Lesson 1

How big money is made trading…building your foundation


This is not where you thought I would begin but it is the most important trading lesson of them all…it has built billion dollar fortunes


I call it "Gamblers’ Odds". The way most people begin to trade, because the odds, just like in a casino, are stacked against them by the way they choose to trade.

People seem to think there is some magical tool that overcomes the bad odds, but bad is bad. The wrong odds cannot make you a winner. In the next free lesson I will teach you one of my favorite indicators for trading. An indicator I have used for decades that will substantially improve your odds of winning.

But if I don’t get the foundation built correctly, it doesn’t matter what indicator you use, you will not succeed. Let’s put in the foundation now.

Trend is the basis of all profits.

If there is not a trend, whether it’s the price of Corn, Gold, or the real estate market, you will not make a profit. Because without trend there is no force taking prices higher where you can sell to take a profit.

Got that?  We must have a trend; no trend, no profit.

This means we need to understand what causes trend. Charts, as you will see in a later lesson help identify a trend but the more telling point is trend is a function of time.

The longer you’re in a trade the more potential you have to catch a large trend move. That is exactly why day traders lose 99% of the time. They do not have time on their side; they must get out by the end of the day which means they have just a few hours for a trend move to develop.

Thus, the only way a day trader can make a large profit…is to have a large position…because he or she can only capture small trends or market swings.

to time, but you are always catching small profits. Eventually you will be hit with one or two large losses that destroys your account.


My way around that is to have small positions and catch large profits.

There it is… That is the basis to the billion-dollar profits that have been made by fund managers as well as individuals. Just think about it…if you have a small position you can only have a small loss. Yet, you may have a large or substantial gain.  With the risk reward in your favor, you are no longer facing "Gamblers’ Odds". You turned the tables on the house; you are playing the game correctly. You don’t bet big, you bet small. Because our indicators tell us when most large moves will occur, you will be looking to capture significant profits to offset the small losses that we all have from time to time.

I practice what I preach. The following chart below shows a trade in the Japanese Yen I had in April 2011. The blue arrow shows where I got in. The red arrow where I exited the trade. As you can see, there was a profit of 4,662 per contract… I was long 16 contracts. My stop loss (which can seen by the green vertical line right below the blue arrow) shows I could’ve lost about $1,200 on the trade. My potential gain was four times greater than my potential loss…and even better…I was able to raise my stop up as the market started to move to the point I would not have lost anything…yet still had the upside potential. That is how it’s done.

Why did I have 16 contracts and not 1 or 5 or 55? That’s covered in my course in the money management section. As you may have read, in a real trading competition, I took $10,000 to $1,100,000 in less than a year of trading. That happened in a large part due to the money management strategy I teach.




The foundation for all of your trading success will come from this one rule. Do you have the correct risk reward ratio? Are you betting small to win big? If you do that, you turn the tables in your favor Then with correct trading skills and my good indicators, which I start teaching the next lesson, you’re on your way to success.

Our next lesson will introduce you to my COT Index…it’s an eye opener.


Good Luck & Great Trading,

Larry Williams

IMPORTANT:  The risk of loss in trading futures, options, cash currencies and other leveraged transaction products can be substantial. Therefore only "risk capital" should be used. Futures, options, cash currencies and other leveraged transaction products are not suitable investments for everyone. The valuation of futures, options, cash currencies and other leveraged transaction products may fluctuate and as a result clients may lose more than the amount originally invested and may also have to pay more later. Consider your financial condition before deciding to invest or trade.