Ep. 1289: Larry Williams Redux with Michael Covel on Trend Following Radio
May 31, 2024
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Larry Williams, a prominent figure in the trading and investment community, shares his insights with Michael Covel. They dive into the chaotic yet humorous experiences at a Beijing conference and the challenges of trading, including IRS audits and regulatory concerns. Williams reflects on his rural roots, political aspirations, and the trust erosion in commodity markets. The discussion emphasizes the importance of simplifying trading strategies for resilience and personal freedom, showcasing the lifestyle that successful trading can offer.
Larry Williams emphasizes the importance of cutting losses and maintaining strict risk management for successful trading.
The evolution of technology in trading necessitates adaptability, but human emotional patterns in market behaviors remain constant.
Williams' libertarian views on limited government reflect his belief in personal responsibility, influencing both his trading and life decisions.
Deep dives
A Humorous Encounter in Beijing
During a speech in Beijing in 2015, a trader recounts his amusing experience of dining with Larry Williams and a local event organizer, who was originally a dentist but had transitioned to hosting investing conferences. The dinner featured unfamiliar dishes that included tripe and intestines, leading Larry to express dissatisfaction with the adventurous menu. Following the meal, the guests were taken to a picturesque park, where the speaker faced a sudden need for a restroom, resulting in a comical yet uncomfortable situation. This light-hearted narrative sets the stage for deeper insights into trading and investing philosophies shared in the episode.
Timeless Wisdom in Trading
The conversation highlights Larry Williams' extensive experience in trading and his belief in the timeless nature of certain principles despite changes in market conditions. Williams reflects on his past legal troubles with the IRS, emphasizing that while the headlines captured a moment in time, the underlying issues stemmed from deeper systemic problems with taxation and governmental overreach. This narrative serves as a reminder that challenges in trading and life often require resilience and adaptability. The lessons derived from Williams' experiences are positioned as relevant and applicable regardless of the current market landscape.
The Importance of Risk Management
Larry Williams emphasizes that effective money management and risk control are crucial for successful trading, stating the mantra of 'bet small to win big.' He narrates how he managed to grow a trading account significantly, attributing much of his success to maintaining a strict risk management protocol. Williams advises that even with a high-risk tolerance, traders should not exceed a 4% risk on a single trade, ensuring they remain emotionally stable through potential losses. His insights emphasize that risk management is not just about calculations, but also about understanding and managing one's emotional response to market fluctuations.
The Evolution of Trading Markets
The discussion transitions to how the trading landscape has changed over the decades, notably with the advent of electronic trading and instant information dissemination. Williams explains that while technology has enhanced accessibility, it also alters the trading dynamics, requiring traders to adapt their strategies. He acknowledges that emotional patterns within trading remain consistent, regardless of technological advancements, as market behaviors still resonate with human psychology. The evolution of markets has created new opportunities and challenges, highlighting the need for traders to stay informed and agile in their approaches.
Libertarian Philosophy in Trading and Governance
Towards the end of the episode, Williams shares his libertarian views on government and how they influence his approach to trading and life decisions. He detests the inconsistency commonly found in political agendas and admires the steady principles of libertarianism, which call for limited government involvement in personal and economic affairs. This political philosophy aligns with his belief in personal responsibility and the necessity for a consistent framework in both governance and trading. Williams' reflections provoke thought on how personal values and political beliefs can intersect with professional practices in trading.
Please enjoy my monologue Larry Williams Redux with Michael Covel on Trend Following Radio. This episode may also include great outside guests from my archive.
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I’m MICHAEL COVEL, the host of TREND FOLLOWING RADIO, and I’m proud to have delivered 10+ million podcast listens since 2012. Investments, economics, psychology, politics, decision-making, human behavior, entrepreneurship and trend following are all passionately explored and debated on my show.
To start? I’d like to give you a great piece of advice you can use in your life and trading journey… cut your losses! You will find much more about that philosophy here: https://www.trendfollowing.com/trend/
