footsteps I dont

know if anyone will ever blitz the field like Robert Bloch did in 98 and99, posting five top-three finishes in division competition And I thinkit may be a while before anyone accomplishes what John Holsinger didin 2002, finishing first and second with separate accounts that appreci-ated 608% and 304% respectively But the fun part is you reallyneverknow Out of left field, another unknown trader will post anotherremarkable finish using his own unique methods, from which we can allstudy and learn

Over the past 20-plus years, there have been competitors from allwalks of life, trading a wide range of markets in a variety of ways How-ever, they typically fit into two main categories: Technical traders whoanalyze historical price data to develop systematic strategies, and funda-


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12 Secrets of The World Cup Advisors

mental traders who base their trading decisions on the analysis of under-lying factors effecting supply and demand On balance, I have found thatthe systematic traders have been more consistently successful in World

Cup competition, although there have been a handful of exceptions Ihave observed that when system trading is practiced properly, it takesmuch of the emotion out of trading and eliminates traders two worstenemies: Fear and greed

System traders expectto incur drawdowns (losses experienced by theaccount over specified periods of time, from equity peaks to equity lowsprior to recovery), and they realize that they may occur before profit-ability is achieved When using fundamental trading techniques, it isoften difficult to pull the trigger after incurring three or four consecutivelosses Following a system, in which drawdowns are anticipated, can helpeliminate this hesitancy System trading boils down to one cardinal rule:Plan you tad and tad you plan The system-trading winners ofthe World Cup Championship have proven that this simple adage can paybig dividends

Part of the beauty of the World Cup Championship structure is that

all techniques are welcome and all traders begin on equal footing Lastyears defending champion has no advantage over a first-time entrantIm proud to say that this format, based on our daydream in 1983,

has become the gold standard of trading Competitors can now com-pete in separate divisions for futures and futures/options, stocks andstock/options and forex trading Entrants can choose from discountsand premiums offered by many respected sponsors, including industry-leading publishers and providers of trading software and data transmis-

sion The World Cup concept has even been licensed in Japan, wherethe Robbins-Taicom Japan World Cup Championship of Futures Tradinghas been thriving since 2001

Around early 2000, however, I realized there was an ingredientmissing from the World Cup formula The talented individuals wehad identified needed a platform from which they could share theirexpertise with a trading community beyond my own brokerage clientsAnd again, from that small gem of an idea, a large multi-faceted planemerged

First up was a web site devoted to the World Cup Champions Withthe help of Chuck Frank, an old friend with nearly 20 years of experi-ence as a broker and trader in the 30-year T-bond pit at the Chicago


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Board of Trade (CBOT), I launched WorldCupAdvisorcom The prem-ise of this site is to showcase select trophy winners from the competition,by broadcasting their actual trading activity in real-time In other words,

past World Cup Champions showwhatthey do, howthey do it, and howthey make fast, decisive moves live for all to observe and learn fromWe were lucky enough to enlist the support of many of our most expe-rienced traders, including the aforementioned Williams, Bloch, Hughesand Mills Im very proud to say that the nucleus we established at thesites inception is still largely intact today And, along the way, weveadded a few fresh faces and expanded the roster to include many non-competitive status advisors, such as Austin Passamonte, whose tradingexpertise has been established outside the World Cup arena

On September 18, 2000, Larry Williams funded his first WorldCup-Advisorcom Live Update account, and we were off to the races Cur-rently, we feature dozens of Live Update accounts, which allow oursubscribers to monitor and learn from a variety of trading styles andmarkets Our traders are baring it all You can actually view the fullaccount activity of these champions their orders entered, open posi-

tions, closed positions and commentary and, thereby, gain insightsand expertise by learning from some of the best in the businessAnd now, with this book, the exemplary ideas, concepts and meth-

ods of this truly world-class collection of traders can be shared with aneven wider segment of the trading community After watching tradersfrom all walks of life compete against each other for so many years, Ivenoticed certain characteristics and habits that are common to our cham-pions I feel that any individual investor or active trader can learn some

valuable lessons from both the victories and the failures of the WorldCup Champs The missteps theyve made along the way are often uni-versal to all traders But the moves they took to rebound from them andtrade their way to victory are so powerful that virtually any investor ortrader will benefit from these insights

Nearly all the World Cup Champs learned their most valuable lessonsfrom their biggest mistakes Rather than packing it in or becoming dev-astated by their losses, the champions typically step back, analyze theirmissteps and use that knowledge to make sure it never happens againIn the first section, John Holsinger and David Cash provide their ownunique accounts of the best lessons they learned by losing and theylost big and how they rebounded and ultimately posted spectacular


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returns As a long-time trader, I related to the experiences of Holsingerand Cash and Im confident you will, too

In section two, Kurt Sakaeda, Neil Peplinski and Chuck Hughes

outline how and why they developed their systems and reinforce theimportance of having such systems With the advent of the computer,Internet and fast and simple software programs, monitoring charts andusing technical trading techniques is easier and more effective than everSection three reveals unique technical approaches used by two of thechampion traders Section four highlights a professional advisor Aus-tin Passamonte who reveals his own unique swing trading techniqueswhich are ideal for todays short-term traders And finally, in the last sec-tion, the legendary Larry Williams opens up for the first time to discusscandidly how he achieved his astounding results in the 1987 World Cupcompetition, and how his trading has evolved over time Larrys honestand frank input is compelling reading for traders of all experience levels

As I embark on yet another year of World Cup competition, I remainas fascinated by and passionate about the trading markets as everTheyre enormously challenging, yet rewarding on many levels Theyre

volatile and unpredictable, yet they can be a powerful ally if you havethe necessary education and discipline It is my great hope that this bookwill provide you with both I invite you to sit back and read the intrigu-ing perspectives of these notable traders Each has valuable insights thatcan help you shape your own trading style

Joel Robbins,

President, Robbins Trading Company


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Looking Back at

Larry WilliamsLegendaryPerformance

In the world of trading, I dont know if there will ever be another

Larry Williams His performance in the 1987 World Cup Cham-pionship of Futures Tradinghas become legendary an 11,376%

tun on his trading account As with every superstar or titleholder,Larry has become the one to beat So far, no one has been able to accom-plish that Perhaps one day someone will

But his numbers alone dont make Larry unique As someone whoknows Larry well and who was in constant contact with him during

his World Cup heyday I can tell you what makes Larry a true legend:his dedication and his drive to test himself, even in the face of toughodds, a deep drawdown or harsh critics

When Larry entered the competition, he was already an accom-plished trader He had already written several well-received books onfutures and stock trading, and he was a popular speaker on the semi-nar circuit The World Cup Championship, however, provided him witha very public arena in which to test his trading prowess What happened

next is history: He funded his competition account with the minimumrequirement of $10,000 on December 15, 1986, and began trading inearly January from his office in Solana, Calif On December 31, 1987,his account balance had ballooned to $1,114,607

These few statistics hardly tell the story, nor do they explain whatmakes Larry unique among traders Along the way, Larry had taken hisaccount to a staggering $21 million dollars Anyone else would havestopped trading Thats what I advised Larry to do Actually, I thought

he was crazy for notstopping But in his mind, traders trade

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So Larry kept trading, only to have his account plummet by $14-mil-lion to below the $1 million mark Very few traders could ever recoverfrom that kind of loss both financially and emotionally But not Larry

He kept on trading, and ended the year with his unbelievable resultTrading big sets you up to be a target Unfortunately, here Larry was

no exception Rumors abounded and critics tried to undermine his per-formance He stood up to the scrutiny and to the test of time In theend, pure trading talent, discipline and a wild trading ride won out

Im honored that in these pages, for the first time, Larry has agreedto discuss the peaks and valleys of his historic accomplishment and thetoll it exacted on his emotions and personal life In a lively and can-did interview with Chuck Frank, a CBOT T-bond broker from 1981to 2000 and Managing Director of WorldCupAdvisorcom, Larry dis-cusses the wins, the losses, the critics, and the importance of alwaystrading

A Conversation with Larry Williams 191


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C h A P T e r 9

Huge Wins, MonumentalLosses, Answering the

Critics, and Always Trading A Conversation with

Larry Williams

I n t e r v i e w b y C h u c k F r a n k

CF: Larry, by 1987 you were already one of the best-known futures tradersin the United States What motivated you to put your reputation on theline by entering the World Cup Championship of Futures Trading?

LW: I actually didnt tink I ad a good noug putation. I

tougt popl pcivd m as sombody wo just did sminasand wot books. T umos a always tat guys lik tat a notfo al, ty cant tad, ty just wit books. And so I tougtmayb I could sow popl tat I can tad a littl bit.

Before entering the competition, did you consider yourself to be a topfutures trader?

Ya, but I can av a lag go. You know, you always tinkyou good. You av to av an go to tad, spcially to tad insiz. You av to b cautious, but you cant b timid. Popl wo aally timid a nv going to stat tading 20, 30, 40 contacts. Itink you av to b a lgnd in you own mind to b a big-timtad. You av to ally bliv in youslf. Is tat gotistical o con-fidnc? I dont know wat it is, but you av to av it, I know tat.

You must have had a target in mind when you entered the competitionCan you put a number on it?

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In my mind, I was tinking if you could tak $10,000 to$80,000$100,000, tat would b ptty pnomnal. I ad takna coupl of $30,000 accounts to a quat-million dollas, but it was

ov a long tim piod, so I knw wat mayb could b don. Buttading campionsips a toug. If you not coct igt away,

you out igt away. And t ot ting is t vagais of t ma-ktplac. Som yas you s diffnt sults in tading campion-sips tan ot yas, and it isnt t tads. Its t makts. Som

yas t makts psnt a lot of oppotunitis and som yas tydont. And tats all t is to it.

Was there flexibility in the system you were using during 87?

Ts always flxibility in most tading systms. I ad just dis-covd, mayb two yas ali, somting now known as volatil-ity bakouts. And I was using volatility bakouts pimaily in tS&Ps and t bond makt. W knw tat if t makt movd offsom pic point opning, clos, avag, midpoint, ig, wat-v tat t mov usually continud. W cam up wit t ov-

all numbs to us, basd on wat pcntag of volatility t angwould b and citia lik tat, and w pogammd it on ou ownsoftwa to s if it wokd. W found it was woking ptty wll.

How was the system run?

W did it by and. It was udimntay. TadStation didnt xist;t wasnt anyting as nic and as simpl as wat w now av.

On January 6, 1987 you closed out a small loser on a one-lot T-bondtrade After 10 trades you were still in the red by a few hundred dollarsNot exactly an auspicious start Did those first few trades concern you?

You always pay attntion to vy tad. But my nti tading lifI avnt bn concnd about my past tads, bcaus past tads donot pdict t futu. Ts a gat xampl of it, in fact, bcaus if

you would look at t fist tads youd say, O, tis guy is going toblow up; wont st wold cods tat wont b batn. So t pastdosnt pdict muc of anyting. You cant say O, my gos, I ada losing tad! Of cous, you pf not to av loss. Did I wantmy fist tad to b a winning tad? Ya, I did. I didnt gt it, but



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I was still in t gam. Bcaus I was using a mony-managmntfomula, I knw I wouldnt gt blown away too muc. I knw I wasgoing to b in t gam fo a wil, vn in a wost-cas scnaio.

In tospct, wats ally intsting is to go on t Intnttoday and find popl wo say tat t contst was iggd, tat Iad on account I put t winning tads in and on I put t los-ing tads in.* Wll, s poof positiv. Wy would I want to avlosing tads to stat t campionsip wit? ealy on is xactly

wn youv got to av t most mony. Youv got to gt a jumpon vybody in a tading comptition, but lik I said you cant lookback. You can study fom you os, but you cant av you osbcom you focal point bcaus otwis youll cok.

[*These rampant rumors precipitated a Commodity Futures TradingCommission (CFTC) audit in 1988, which identified no improprieties.]

You then hit a streak that may well have been the turning point of youryear You reeled off eight consecutive winners, trading no more than asix-lot of T-bonds or S&Ps, to move your account ahead by more than

$23,000 and give yourself some breathing room Had that early streakgone the other way, your year might have been over

Su, its always tu, wat if I ad a bunc of losing tads? Buta tads supposd to av mo winning tads tan losing tads.So vy stak is t combination of wat t makt psnts and

wat t tad can do wit it.

Once a trade was entered and your stop was in place, would you hangaround the office all day monitoring every tick of the market?

Ya, back tn I was usually watcing t makt all t tim,it was igt in font of m. I was t fo almost vy tick.

Was there any intra-day activity that could occur to prompt you to over-ride the system once a trade was initiated and exit prematurely?

I dont know tat I did. T systm tads w mcanical s a buy od, s t stop, s w to gt out butt w also tings tat would appn wit inta-day maktindicatos along t way tat would giv m buys and slls, and Iad to b t to watc tat. I was looking fo ctain indicatos to



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tak plac so tat I could do ctain tings; tats wy I was lookingat t scns all day.

Did you make any impulse trades that were not indicated by the systemor by intra-day indicators?

Im ctain I did, I man w all do. I would li if I said I didntdo som on impuls.

In early March came an incredible stretch of 19 winners in 21 trades,during which your account value appreciated by more than $100,000

You had moved your size up to 20 and 30 lots Can you explain themoney-management technique you employed?

I was using somting calld t Klly fomula tat ralp Vincad populaizd. I found t Klly fomula in a littl blackjackbook, and ralp and I statd fooling aound wit it and it ld tot wol ting of mony managmnt. Actually J.L. Klly J. oigi-nally dvisd t fomula fo t flow of lctons toug cicuity.

But said you could apply it to blackjack btting to masu isk/wads, too, and tn w applid it to tading. Its vy wild and itwill xponntially incas t numb of contacts you tadingwn you winning, so you s tat w stppd up fom 1 lot to 30lots apidly. But wn you los mony youv got to stp back down.I us a vaiation of tat in my own tading today.

Can you explain the specific formula?

Lts put F as amount of capital to tad. T amount of capi-tal quals t payoff atio tats t isk/wad atio plus 1,dividd by pobability t systm accuacy minus 1.

So F 5 (payoff atio 1 1) 4 (pobability2 1)

I did som tabls on it. Lts say you systm is 40% coct and asa 2.5 isk/wad atio, youll us 16% of you mony. If you systm

is 63% coct wit a 2.5 isk wad/atio, youll us 55% of youmony on vy tad. So it vais by accuacy. Its a matix of taccuacy vsus a isk/wad atio.



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Towards the end of March 87, you took a hit of nearly $43,000 on a50-lot bond trade But you came right back and made $220,000 on yournext seven trades Is it hard to get back on the horse after a loss of that

magnitude?

I considd it sot of a dnt. At tat point, you kind of a littlgoofy in you ad bcaus youv sn ts ug quity incass. Andsuddnly I alizd I was doing somting tat adnt appnd bfo.Tis is a bad analogy, but in a vy small way I can undstand watBay Bonds and Mak McGui av gon toug. I know its totallydiffnt, and ty so muc gat in wat tyv don tan Ill v

b, but I can lat to t sns tat, hy you doing somting tatsistoic. And ts a lot of xcitmnt and pid in saying, Ya,somtings going on tat Im almost not in contol of myslf.

I ally flt tat way a lot. Its almost lik I could walk on t watsof t commodity makts bcaus I was so in sync wit tm. You

just in tat zon. And tn wat catcs up to you is tat you appantsuccss bings out a lot of citics. A lot of popl a looking ov yousould, and tats pssu. Iv always ad tat bcaus Iv bn in

t public y. I ad always ad it bfo, butneverto tat xtnt.

How did you know that people were watching what you were doing?

Popl fom t floo would call wn ty saw I was suddnlytading lag lots in wat ad bn a small account. Popl adfound out wat was going on. T umo got aound and t wsom popl wo said tat it was iggd, and som popl wo said

I wasnt any good bcaus I was just tading bonds and S&Ps. Soyoull s tims tat ya w I tadd (soy)bans and (pok)bllisand stuff, just to say hy look, I am good; I can tad wat I wantto. And dan it all, Im gonna do it. And so som tads in t

w simply to spond to citics. It ad noting to do wit allymaking mony. It was to say, Look, you giv m a makt and if Imfocusd I can tad tat suck. And so som of tos tads wally fo tat pupos only.

And tn suddnly I tougt, Wll, tis is cazy, Im tading towin a campionsip and cat istoy, not to ply to my citics.But you gt caugt up in t ply to you citics. And ty vy-

w, and I dsvd a lot of it, too. I bougt it on myslf.



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Why do you say that?

Wll, I dont know tat I av an obnoxious psonality, but

mayb its a flamboyant psonality wn it coms to tading in tmakts. And Iv always tid to spaat myslf fom t cowd alittl bit. Wn you do good sac and good witing and goodpsntations, it daws out citics. Swasbuckls av popl wo

want to swasbuckl against tm.

After closing out a 105-lot winner of $192,000 on April 29, your accountbalance was a whopping $872,000 You had made two-thirds of a mil-

lion dollars in 20 trading days and had a lock on first place in the WorldCup competition Were there any thoughts about cashing in your chipsat that point?

Ya, t w sval points along t way aly in t yaw you saying, Wll, you know, Iv don it. But w ad alot of tim lft, and it would av flt ptty ollow to say, Wll,all I ally did was gt a jump on ot popl , tn I took my

mabls and wnt om. I dont tink al mn do tat.

Was there anybody who was giving you any kind of run for your moneythat year?

O ys, t w. T w a bunc of us in t pack at t$40,000 to $50,000 lvl. T was pssu. I was woid about

w I was: scond, tid, fout, scond, tid, fist, scond. It was

up and down t fo a wil.

By the end of May, your account balance had been more than choppedin half You had stepped up your size and 100-lots were common in boththe bonds and the S&Ps, but the magic seemed to have worn off Howwere you sleeping?

Sam as always. Tis is wat Iv don all my lif. Som popllook at tis kind of tading and ty go, O my gos. Wll, Iav tat sam aw fo a mcanic, bcaus I dont know ow tofix mcanical tings. Wn sombody bings in a junk ap I say,No way t guy can do tis, and pais it. But tats wat sould do bcaus tats wat is ca is and livs wit tat.



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And tats wat Iv don tougout my ca, so its no gat skillo anyting of gat aw. Its just wat Iv don all my lif. Iv adups and downs of ug magnitud in my tading and so its noting

nw. Its t lif of a tad.

In June, you started the long climb back You made 38 round turns thatmonth, averaging 50 lots per trade, and clawed your way back to nearly$780,000 by the end of the month The trades you mentioned in otherproducts Euros, T-bills, gold, silver, cattle, pork bellies, and later SwissFrancs and coffee were starting to appear In addition to making thestatement that I can trade any market, did you see some good oppor-tunities in those other markets?

rsponding to citics was t main ason to b in t otmakts. All ts umos w going aound saying I can do tisand not tat. Gos, tat was 15 yas ago, and Im ctain I wasptty cocky, mayb vn an obnoxious pson, bcaus succss kindof maks you tat way. You know, suddnly you doing tings tatavnt appnd bfo.

Although the trades you made in other markets were on balance margin-ally profitable, they sidetracked you from focusing your full attentionon your main trading targets of bonds and S&Ps Do you regret makingthose trades?

O, I cant gt t past. If you in tis businss of spculat-ing, you nv gt t past. T past cant av you. I dont look at

t past; I dont ca about it. T past is ov, its dad, its istoy.

A losing trade of $360,000 on a huge 237-lot in the bonds late in Julywiped out most of your profit for the month Three more losing tradesfollowed quickly, and you had lost close to half a million dollars in oneweek How were your nerves holding up?

It didnt fl al good. I tougt mayb I ad lost t touc.

Were you thinking that maybe you never had it?

No, I dont tink tat as muc as I was tinking, Iv bntoug tis bfo. You know, Id sn ot swings lik tat bfo.


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Id said to myslf, Tis kind of ting appns. I scwd som tingsup . Can you gt back on tack, Williams? You gotta gt back intat goov. Wv tat flow is, you gotta gt back in it.

When you hit the skids with a system youve developed, do you wind upsaying, The system lost money today or do you say, I screwed up andlost money today?

Bot can appn. You can scw up and los mony bcaus youdont follow t systm o t systm can los mony. You notimmun fom it. evn if you following t systm and you

not scwing up psonally, its always going to b an up and downbusinss. If you looking fo pfction and mony vy day, youin t wong businss. Tats not wat tis is about.

In the extreme volatility of August 87, you reverted to your originalMO, limiting your trades to the bond and S&P pits On the strength ofwinners of $130,000, $200,000, $114,000, and $208,000 all in thebonds you finished the month with more than a million dollars in

your account You had overcome the big setback and were finally abovethe seven-figure mark Why not stop and leave well enough alone?

Gd is a disas of t Wstn wold. Plus, again, I was in atading campionsip and I wantd to still pus t pdal to tmtal. T point wasnt to gt to August o Octob; t point wasto gt to t nd of t ya. And ow would it av lookd if I tookmy mabls and walkd away aly, spcially at tat point wit all

of t backgound nois aound Lay Williams? In a way, I cannotxpss to you wat it was lik. Popl would call m and tll mabout t umos and complain about tings to m. T was a lotof attntion to it. I figud in my mind tat I was going to go to tnd of tis ting. I was not going to walk away bcaus tat wouldb on mo ting fo t citics to aangu at O wll, quitaly.

And I also didnt know in my mind ow fa I could tak it, wI could tak it, wat I could do wit it. T ll wit all t cit-ics and stuff, wat could Lay Williams do? I knw I ad my acttogt and tings w going wll. Wat could I do? I wantd toknow tat.



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With 100- and 200-lot trades common in your account, the quality offills in wild markets must have been a huge issue for you Were you sat-isfied with the bond and S&P pit brokers who were selected to fill for

traders in the competition?

Wll, ys. I was also managing accounts at tat tim fo rob-bins (Tading Company) as wll as anot fim. Jol (robbins) adpickd som popl tat tougt w ptty good on t floofilling ods, spcially in siz. Id gon to Cicago, mt wit tboks, talkd wit tm. I flt I ad good popl assisting m tofill ods.

Amid tremendous volatility, you stepped up your size with bond tradesin excess of 400 contracts in September Your $10,000 stake had swelledto $2,042,967 Any thought at that juncture of putting the flag on topof Everest and saying Here it is?

No.

Was there any threshold you could have crossed that would haveprompted you to stop trading? Three million? Five million?

No, t was no numb, no dolla amount at tat point. Tgoal was gt to t nd of t contst and lts s w you a,Lay, wil xposing youslf to a lot of isk along t way. It wasa yalong tading campionsip and al popl stay fo t fullid.

And to tis day, tis is t fist tim tat Iv v fncdtos tads of 87, t fist tim I v ally talkd about it. Idcidd wn I was toug tat I didnt want to look at it, and Iavnt lookd at it sinc. To m it was lik, hy, you know, I didit. Im toug wit tat; go on to anot ting in my lif. I gussIm not big on looking back.

Did you have a thought as to the maximum quantities you could trade

without disturbing the market?I flt I could tad up to 300 S&Ps, and I could pobably tad

5,000 bonds at tat point witout distubing t makt. But tatdosnt man I was igt. (Laugs)



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In the plunge of October 87 you got hammered Two trades alone cost$800,000 The $2 million milestone was in the rear-view mirror Whatwas your frame of mind then?

Duing t big quity dawdown, I was actually in Afica on asafai. T tading was lft to a coupl of guys in my offic bcausit was automatic. And w unfotunatly sold bonds, and in t fligtto quality of t cas of 87 bonds gappd up. I didnt av a clu

wat was going on at t tim, and by t tim ty got out w ada bit of an quity dip t tat you alludd to.

Were you literally on safari?

Ya, I was in Knya. W w on ou way to t Mt. KnyaSafai Club and t littl guy wo cam to pick us up wit tis two-sat plan said, O t stock makts casd, t stock maktscasd. I said, Ya, I know, it was going down wn I lft. And said, O, no, its down big tim now. Wn w got to t safaiclub I could a popl say, Its down 200 points and 200

points back tn was down a lot. Tn ty said, Its down 300,and tn, No its down 500. Finally I ad sombody say, Itsdown 600. And at tat point about alf t oom got up and madpon calls to Amica to s wat ad gon on. Wn I found out

wat wnt on, I said, O, I wond wat tos guys did? A wigt o a w wong? W could av bn igt, too, you know.But w w wong.

You didnt check to see what your positions were?

No, I did not know. I tougt, Wll, I know t makt wasdown 600 points. Now Iv got an option . I could find out if Imlosing o winning o I could njoy t safai. If Im winning Im goingto b ally wappd up and I wont njoy tis, and if Im losing fosu I wont njoy tis, so you know wat? Im not going to find out.So I didnt av a clu wat was going on. Intuitivly, I didnt tink it

was good, and mayb tats wy I didnt call. But I continud on tsafai, and two days lat I got it wit malaia and tat was pttysv. Gtting malaia was a lot wos tan t quity dip w ad. Mymind ally wasnt too concnd about tading at tat point. It was



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just lik, I gotta gt ov tis to gt outta and tn com back toAmica. I ad no stngt at all fo t fist fou o fiv days.

Did you ever total up your losses on Black Monday that October?

O, I dont know, youd av to look at it. Again, you know Idont look back. I ally lik wat Satcl Paig said: Dont lookback. Somting migt b gaining on you. I nv ally lookd att numbs, but I know it was lik a million bucks o somting.Sombody pointd it out to m.

Did the pressure of these huge swings spill over into your personal life atall?

Su. Bcaus I ad way too muc mony on vy singl tad,I tink tat my motions w affctd and tat I pobably wasnta paticulaly plasant pson to liv wit. Im not manic-dps-siv, but it dos tak you in tat diction wn you mak a quatmillion bucks on day and tn los a quat million t nxt. My

motions fluctuatd and I tid to contol tm so it didnt wasov into my psonal lif, but it did. I tink my family ptty mucundstood wat was going on.

Even after that debacle, which included a $638,000 loser on a 400-lotin the bonds, you never missed a beat Your account continued tradingwhile you were recuperating in Kenya, and you picked up the order-entryyourself when you got back home You traded to the wire December

28th, 29th, 30th, and 31st

Ya, I flt tat I ad an obligation to do tat. Som popl intading campionsips gt up to som point and quit, and ty may

win t campionsip o sombody may snak up on tm. Obvi-ously, nobody was going to snak up on m at tat point. But Istill flt t was an obligation to continu doing wat I ad don and tat was to tad and sot of tat was pulling up sot

and not walking t walk of a al tad.

When you closed out the last trade of the year on December 31 andposted the final account balance of $1,114,607, were you feeling moresatisfaction or relief?



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Tats a ally gat qustion. It was lif tat it was ov. I adbn und tis micoscop fom vybody witin t businss andit was nic to suddnly b out of t limligt and off stag. It was

ally nic.

You have not traded in the World Cup since the historic 87 perfor-mance But you did commemorate the 10th anniversary of the victory ina dramatic way Can you talk about that?

Wll, ya, again mayb on of my waknsss is tat I spondto citics too muc. But t umos w still out tat I ad iggd

t tading campionsip wit robbins Tading Company, wicmaks littl sns bcaus ts a winn vy ya. Ty dont avto cat a winn; ts always a winn. But myopic popl dontundstand tat, and tat was boting m. And tn som poplsaid, O, s a as-bn, s wasd up, and so I tougt, Wll,lts do somting on t 10t annivsay; Im going to tac onof my kids to tad. And so I taugt on of my daugts (actssMicll Williams) a littl bit about tading and I said, hy, if

youv got t mony, wy dont you s wat you can do? And ssaid, OK, lts do it, Dad.

Was the $10,000 stake her money and her risk?

Ya, s ad don so many TV sows and movis and s wasmaking ptty good mony fo a 16-ya-old kid. Actually, s wasmaking ptty good mony fo an adult.T intsting ting about

Micll was tat wn s won, a lot of popl said, Tis is bogus, dad was doing t tads, o how can s tad; ss a 16-

ya-old kid? Kids cant opn up commodity accounts! Popl wwong on bot counts.

Micll ad bcom lgally mancipatd to sign a contact foWan Bots fo on of t movis s did, and so s ad lgaligt to contact. S was nting t ods slf, but tn aftt o fou monts in t comptition, Dawsons Ck (t TVsis) bgan, and s was gtting cast calls at wid ous lik toclock in t moning. S said, Dad, I just cant do all tis. AndI said, Wll, you know wat, just call Gn (Payn) at robbins andtll im to follow t otlin. So s calld Gn and told im to



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just follow t otlin wit tis mony managmnt ting w adtalkd about, wic was on contact fo vy $10,000.

Michelle ran away with the 97 title with an even 1,000% return, add-ing $100,094 to her bank account Any other family members we shouldknow about?

You know, ty dont want to tad. Nobodys ally intstd.evn t actss-daugt dosnt tad anymo.

Under what circumstances would you consider participating in the World

Cup Championship of Futures Tradingagain?

Im tinking of doing it again soon. T will b umos againon t nxt big annivsay (t 20t in 2007), but I dont know if Ican wait tat long. But its ad to do all t lctuing and tacingI do and still tad tat aggssivly. You av to ally b focusdto do tis. Id lik to do somting tats ally flamboyant, at lastvy 10 yas, to sow tat Im still aound. Mayb Im just looking

fo an xcus . Wll s wat appns.

Would you start with the minimum of $15,000?

Ya, stat small. Tats t toubl. A lot of popl figu tst old adag in Las Vgas: To win big you gotta bt big. Totally

wong. You know ow t ous taks you mony. You want tostat small wit $15,000. You can tak tat somplac, and wat can

you los $15,000 at t wost? Can you mak tat back? Su, ina atbat. But if you stat wit $150,000 o $200,000 and dumptat, tats ad mony to gt back.

Is there anything that people can learn from 87 in terms of systems trad-ing and living through drawdowns?

Ya, ty can lan a coupl of tings. Ty can daw fom tfact tat wn I wnt toug down piods, I didnt walk away; Ididnt lt t vnt gt to m, I continud doing wat I was doing.I was way ov-lvagd and ty sould lan to do lss tan watI did. Ty sould also aliz tat sombody can sow you a tack


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cod ypottical o al-tim tading and t uman mindjust buzzs toug it but dosnt undstand t motions of livingtoug two o t losing tads. T fact tat my nam is on it o

a systm as appad to wok in t past, guaants noting. Tfingpints of t past a nv sn in t futu.

If you compete again, what would the primary motivation be?

To win. To compt and to sut popl up. Itll sow tat Im stillaound and I can still tad. T citics and t naysays out ta not just citics of m, ty citics of tis industy, ty say

vybody loss tading commoditis. Wll, Iv sown on a som-wat consistnt basis tat tats fallacious. And you know I dontmind sowing tat and doing it again. And so, I nd to find somintsting way of doing it.

Do you feel in your heart that you can replicate what you did in 87?

No, bcaus tat was a combination of a vy low magin and a

vy wild makt. If tos conditions com again, vn tn I dontknow if Im going to b skilld noug to do it. Mayb I am wasdup. You know, tats always in t back of my mind. At 60 yas ofag you say, hy, it could b my btt days a bind m, and so

you av to wond about tat. But you av to av t igt con-ditions. Can I go in and win a contst? Not at will, but you know, Ican compt, I can gt in t. I migt b fist o scond o tid,but Id lik to tink Id b in t top backt. Win? Mayb, mayb

not. But will I sow tat I can do it? Ya. And tats t goal ally,to sow tat it can still b don.

I would ally lik to ncouag popl to look at t campion-sips, all of tm, robbins as wll as t ots. S wat typ ofstatgis win ts tading campionsips, so you know w toinvst you tim and you own sac and ducation. Tats citi-cal. W can lan so muc fom t styls tat win ts campion-sips. Bcaus t a lot of mtodologis out t tat pupotto mak mony, so lts look at wic ons win t tading campi-onsips to s wic a t most ffctiv.



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In your opinion, will someone surpass your 11,376% performance inthe next 20 years?

I op so. I dont s wy not. W know mo about t maktsnow tan w did tn, and w undstand tings wit mo know-ldg, so opfully sombody can bat t pants off m.

Do you think that a top finish in the World Cup Championship, in and ofitself, qualifies an individual to give advice to other traders?

I tink it nds to b spctd. Any of ts guys wo av atop finis did somting tat no on ls did tat ya. In tis busi-nss, you lan to spct succss.

Is there any futures trading championship in your mind thats compa-rable in prestige and magnitude to the World Cup?

No, t Robbins World Cup Trading Championship as t tackcod. Its catd som gat tads and a lot of cas. I tinktat if a guy o gal tinks tat ty good, ty ougt to op on

tis ting to tst tmslvs. It will bing out tings in you; it willmak you gat tan you a. I know t Robbins World Cup Trad-ing Championship mad Lay Williams a diffnt pson. And Imctain tat its don tat fo all of t winns. Not only gttingto know Jol and t popl at robbins, but in tms of you ownsns of youslf. You dont av to win; I tink just bing in it willcang you ability to tad.

What did it specifically tell you about yourself?

Tat mony managmnt is so citical. Tat I was still vy inad-quat in a lot of tings.

You have a million reasons to feel quite adequate about 1987

T you go.


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