Million Dollar Challenge by Magna Forex Signals

Warning There is a risk of loss in trading. Do not risk funds you can not afford to lose. These methods are educational only this is not an invitation to trade. You are responsible for your own trading decisions and outcomes..

All materials are copyright Larry Williams 2006 No permission is given to reprint or resell this material in any format. I have and will continue to bring suit against any and all violations of this and in any country of the world

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I have resisted electronic tvadingfor the last five years but finally, realizing that once again I wasplaying yesteryears game in sticking -topit trading sessions only. What turned the table was seeing one of my students make $10,000 to $20,000 almost night after night trading these markets. "What are you using", I asked him he told me just the stuff he had learned at the Million Dollar Challenge seminars with a few little twists of his own. There is actually a very long story behind all this that some day I will tell, but for now lets get to some basic points.

Lesson #I GLOBEX OR FOREX ? With more than a little help from my friends I got a Forex account set up and began trying to trade. It was so frustrating; price would go to or below my buy limits and I was not filled! I was long a 10 lot and prices rallied way past my exit and again, no fill! In despair I called up my student and asked if he was trading Forex his reply was classic, "I don't know what market it is, I'll find out and call you back" That ladies and gentlemen is how I became a Globex trader. The student taught the teacher who was very frustrated by Forex fills. My fills in the Globex have been right on the money, what I expect for fills. This is the market to trade, at least for me. I know, you say there is no commision charge in the Forex; I will counter there is a huge cost of doing business there---usually 2 pips or ticks per trade. "Free Commission" or "No Commission" screams the brokers Pop up Message. Wrong, real wrong.. .as daddy said when I left home, "There are no free lunches, son", the world has not changed. Well gang that's the first secret; ride the horse one can ride and that's the Globex.

Lesson #2 WHAT TIME FRAME TO TRADE Now here comes the next huge secret; what time frame is the best to trade? The chart below is a 30 minute chart of the Euro.. .I'd like to call your attention to how the size of the ranges go from almost non existent to very large ranges;

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TICK BARS TO THE RESCUE The secret behind the above chart is that it takes 700 ticks to form each bar.. .they are not based on time, 5 minutes, 30 minutes etc. This makes a huge difference in trading as you will see. I suggest the following size tick bars Y d 4 W rrercs %? QOB T\CLT

CHF700

BRITISH POUND BONDS EURO $

400 TICKS 350 TICKS 700 TICKS 900 T\L.~

%-rc\\~uu A 7% t p 500 If you want to trade more often simple reduce the number of ticks required to form a bar. All the charts I will'be using are tick bars, there is no time involved in the construction of these bars. If you want to trade more often create smaller tick bars and trade, accordingly, for smaller targets.

THE CORE CONCEPT "This is not rocket science" The central point of how I have made money trading these markets is to always be with the trend. This does not take any fancy math, complex rules or formulas. It is all about trend.. .in some fashion we want to follow the short term trend. Once in a trade we want to get out of it, even more so than we wanted to get in! There are several tools I use to give me the buy and sell signals. The two big guns are my Blast Off! Indicator and a simple Oscillator we affection ally call, "Williams Price Oscillator. Here are the formulas;

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BLAST OFF! INDICATOR X=l MovingAvg (Abs (Close - Open) , X Days) l MovingAvg ((True High - True Low) , X Days) * 100 This is simply the open minus the close of the current bar/ the true range of the bar to tell has what % of the range the open to close represented. Small values, less than 20, set up reversals.

b Upon close observation you will see that most explosive moves come when this index closes under 20% and most halts or stops of trend moves take place when the index closes above 75%. This gives way to our entry rules;

BUY LONG--When the i n d k 'crossesabove zero buy at the high of that bar plus one tick

SELL SHOR T--When the index crosses below zero sell at the low of that bar minus one tick

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WILLIAMS TRADE OSCILLATOR

We call this "The Blue Line". There is nothing else to it. The exact formula will not be given. If you are a Trade Station user I will get it for you in a locked up version. The reason for doing this is someone will steal this index; as you will see it is very good. I use the settings at 713 you may want to alter these as you see fit for other time frames and markets so that flexibility is there. This index tells us when the current trend or momentum of the market has changed. The rules to use it are very simple;

BUY LONG--When the index crosses above zero buy at the high of that bar plus one tick

SELL SHOR T--When the index crosses below zero sell at the low of that bar minus one tick

I do use some other "junk" in a very subjective manner. These indicators give me an idea of where price might go and are helpful in telling is the trend and can be used for trend changes but I do not have specific rules. Here is that stuff; WILHI

MovingAvg (Close , 3) + 1. (MovingStdDev (Close , 3 ) + Avg True Range (3)) / 2 WILO MovingAvgW (Close , 3) - 1. (MovingStdDev (Close , 3) + Avg True Range (3)) / 2 WILM MovingAvgMethod (AVGhlc , 3 , 1) These are merely averages I use to look at to get an idea where price may be headed, they can also be used for buys and sells but are not as mechanical as most my trades. WILHI creates a channel of highs, WILO of the lows and WLM of the mid price of the ranges. The short abbreviations are used so the values show on the screen.

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The art of the trade

...

You have the rules, but let me tell you it is not that easy; this is frustrating hand to hand combat at all times. You will miss trades, you will get slippage all sorts of things can happen. Most of the problems will be because you think you know what the market will do. You don't, the sooner you get over thinking you know anything the better off you will be. Really. Since we are always buyinglselling on tick past a bars extreme the natural question is can you wait for a pullback? Yes you can, I have done that lots of times. My estimate is that 50% of the time you can get a 2 tick better fill from the high of the bar, a net gain of 3 ticks, Yet, today, I missed two great trades waiting for a pullback, in other words 50% of the time you will be frustrated about missing profits.

...TRADING TACTICS.. .. TARGETS---I usually place my target order at the sane time as my entry as I have seen days when price blast up to the target, the reverse, so I have learned to have resting target orders. MAKING IT BACK---You will have losses. Do not try to make all your money back on the next trade by doubling the number of contracts. You could start with a 5 lot, if stopped out do 6 contracts on the next trade. If that's a loser go to 8 on the next and then lO..once at 10 stay there, do not increase anymore. GOAL BASED TRADING---I set a goal for X$ per day. Once I get there I stop trading. I turn off the platform. It seems the longer in the day I trade the higher my chances for a loss and the more mentally fatigued I get resulting in more difficult trading. TIME O F DAY---For sure I will stop trading with 90 minutes to go in the session as I may not be able to get out thus incurring overnight exposure. It seems most my money has been made early in the sessions.. .also that the initial direction of the early TICK BARS becomes the trend for the day most of the time. A good time to stop is 3 pm EST. TREND BIAS---Should you want to be very careful of trade selection using BLAST OFF! Only trade in the direction of the WTO trend. PFUCE TARGETS---I'm usually trading for just 10 ticks but this is up to you I want to have larger targets. I look at the channel lines for targets as well. BACK TO BACK SIGNALS-It happens; you go long, are then stopped out and into a short or opposite trade. If so I try to sneak a few more ticks out of that trade. Also is stopped out there is a great tendency to want to reverse. I think it's better to take your beating and wait for the next trade. PICK AND PAY-Do you know the grocery store called Pick and Pay? That's a great name to keep in mind while day trading.. . if you think you are smart enough to Pick the winners from the losers.. .you will Pay for it. I can't, you can't.. .just take the trades. Stop thinking, be happy. START STRONG--FINISH WEAK-I usually have large positions on my fust trade on the notion if it wins I've jump started the day, it if loses I have all day long to get it back.

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LET'S LOOK AT SOME TRADES..

All trades discussed here are actual trades I really took, as I really trade! Keep in mind there are only two things to look for; Blue Line Crossings and Blast Off! Setups. Simple enough?

STOPS FOR BLASTOFF! ENTRIES

IS THE HIGH/ZO W OF THE BAR PRIOR TO ENTRY. ONCE ENTERED IT CHANGES TO THE HI-0 w OF THE LAST 2 BARS ONE BAR AFTER ENTRY HAS CLOSED STOPS FOR BLUE LINE CROSSINGS

MY STOP IS THE HIGAYLO W OF THE BAR PIUOR TO ENTRY AN OPPOSITE SIGNAL

Let's take a look at some real trades I really had;

This trade sequence began at 3:09prn in Africa, trading with a 3G card;

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With the formation of the Blast Off! Bar a sell was set up to if the low of 1280.2 was taken out. It was and my fill was 1280.1. Once in I placed a target at 1279.01. As luck would have it prices formed another Blast Off! Bar which means I had to reverse. Here I got lucky; as soon as the 1281.3 print took place, prices plummeted so I went long on the pullback at 1280.8, taking a .7 loss from my short and set my targets at 1282.3 and hoped. ..which did no good.. .as yet another Blast Of? Bar appeared forcing me to give up hope and sell short at 1279.6 my fill was at 1279.5 taking a 1.2 loss and finally my target at 1278.6 was reached for a 9 tick profit meaning I had lost 10 ticks. This was not a good sequence of trading, but real.

More real trades.. ..

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The above chart is of the next day Friday, May 1 9 2006. ~ The day started out real well as the first tick bar created a blast off pattern. I waited for prices to rally back above the low and sold short on a limit bases 2 ticks better. I got out way too soon, as you can see at #1, prices went straight down. My next trade at #2 was a hard one; a blast off bar! Formed I went long and it took forever for prices to break out and start to rally. The close of the next bar also formed a blast off day so if changed my stop to a reverse at the low of that bar.. .prices took it out and I got my money back. Trade #3 was fun...Louise was driving me to the airport so I could trade. A Blast Off! Bar popped up and I went long.. .looking for my 10 tick profit. Again to it took forever so I decided to just lower my target at get out as we were at the turn off to the airport. I changed my order and.. .amidst a downpour of rain.. .lost my connection so I had no orders or did I? I really did not know if the change had gone through. Of course it took two lifetimes to reboot and get data. By then I saw I still had the original orders working so they were cancelled then lowered the target to 1 tick from last price.. .and never got filled prices backed off. I cancelled that order.. .prices rallied back, dipped again and with the airport in sight I took a 5 tick profit. As you can see prices rallied more than 10 ticks, I was thinking again.. .shoulda held on! IMPORTANT LESSON---If you are going to place a trade you must be able to be there for the entire session or time period needed to exit. We hope to enter quickly, but I've seen some of these trades last hours, or a new and opposite trade pops up. You cannot be absent from the scene of the crime. While lecturing in Italy I put a trade on that lasted so long I had to take my computer to the speaker's party and keep looking at it until the trade was completed.. .a 4 hour ordeal! Upon release from prison in Australia I got my laptop back, popped it open and did this trade;

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The net gain from the trade was $750 on a 5 lot order. ..it was important for my mental state to get right back into the game.

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BREAKTHROUGH IN SHORT TERM TRADING There is nothing easier, in the marketplace than predicting the short term swings, it's just that all predictions are very, very difficult to make come true. However, short term forecasters have an advantage in that we only have to predict a day or two out. ..not years! Before we can trade, howevki, we need to assure we are on the right track to success ...this business is not just about trading, it is about winning at the game of making money.

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First things first---where to place your stops; In a study of the S&P 500 from 1982 to 2002 I found that 716 lows of the day were made with the price value of .50 and 809 lows made with a price value of .OO for the last 2 digits. there were no other values even close, .10,.20,.30,.40,.60,.70,.80or .90 to having this many occurrences of the daily low. The average of all the values was 250 occurrences and the largest was 324 lows coming at a value not .50 or -00 By the same token on the upside 733 highs came with the value ending in .50 and 717 highs came at even money of .OO, like with the lows the average per .10 was 260 and the next greatest number of highs at a price point not ending in .50 or .OO was 357.

...

In short it seems most stops are bunched at even money and haCf way points I have found this to be true in other markets as well. This may help you in your stop placemeni,

MONEY MANAGEMENT MY SOL U T M TO THE PROBLEM The creation of wealth does not comefrom being a good trader! In system development it is easy to fool ourselves by creating a system that is 90% accurate, making scads of money, but will eventually kill us. Doesn't sound possible, does it? Well it is and here's how. Our 90% system makes $1,000 on each winning trade and has 9 winners in a row leaving us ahead by a cool 9 G's. Then, along comes a losing trade of $2,000, netting us $7,000, not bad. We get nine more winners and are sitting pretty with $16,000 of profits when we get another loss, but this one is a big one, a loss of $10,000, the largest allowed by the system, setting us back on our fannies with only $6,000 in our pocket. But, since we had been playing the game by increasing after making money, we had two contracts on and thus lost $20,000. We were actually in the whole $4,000 despite 90% accuracy! I told you this money management stuff is important. What ate us alive was that large losing trade. That's the devil we need to protect against and incorporate into our money management scheme. The way I do this is first to determine how much of my money I want to risk on any one trade. I'm a risk seeker. So, for the sake of argument and illustration, let's say I'm willing to risk 40% of my account balance on one trade. If my balance is $100,000 that means I've got $40,000 I'm willing to trade. Since I know the O 2005 Lany Williams - Million Dollar Challenge

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most I can lose is, say $5,000, I divide $5,000 into $40,000. The result is that I can trade 8 contracts. The problem is if I get two large losers in a row, I'm down 80%. So we know 40% is too much risk. Way too much! Generally spealung you will want to take 10% to 15% of your account balance and divide that by the largest loss in the system or the loss you are willing to take. You will then arrive at the number of contracts you should trade. A very risk oriented trader might trade close to 20% of hisher account on one trade. But keep in mind, with three max losers in a row you will have lost 60% of your money. The beauty of the formula is that you can tailor it to your personal risk acceptance or aversion. So there it is, my money management formula: (account balance *risk percent)/largest loss = contracts or shares to trade. There are probably better and more sophisticated approaches, but for us run of the mill traders not blessed with a deep understanding of math, this is the best I know. The beauty of it is that you can tailor it to your riskheward personality. If you are Tommy Timid use 5% of your bank; should you think you are Normal Norm use 10% to 12%; if you are Leveraged Lany use from 15% to 18%; and if you are Swashbuckling Sam or a Dangerous Dan use in excess of 20% of your account. . .and go to church regularly. I have made millions of dollars with this approach. What more can I tell you? You have just been handed the keys to the kingdom of speculative wealth. A CRITICAL COMMENT TO BE READ... This is the way life as a trader works: we develop a system or trading strategy, polish it off and start trading expecting the future to be like the past. It never will be, ever. And seldom will the future be better. Thus, what we need to do is under-bet our system or approach. Do not put as much money behind the system as the numbers from the past suggest you can. For most of us a 5% risk factor is all that's needed to do rather well in this business, the big professionals use a 1%-2% risk, that's how they stay alive which is what this business is all about.

Under-trade, Under-bet and you will be overwhelmed with results Really wealthy people do not make big bets

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WHAT MAKES FOR A WINNING TRADER?? By brett steenbarger

"Having worked with a group of nearly 6Oprofessional traders for the past couple of months, my sense is that personality variables are only indirectly related to trading success. While the wrong traits can certainly ensurefailure, it is not clear to me that any single set of traits best accountsfor success. . What distinguishes our most successful traders is actually a very simple variable: the amount of exposure that they have to their markets. Our top traders in two different areas (currency, equities) not only sit through more minutes of the trading day than other traders; they also utilize methods to record their trades and then replay market days after the trading day has finished. Extensive videotapes allow these traders to actually relive the market action during the times they made their greatest mistakes, providing an immediate and realistic learning tool. The personalities of these traders are quite, quite different, but the common thread is a drive to succeed and a very strong work ethic. Because they trade quite frequently and follow markets closely every hour, in a week of market activity they have experienced more market action than other traders might experience in a month. This immersion very much fits the research literature re: the acquisition of expertise in fields as different as sports, chess, and music."

AND NOW---IT'S TIME TO LEARN TO TRADE!

Chartists have been peering, and fumbling, with charts for over 600 years, if you are to believe the Candlestick crowd. Yet, to the best of my knowledge what I'm about to reveal to has never been presented.. .the facts on what really influences short term swings. In a matter of moments you will have specific inside knowledge very few people on the planet have. First though I'd like to dispel what I think are market myths (I may be wrong but this is what I have come to believe to be true after 40+ years of trying to beat the markets). I will show you the most important parts of short term patterns; ranges, gaps, inside days, type of range and the next days opening. After that you will learn to back your trades with short term fundamentals. First, though I'd like to draw your attention to what I think does not work;

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FIBONACCI RETRA CEMENTS ARE, AT BEST A BAD TOOL...AT WORST A HOAX I have many friends that use Fibonacci levels; some have written books about it, others have made careers over these numbers. They are nice people, yet what I'm about to show you is harsh evidence that there is no significance to these supposed support points. For those of you new to all this, Fibonacci was an Italian math major who noticed a sequence of numbers that is 1,1,2,3,5,8,13,2 1.. .each new number is the product of the last two numbers. So, following 2 1, the next number is 34 (13 +21). The ratio of these numbers has had market guys all a buzz since the early 1900's.. .so I've got a large task here to repeal over 100 years of a belief system. But, that's just what I'm going to do, right here in front of your eyes. Followers of Fibonacci, stake their main work on the ratio of .6 19, the last number in any sequence, when divided by the prior number is always that ratio. If we divide 21 by 34 we get .619, divide 34 by21 andwe have ...drum roll here ... 1.619. Step back a moment and divide 8 by 21, one step back, and we have .38 the next big "Fib" number. HOW THEY SAY IT WORKS

This camp of "true believers" has written, time and time again, that when markets rally the ensuingpullbacks, declines, will stop at a % re-tracment of the up move. Ifprice rallied from 30 to 80, a rally of 50points, the pull back from this rally should (they say must or will) come at amounts equal to 38% of 50, 50% of 50, or 1.62 of 50. Should the decline take out the low at 30 it should stop and 1.38 % or 1.62 % of 50.

I think this is a fair statement, the basis, of followers of Mr. Fibonacci

While many "fib" proponents believe this, they make an error in their assumption. Retracement theory says that at the common retracement levels, prices fmd significant resistance to further movement, not that prices must stop there. There is an important distinction between the two! This is a costly mistake that is commonly made by inexperienced traders and technicians. Retracement levels are a good place to put a buy stop or sell stop. Grab your latte's, fasten your seat belt, 'cause here we go.. The following chart, by Jeff Parent, was a test of where re-tracement levels came in up-moves in S&P 500 stocks. What it shows is that markets can stop at re-tracement of a rally and

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almost any point! (Thanks, Jeff, from all of us) If Fibonacci was really accurate we should see at least a cluster of these re-tracements coming at .38, .50 and .62.

FIBONACCI RETRACEMENT % LEVELS

Here's what Jeff had to say about his study;

This is a histogram showing % retracements from up moving legs. I've used zigzag function with 20% filter to find tops and bottoms. These represent retracements from local tops; they were culled from the S&P 500 between '97 to now. 8,000 data points were collected. The histogram steps by 2.5%. I did not use the S&P500 index; I used the stocks in the S&P500 index, that's how Igot 8,000 data points. For stocks trading below $9,1 did see some clustering around the 50% and a couple of other fib areas. They were visually significant because I could see spikes in the histogram, however, no system could be created to take advantage of this observation.. .it just doesn't happen often enough. Jeff Parent

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WHAT THE CHART SHOWS ME Well, it's really what the chart does not show that bothers me the most here. What we should see is large clusters of lows coming where those fabulous Fibonacci retracement levels are. What we see is that markets can retrace to, and "bounce" off just about any % retracement value. There are no clusters around the Fib numbers, the largest numbers of bounces came at 87.5, a stretch of any basic Fib math. The magic .38 shows no ability to stop a decline, .62 has no significance to it.. .I see nothing socially redeeming here, at all, for traders.

AND IT THAT'S NOT ENOUGH For all I know, Jeff s study is flawed, I don't think so, but good research calls for confirmation. My next step was to do a hand test of the S&P 500. I marked off all swings of 5% or more with what Genesis Data (gfds.com) calls their Zig Zag indicator that captures all such swings.

I then looked at two different time periods, 1992-1993 and 2002-2003. I measured each and every rally of more than 5%, and then noted the low following the rally to see what price it stopped at and then divided the amount of decline into the rally to get the actual % of retracement. As the first example below shows, there was a rally on 101511992 from 696 to 749 and the ensuing decline ended at 732 so the math is 749-696 =36/ 17 (749-732=17). In this case the answer is close to, but not at, the 38% Fibonacci level. The table here shows all such rallies and their stopping point for the ensuing corrective wave.

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DATE

LOW

HIGH

RETRACEMENT LOW

AVERAGE

DATE LOW

HIGH

% OF PULLBACK

.87

RETRACEMENT LOW

% OF PULLBACK

AVERAGE

1.39

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DATE LOW

HIGH

RETRACEMENT LOW

% OF PULLBACK

AVERAGE

75.5

As you can see I tested 10 rallies in each time period. The results do not support the Fibonacci theory in that out of 20 examples .62 or .38 there were only 2 declines that came close, one of .62 and one of .36. The average decline in the 1992-1993 sample was 87%, in the 2002-2003 study the average stopping points was 1.39% of the rallies. Such a poor showing caused me to test waves of just 2% change. The next table shows that study on 2003 data. The average decline was 75% and there were no direct hits at .62 or .38. In fact out of 30 swings, chosen at random, the supposed magic .62 and .38 numbers appear, plus or minus 1%, only 2 times. A book has been written saying the magic point of retracements is 50%...that's where to be a buyer. Some book, some idea, based on this study. Of the 30 swings, 6 stopped between 50 and 60. In other words just a little over 10% of the swings bottomed in this supposed "sweet spot" on the charts. The average of all 3 tests is a pull back of loo%! WAKING UP LATE AT NIGHT---Just before I wrote this I was startled from a deep sleep ( Yea, right, sure, S&P traders never sleep deeply) with one last though, that I should try the same test, but this time use hourly bars. The Fib crowd is big on these bars, me, I prefer ones overlooking the ocean. So again I marked off the dominant swing points and am listing them here from last December through the middle of February. I'll let the facts speak for themselves.

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60 MINTJTE BAR CHARTS DATE LOW

HIGH

RETRACEMENT LOW

% OF PULLBACK

AVERAGE PULL BACK 92.2

Perhaps you can see some rhyme and reason to all these numbers, for the life of me I cannot. Draw enough lines on a chart and something will happen on one of them.. .keep in mind in this study I only measured termination of up and down moves ( bounces may have occurred along the way) which represent the best buy points, not just little bobbles, which I think makes this study even more important. A "True Fibber" recently posted this testimonial for this technique; I suggest you read it closely;

Protrader that generates automated fib levels using 40 time frames to trade the -minis and thefib levels are uncannily accurate. The same holds truefor bonds and currencies. The next challenge once a fib level is hit on the way up and bounced, is to decide whether it will reverse or turn around and blast U P through it to the next level. But very rarely does price not take a pause and bounce off an automatedfib level. The underlining is mine. Isn't that always the question, if it will go up or down? I think so. Which mean even something that is; "uncannily accurate" is meaningless if it still does not tell us what will happen. Stop and think, folks! If there is a proper use of Fib Retracements, it is to predict where significant resistance to further price movement will occur, not to call the termination of a decline.

Need I say more? Yeah, I will.. .don't take my word on this subject, boot up your computer and testfor yoursew Trust, but verifi is always the best policy in this business. These numbers may be a tool, but they have no ability to call where the termination of a decline, following an up move will takeplace. Perhaps where a bounce will come, maybe where stops should or should not be placed.. .but I can find no evidence that markets turn at these 'magic' levels. Thanks to Jeff Parent, Dave Steckler and Tom DeMark for input and help on this.

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AND A GANDER AT GANN---Right or wrong I call them like I see them and to me Gann is the most overrated technical tool out there. I could tell you how I knew his son or his promoter F.B. Thatcher, or perhaps ask why he sold his service to 3 people at the same time shortly before his death. I won't do that.. .I'm too nice a guy to speak ill of the dead. So instead, I will just point out that with one or two exceptions non of the Gann Groupies have ever won a trading contest, manage tons of money or even trade real time or show their results or forecasts. That upsets folks like me "let it all hang out", folks who really trade and have to live and die by our results. All the do is advertise that they, and they alone, have finally cracked the code to the rnish-mash W.D. left behind. I hope someone does.. .but please.. .prove it with real trades or revealing your forecasts in advance.

WHAT DOES WORK

HOME ON THE RANGE---Very few traders know of the gargantuan impact the size of today's range has on our potential winnings for the next few days. Let me get right to it with a demonstration of what a difference a range makes. My first study is to simply ask what type of trade is set up when we have a day that closes lower than the prior close and that day's true range is less than the prior true range. Before I go on, by true range I mean whichever is greater using today quote high and low or if the market has gapped from the prior close using that close as the true highllow. Also in all instances here I and using the S&P 500, a $4,500 stop and my bailout exit.

CLOSE LESS THAN PRIOR DAY ON SMALLER RANGE 681 TRADES + $28,043 AVERAGE TRADE + $36 DRAWDOWN OF - $92,985 CLOSE LESS THAN PRIOR DAY ON LARGER RANGE 695 TRADES

+ $106,695 AVERAGE TRADE + $121 DRAWDOWN OF - $101,000

Look at what we have, about the same number of trades but almost 4 times the profits. That is a staggering difference.. .all based on just one simple difference the size of the last days range! Let's see where we can go with this.. .if one down close is good, how about two successive down closes, and again we will split the trades into those with the last down close on a smaller or larger range.

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2 MINUS CLOSES LAST DAY HAS A SMALLER RANGE 368 TRADES

+ $7,428 AVERAGE TRADE + $20

DRAWDOWN OF - $105,070

2 MINlJS CLOSES LAST DAY HAS A LARGER RANGE 459 TRADES

+ $153,708 AVERAGE TRADE + $459

DRAWDOWN OF - $54,930

Perhaps now you see why I am so excited about this breakthrough in technical analysis.. .profits are 7 times greater than the smaller range days. Of great interest to me is the books all say a decline on lighter volume (range) is more bullish than on increased volume (range). Well, I'm here to tell you that is flat out wrong.. .big time wrong But, speaking of volume lets look at the same pattern adding one more input, if volume was up or down on that second down close. Guess what, there are fewer trades on the lower volume but they show an average profit per trade of $357 on less volume and $363 on higher volume. Range reins, volume did not matter. Right now you are probably saying, "OK, Larry but what if we have had 3 consecutive down closes, will the size of the range still matter?" Good question and here is the answer, direct from the Genesis (gfds.com) data;

3 MINUS CLOSES LAST DAY HAS A SMALLER RANGE 186 TRADES +$2 1,043 AVERAGE TRADE + $186 DRAWDOWN OF - $75,070 3 MINUS CLOSES LAST DAY HAS A LARGER RANGE 2 17 TRADES

+ $136,523 AVERAGE TRADE + $634

DRAWDOWN OF - $20,585

Are you getting my drift yet.. .the size of the most current true range matters, and matters a great deal. Here are more insights on this formation

02005 Lany Williams - Million Dollar Challenge

Page 29

4 MINUS CLOSES LAST DAY HAS A SMALLER RANGE 79 TRADES

+ $31,920 AVERAGE TRADE + $404 DRAWDOWN OF - $27,070

4 MINUS CLOSES LAST DAY HAS A LARGER RANGE 78 TRADES

+ $84,403 AVERAGE TRADE + $1,082

DRAWDOWN OF - $16,365

Finally let's take this one step fbrther to 5 consecutive down closes.. .this is the type of selling pressure that gets all the oscillator guys and gals and number counters ready to buy. Half the time they probably shouldn't. ~ l i i c half.. h .aha.. .you know the times.. .it's when the last days range is smaller than the prior days! 5 MINUS CLOSES LAST DAY HAS A SMALLER RANGE 25 TRADES

+ $7,118 AVERAGE TRADE + $274

DRAWDOWN OF - $4,545

4 MINUS CLOSES LAST DAY HAS A LARGER RANGE 28 TRADES

+ $50,153 AVERAGE TRADE + $1,791

DRAWDOWN OF - $33

Note, the last set up shown here is very tradable.. .add it to your roster of trades. You can see how easy it is to develop a winning strategy. I will come back to this later, but for now we can see that there are differences in day to day action that give us large advantages in the game.

O 2005 Lany Williams - Million Dollar Challenge

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NOW LETS LOOK AT UP CLOSES I'd just like to reverse things now, let's say the market has closed up for the day so we want to sell tomorrow. But unlike the uninformed public we are quick to recall that ranges can make a difference so we boot up our computer to see if the size of the range matters. Had we just opened up a book on technical analysis we would have read that advancing prices on advancing volume (larger ranges) is bullish. We, however are skeptics, folks like us need poof before we plunk down our very hard earned money.

CLOSE GREATER'TWAN PRIOR DAY ON LARGER RANGE 745 TRADES -$116,600 AVERAGE TRADE - $157 DRAWDOWN OF - $192,985 Wait a moment, that doesn't look like such a good buy signal. It's probably due to the up close we mutter. A good researcher is not phased by results and is unwilling to jump to conclusions we decide to run the exact same test but query about the range being smaller than the prior day;

CLOSE LESS THAN PRIOR DAY ON SMALLER RANGE 893 TRADES +$183,853 AVERAGE TRADE

+ $206

DRAWDOWN OF -$50,505

"Wow!", we exclaim, "It sure looks like there is something to this range stuff ', and it is not what we read about in the books. The best buy comes on an up day with a smaller range.. .that one little difference has net gain of $300,000 from minus to up. The number of trades is similar, the time period is the same and no other features of the market were looked at just the range relationships. I know what you are thinking, "What about two up closes?". Here is the answer;

2 UP CLOSES LAST DAY HAS A LARGER RANGE 264 TRADES - $23,368 AVERAGE TRADE - $89 DRAWDOWN OF - $71,963

2 UP CLOSES LAST DAY HAS A SMALLER RANGE 290 TRADES +$53,288 AVERAGE TRADE + $184 DRAWDOWN OF - $38,745

O 2005 Larry Williams - Million Dollar Challenge

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By now I think we can postulate, from h s study some rules for range analysis. I have done a lot of other studies, not shown here, that all reach the same conclusion regarding the influence of the size of ranges on short term market swings. This can best be summed up as;

LARGER RANGES ON DOWN CLOSES SET UP THE BEST BUYS SMALLER RANGES ON UP CLOSES SET UP THE BEST BUYS.

The reverse is equally true LARGER RANGES ON UP CLOSES ARE THE BEST SELLS SMALLER RANGES ON DOWN CLOSES ARE THE BEST SELLS.

Here are some numbers behind that last statement, in test of 2 up closes with the last coming on a smaller range and then selling the next open, some $20,5 15 was lost. Selling if the range had been a larger range made $5,108, five times more profits.. .all based on the size of range.

LET'S ADD SOME MORE FUEL TO THE FIRES As you have seen ranges matter. The devil, as they say, is in the details, as the range study shows this is true of the market.. .more than we ever thought.

0 2005 Larry Williams - Million Dollar Challenge

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I. GAPS MATTER Here's a simple study, we will buy after 2 down closes. That's all we are looking for, no range size, no volume, no nothing.. ...........yet. There have been 607 possible trades malung $75,098 for an average profit per trade of $124, and large drawdown of over $100,000. This is not tradable. If we make one very little and overlooked point the figures change dramatically. All we have to do is ask if the high of the first down close was less than the low of the prior day (h. 14.2). The answer is a loss of $77,625 on 67 trades. The lesson is clear a gap one day back loolung at the highs and lows does not set up good buy points. Let's next ask if the high of the first down close was less than the close of the prior day (h.l<c.2). The answer is a loss of $60,220 on 161 trades. The lesson is clear a gap from highs to closes one day back also does not set up good buy points. If we structure the trade like so ( h. 1 is > 1.2) we fmd 598 trades making $80,791 with an average profit per trade of $145! Look for gaps is the lesson to be learned.

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2. INSIDE DAYS MATTER Inside days, that is where the high and low are less than or equal the prior true high while the low is greater than or equal the prior true low, are a bane to market traders. As you will see they need to be dealt with. Let's look at our study of 2 consecutive down closes, and test either day being an inside bar; INSIDE TODAY INSIDE YESTERDAY

+$12,028 +$54,548

68 TRADES 161 TRADES

+$I77 PER TRADE +$337 PER TRADE

In every pattern I look at, every day, I look for inside bars as they can make a huge difference in understanding the current market. Once I got the notion of "cleaning up" old patterns I was astounded to see the number of inside days as part of or close to the trades that lost money.

I am listing here the impact of inside days starting with today, day 0 as an inside day ($32,285) going back to day 6 as an inside day ($12,028).

Test## Win% Trades AVEWin

Net Profit Ava Trade Inside Dav

Of all the inside days the one we have to be the most careful with is today's, the day that just closed, the last one we have to gander.

Test## Win% Trades

Ava Win

O 2005 Lany Williams - Million Dollar Challenge

Net Profit Avg Trade ODAY

Page 34

GETTING IN THE ZONE TO TRADE

...

Stock and commodityprices are more complex than most think there is intricacy to each day that we need to study. You have begun to see that. I'd like to introduce you to my next important concept of market structure, Opening Zones. The market can open in one of four zones as I have illustrated here; -

ZONE 4 OPEN > HIGH ZONE 3 OPEN > CLOSE < HIGH ZONE 2 OPEN > LOW < CLOSE

ZONE 1 OPEN BELOW LOW There is an immense amount of difference in what happens the next day, seemingly based on where the market opened (what zone) that day. There are only 4 possible ways a market day can evolve; it can be an up range day, a higher h g h and a higher low than the prior day. A down range day, that's evidenced by a lower high and low or an Inside or Outside day. There are no other possible configurations. A LOOK AT UP RANGE UP CLOSE DAYS ---When we had these days I looked at buying based on where the market opened, the next day. So, we have an up range day, does it matter where it opens if I simply buy on the opening? Here are the results ZONE 4 ZONE 3 ZONE 2 ZONE 1

-$41,138 +40,893 +$71,190 -$16,8 13

-$137ATRADE +$138ATRADE +$I23 A TRADE $2 10 A TRADE

300TRADES 138TRADES 578 TRADES 80 TRADES

What we see is quite a Ifference, opening in zone 1 and 4 lose money, the other 2 zones make money.

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A LOOK AT UP RANGE DOWN CLOSE DAYS---Now let's look at up range days that have down close. Technical books usually describe these are reversal day, saying markets top out in this fashion, which is dead wrong. Here are the results from the same testing as above; ZONE 4 ZONE 3 ZONE 2 ZONE 1

-$16,430 +$68,973 +$16,048 +$39,213

- $183 A TRADE + $359 A TRADE +$I22 A TRADE +$461 A TRADE

9 TRADES 359 TRADES 134 TRADES 85 TRADES

SEE THE SWEET SPOT? What I see is that each pattern as a "sweet spot" an opening zone that is more bullishhearish than the other 3 zones. Listen up here, now; I trade with this as one of my key points. This is a critical part to understanding the market on a short term basis. All signs can be on go, but a wrong opening zone kills the trade. I don't think anyone has focused on these zones, as I have. They are critical, because not all days are the same.. .they must be paid attention to. DOWN RANGE WITH UP CLOSE---In the next example we have had a day with a lower high and a lower low, but it managed to come off the lows and close up for the day. These are seen, by most, as reversal days, that prices have bottomed. I don't think so. But, for now let's look at buying the next day based on the opening zone; ZONE 4 ZONE 3 ZONE 2 ZONE 1

+$20,925 +$4,430 +$67,968 +$16,205

- $161 A TRADE +$42 ATRADE +$365 A TRADE +$1,473 A TRADE

130 TRADES 106TRADES 186 TRADES 11 TRADES

Again we see some zones are better than others. In this case zone 2 has a much larger average profit per trade.. ..that's the best place to open for this pattern DOWN RANGE WITH DOWN CLOSE---This is just a good, old fashioned down and dirty day, the low is lower than the prior day, as is the low and the close. Nothing fancy here, prices just dropped and kept going down. The question is does it matter where we open tomorrow? Here, take a peek for yourself; ZONE 4 ZONE 3 ZONE 2 ZONE 1

-$23,568 -$1,413 +$55,780 +$94,118

- $298

A TRADE A TRADE +$271 A TRADE +$446 A TRADE

- $03

79 TRADES 5 15 TRADES 206 TRADES 21 1 TRADES

Again we can see a world of difference. A traditional chart guy might well see a few down range down close bars and conclude they are not that great---if he or she only saw time the opening in zone 3. We see that zone one and two openings are a profit zone for short term traders.

O 2005 Larry Williams - Million Dollar Challenge

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ADD ANOTHER TWIST TO IT.. ..All down ranges are not the same. Some down range, down close days close, above the prior days low, others close less than the prior days low, these are called "naked close" a term Joe Stowell coined, as the close is outside or naked to the prior days range. Let's now turn our attention to these days and see if the zones tell us even more as we are now looking at prices in a microscopic view. DOWN RANGE DOWN CLOSE > PRlOR DAYS LOW ZONE 4 ZONE 3 ZONE 2 ZONE 1

$1 1,505 1,158 58,243 74,648

$67 A TRADE 5 A TRADE 211 A TRADE 1,588 A TRADE

171 TRADES 2 19 TRADES 276 TRADES 47 TRADES

It takes just a quick glance to see there are real trading opportunities in zones 1 and 2 and not nearly as much pay dirt to be mined in 3 and 4. Ok, what if we have a naked close, what type of pay dirt are we l o o h g for there? DOWN RANGE DOWN CLOSE < PRIOR DAYS LOW ZONE 4 ZONE 3 ZONE 2 ZONE 1

$-7,988 - 6,083 67,050 45,903

$-200 A TRADE -14 ATRADE 373 A TRADE 258 A TRADE

40 TRADES 436TRADES 180 TRADES 178 TRADES

KHY DOES THE OPEN MATTER?? I think there are several reasons here. If a market opens up too high it has already become "overbought", particularly if the market had closed strong the following day. One of the most powerful rules of trading is to do the opposite of everyone else. So, if the market gaps up---the public bought---there may well be a better place to buy. When it gaps down---the public sold---we often see that as the best buy entry for most patterns. As I see it, markets move from level to level, based on fundamentals.. .value if you will. But the swings along the way are driven by the current public and professional opinions of the day, whatever is in vogue at the instant. The open is a reflection of the most current psychological condition of the market place. This is not to say that all up opens should be sold---but they better be investigated!

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FUNDAMENTALLY SOUND Here comes the big one, the one that blows away pure technical analysis! While I think I have made a good case here for us to look at the technical price structure of the market, an even better case can be made for looking at the current fundamental structure. By that, I mean we need to turn our attention to one of the main driving forces of stock prices.. .the trend of the bond market. Bonds matter. Let me show you just how much. Here is the simple Genesis code; IF Close < Close. 1 And Close. 1 < Close.2 And Next Bar Open Of TQ < Bonds . What this means is that if there have been 2 down closes and TQ (the day session opening of bonds) is less than the prior day we will buy on the open of the next day. Do traders key off of the bond opening, does the daily direction of bonds influence stock prices? BONDS OPEN DOWN $31,890

382 TRADES - $83 TRADE $123,403 D DOWN

Hrnm.. .it does not look like we want to buy the S&P's on the open of days when the bond market has opened down. What about on days bonds opened greater than the prior close? BONDS OPEN UP

+$83,245 394 TRADES +$219 TRADE $34,893 D DOWN

What a difference we have here.. .from losing $83 a trade to making $2 19.. .all based on the reality of fundamentals. What a novel concept; that rates matter. While we are on the subject of bonds let's look at the same two down close scenario but only buy if bonds are in and up trend or a down trend. Let's recap this next study, we are going to wait for two consecutive down closes, then test buying if bonds are in a down trend. We will determine that by saying if a 6 day moving average of bonds is lower than 3 days ago the trend is down. IF Close < Close. 1 And Close. 1 < Close.2 And MovingAvg (Bonds ,6) < MovingAvg (Bonds ,6).3 One could use various ways to measure trend, this is just and easy one to program and now for the results; BONDS IN DOWN TREND -$110,930 BONDS IN UP TREND

309 TRADES $149,008 DRAW DOWN

+$210,483 374 TRADES 419,950 DRAW DOWN

O 2005 Larry Williams - Million Dollar Challenge

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Talk about swings.. .there is a difference here of $320,000 based on one simple fundamental fact of life, the direction to the bond market. If this doesn't get you to throw away those point and figure charts or blow out the candlesticks, I don't know what will! But I will still try to convince you with this. Suppose we buy the S&P only when the trend is up and Bonds open higher the next day.. .that's based on the fundamental facts of life. Let's also put in one simple rule for the SP 500; we only buy if they open tomorrow <= todays close and >= todays low. This is the "sweet spot" of S&P opening prices, see more about this in my study of ZEROING IN ON ZONES. Such a pattern brings home the bacon with these results;

0 2005 Larry Williams - Million Dollar Challenge

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BONDS UP TREND BONDS OPEN UP

SP OPENS IN ZONE 2

This, all you little buckaroos out there in Fibonacci fantasy land is your last wake up call. It is pretty easy to find winning patterns when we deal with how the markets really work. "Not good enough", you say? Ok, let's try to polish this up just a little being on the lookout for.. .for what? "Gaps and Inside days", you reply. Good, you are getting the message. Here's some cleaned up code IF Close < Close.1 And Close.1 < Close.2 And MovingAvg (Bonds , 6) > MovingAvg (Bonds , 6).3 And Next Bar Open Of tq > Bonds And Next Bar Open <= Close And Next Bar Open >= Low And Not Inside Bar.2 And High. 1 < Low.2 = False And Not Inside Bar. 1 And here are the results of trading just this pattern:

Summary - All Trades Report n v e m 11

Total Net Profit:

Profit

Tntsll T r s l r l ~ c * Avprslop T ~ s I ~ P * Avo fi n f Rars in Trade. Avo fi n f Tradec n e r Mau Clnced-mlt Armmint Si7e Re~lilired* n n e n EnllitvCln-r~ntStreak-

WinninoP ~ r r ~ n t a o ~ . Pslvniit Rsltin f A v o 7-Scnre (WIT. Percent in the MarketM a u Tntradav R e h i m Pct. Kellv Ratin. n n t i m a l f.

Winnino Trarlec Tntal Winnersh c s Prnfit. Aversoe Win. T .aroect Win. T .aroect n r a w d n w n in Avo n r a w d n w n in Avo Riin TTn in W i n . Avo Riin n n w n in M n s t Cnncer Wins' Avo fi n f Cnncec Wince Avo fi n f Rarn in Winc.

mrrr.

,mr

T .ncincr Trarlec 46 $80 hh8 $1 754 ~ 1 7n5 5 -R9 795 -R1 hh? R7 748 -R1 hh? 4h 46 nn 7 11

Tntal T .ncerc. G m c c T .ncsAvemoe T .nee. T .aroect T .neeT .aroect Peak in T .nee, Avo Peak in T .nee. Avo Rnn TTn in T .ncr. Avo Riin n n w n in T .neeMnct Cnncec T .nccec. AVU fi n f Cnncec T .nccec. Avo fi n f Rarc in T .nccec-

An alert student may also inquire about the size of the ranges.. .sure.. .the pattern looks pretty good as is, but we think the range size should matter. Here you see what happens of we use all the rules as above, except the last down days range must be greater than the prior one;

02005 Larry Williams - Million Dollar Challenge

Page 40

nvern 11

Total Net Profit:

Profit Factor lhTT7.

Tntsll Trarloct Avorsluo Trslrlot Avu ii n f Rnrc in Trade. Avo # nf Trndec ner Maw Clnced-mit Arcniint Si7e ReniiiredOnen Eniiitv. C i i r r ~ n Streak. t

27. ~2.f;n~

7 71 11

a 7 5 1711

77 Winc

Winninu Trnrlec Tntnl Winnerc. Crrnnc Prnfit. Averaoe Win. T aroect Win. T .nroect nrnwdnwn in Avu n r a w d n w n in Avo Riin T Tn in Win. Avu Riin n n w n in Mnct Cnncer Wince AVO # n f Cnncer WincAvu # n f Rarc in Winc-

IhT

Winnino P n v n ~ Rsltin ~t (Avo 7.-S c n r ~ (WIT Percent in the Maw Tntradnv Rehim Pct. Kellv Rntin. nntimnl f.

1nn.noA 3. c ; ~ ~ . R A

nn n 9%

-a5 i 7 n 777 9% 1 nnnn

n nn

T .ncino Tmdec Tntnl T .ncmc. Ch-ncc T .nee. Avernoe T .neeT . a r u ~ cTt .neeT .nruect Peak in T .nee. Avu Peak in T .nee. Avo Riin T Tn in T .nee. Avo Riin n n w n in Mnct f i n c e c T .nccec. Avo # n f Cnncer Avu # n f Rnrc in

Pretty much as expected, lots of good things happened, the most important is that our average profit per trade doubled....aha...there is madness to the markets! At last the truth of trading is being discovered, simply, mechanically and with no mumbo-jumbo incantation of magic and mystic.

WELCOME---YOU HAVE MADE IT THIS FAR! The purpose of all this has been to show you how markets work and to educate you as to what to look for when it comes to trading. There are millions of market patterns using the last 2-5 days. Now you know what to look for, what to be leery of, and what to hone in on as setting up the best possible trades. People are pretty shell shocked when they see that often I have long string of trades with 90% winners. This happens because I understand, a little, these patterns, and the fact I don't want to or need to trade every day. I just want to trade when the patterns are perfect! It all comes together in the patterns I'm next presenting, the zones, and gaps, inside and outside days and what the bond market has been doing in the various patterns. I do not expect you to memorize them, I am no longer able to, but they can be traded, re-worked and used in successful short term trading.

O 2005 Larry Williams - Million Dollar Challenge

Page 4 1

There are four major elements that bring about quick, short-term changes in the bond market that have stood the test of time. They are;

1. TRADE DAY OF MONTH 2. TRADE DAY OF WEEK 3. SEVERAL PRICE PATTERNS 4. THE RELATIONSHIP TO GOLD & CRB

1. TRADE DAY OF NIONTH Generally speahng, the best TDOM's are 8 and 21 for buys, 3 and 13 for sells, as well as the first trade day of the month for buys. Here are the best TDOMS by the months. These "set up" the best times each month to develop a bias towards establishing trades. The TDOM means to take action the next day as the computer code reads, "If TDOM=l then buylsell tomorrow" thus the entry day would be the day following the TDOM shown.

02005 Larry Williams - Million Dollar Challenge

Page r

PZO' T OSP ITS TO£

OLZ 6PZ

s€I'€ 8 ~ 1 ' ~ SPS' I

/111111/////l/111111llllllllllll/lllllll//l/llllllll////////ll//lW ~ll

Total net profit Gross profit

$246,515.00 $40 1,410.00

b I M U f i D - 1 e S L 1 \\\\\\\\\\\\\\\\\\\\\\\\t\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\

Gross loss

Total # of trades Number winning trades

783 652

Largest winning trade Average winning trade Ratio avg winlavg loss

$3,392.50 $615.66 0.52

Largest losing trade Average losing trade Avg trade {win & loss)

24 2

Max consecutive losers Avg # bars in losers

Max consecutive winners Avg # bars in winners

-154,895.00

Percent profitable Number losing trades $-2,638.75 $- 1,182.40

$3 14.83

Max closed-out drawdown Profit factor Account size required

$-5,408.75 Max intra-day drawdown $-5,672.50 2.59 Max # of contracts held 1 $8,672.50 Return on account 2,842% .............................................................. LONG TRADES -Test 1............................................................. Total net profit $1 17,370.00 Gross profit $186,506.25 Gross loss $49,136.25 Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg winlavg loss Max consecutive winners Avg # bars in winners

364 295

Percent profitable Number losing trades

$2,736.25 $632.22 0.63

Largest losing trade Average losing trade Avg trade {win & loss)

25 1

Max consecutive losers Avg # bars in losers

$-2,638.75 $-1,001.97 $322.45

It is possible to combine what we have learned into a decent, and easy to follow, trading strategy. The secret is to combine the TDOM with the best months and then make certain the trend of Gold is setting up the buy or sell trade. The exit is first profitable open + 2 points after on day in the trade, not counting the entry day. The buy reauirement is that the TDOM be 8 or 17 (for action the next day) and the months are June, July, October or November. Gold must have closed lower than 6,9 or 28 days ago. If so, buy at the open the next day. The sell requirement is that the TDOM be 3 (for action the next day) and the month is February, May, June, July, August or November. TDOM 13 is used for January, April-May, August or November. In both cases Gold must have closed greater than the close 14,16 or 22 days ago. If so sell at the open the next day.

O 2005 Larry Williams - Million Dollar Challenge

Page 46

uillgcbt WIIUUII~

~rduc

DL,LUJ.UU

Average winning trade Ratio avg winlavg loss

. .

!&sGDP~C!~-

luslng ~

~ a u c

Average losing trade Avg trade (win & loss)

46 2

Max consecutive losers Avg # bars in losers

Max consecutive winners Avg # bars in winners Max closed-out drawdown Profit factor Account size required

Largest

$609.20 0.49

$2,697.50 10.13 $5,697.50

Max intra-day drawdown Max # of contracts held Return on account

9- I,'~LU.UU

$-1,222.08 $523.36

$-2,697.50 1 1,175%

Highlights -All trades - - - -. - -. -.- - - - - - - - -.- - - - - - - -.- - -. - - - - - - - - - - - - -Date - - - - -. ...- - - - - - - - - - - - - - -Time - - - - - - - .-. - - - - - - - - - - -.- - - - - Amount - - - -- - -- - -

Largest Winning Trade Largest Losing Trade Largest String of + Trades Largest String of -Trades Maximum Closed-Out Drawdown Maximum Intra-Day Drawdown

07119/94 10/27/95 07116/99 08/02/99 10/27/95 10/27/95

$2,205.00 $ -1,420.00

46 1 $ -2,697.50 $ -2,697.50

.......................................................... LONG TRADES -Test 1 ........................................................

Total net profit Gross profit

$35,446.25 $40,8 13.75-

Total # of trades Number winning trades

63 59

Largest winning trade Average winning trade Ratio avg wintavg loss

$2,205.00 $69 1.76 0.5 1

Max consecutive winners Avg # bars in winners

27 2

Gross loss

$-5,367.50

Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & loss) Max consecutive losers Avg # bars in losers

BEST OF THE FIRST TRADE DAYS OF THE MONTH Another axiom of the Bond market is that prices usually rally around the first trading day of the month. To that end, here are the best months to be a buyer of on the open of the first trading day of the month;

JUNE

$1 1,020 OCTOBER 14,586 DECEMBER 10,492

19/16 84% $580 -3,340 21/20 95% $694 1,795 21/19 90% $500 1,670

AND THE END OF MONTH RALL Y...

O 2005 Lany Williams - Million Dollar Challenge

Page 47

Next let's look at buying if TDOM is 20, at 30% of that days range added to the next days opening. Use a $1,500 stop and exit after two days in the trade for the $30,373, profits from 1988 to date. These results exclude March and I noticed one might want to exclude October as well. The point is there is a pattern here we should be looking at for trading opportunities.

PERFORMANCE SUMMARY Model Name: Test Number: Notes: Data: Calc Dates:

BONDS BEST TDOMS MONTH 2 of 12 DAY T-BONDS 10117/88 - 09/30/99

Developer:

LARRY

67/99

--------------------------.-------------------------Num. Conv. P. Value Comm Slipaag.ge---------- ?~!argi-r!.~F!!rmaf - - Dci~e:~at1?\FijeNa1??e 144 -3 $31.250$45 $ O $ 3,000 CSI C:\GD\BACK67\F061.DTA ll/llll////llll//llll//lllllllll//lll/ll//////////////////////// ALL TRADES -Test 2 .............................................................. Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg widavg loss Max consecutive winners Avg # bars in winners Max closed-out drawdown Profit factor Account size required

$30,373.75 $38,192.50 41 36

Gross loss Percent profitable Number losing trades

$-7,818.75 87% 5

$3,173.75 $1,060.90 0.67

Largest losing trade Average losing trade Avg trade (win & loss)

$-1,638.75 $-1,563.75 $740.82

12 4

Max consecutive losers Avg # bars in losers

2 2

$-3,183.75 4.88 $6,402.50

Max intra-day drawdown Max # of contracts held Return on account

$-3,402.50 1 474%

Highlights -AU trades Description Date Time Amount Largest Winning Trade 08/05/96 $3,173.75 $ - 1,638.75 Largest Losing Trade 02/05/96 1 1/06/95 12 Largest String of + Trades Largest String of -Trades 05/02/96 2 05/02/96 $ -3,183.75 Maximum Closed-Out Drawdown 06/03/96 $ -3,402.50 Maximum Intra-Day Drawdown ...................................................... LONG TRADES -Test 2 ...................................................................

2. TRADE DAY OF WEEK these are incorporated in patterns and relationships. Day 5 is critical. Sells~usuallycome mid-week. Check the charts to see what to expect, what is normal for each day of the week.

O 2005 Larry Williams - Million Dollar Challenge

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3. PRICE PATTERNS

Fake Outs, Oops!, Oops! 1 day back, Naked Close, Best TDOM's, check for very large OR small values of close minus the open (Nearly Perfect). You need to be able to instantly spot these set-ups.

4. THE RELATIONSHIPS Gold or CRB higher tbai~X days 'ago is bearish for Bonds Generally speaking, 1 and 22 days for buys Gold or CRB lower than X days ago is bullish for Bonds Generally speaking 14 and 22 for sells The combination of both markets is ideal, but fewer trades.

BONDS, GOLD AND THE CRB RULE THE WAY

We know TDW 2 is not a good setup to buy bonds. Thus, I asked about buying any day but Wednesday if the 30-day average of gold was less than the previous 30-day average. The results are interesting, when the m.a. is less than yesterday, from 1989 through 1999 77% of buys on the open were profitable with an average profit per trade of$105 on a $14,568 drawdown with a net profit of $44,336. If the m.a.was greater than the prior day, Gold in an uptrend, 70% of the trades were successful, yet there was a loss of $15,3 10 on a $24,453 drawdown. Clearly Gold rules the way for bonds. Taking this a step further I looked not only at gold in a downtrend but required entry take place only if price rallies 20% of the previous days range above the next days opening, and today was a down close. This does much better, making $63,073 with 80% accuracy and an average profit per trade 0 8 1 65. Add just one more rule, a requirement that today's range be less than the average range of the last 5 days and a tradable system begins to appear as the profits of $44,952 on 183 trades means an average profit per trade of $245 on a $7,627 drawdown. The evidence suggests Gold really does matter and is a good set up for traditional technical rules, such as volatility breakouts, range shrinkage and the like.

A NEW TWIST..

......

O 2005 Larry Williams - Million Dollar Challenge

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Yes, gold impacts bonds, but the CRB index may actually do an even better job. As a case in point I offer this; when the 22 day m.a. of the CRB is less than the prior days reading and we buy on the open the next day, like with gold and a 30 day average, we "make" $54,088 with 78% accuracy, $148 a trade on 364 trades and a $13,642 drawdown. As your recall Gold on 42 1 trades made $44,336 with a $14,568 drawdown. How about the small range volatility expansion setup that made $44,952 on a $7,267 drawdown with Gold in a downtrend compared to the CRB? The same pattern but with the 22 day m.a. of the CRB lower than the prior day makes $42,912 with a $3,377 drawdown and average profit per trade of $295 vs. $245 when using gold. We can combine both data streams with a 4-day average of gold less than the prior days and a 14 days average of the CRB less than the prior day to snake out 263 trades with $192 a trade on a $7,996 drawdown. Finally, we know the best set up day to buy is Friday with a down close. When the 28 day m.a. of gold is lower than the prior day and the 14 day of the CRB is also lower There have been 70 trades with 63 winners producing a handsome $418 per trade with a net profit of$29,287.

Clearly we can get more bang for our buck using both data streams to set up trades.

5. THE DAILY QUESTIONS

What TDOM and TD W is it? What month is it? What is the current price pattern? What is the trend of Gold and the CRB? Is an OOPS! probable?

6. RULE BASED TRADING This is how 1 trade. I have numerous rules or patterns to enter long or short. These are based, in part, on all of the above. The rules appear complicated, but

Can be followed with some ease, thanks to computers. Each day I look at the current pattern of the last 3-4 days then find similar patterns in the past to looking for repetitive action.

There are may signal and entry rules I have developed over the years. I am presenting them here for you in what I hope is an easy to learn---and follow---format.

Here are the year by year results; O 2005 Lany Williams - Million Dollar Challenge

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By Year Report Sep 8, 2004 11:44:30

Name:

A NEW MDC BONDS

Symbol:

TQ-067

Statistic to chart Profit, Position selection All trades, From date 01/21/1988, To date 09/08/2004, lgnore trades c= -999,999,999, lgnore trades >= 999,999,999, lgnore big wins 0, lgnore big losses 0, Profit is >= 0.00, Show cents No

Year

Profit

Net Profit

1988

Tra des 23

$8,465

1989

$7,559

$16,024

1990

$10,506

$26,530

1991 1992

21 17

$6,055 $5,079

$32,585 $37,664

1993

$10,371

$48,035

1994

$7,659

$55,694

1995

$8,003

$63,696

1996

$9,003

$72,699

1997

$9,965

$82,664

1998

$11,670

$94,334

1999

$9,333

$103,666

2000

$11,123

$1 14,789

2001

$13,164

$127,953

2002

$9,535

$137,488

2003

$16,463

$153,950

2004

$5,038

$158,988

Win Pct .100.0 % 100.0 % 100.0 % 95.2% 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 90.0%

Win Avg

AvgTrade

Max Loss

$368

Loss Avg $0

$368

$329

$525

$386 $299

$-I ,670 $0

$288 $299

$-I ,670 $0

$45 1

$425

$445

$500

$433

$486

$49 1

$348

$454

$353

$549

$465

$-I ,670

$252

$-I ,670

ND NOW THE SPECIFIC RULES ..................

O 2005 Larry Williams - Million Dollar Challenge

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Strate~y: A NEW MDC BONDS Commission/Slippage: $45.00

Identifier Market 1 CR GC Weekly

Security Day T-bonds Cadj Liq Crb Index Cadj Liq Comex Gold Cadj Liq Day T-bonds Cadj Liq

Bar Period Daily (Default) (Default) Weekly

Sec T w e F F F F

Symbol TQ-067 CR-067 GC-067 TQ-067

Rules: RuleName: Rule Text: Use: Action:

RuleName: Rule Text:

Use: Action: Exit on Entry Bar:

Input Vara RuleName: Rule Text:

Use: Action: Exit on Entry Bar:

Input Vara

RuleName:

A A A JAWS-1 IF Trading DayOfMonth > 18 And Gold < G0ld.5 And Close > Close.12 THEN BUY Next Bar at MARKET OFF Long Entry

atr profit from mid point IF True THEN SELL Next Bar at Entry Price + True Range * Vara 1 100 LIMIT OFF Long Exit False

Value 300

Optirniz OFF

From

To Val

Step Val

BOND EXIT OPEN > ENTRY IF Next Bar Open > Entry Price { And Next Bar Open >= Close ) THEN SELL Next Bar at Next Bar Open - Avg True Range (3) * Vara 1 100 STOP OFF Long Exit False

Value 40

Optimiz OFF

From

To Val

Step Val

BOND EXIT OPEN < ENTRY

O 2005 Larry Williams - Million Dollar Challenge

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Rule Text:

Use: Action: Exit on Entry Bar:

Input Varb

RuleName: Rule Text: Action: Exit on Entry Bar:

Input Vara Varb

RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount

RuleName: Rule Text: Action: Exit on Entry Bar:

Input Vara Varb

RuleName:

IF Next Bar Open < Entry Price THEN SELL Next Bar at Next Bar Open - Avg True Range (3) / 100 STOP OFF Long Exit False Optimiz OFF

Value 100

From

To Val

* Varb

Step Val

delayed Long: LW Bailout IF Bars Since Entry >= Vara And Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open + Tick Move * Varb LIMIT Long Exit False

Value 0 2

O~timiz From OFF OFF

To Val

Step Val

Exit Long: Stop Loss IF Bars Since Entry >= 0 THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False

Value 1600

Optimiz OFF

From

To Val

Step Val

Exit Short: LW Bailout IF Bars Since Entry >= Vara And Next Bar Open < Entry Price THEN BUY Next Bar at Next Bar Open - Tick Move * Varb LIMIT Short Exit False

Value 0 2

Optimiz OFF OFF

From

To Val

Step Val

Exit Short: Stop Loss

O 2005 Larry Williams - Million Dollar Challenge

Page 53

Rule Text:

Action: Exit on Entry Bar: Input Stop Loss Amount

RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

IF True THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP Short Exit False Value 1500

Ovtimiz OFF

From

To Val

Step Val

MDC #28 equal close IF (Monday Or Tuesday Or Thursday) And Close >= Highest (Close, 8). 1 And Next Bar Open < High And Next Bar Open > Close And Low < High. 1 And ~ 0 w . 1< High.2 And Not Inside Bar.2 And Not Outside Bar.2 THEN SELL Next Bar at Next Bar Open + Range * 0.10 LIMIT Short Entry

mdc 2003- 1 IF Wednesday And Open < Close And Inside Bar = False And High > Close.7 And Close > High. 1 And Open. 1 <> Close. 1 And Open > Low And LOw.1 <> Low.3 And High.2 > Close.2 And Low <> 0pen.l And Low. 1 0 Low.2 And Open.2 > Low.2 And Open. 1 > Low. 1 And Outside Bar = False And Low 0 Close. 1 And Close.1 0 High.4 And Open. 1 <> Close.2 And Next Bar Open 0 Close THEN BUY Next Bar at MARKET Long Entry

Action:

mdc 2003-2 IF Friday And Close < Open And High > High. 1 And Not Outside Bar. 1 And Low < High. 1 And Open. 1 0 Low. 1 And Next Bar Open 0 Open And Open < High And Open.2 < High.2 And Next Bar Open > Low And High.3 > Close.3 And Next Bar Open < High And Outside Bar = False Long Entry

RuleName:

mdc 2003-3

O 2005 Lany Williams - Million Dollar Challenge

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Rule Text:

IF Willspread (Gold , 3 , 6 ) > 0 And Low - MovingAvg (Close , 18) < Tick Move * 40 And MovingAvg (Close , 18) < Low And Not Outside Bar And Not Inside Bar.4 And High 0 Open And High 0 Close. 1 And Open 0 Close And High.3 0 Close.4 And Open. 1 0 High.3 And High > High. 15 And Not Outside Bar.5 And Open. 1 0 Close.2 And Close 0 Open. 1 And Next Bar Open <> High. 1 And Open <> Low And Close. 1 0 High.2 And Open. 1 0 Open.2 And Open.4 0 High.4 And Close.5 0 High.6 And Low <> Close.1 And Open.2 <> Close.4 And Open 0 High.2 And Low <> Low. 1 And Open.4 <> Open.3 And High > Close.2 And Not Outside Bar.26 And Low. 1 0 Low.3 And Open.2 0 High.4 And Open.3 <> High.5 And Open 0 Low. 1 And Low. 1 0 Low.2 And Open 0 Close. 1 And High. 1 0 High.3 And Next Bar Open < Close And (Inside Bar And Close > Close. 1 And Outside Bar.2) = False mTTm-\T

n T - T

-\T

C ( .

--T\T\

Action:

Long Entry

RuleName: Rule Text:

mdc 2003-4 IF Open > High.3 And High.4 < High.5 And Open.4 < Open.5 And Low.3 > Low.4 And Open > High.4 And Low.4 < Low.5 And Low. 1 < High.2 And Low < High. 1 And Close > Close.1 And Not Outside Bar.2 And Close. 1 > Open. 1 And High > High. 1 And High.2 0 Close.2 THEN BUY Next Bar at MARKET Long Entry

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

mdc 2003-5 cot IF COT Commercials Index (3) > 85 And Not Outside Bar.7 And Not Inside Bar. 13 And Next Bar Open > Low And Next Bar Open < High And Open 0 High. 1 And Not Inside Bar And Not Inside Bar. 1 And Not Inside Bar.2 And Low 0 High. 1 And Next Bar Open < High. 12 Or Next Bar Open < High. 1 And Outside Bar = False THEN BUY Next Bar at High STOP Long Entry

Use: Action:

mdc 2003-6 IF Friday And Close < Open And High > High. 1 And Low < High. 1 And Open. 1 0 Low. 1 And Next Bar Open 0 Open And Open. 1 0 Close. 1 And Not Outside Bar.2 And Not Outside Bar. 1 And Open 0 High And Open.2 0 High.2 And Next Bar Open > Low And Inside Bar. 1 = False And Close. 1 0 Close.2 THEN BUY Next Bar at MARKET OFF Long Entry

RuleName:

mdc 2003-7

O 2005 Larry Williams - Million Dollar Challenge

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Rule Text:

IF High > High. 1 And Close > Close. 1 Or Close > Open And Close.2 < Open.2 And High.2 < High.3 And High.4 > High.3 And High > High.6 And Not Outside Bar And Low <> Low. 1 And Low <> High. 1 And Low. 1 o Low.2 And Next Bar Open >

Use: Action:

Close THEN BUY Next Bar at MARKET OFF Long Entry

RuleName: Rule Text:

mdc 2003-8 IF (Gold < Gold.3 Or Gold < Gold.2 Or Gold < Gold.23) And Inside Bar. 1 = False And Outside Bar.2 = False And Outside Bar.4 = False And Inside Bar.6 = False And Close < Open And Close < Open.3 And Open. 1 Close And Open 0 Close. 1 And Open <> Low. 1 And Open <> High And Open <> High.5 And Open. 1 <> Close. 1 And Open. 1 0 Low.1 And Open.3 0 Close.3 And Open.4 <> High.7 And Open.6 0 Low.6 &d Low 0 High. 1 And High <> Low.6 And High <> Close. 1 And High 0 High. 1 And High 0 Low.3 And High.3 0 High.4 And Close 0 Low.2 And Close 0 Close.2 And Close <> Close.4 And Close.2 <> Close.3 And Close.2 <> Low.2 And Close.3 <> Close.4 And Close.3 0 Low.2 And Close.5 0 Low.3 And Next Bar Open < High.7 Or Next Bar Open < High.3 And (Outside Bar And Close < Low.1 And Close < Low.2 And Close < Low.3) = False And Next Bar Open >= Close And Next Bar Open < High THEN BUY Next Bar at Next Bar Open STOP

Action:

Long Entry

RuleName: Rule Text:

mdc 2003-9 IF Monday And Close < Close.1 And Gold < Gold.6 And Next Bar Open < Close. 1 And True Inside Bar.4 = False And Low.0 > Close.1 = False And Low. 1 > Close.2 = False And Low.2 > Close.3 = False THEN BUY Next Bar at Close. 1 STOP Long Entry

Action:

RuleName: Rule Text:

Action:

mdc 2003-last IF (Thursday Or Friday) And Open > High. 1 And Close < Close. 1 And (Close > Low.45 Or Close > Low.22) Or (Gold < Gold.35 Or Gold < Gold. 1 Or Gold < Gold.4 Or Gold < Gold.90) And Next Bar Open > High = False And Next Bar Open = Close = False And High. 1 > Low.2 And Low. 1 0 High.2 And Range > Avg True Range (5) * 0.60 And Next Bar Open >= Low THEN BUY Next Bar at MARKET Long Entry

O 2005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

MDC BNDS( Zones - CL 2 zones) IF Next Bar Open >= True Low And Next Bar Open <= High And Next Bar Open < True Low + True Range * 0.35 And Close < Close. 1 And Not Wednesday And CRI3 < CRI3. 15 And Not Tuesday And (Gold < Gold. 1 Or Gold < Gold. 10) And Low > Low.24 Or Low > Low.26 And True Inside Bar.3 = False And Inside Bar = False And High > Low. 1 And Open > Open. 1 Or Open > Open.2 THEN BUY Next Bar at True Low + True Range * 0.35 STOP Long Entry

EXIT RULES FOR BONDS

DELAYED BAILOUT + 2 TICXX---Thewbestshort term exit I have found for bonds is to buylsell today, allow tomorrows market to complete itself and then take our profit at the first profitable open +I- 2 ticks. The accuracy is very high with this approach and the profit per trade is more than enough to cover slippage and commissions.

TRADE TO TRADE---Any bond system that has about an equal amount of buys and sells can be traded without any exit, other than the stop, by just going from one signal to the opposite. The accuracy declines, but the risk reward skyrockets. I am showing the pattern trading system signals from 1990, as well as just the last 375 trading days, with both exit techniques.

O 2005 Lany Williams - Million Dollar Challenge

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Data: Calc Dates: 1

DAY T-BONDS 67/99 0125188- 10/08/99

Num, .CornP.-Value. -CmwS!kpage Margin-!?om-at Dri-~e:\Path\FileN~e 144

-3

$ 31.250 $

$ 0$

3,000

CSI C:\GD\BACK67\F061.DTA

.................................................. ALL TRADES -Test 1 .................................................... Total net profit $233,532.50 Gross profit $348,156.25 Gross loss -1 14,623.75 Total # of trades 409 Percent profitable 61% Number winning trades 250 Number losing trades 159 Largest winning trade $9,548.75 Largest losing trade $-1,670.00 Average winning trade $1,392.62 Average losing trade $ -720.90 1.93 Avg trade (win & loss) $570.98 Ratio avg widavg loss Max consecutive winners 8 Max consecutive losers 6 Avg # bars in winners 6 Avg # bars in losers 5 Max closed-out drawdown $-5,25 1.25. Max intra-day drawdown $-5,657.50 Profit factor 3.03 Max # of contracts held 1 2,697% Account size required $8,657.50 Return on account .................................................. LONG TRADES -Test 1 ................................................. Total net profit $145,605.00 Gross profit $216,610.00 Gross loss $-7 1,005.00 Total # of trades 23 1 Percent profitable 61% Number winning trades 142 Number losing trades 89 $- 1,670.00 Largest winning trade $9,548.75 Largest losing trade Average winning trade $1,525.42 Average losing trade $ -797.81 1.91 Avg trade (win & loss) $630.32 Ratio avg widavg loss 7 Max consecutive winners 9 Max consecutive losere Avg #bars in winners 7 Avg #bars in losers 5

LARRYS TRAILER--- The-following trailing stop works well in Bonds as it provides a higher accuracy that just trade to trade, yet still has a large riskheward ratio. The rule is to hold the trade for one day, not counting entry, the if the close is greater than the entry price + 2 points exit the long tomorrow at the open tomorrow -140% of today's range. On the sell side the requirement is for close lower than the entry price2 points, then use a stop that is 80% of today's range added to tomorrows opening. Here are the results of this exit on a system; Data: DAY T-BONDS 67/99 Calc Dates: 10/25/88- 10108199

Num.-Conv,P.Value- Cczm---Sli~~+ge. .Mar:gigil!---FormattttDd~Ye~Fr!fh\Ffl!!~amme

144 -3 $ 31.250 $ 45 $ 0 $ 3,000 CSI C:\GD\BACK67\F061.DTA .......................................................... ALL TRADES -Test 1 .................................. Total net profit $240,983.75 - 102,678.75 Gross profit $343,662.50 Gross loss Total # of trades 458 Percent profitable 64% Number winning trades 295 Number losing trades 163 Largest winning trade $9,548.75 Largest losing trade $- 1,670.00 Average winning trade $1,164.96 Average losing trade $-629.00 1.84 Avg trade (win & loss) $526.17 Ratio avg widavg loss Max consecutive winners 13 Max consecutive losers 4 Avg # bars in winners 5 Avg # bars in losers 3 $4,635.00 Max intra-day drawdown $-5041.25 Max closed-out drawdown Profit factor 3.34 Max # of contracts held 1 Account size required $8,041.25 Return on account 2,996% ......................................................... LONG TRADES -Test .................................. Total net profit $144,641.25 Gross profit $2 15,916.25 Gross loss $-71,275.00 67 1 Percent profitable 64% Total # of trades Number winning trades 172 Number losing trades 95

O 2005 Larry Williams - Million Dollar Challenge

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Largest winning trade Average winning trade Ratio avg wintavg loss Max consecutive winners Avg #bars in winners

$9,548.75 $1,255.33 1.67 16 5

Largest losing trade Average losing trade Avg trade (win & loss) Max consecutive losers Avg #bars in losers

$- 1,670.00

$-750.26 $541.73 5 4

WHAT'S YOUR MONTHLY BATTLE PLAN? WHATARE THE BIASES? WHAT'S THE CURRENT PATTERN? WHAT'S THE TREND OF GOLD AND THE CRB? W E R E SHOULD ENTRY COME?

O 2005 Larry Williams - Million Dollar Challenge

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THE JAWS OF DEATH SHORT TERM SET UP FOR THE BOND MARKET

In the summer of 2000 I was struck by the idea of looking at this pattern in a new way. The first run through the computer produced lots of profitable trades with very little "playing" with the data. The importint relationships I noticed are 1) the opening direction of the day for gold and bonds is very important. Makes sense, the opening direction is the most current data we have on the market. The other relationship is that of naked closes, these powerhouse days set up extreme divergent conditions we can trade. Here are the rules: The same naked close and opening relationships appeared in the S&P vs. Bonds data I have been looking at for so many years but in a different light. I am certain there are more patterns to uncover in that the concept is new, so give it time and even more god stuff will follow I am certain.

BUYS

1. If day of week is 3 and today's close is > yesterdays high and greater than the low 10 days ago and the open today is < yesterdays high while gold is lower than the close 4 and 9 days ago, then buy tomorrow at the open tomorrow + 10% of today's range. 2. Any day but 3 and close < close yesterday and close > the close 5 or 13 days ago while gold has closed < the low 2 ago then buy tomorrow at the open + 10% of today's range. 3. If TDOM > 18 gold closes lower than 6 days ago while bonds close > close 11 ago buy at the open tomorrow.

O 2005 Lany Williams - Million Dollar Challenge

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SELLS

1. If TDOM is 2 and Gold closed today > the high 3 days ago and bonds have closed above the high 3 days ago or the close 4 days ago then sell tomorrow at market on open. 2. If TDOM is 3 and gold closes > the prior days high while bonds close < the close 1 or 2 or 7 days ago then sell tomorrow on the open.

FIRST PROFITABLE OPEN + 4 TICKS IF LONG THE EXIT FOR THESE TRADES AND - 2 IF SHORT OR $1,500 STOP I am showing the results for the last 6000 days of trading as well as the last 360, using a $1,500 stop and ?hbail out exit.

O 2005 Lany Williams - Million Dollar Challenge

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Data: Calc Dates:

T-BONDS-9967 12/80 06/24/59 - 3/02/73 DAY

................................................. ALL TRADES -Test 1 ................................................... Total net profit $57,112.50 $4,266.29 Gross profit $101,378.75 Gross loss Total # of trades 2 10 Percent profitable 84% Number winning trades 177 Number losing trades 33 Largest winning trade $2,548.75 Largest losing trade $-1,638.75 Average winning trade $572.76 Average losing trade $-1,341.40 0.42 Avg trade (win & loss) $271.96 Ratio avg winlavg loss Max consecutive winners 30 Max consecutive losers 2 Avg # bars in winners 2 Avg # bars in losers 3 Max closed-out drawdown $-3,582.50 Max intra-day drawdown $-4,301.25 1 Profit factor 2.29 Max # of contracts held $7,30 1.25 Return on account 782% Account size required //////////lll///ll//l//llNllll//////////////// LONG TRADES Test 1 ............................................. Total net profit $33,387.50 Gross profit $65,471.25 Gross loss $-32,083.75 Total # of trades 140 Percent profitable 84% Number winning trades 118 Number losing trades 22 Largest winning trade $1,892.50 Largest losing trade $-1,638.75 Average winning trade $554.84 Average losing trade $-1,458.38 Ratio avg w d a v g loss 0.38 Avg trade (win & loss) $238.48 Max consecutive winners 20 Max consecutive losers 2 Avg # bars in winners 2 Avg # bars in losers 3 /////////lll///////l///lNlllll/////////////// SHORT TRADES -Test 1 ............................................. Total net profit $23,725.00 Gross profit $35,907.50 Gross Loss $-12,182.50 Total # of trades 70 Percent profitable 84% Number winning trades 59 Number losing trades 11 Largest winning trade $2,548.75 Largest losing trade $-1,545.00 Average winning trade $608.60 Average losing trade $-1,107.50 Ratio avg winlavg loss 0.54 Avg trade {win & loss) $338.93 Max consecutive winners 15 Max consecutive losers 2 Avg # bars in winners 2 Avg # bars in losers 3 Max closed-out drawdown $-1,988.75 Maxintra-daydrawdown $-2,332.50 Profit factor 2.94 Max # of contracts held 1 Account size required $5,332.50 Return on account 444%

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SHORT TERM S&P TRADING

Trading the S&P 500 is as wild as it gets, It's a two edged sword that cuts very quick and very sharp, To most people it appears there is little sense or order to what's going on here, In fact, my research has uncovered some extremely good trading opportunities, for the trader diligent enough to record each day's activity and note the appropriate patterns, this market gets jump started by thefollowing;

1. TRADE DAY OF MONTH

2. TRADE DAY OF WEEK 3. THE BOND MARKET

4. PRICE PATTERNS

1. TRADE DAY OF MONTH-It is very clear to me that the best set up TDOM's for buying come early in the month like days 4,6,7,13, and late in the month like 19,20,2 1 and 22. The best sells come at the same time period if conditions are right; days 3,5,6,11,19 and 2 1 have performed well. Around day 11 is the best typical sell.

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Here are the best buv lonz TDOM's and Month with performance shown;

TDOM

$ PROFITS

#TRADES

JANUARY 7 9 10 18 20 22

19,160 18,485 23,185 24,3 10 19,355 7,660

17/15 17/13 17/14 17/15 16,14 717

88% 76% 82% 88% 87% 100%

1,127 1,087 1,363 1,430 1,209 1,094

FEBRUARY 8 23,985 13 24,185

17/16 17/15

94% 88%

1,410 1,422

MARCH 10

21,335

17/16

94%

1,255

MAY 5 20 17 22

3 1,460 24,760 14,485 9,260

17/17 17/14 17/15 717

100% 82% 88% 100%

1,850 1,456 852 1,322

14,910

17115

88%

877

JULY 7 8

21,860 1 14,635

17/16 17/15

94% 88%

1,285 860

AUGUST 23

7,635

717

100 %

1.090

17/15

88%

710

AVG PROFIT

JUNE

SEPTEMBER 18 12,085

O 2005 Larry Williams - Million Dollar Challenge

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OCTOBER 10 13 19 21 23

45,360 30,860 56,660 18,375 7,210

NOVEMBER 20 20,650 15/14 DECEMBER 14 18,560 17/16

BUYING ON THE OPENIEXIT ON THE CLOSE FIRST DAY OF EVERY MONTH Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

$97,138 270 $360 NIA 12.0 -$23,405 $43,143 $0 3 Wins

Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

O 2005 Larry Williams - Million Dollar Challenge

Profit Factor ($Wins/$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): Z-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Retum Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

Page 65

Equity Curve

AND ON THE SELL SIDE WE HA VE...

The best TDOM's by the month are as follows. JANUARY--- NO IDEAL SELL TRADE DAY SETUPS FEBRUARY 18 8,597

17/16

505

3,545

MARCH 18

1 1,872

17/16

698

3,750

MAY 18

14,610

17/15

859

2,637

02005 Larry Williams -Million Dollar Challenge

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JULY 5 11 12 23

10,060 19,160 19,972 9,410

AUGUST 19 20

11,297 22,997

SEPTEMBER 6 11 12 16

14,040 9,740 12,815 13,215

OCTOBER 3 11 18

11,672 18,747 36,860

NOVEMBER 6 8,597 DECEMBER 5 11,935 7 12,310

And, the next clip shows the results of just the sell signals from inception and 1999. Following that is the combined results---of buys and sells--- from inception and just 1999. The point should be very clear, there are times of the month more set up for selling and buying than others and we should focus on these windows of opportunity.

O 2005 Larry Williams - Million Dollar Challenge

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///////////////l//////////////////////////////////ll/////////////////////////A\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Directory : C:\MONTANA Printed on: 10111199 02:02pm PERFORMANCE SUMMARY @ A BEST SF DAYTRADER Model Name: Test Number : 1of1 Notes: Best TDOM's

Data : Calc Dates :

Longs Only

S&P 500 IND-9967 12/98 08/09/82 - 10111/99

Nwn2.. .Cony.-P, - - - Valuee- - - Comm..

- - S!i~p-aze - - - - Mxd-n- - - -F-~rnat Drive~\pat!!!F1!e?%ame $ 0 $ 3,000 CTIPC C:\GD\BACK67W59.DAT ...................................................... ALL TRADES -Test 1.............................................................. Total net profit $220,172.50 Gross profit $345,010.00 Gross loss -124,837.50

149

2 $

2.500

Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg widavg loss Max consecutive winners Avg # bars in winners Max closed-out drawdown Profit factor Account size required

$45

432 377

Percent profitable Number losing trades

$17,205.00 $9 15.15 0.40

Largest losing trade Average losing trade Avg trade {win & loss)

50 2

Max consecutive losers Avg # bars in losers

$-18,465.00 2.76 $21,465.00

Max intra-day drawdown Max # of contracts held Return on account

87% 55 $-11,670.00 $-2,269.77 $509.66

$-18,465.00 1 1,025%

lll/ll///ll////llllll//////IIIIIIIIIIII//I/II/IIIIIIIIII///IIIIIIIIIA\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\ Directory : C:\MONTANA Printed on: 10/11/99

02:02pm Model Name Test Number Notes Data Calc Dates

PERFORMANCE SUMMARY @ A BEST SP DAYTRADER Developer 1 of 1

Best TDOMVS Shorts Only

: S&P 500 IND-9967 12/98 : 08/09/82 - 10111/99

............................................................ ALL TRADES -Test .........................................................

Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg widavg loss Max consecutive winners Avg # bars in winners Max closed-out drawdown Profit factor Account size required

$172,442.50 $228,057.50 236 2 14

Gross loss Percent profitable Number losing trade

$19,705.00 $1,065.69 0.42

Largest losing trade Average losing trade Avg trade (win & loss)

33 3

Max consecutive losers Avg # bars in losers

$-8,590.00 4.10 $1 1,590.00

O 2005 Larry Williams - Million Dollar Challenge

Max intra-day drawdown Max # of contracts held Return on account

$-8,590.00 1 1,487%

Page 68

Model Name: Test Number: NO~S: Data: Calc Dates:

@ A BEST SP DAYTRADER : lof 1

Developer

Best TDOM's

S&P 500 IND-9967 12/98 Buy & Sells 08/09/82 - 10111/99 ?WnICWV, P.--Va!u-c- --Ccoommmm S!ipp.agc-?Aargb-- I~.mat - tt5!~~e;\Path\Fi~eNmee 149 2 $ 2.500 $45 $ 0 $ 3,000 CTPC C:\GD\BACK67\F59.DAT llllllllllllllllllll/ll/llllll/l//lllll//////////////// ALL TRADES -Test 1 ......................................................... Total net profit $38 1,887.50 Gross profit $571,752.50 Gross loss -189,865.00 Total # of trades Number winning trades

710 573

Largest winning trade Average winning trade Ratio avg winlavg loss

$19,705.00 $997.82 0.71

Largest losing trade Average losing trade Avg trade (win & loss)

$1 1,670.00 $-1,385.88 $537.87

33 1

Max consecutive losers Avg # bars in losers

4 3

Max consecutive winners Avg # bars in winners Max closed-out drawdown Profit factor Account size required

$-15,510.00 3.01 $18,510.0

Percent profitable Number losing trades

Max intra-day drawdown Max # of contracts held Return on account

80% 137

$-15,510.00 1 2,063%

THE ULTIMATE BEST MONTHIBEST TDOMIDATAZ STRATEGY

The following results combine several strategies; first we will BUY only if the TDOM is >19 and it is January, February, May, June, October or November, at the next days open.. .if the T Bonds are greater than 2 or 16 days ago. The sell criteria is to sell if TDOM=12 or TDOM=13 the month is January, March, July, August or September at the next days open ...if the close of TBonds is less than the close 5,8 or 15 days ago. The $226,005 of profits on 156 trades, about 10 a year, has 90% accuracy with a whopping $1,448 average profit per trade. In 1999 this approach has made over $50,000 ................................................... ALL TRADES -Test 1 ............................................................ Total net profit $226,005.00 $46,875.00 Gross profit $272,880.00 Gross loss

Total # of trades Number winning trades

156 141

Largest winning trade Average winning trade Ratio avg winlavg loss

$17,455.00 $1,935.32 0.6 1

Largest losing trade Average losing trade Avg trade (win & loss)

35 1

Max consecutive losers Avg # bars in losers

Max consecutive winners Avg # bars in winners

Percent profitable Number losing trades

Max closed-out drawdown $-7,090.00 Max intra-day drawdown $-7,370.00 Profit factor 5.82 Max # of contracts held 1 2,179% Account size required $10,370.00 Return on account ....................................................... TRADES -Test 1 ......................................................... Total net profit $130,770.00 Gross profit $159,150.0 Gross loss $-28,380.00

O 2005 Larry Williams - Million Dollar Challenge

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Total #of trades Number winning trades

94 85

Largest winning trade Average winning trade Ratio avg winfavg loss

$14,705.00 $1,872.35 0.59

Largest losing trade Average losing trade Avg trade (win & loss)

22 1

Max consecutive losers Avg # bars in losers

Max consecutive winners Avg # bars in winners

Percent profitable Number losing trades

FIRST TRADING DAY OF THE MONTH

Along this same line buying on the open of the First Trading Day of the Month (FDOM) Has presented some wonderful trades. The best of the best are shown using a $3,500 stop and first profitable open for the exit.

JANUARY MARCH JUNE JULY AUGUST DECEMBER

$14,492 9,3 10 11,487 11,097 10,110 16,347

16/14 17116 15/13 17/17 17/16 17/17

87% 94% 86% 100% 94% 100%

$905 $547 $765 $652 $594 $96 1

-5,202 -4,170 -2,787 -2,535 -3,545 -1,137

You can usually hold on to these trades for more than one day.. MORE ON THIS IN THE LAZY MANS DAY TRADER SYSTEM

2. TRADE DAY OF WEEK-Generally speaking TDW's 1,2, and 5 have set up the best buys, TD W's 3 and 4 have led to the best market slides.

3. THE BOND MARKET --Higher bond prices seem to almost "cause" stocks to rally, while lower bond prices pull stocks down. Generally speaking Bonds greater than 20 or so days ago are bullish, lower bearish. There is also a 15 and 5 day magnet effect at work, as you will see in my signals.

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HOW BOND OPENINGS IMPACT THE S&P 500 I got into a heated discussion with another trader over the impact of Bonds on the S&P 500 on a short term basis. He claimed it was ephemeral at best and one needed to watchfor changes. that my study from 1982 to date was over too long of a time period.. .that I should have looked at just the last 6 years.

...

So I did and here is what I found; Looking back at just the last 6 and $4years I see there were 829 times the S&P opened higher than the prior days close. Exit moc on these days would have lost $-88,330 or -107 a trade. When the S&P opened lower there were 770 trades losing $-28,275 or -37 a trade.

In the 8 prior years, 1990-1998, I found 1,020 times that bonds opened higher. Buying on those openings, exiting on those closes, lost $-19,538 or -19 a trade. There were 938 days with a lower opening. The same buy and exit rule produced $+12,563 of positive profits for a net gain of $13 per trade. I have deducted $50 from all trades in this report, by the way.

...

Well what we see here, in both sets of data, is that as lower opening is more bullish that a higher opening.

If we turn our attention to just the direction of the bond market; I find 745 days with bonds opening less than the prior day and a loss of $65,075 or - 87 a trade. When Bonds opened higher there were 809 trades losing $59,980 or -74 a trade.

In the prior 8 years there were 888 down openings in Bonds with a loss of $12,023 or -14 a trade. We saw 1,008 higher openings losing a little less, $7,443 or -$7 a trade.

Well.. what we see here, in both sets of data, is that higher Bond openings are more bullish than a lower Bond opening.

My next step was to look at the basic possibilities of stock openings vs. bond openings. Here is what I found out from 1998 to date; THE SUM OF THE P A R T S 1 9 9 8 THRU 2004 trades +I-$ $ avg. trade 345 -72,525 -210 442 -50,115 -1 13 287 -29,315 -102 451 +21,005 + 47 It was just as easy to run that data for the 8 prior years to see if there was consistency to the opening direction relationship of these two markets. Here is what I found; S&P OPEN

+ +

BONDS OPEN

+ +

THE SUM OF THE P A R T S 1 9 9 0 THRU 1998 O 2005 Larry Williams - Million Dollar Challenge

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S&P OPEN

+ +

BONDS OPEN

trades 652 300 555 332

+ -

+I-$ -28,815 -4,950 -10,063 +22,335

$ avg. trade

-44 -17 -1 8 + 67

The market was not as volatile in the 1990-1998 time period yet the average profit per trade number shows the same thing; tt is the worst +- and - - are about the same and + is bullish, at leastfor the very short term.

DEPENDANCY??? If all this matters one would think that the size of the gap up in bonds should influence the magnitude of the S&P change for the day. Well.. ..guess what.. .it does! (At least in the 1998-2004 study) TICK SIZE OF UP GAP IN BONDS

TRADES

O 2005 Larry Williams - Million Dollar Challenge

$ PROFT

A V TRADE

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4. PRICE PATTERNS---You probably know the best patterns, my OOPS!, Volatility breakouts, Fadeouts, Outside down close days and the like. The secret is putting them into a working order.

AN INSIGHT INTO OUTSIDE DAYS

While all market days are confusing, the most confusing one of them all is what's know as and "Outside Day'; or bar, day that make a higher high than the prior day as well as a lower low. Let's study them this month;

OUTSIDE MARKETS MORE THAN YOU THINK-While books and market lore touch on the Outside Day (OD) there has not been much specific work as to how, if it at all, these can be traded. For the most part authors have seen OD with a down close as bearish, those with an up-close as bullish. They are, for the most part, wrong on that assumption. Let's look at some "raw" figures for openers. Since 1982 when the S&P began trading there have been 624 outside days, and 4,937 days that were not of this ilk. In other words, almost one in every 13 days we see an OD unfold.

If the OD had an up close and we bought the next day on the open and exited on the close we would have lost on those 269 days, an average of -$195. If the OD had a down close and we bought the next day on the open and exited on the close we would have lost on those 352 days an average of -$72. So, at first blush we see that up close OD are not as bullish, at least for the short term, as has been alleged.

NOTHING IS MORE DIFFICULT THAN DA Y TRADING---I cannot think of anything more difficult than day trading (other than predicting with Elliott Wave!). So to show the impact of the OD I will be using an exit on the close of entry.. .no hold over night.. .the trade has to work that day or not. This is putting strong demands on the pattern or market. As an example if you bought on the opening following all up days (that were not OD) we find 2,625 trades with an average profit of $15, after $50 for commish. Same scenario but with a down close and you lose $62 a trade on the 2,25 1 trades.

If we buy on the open following all OD with an up close we see a very uncomfortable $52,000 slip away from us on 269 trades. Ouch! So much for OD up closes being real bullish for the short term, -$I93 per trade. O 2005 Larry Williams - Million Dollar Challenge

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OK, what if we buy after just down close OD's? Sorry to say, it is not much better, you still lose some $25,000 on 352 trades but that's a hit of only -$72 per trade. Keeping those numbers in mind we can now look at possible OD trades. I'll start with a favorite of mine; we will buy at the low of the OD if the market opens below the low the next day, this is my OOPS! Pattern, most of us know and love so well. Taking OOPS! Signals afier down closes loses a lot, $38,463 or $855 a trade. Taking them after an up close OD would be nice but it only happened one time. SELLING AT THE LOW O F THE OD---Instead of taking the OOPS! Buy if we sell should prices rally back to the OD low we make $34,413 on 45 trades with as hefty, hefty profit of $765 per trade! Speaking of selling, OOPS! Sells are not so good following an OD with an up or down close you lose money, even lose money doing the opposite. How can that be? Commissions eat a short term trader alive as they would on these patterns.

WAYS TO TRADE OUTSIDE DAYS--Well, let's cut to the chase...there are ways to trade this pattern...but they are few and far between and so, so hard to fmd. But find 'em we do, that's what you pay us for!

1. Let's start with an easy one; look for an OD with a down close that opens less than the high of the OD. Given all that, we then buy at the high of the OD. This trade has appeared 63 times making a day trader ( keep in mind we buy on the stop and exit moc) on 63 trades with and average profit of $332. The drawdown was small, only $1,700 and the trade sports a 65% accuracy with a 2.0 risk reward ratio. Had you taken this same trade but only on up close OD, you would have been stung for -$17,675 on 115 trades, getting clipped for $154 per trade. Ouch!

2. There is another way to look at this pattern. Instead of waiting for the high of the OD to be broken what happens if we buy at the high of the day prior to the OD? Good question and it has a very good answer; In this case we will buy at the high of the prior day of today's open is less than the OD high, and the OD was a down close. The Down close is important as the masses "see and feel" the selling pressures of this washout day and are not interested in being a buyer the next day. Dummies.

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I say that as in the 83 trades there has been a net profit of $35,115 for a very large $423 a trade. Over 67% of the trades were winners with a 2.2 risk reward ratio and small $2,700 drawdown.

5. THE DAILY QUESTIONS--Other than "Why would anyone trade this market" the big questions are to establish the trend of Bonds, potential OOPSJ, TDW, TDOM and basic price patterns. 6. RULE BASED TRADING-This caiget as complicated or simple as you want. I am providing the specific rules at this seminar for patterns, formations, days of the week, etc., that I actually trade with.

7. INTER DAY TRADING-The key is to await any of the above then use a Will Spread 5/20 on 15 minute bar charts with T Bills or Bonds. At the start of every month you have a set up buy, a set up sell around TDOMU-12.

MDC 2004 S&P TRADING SYSTEM RESULTS

Summary All Trades Report Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # o f Bars in Wins:

$1,529,325 1,190 $1,285 1.66 51.9 -$6.640 $28,408 $0 3 Wins

1982 THRU Apr 19, 2005 08:24:05

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): 2-Score (WlL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

O 2005 Lany Williams - Million Dollar Challenge

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Strategy: MDC MAY 2004 SP SYSTEM BAIL OUT AND 3,500 STOP

Strategy: MDC MAY 2004 SP locked 11/04 Cornrnission/Slippage: $45.00 Bars Required to Test: 100 Estimated Length of Longest Trade: 100 Pyramiding Off From Date: 01/30/1900 To Date: 01/04/2002

Data Info: Identifier Market 1 TQ

Security S&P 500 Index (Pit) Cadj Liq Day T-bonds Cadj Liq

Bar Period Daily

Sec T p e F

Svmbol SP-067

Daily

TQ-067

Rules:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

A A TEST IF Next Bar Trading Days After Holiday = 1 And Next Bar Open > HighAndLowCHigh.1 {And BLASTOFF! ( 1 ) > 1.5 ) A n d { ( Close > Projected High. 1 And Next Bar Open < Projected High = false Bonds > Bonds. 18 Or Bonds > Bonds. 26 ) MovingAvg (Bonds, 25) > MovingAvg (Bonds ,25).2 Or MovingAvg (Bonds , 16) > MovingAvg (Bonds, 16).2 Or MovingAvg (Bonds, 3) > MovingAvg (Bonds, 3).2 THEN BUY Next Bar at W T Long Entry

Action:

aA IF Up Range And Close < Open And Down Range. 1 And Close. 1 > Close.2 And Down Range.2 And Close.2 < Close.3 And Close. 1 < Close.4 Or Close < Close.9 THEN BUY Next Bar at High. 1 STOP Long Entry

RuleName:

aaaaaaaa

O 2005 Larry Williams - Million Dollar Challenge

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Rule Text:

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

IF Up Range And Close > Open And Down Range. 1 And High. 1 < Low.2 And High < Low.2 And Next Bar Open > Low THEN SELL Next Bar at MARKET Short Entry

a a a a sell IF Up Range. 1 And Open. 1 > High.2 And Close. 1 > Close.2 And Close. 1 < Open. 1 And Down Range And Close < Close. 1 And Close > Open And Next Bar Open > Low THEN SELL Next Bar at Low STOP Short Entry

A a Sell IF Inside Bar And Close > Close. 1 And Close > Open And Close. 1 > Close.2 And Close. 1 > Open. 1 And Next Bar Open < High And Bonds > Bonds. 1 Or Bonds > Bonds.4 And Low. 1 < High.2 And Low.2 < High.3 Long Entry

a a sept test IF High < Low. 1 And Close < Open And Next Bar DayOfWeek = 2 And Low > Low.31 Or Low > Low.21 And Bonds > Bonds.38 THEN BUY Next Bar at MARKET Long Entry

a air west test IF Inside Bar And Close < Close.1 And Close > Open And (Next Bar Open > High And Next Bar Open < High. 1) Or (Next Bar Open >= Close And Next Bar Open <= High) THEN SELL Next Bar at Low STOP Short Entry

a great falls n o 0 IF Close < Close. 1 And Close. 1 < Close.2 And Range < Range. 1 And Range. 1 > Range.2 And Next Bar Open < Low. 1 And Next Bar DayOfWeek = 1 And High.1 > Close.2 And Next Bar Open 0 Low.4 THEN BUY Next Bar at Low. 1 STOP Long Entry

O 2005 Lany Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

A KEY REVERSAL TEST-1 IF Down Range And Close > Close. 1 And Down Range. 1 And Close. 1 < Close.2 And Next Bar Open < High And Next Bar Open > Close And High < Low.4 THEN BUY Next Bar at Low.3 STOP Long Entry

A KEY REVERSAL TEST-2-2 IF Down Range And Close > Close. 1 And Down Range. 1 And Close. 1 < Close.2 And Next Bar Open < High And Next Bar Open > Close And High < Low.2 THEN BUY Next Bar at Low.2 STOP Long Entry

a loser to a winner IF Open > Close And Open. 1 > Close. 1 And Open > High - Range * .I And Open. 1 > High. 1 - Range. 1 * .1 And Down Range And Next Bar Open < Close And Not Tuesday And Close < High - Range * .5 THEN BUY Next Bar at MARKET Long Entry

aa louise IF Low.2 > High.3 And High. 1 < High.2 And Low. 1 > True Low.2 And Close < Close. 1 And Next Bar Open < Low.2 THEN BUY Next Bar at Low.2 STOP Long Entry

abq test# 2 IF Up Range And Close > High. 1 And Close > High.2 And Close. 1 > Close.2 And Next Bar Open > Highest (High ,2). 1 And Next Bar DayOfWeek = 1 And Bonds < Bonds. 14 Or Bonds < Bonds.40 Or Bonds < Bonds.2 And Inside Bar.2 = False And lnside Bar. 1 = False THEN SELL Next Bar at Highest (High ,2). 1 STOP Short Entry

RuleName:

Add ons year 2000 Sell 1* 1

O 2005 Larry Williams - Million Dollar Challenge

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Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

IF Low > High. 1 And Next Bar Open >= Close And Low < High. 19 Or Low < High.5 And (Open. 1 < Low.2 And Close. 1 > Close.2) = False And Low > Low.4 And Low > High.5 Or Low > High.30 Or Low > High. 13 THEN SELL Next Bar at MARKET Short Entry

advanced fakeout IF Up Range And Close < Close. 1 And Up Range. 1 And Range < Range. 1 And Close. 1 < High. 12 Or Close. 1 < High. 17 And Not Friday And Low. 1 <= High.2 Or Close. 1 < Close.7 And Next Bar Open >= Close THEN BUY &xt Bar at High. 1 STOP Long Entry

an outside sell < open IF True Outside Bar And Close > Close. 1 And Next Bar Open < Close And Close < High. 1 And Close > High. 10 Or Close > High. 15 Or Close > High.30 And (High < High.5 And Low > Low.5) = False Or Close > Open THEN SELL Next Bar at MARKET Short Entry

Best S&P Fakeouts Buy 1 IF High > High. 1 And Low > Low. 1 And Close < Close. 1 And Close.1 > High.2 And (High < Highest (High , 9). 1 Or High < Highest (High , 15).1) And Next Bar Open < High Or Next Bar Open < High.6 And Next Bar Open > High. 1 THEN BUY Next Bar at MARKET Long Entry

blast failure sell -2 IF Down Range And Next Bar Open > Close { And Not Wednesday And Not Thursday } And Open < Close And BLAST OFF! (1) > 13 And Close > Low. 1 And High. 1 > Low.2 And BLAST OFF! (1).2 > 1 { And Next Bar Open <= High And Range < Avg True Range ( 7 ) } And Next Bar Trading Days After Holiday 0 1 And Inside Bar. 1 = False And True Inside Bar THEN SELL Next Bar at True Low. 1 STOP Short Entry

O 2005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

CHERRY PICKED SELL 2 trades? IF Close.2 < Close.3 And Up Range. 1 And Close. 1 > High.2 And Up Range And Low > Close. 1 And Close > Close. 1 And High < Low.8 Or High < Low.9 Or High < Low. 11 THEN SELL Next Bar at Low STOP Short Entry

day trader sell open 3 IF Next Bar Open > High And Not Monday And Not Wednesday And Bonds < Bonds. 13 And Bonds < Bonds.2 And Outside Bar. 1 = False And Outside Bar,= False &nd Close > Close.7 Or Close > Close.9 Or d > Low.7 Or LOW > Close > ~ l o s e . 3Or Close > ~ l o s e . 4~ n Close Low.24 THEN SELL Next Bar at Next Bar Open - Range * 0.24 STOP Short Entry

DAY TRADER SELL O>H IF Next Bar Open > High And ADX (9) > 14 And ADX (9) < 47 And Not Monday And Not Wednesday And Bonds < Bonds. 13 And Bonds < Bonds.2 And Outside Bar. 1 = False And Outside Bar = False And Close > Close.7 Or Close > Close.9 Or Close > Close.3 Or Close > Close.4 THEN SELL Next Bar at Next Bar Open - (Next Bar Open - Low) * 0.12 STOP Short Entry

day trader sell Opne 2 IF Next Bar Open > High And Not Monday And Not Wednesday And Bonds < Bonds. 13 And Bonds < Bonds.2 And Outside Bar. 1 = False And Outside Bar = False And Close > Close.7 Or Close > Close.9 Or Close > Close.3 Or Close > Close.4 And Close > Low.7 Or Low > Low.24 THEN SELL Next Bar at Next Bar Open - Range * 0.28 STOP Short Entry

DTrade open < PH4 IF Next Bar Open < Projected High.4 And Next Bar DayOfWeek 0 1 And Bonds > Bonds. 1 And (Bonds > Bonds.2 Or Bonds > Bonds.3) And Inside Bar = False And Close < Open Or Close < Close. 1 And Low.2 > High.8 THEN BUY Next Bar at Projected High.4 STOP Long Entry

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RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount

RuleName : Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Exit Long: Stop Loss IF Bars Since Entry >= 0 THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False

Value 3500

O~timiz From OFF

To Val

Stev Val

exit short 112 bailout IF Next Bar Open < Entry Price THEN BUY Next Bar at MARKET Short Exit False

Exit Short: 1 Day after Stop Loss IF Bars Since Entry >= 0 THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP Short Exit False

Value 3500

Ovtimiz OFF

From

To Val

Stev Val

false bottom sell IF Outside Bar And Close > Close. 1 And Close. 1 < Close.2 Or Close. 1 < Open. 1 And Next Bar Open >= Low. 1 And Close < Low.3 Or Close < Low. 10 Or Close < Low.23 And Bonds < Bonds.2 Or Bonds < Bonds.41 Or Bonds < Bonds. 15 Or Bonds < Bonds.6 THEN SELL Next Bar at Low. 1 STOP Short Entry

five lower lows Buy +open IF Low < Low. 1 And Low. 1 < Low.2 And Low.2 < Low.3 And Low.3 < Low.4 And Low.4 < Low.5 And Thursday Or Friday And Next Bar Open > Close THEN BUY Next Bar at Close LIMIT

O 2005 Lamy Williams - Million Dollar Challenge

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Action:

Long Entry

RuleName : Rule Text:

gap down to a sell 11/03 IF Down Range And Close < Low. 1 And High. 1 < Close.2 And Next Bar Open > Close. 1 And Outside Bar.2 = False THEN SELL Next Bar at Close. 1 STOP Short Entry

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

goofy gapper(MDC only) IF Next Bar Open.< Close And (Close - Next Bar Open) > True Range * 0.55 And MovingAvg (Bonds ,55) > MovingAvg (Bonds ,55). 1 Or MovingAvg (Close , 18) 7 MovingAvg (Close , 18). 1 And Close < Low.3 Or Close < Low.7 And Outside Bar = False And Abs (Close Close. 1) > Range. 1 * 0.10 And Outside Bar. 1 = False THEN BUY Next Bar at Next Bar Open STOP Long Entry

goofy gapper-TD IF Next Bar Open < Close And (Close - Next Bar Open) > Avg True Range (I) * 0.55 And MovingAvg (Bonds ,50) > MovingAvg (Bonds, 50). 1 And Close < Low.3 Or Close < Low.7 And Not Friday And Outside Bar. 1 = False THEN BUY Next Bar at Next Bar Open LIMIT Long Entry

ID then down & back up IF True Inside Bar. 1 And Close < Close. 1 And Close > Low.2 And Bonds > Bonds.2 And (Bonds > Bonds.5 Or Bonds > Bonds. 10) And Close < Close.2 And Next Bar Open < High And High < Close. 1 THEN BUY Next Bar at Close. 1 STOP Long Entry

Action:

IN ON AND OUTSIDE DAY IF Next Bar Open < Low And Low.2 <= Close.3 And Not True Inside Bar And Inside Bar. 1 = False THEN BUY Next Bar at Lowest (High, 1) STOP Long Entry

RuleName:

INSIDE DAY GAP UP

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Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

IF Inside Bar And Close > Close. 1 And Low > High.5 And Low. 1 > High.5 And Low.2 > High.5 And Next Bar Open < High. 1 And Next Bar Open >= High THEN BUY Next Bar at High. 1 STOP Long Entry

INSIDE DAY SPREAD PRIOR CLOSE IF Inside Bar And Open < Close. 1 And Close > Close.1 And Close. 1 < Close.2 And Close. 1 < Open. 1 And Close. 1 < Close.7 Or Close. 1 < Close.3 Or Bonds > Bonds.4 And { not traded 2 104 tested ) Next Bar Open < High. 1 THEN BUY Next Bar at MARKET Long Entry

INSIDE SPREAD PRIOR C OPEN >H IF Inside Bar And Open < Close. 1 And Close > Close. 1 And Close. 1 < Close.2 And Close. 1 < Open. 1 And Close. 1 < Close.7 Or Close. 1 < Close.3 Or Bonds > Bonds.4 And Next Bar Open > High. 1 { TESTED 2 I 04 NOT TRADED ) THEN BUY Next Bar at High. 1 LIMIT Long Entry

JAN 200 1 BUY 4.0.Day IF Not Tuesday And Open < Close. 1 And High < High. 1 And Low < Low. 1 And Close > Close. 1 And Close.1 < Close.2 And Next Bar Open < Close And Outside Bar. 1 = True And Close > Low.4 Or Close > Close.7 THEN BUY Next Bar at High STOP Long Entry

Action:

July 2003 sell IF Close. 1 < Open. 1 And Open < Close. 1 And Close > Open. 1 And Next Bar DayOfWeek 0 1 And Inside Bar. 1 = False And Close > Close.5 Or Close > Close. 12 And Next Bar Open >= Close. 1 And Low. 1 < High.2 And Next Bar Trading Days After Holiday <> 1 THEN SELL Next Bar at Close. 1 STOP Short Entry

RuleName:

long 112 bailout ORGNL

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Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text:

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

IF Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open STOP Long Exit False

march 2003 low IF Close. 1 < Low.2 And Close < Low. 1 And Next Bar DayOfWeek = 3 And Next Bar Open < Low. 1 And High - Close < True High. 1 - Close. 1 And (True Inside Bar.2 And High. 1 < Low.2) = False THEN BUY Next Bar at Low. 1 STOP Long Entry

mass confusion $#1 IF Next Bar Open < Low. 1 And Next Bar Open < High.3 And High > Low.4 And Bonds > Bonds. 12 Or Bonds > Bonds.3 And Bonds > Bonds.4 And True Inside Bar = False And Outside Bar = False And Low. 1 <= Close.2 And True Inside Bar.2 = False And (True Inside Bar.3 = True And High.2 <= True High.4 And Low.2 >= True Low.4) = False And Low. 1 < High.3 Or Low. 1 < High.7 { And Next Bar Trading Days After Holiday = 1 this is ok ) THEN BUY Next Bar at Low. 1 + Tick Move STOP Long Entry

MEDIA HYPE IF Next Bar DayOfWeek = 1 And Range < Range. 1 And Close > Close. 1 And Close. 1 > Close.2 And Next Bar Open > High. 1 And Next Bar Open < High And (Low > High.3 And Low > High.20 Or Low > High.4) And High.1 > High.2 Or High > High.4 And Low > High.3 Or Low > High.4 And High. 1 > High.2 Or High > High.4 And (Down Range. 1 And Close. 1 > Close.2) = False THEN SELL Next Bar at High. 1 STOP Short Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

MEDIA HYPE INSJDE IF Inside Bar And Close > Close. 1 And Close > Highest (Close ,9).1 And Next Bar Open > High. 1 And Next Bar Trading DayOfWeek = 1 THEN SELL Next Bar at High. 1 STOP Short Entry

mickey hammer IF { Close < Close. 1 And Close < Open And Open - Close > Close Low * 3 And High < High. 1 And Close < Close. 10 Bonds > Bonds. 1 Or Bonds > Bonds. 5 And } Close < Close. 1 And Close < Open And Close - Low > High - Close And Next Bar Open < True High And Next Bar Open >= Low And Not Down Range. 1 And High. 1 > Open.2 And (Open > Low. 1 Or Open > Low.2 Or Open > Low.3) And (High < Close. 1 And Low. 1 > Close.2) = False And Next Bar Open < Close. 1 And Open < Close. 1 Or Open < Close.3 And { Bonds > Bonds. 15 Or Bonds > Bonds. 7 Or Bonds > Bonds. 32 And } Close > Low. 16 Or Close > Low3 THEN BUY Next Bar at True High + Tick Move * 2 STOP Long Entry

missing in action IF Close < Close. 1 And Close. 1 < Close.2 And Close.2 < Close.3 And Close.3 < Close.4 And Close.4 < Close.5 And Next Bar Open < High And Not Wednesday And Bonds > Bonds.2 Or Bonds > Bonds.27 Or Next Bar Open Of tq > Bonds THEN BUY Next Bar at MARKET Long Entry

RuleName: Rule Text:

my 2 ups and a gap IF Up Range And Close > High. 1 And Up Range. 1 And Close. 1 > High.2. And Next Bar Open > High And Close < High.3 Or Close < High.5 Or Close < High.6 Or Close < High.7 Or Close < High. 18 And High > Low.3 1 Or High > Low.25 THEN SELL Next Bar at Next Bar Open STOP

Action:

Short Entry

02005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

new 25 day hi sell IF Up Range And Close > High. 1 And Close > Highest (High ,25). 1 And Next Bar DayOfWeek 0 1 And Next Bar DayOfWeek 0 5 Or Next Bar Trading Days ARer Holiday = 1 And Next Bar Open > High THEN SELL Next Bar at MARKET Short Entry

NEW SP BUY 4 IF Not Wednesday And Close - Low < Close. 1 - Low. 1 And Close < Close. 1 And Close. 1 < Close.2 And Close.2 < Close.3 And Close.3 < Close.4 And Close Of Tq > High. 1 Of Tq And Next Bar Open < Close Range * 0.10 THEN BUY Next Bar at MARKET Long Entry

october mdc#2 Buy 4 "2" IF Next Bar Open <= Close And Friday And Next Bar Open >= Low And (Close < Close.2 Or Close < Close.5 Or Close < Open) And (Outside Bar And Close < Low. 1) = False And (Close < Close. 1 And Close < Open) = False And (Close > Close. 1 And Close < Open) = False And Low < High. 1 And (Outside Bar And Close > Close. 1 And Open < Low. 1) = False And Down Range THEN BUY Next Bar at MARKET Long Entry

ODAY UP OPEN BUY THE DIP IF Outside Bar And Close < Close. 1 And Inside Bar. 1 And Close. 1 > Close.2 And Next Bar Open > Close THEN BUY Next Bar at Close LIMIT Long Entry

OOPS/FAKEOUT SELL IF Up Range. 1 And Open. 1 > High.2 And Close. 1 < High.2 And Down Range And Close < Close. 1 And Close > Open THEN SELL Next Bar at Low STOP Short Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

open 5 IF Close < Open.5 And MovingAvg (Bonds, 5) > MovingAvg (Bonds, 85).2 Or MovingAvg (Close , 6 ) > MovingAvg (Close ,6).2 And Not Inside Bar.4 And Not Inside Bar.5 And Not Inside Bar.6 And Next Bar Open < Open.5 And Next Bar Open > Low And High > Close. 1 And High. 1 < Close.2 = False And (True Inside Bar. 1 And True Inside Bar.2) = False And (Low.1 > Close.2 And Close > High. 1) = False And (Outside Bar.2) = False And Not Inside Bar And Next Bar Trading Days After Holiday 0 1 THEN BUY Next Bar at Open.5 STOP Long Entry

OUTSIDE UPSIDE FAKEOUT IF Outside Bar. 1 And Close. 1 > Close.2 And Up Range And Close < Close. 1 And Next Bar Open < High. 1 And { Bonds > Bonds. 17 Or Bonds > Bonds. 10 Or Bonds > Bonds. VARA ) MovingAvg (Bonds , 16) > MovingAvg (Bonds , 16).3 THEN BUY Next Bar at High. 1 - Tick Move * 1 STOP Long Entry

outsidelafter inside G IF Outside Bar And Close < Open And High.2 > High And High. 1 >= Low.2 And Next Bar Open < Low. 1 And Inside Bar. 1 And Next Bar Open > Low THEN BUY Next Bar at Low LIMIT Long Entry

proj lo buys IF Next Bar DayOfWeek = 1 Or Next Bar DayOfWeek = 3 And Next Bar Open < Projected Low. 1 And Bonds > Bonds. 18 And True Inside Bar.0 = False And True Inside Bar.4 = False And Outside Bar.2 = False And Outside Bar.5 = False And True Inside Bar.2 = False Or True Inside Bar.0 = False And High >= Low. 1 And Low. 1 <= High.2 And (Close > Close. 1 And Close < Open) = False And (Close. 1 > High. 1 And High < Close) = False And (Outside Bar And Close > Close. 1) = False And High >= Close. 1 And (Close = Open) = False THEN BUY Next Bar at Projected Low. 1 STOP Long Entry

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RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

proj lo buys-2 IF Next Bar DayOfWeek = 1 Or Next Bar DayOfWeek = 3 And Next Bar Open < Low. 1 And Bonds > Bonds. 18 And True Inside Bar.0 = False And True Inside Bar.4 = False And Outside Bar.2 = False And Outside Bar.5 = False And True Inside Bar.2 = False Or True Inside Bar.0 = False And High >= Low. 1 And Low. 1 <= High.2 And (Close > Close.1 And Close < Open) = False And (Close.1 > High. 1 And High < Close) = False And (Outside Bar And Close < Close. 1) = False And High < Close.1 = False And (High. 1 < Low.2) = False And Down Range And Close > Close. 1 = False THEN BUY Next Bar at Low. 1 STOP Long Entry

Projected HiILow C >B3-A$ IF Close < Projected Low. 1 And Not True Inside Bar. 1 And High > Close. 1 And Monday Or Tuesday Or Thursday And Low.2 <= Close.3 And Next Bar Open < Projected Low. 1 And Inside Bar = False And Outside Bar.3 = False And Range < Range. 1 Or Close - Low > Close. 1 - Low. 1 Or Bonds > Bonds.28 Or Bonds > Bonds. 16 Or Bonds > Bonds. 11 Or Low > High. 10 THEN BUY Next Bar at Projected Low. 1 STOP Long Entry

pull back and run 1/1/04 IF Close.3 > Close.4 And Close.2 < Close.3 And Close.1 < Close.3 And Close < Close.3 And Low > True Low.6 And Next Bar Open < Low.2 And Bonds > Bonds.36 Or Bonds > Bonds.2 Or Bonds > Bonds.28 Or Bonds > Bonds.12 Or Low > High. 16 And lnside Bar = False THEN BUY Next Bar at Low.2 STOP Long Entry

sadaam buy IF Open. 1 < Close. 1 And Open > High. 1 And Open > High.3 And Open > High.5 And Open > High. 10 And Close < Close. 1 And Next Bar Open < Close And Bonds < Bonds. 1 And Monday Or Wednesday THEN SELL Next Bar at Close LIMIT Short Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

sadaam sell IF Friday And Next Bar Open >= High And (Next Bar Open > High + Range * 0.30 Or Next Bar Open > Close + Range * 0.62) And Next Bar Open > High.4 Or Next Bar Open > High.5 Or Next Bar Open > High.6 THEN SELL Next Bar at Next Bar Open - (Next Bar Open - High) * 0.4 STOP Short Entry

SELL LOW 1 @ HI 1/04 IF Low > Low. 1 And Open < Open. 1 And Close < Close. 1 And Open > Close. 1 And Next Bar Open > High THEN SELL Next Bar at High STOP Short Entry

Specialist Trap IF Close. 1 > Low.4 And Close.2 > Low.4 And Close.3 > Low.4 And Close < Lowest (Close ,4). 1 And Next Bar Open < MovingAvg ((Highest (High ,4). 1 + Lowest (Low ,4). 1) / 2 , 4 ) And Next Bar Open < Highest (Low , 2 ) And Bonds > Bonds. 12 And Not Inside Bar THEN BUY Next Bar at Highest (Low, 2) STOP Long Entry

ST CROIX SELL #2 IF Close.2 > Close.3 And Up Range. 1 And Close. 1 > Close.2 And Up Range And Close > Close. 1 And Next Bar Open > High And High < High.6 And Bonds < Bonds.28 THEN SELL Next Bar at High STOP Short Entry

student inside day IF Next Bar High < High And Next Bar Low > Low And Close < Close. 1 And Next Bar Close > Next Bar Open And Bonds > Bonds. 1 And Bonds > Bonds.3 And Outside Bar = False And Close < Close. 11 Or Close < Close. 12 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text: Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

tdom tester IF Close > Close.1 And Close > Open And High. 1 < Low.2 And High > Low.2 And Next Bar Open > Close And Close. 1 < Open. 1 And Next Bar Open > High THEN BUY Next Bar at High STOP Long Entry

test$$ IF Next Bar Open > High. 1 And True Inside Bar And Close > Close. 1 Or Close > Open And Monday Or Friday THEN SELL Next Bar at High. 1 STOP Short Entry

THURSDAY TRAP 2/05 IF Close > Low + Range * 0.90 And Low < High. 1 And Close > High. 1 Or Close > High.7 Or Close > High. 12 Or Close > High.24 And Bonds < Bonds.8 Or Bonds < Bonds. 12 Or Bonds < Bonds.27 And Next Bar DayOfWeek = 5 And (Outside Bar. 1 And lnside Bar) = False THEN SELL Next Bar at MARKET Short Entry

TOM TOM IF Friday And Close > Close. 1 And Close < Open And Open > High. 1 And Outside Bar = False And Next Bar Open = Low = False And Bonds < Bonds.8 Or Bonds < Bonds. 14 Or Bonds < Bonds.35 Or Close < Close. 17 Or Close < Close.35 And Next Bar Open > True Low And Low > Close. 1 THEN SELL Next Bar at MARKET Short Entry

toronto IF Close. 1 > High.2 And Up Range And Open > High. 1 And Low < High. 1 And Close < Open And Next Bar Open < High. 1 And Next Bar DayOfWeek = 1 Or Next Bar DayOfWeek = 5 THEN BUY Next Bar at High. 1 STOP Long Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

TWO DOWN SELL LMT 1/04 IF Close < Low. 1 And High. 1 < Low.2 And Next Bar Close > Close And Next Bar High < High.2 Or Next Bar High < High.9 { And ( Close. 2 < Close. 3 And Close. 3 < Close. 4 ) = False } And Next Bar Close > Next Bar Open And Close > Low. 13 Or Close > Low.30 Or Close > Low.43 Short Entry

two ups OPEN>C<H IF Close > Close. 1 And Close. 1 > Close.2 And High - Close > High. 1 Close. 1 And Close > Close.7 And Bonds < Bonds-3 And Tuesday Or Thursday And (Bonds.1 < Bonds.7 Or Bonds. 1 < Bonds.4 Or Bonds. 1 < Bonds.5 Or Bonds. 1 < Bonds.0) And Next Bar Open >= Close And Next Bar Open < High THEN SELL Next Bar at High + Range * 0.04 LIMIT Short Entry

two ups oPEN >H IF Close > Close. 1 And Close. 1 > Close.2 And High - Close > High. 1 Close. 1 And Close > Close.7 And Bonds < Bonds.3 And Tuesday Or Thursday And (Bonds. 1 < Bonds.7 Or Bonds. 1 < Bonds.4 Or Bonds. 1 < Bonds.5 Or Bonds. 1 < Bonds.0) And Next Bar Open > High THEN SELL Next Bar at MARKET Short Entry

UP RANGE AFTER INSIDE DAY IF Inside Bar.1 And Close. 1 < Close.2 And Close > High. 1 And Next Bar Open <= High And Close < Close. 10 THEN SELL Next Bar at Low STOP Short Entry

Vienna Sell 4 IF High > True High. 1 And Close > Close. 1 And High. 1 <= High.2 And Low. 1 >= Low.2 And Close.2 > Close.3 And Next Bar Open < High THEN SELL Next Bar at Low.1 STOP Short Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

Vienna Sell 5 IF Close < Low. 1 And High. 1 > High.2 And Low. 1 > Low.2 And Close. 1 < Close.2 And Close.2 > Close.3 And Low < Low.2 And Close < Open And Next Bar Open > Close And Range <= Avg True Range (4) * 1.60 THEN SELL Next Bar at Low STOP Short Entry

w Buy 4

IF Monday And ((High <= High. 1 And Low >= Low. 1) = False) And Close < Close. 1 And Close < Open And Open < High. 1 And Next Bar Open < Low and High > Low. 15 Or High > Low.30 THEN BUY Next Bar at Low STOP Long Entry

wednesday triple xpress IF Close < Close. 1 And Close. 1 < Close.2 And Close.2 < Close.3 And High.2 > High.3 And Next Bar DayOfWeek = 3 And Next Bar Open < High THEN BUY Next Bar at MARKET Long Entry

x days ago sell - 1 IF Monday Or Tuesday And Close > Close. 1 And Close > Open And Next Bar Open > High.8 And Bonds < Bonds.4 Or Bonds < Bonds.7 And Next Bar Open < High.4 Or Next Bar Open < High.3 Or Next Bar Open <= High. 1 And Low. 1 <= High.2 Short Entry

x days ago sell33 2 IF Next Bar Open > High.4 And Thursday = False And Bonds < Bonds. 14 And Bonds < Bonds.2 And Outside Bar = False And (Open > High. 1 And Close < Open) = False And Low > High. 1 = False And (Open. 1 < Low.2 And Close. 1 > Close.2) = False And Inside Bar = False And Low < Close. 1 And High. 1 > Low.2 And Outside Bar. 1 = False Short Entry

0 2005 Larry Williams - Million Dollar Challenge

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RuleName : Rule Text:

Action:

YADAYADA SELL 1 orgnl IF Close Of Tq < Close.4 Of Tq And Low >= Close. 1 And Close > Close. 10 And Next Bar Open > True High And (Close > Close.3 Or Close > Close.4 Or Close > Close.7) And (Bonds > Bonds.40 And Close < Close.40 Or Bonds > Bonds.45 And Close < Close.45) = False And Close > Low.6 Or Close > Low.4 THEN SELL Next Bar at MARKET Short Entry

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EXIT TECHNIQUES

"Anyone can get into a trade, getting out is where the money is"

BAIL OUT This is certainly the premier short term trading technique for the S&P 500. The rule is simply to exit, "bailout" of your trade the fnst time the market opens showing you a profit. The results of the S&P system trades are shown here with this exit.

MY BETTER BAILOUT This entry technique seeks to ride the trend. The procedure is to exit a long---if the open tomorrow is greater than entry price---EXIT at the open -30% of today's range. If the open is less than our entry, then EXIT at the open- 60% of today's range. If short, just reverse the procedure, i.e., if short and profitable exit at the open + 30% of the range, of not profitable then exit at the open plus 60% of the range. This allows you to ride a large move, should you think one is underway.

DELAYED BAILOUT This was discussed under the Bond section. Generally speaking a 1 day delay will increase profits but decrease accuracy.

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THE JAWS OF DEATH SHORT TERM SET UP FOR THE S&P 500 The same naked close and opening relationships appeared in the S&P and Bonds data I have been looking at for so many years but in a different light. I am certain there are more patterns to uncover in that the concept is new, so give it time and even more good stuff will follow I am certain. Buys

1. If day of week= 1 or 2 or 4 and the value of today's close- the low is < the same value from yesterday and today's close is a down close while yesterdays high is > the close the day before it (close 2) AND BONDS closed today above yesterdays high and open tomorrow is < close - 10% of yesterdays range buy at market. 2. If any day buy Wednesday and the close - low is less than that value yesterday and BONDS closed > the prior days high and open tomorrow < close - range *O. 10 buy at market Use this with 2, 3 or 4 consecutive down closes. 3. Day is 1'3 or 5 and true range > true range (1) and high (l)>=close (2) and close < close (1) and close < open and BONDS closed greater than yesterdays high and open tomorrow < close -10% range then buy tomorrow at market.

4. Day of week is 4 or 5 and today's high >= yesterdays close (no gap) and the open is < high (1) and > low (1) (no oops!) and the close is <the low 5 days ago. AND, BONDS closed > the high 7 days ago and gold has closed above yesterdays open and opens tomorrow > today's low buy tomorrow at open + 10% of today's range. 5. Day of week is 1,3 or 5 BONDS close > prior high, today in the S&P is a down close 6. And yesterdays high is >= prior close (no gap) and open tomorrow < close buy at yesterdays close on a stop

EXIT IS $3,750 STOP OR FIRST PROFITABLE OPENING

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A). IF DAY OF WEEK IS 2 AND BONDS CLOSE IS LESS THAN THE LOW 2 DAYS AGO AND TODAYS S&P CLOSE IS GREATER THAN THE HIGH 5 DAYS AGO

1. A) AND today's range is less than the 5 day average range * 1.5 while the open tomorrow is greater than today's close then sell tomorrow at today's close stop. 2. A) above AND the open of bonds tomorrow is less than today's close or today's close is less than the close 7 days ago while the S&P open tomorrow above today's low and less than today's close then sell tomorrow at today's close on a stop. 3. A) above AND today's open is less'than yesterdays lows then sell at market.

B). DAY OF WEEK IS ANY BUT 2 and bonds close lower today than yesterday close and lower than the close the day before that (2 down closes) while the S&P's have three consecutive up closes but close today below yesterdays high (no naked close today) then sell tomorrow at market. C). IF TODAY IS FRIDAY and we have a naked up close while the prior day was also an up close and bonds close today below the low 2 days ago then sell Monday at the market.

THE RESULTS SPEAK FOR THEMSEL W S

This model does not trade a great deal, about every other week, these trades are well worth waiting for with high accuracy, small drawdown and a plump $898 average profit per trade (it has been over $2,000 a trade in 2000).

Data Calc Dates

: S&P 500 IND-9967 12/80 : 09114154- 03/01/73

..................................................... ALL TRADES -Test 1 ........................................................... Total net profit $2 15,562.50 Gross profit $271,3 12.50 Gross loss $-55,750.00

Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg winlavg loss Max consecutive winners Avg #bars in winners

240 215

$1 7,205.00 $1,261.92 0.56 31 2

02005 Lany Williams - Million Dollar Challenge

Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & 1088) Max consecutive losers Avg # bars in losers

$-8,645.00 $-2,230.00 $898.18 3 4

Page 96

Max closed-out drawdown Profit factor Account size required

$4,645.00 Max intra-day drawdown $43,680.00 4.86 Max # of contracts held 1 $1 1,680.00 Return on account 1,845% .......................................................... LONG TRADES-Test ........................................................ Total net profit $154,192.50 Gross profit $197,210.00 Gross loss $-43,017.50 Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg win/avg loss

161 147 $17,205.00 $1,341.56 0.43

Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & loss)

91%

14 $-8,645.00 $-3,072.68 $957.72

- 22 Max consecutive losers 1 2 Avg # bars in losers 4 llllllllllllllll////ll/l/lllllllllllllllll////////////// SHORT TRADES -Test ..................................................... Total net profit $61,370.00 Gross profit $74,102.50 Gross loss $-12,732.50 79 Percent profitable 86% Total # of trades Number of winning trades 68 Number losing trades 11 Largest winning trade $12,330.00 Largest losing trade $-3,795.00 Average winning trade $1,089.74 Average losing trade $-1,157.50 Ratio avg winlavg loss 0.94 Avg trade (win & loss) $776.84 Max consecutive winners 17 Max consecutive losers 2 2 Avg # bars in losers 6 Avg # bars in winners Max intra-day drawdown $-5,307.50 Max closed-out drawdown $-31795.00 Profit factor 5.81 Max # of contracts held 1 Account size required $81307.50 Return on account 738%

Max consecutive winners Avg # bars in winners

Highlights -Short trades Description Largest Winning Trade Largest Losing Trade Largest String of + Trades Largest String of -Trades Maximum Closed-Out Drawdown Maximum Intra-Day Drawdown

Date 04/27/72 0 1120169 01/26/73 10/05/59 01/20/69 04/08/69

Time

Amount $ 12,330.00 $ -3,795.00 17 2 $ -3 1795.00 $ -5,307.50

.................................................................................................................................................................. Prepared using System Writer Plus Version 2.18 by Omega Research Inc.

02005 Larry Williams - Million Dollar Challenge

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THE TRADE NO ONE WANTS Against my better judgment I am releasing the following trading rules for the very first time. They are based on a most unique concept. As you know I like to hold my positions over night for the first profitable opening. This works best over all, but sometimes prices gap against me so I give some back. I don't like that, nor do I subscribe to the notion that you should give till it hurts (That's right up there with the idea you should give to the poor, a notion the obvious scheme of a poor person. Reward poverty, what a concept! I prefer giving to the needy, they mayor may not be poor.) Anyway, in looking at these days that gap upldown the next day I noticed one common element--the more it looks like the dumbest thing you could do that day would be to buy on the close the greater the odds for a gap the next day. "No One" wants to hold overnight and "No One" wants to buy on large range days that -n their lows. No one that is but me. Here are the results and the rules:

Summary All Trades Report Name:

A ONE NO ONE MDC 10103

Symbol:

SP-067

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

$125,020 74 $1,689 1.18 20.1 -$4,145 $25,408 $0 1 Wins

O 2005 Larry Williams - Million Dollar Challenge

Sep 8, 2004 12:38:19

Profit Factor ($Wins/$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): Z-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

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------------------

RULES FOR THE TRADE NO ONE WANTS-------------

Strate~v: A ONE NO ONE MDC 10103 CommissionlSlippage: $45.00 Bars Required to Test: 60 Estimated Length of Longest Trade: 60 Pyramiding Off From Date: 10/25/2000 To Date: 05/24/2001

Data Info: Identifier Market 1 TQ

Security S&p 500 Index Cadj Liq Day T-bonds Cadj Liq

Bar Period Daily Daily

Sec T w e F F

Symbol SP-067 TQ-067

Rules: RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text: Action:

buy # 2 9/9/00 IF Monday Or Tuesday And Next Bar High >= Close And Close < Low. 1 And Close. 1 < Close.2 And Next Bar Close < Low And Next Bar Close > Low.6 Or Next Bar Close > Low. 17 Or Next Bar Close > Close.4 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

CFL buy IF Next Bar Close < Close And Next Bar Close > Next Bar Open And (Next Bar High < High. 1 And Not Monday) Or (Next Bar High < High.5 And Next Bar Low < Low.5) And Not Monday And Next Bar Close < Close. 1 = False Or Next Bar Close < Close.4 = False Or Next Bar Close < Close. 18 = False And Close > Low.4 Or Close > Low.2 And True Inside Bar = False And (Next Bar High <= High And Next Bar Low >= Low) = False THEN BUY Next Bar at MARKET ON CLOSE Long Entry

Disaster Buy 1 IF High > High. 1 And Close < Low. 1 And Next Bar Open < Open.2 THEN BUY Next Bar at Open.2 STOP Long Entry

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RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Vara

RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount

RuleName: Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount

Exit Long: LW %Range ONLY IF True THEN SELL Next Bar at Next Bar Open - Avg True Range (4) * Vara 1 100 STOP Long Exit False

Value 45

Optimiz OFF

From

To Val

Step Val

Exit Long: Stop.Loss . IF Bars Since Entry >= 0 THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False

Value 4000

Optimiz OFF

From

To Val

Step Val

exit short 112 bailout IF Next Bar Open < Entry Price THEN BUY Next Bar at MARKET Short Exit False

Exit Short 1ST PROFT CLOSE IF Next Bar Close < Entry Price THEN BUY Next Bar at MARKET ON CLOSE Short Exit False

Exit Short: Day after Stop Loss IF Bars Since Entry >= 0 THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP Short Exit False

Value 4100

Optimiz OFF

O 2005 Larry Williams - Million Dollar Challenge

From

To Val

Step Val

Page 100

RuleName: Rule Text:

Action: RuleName: Rule Text:

Action:

RuleName: Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action: -

goffey gapper MOC IF Next Bar Open < Close And Close - Next Bar Open > Range * 0.55 And Next Bar Close > Next Bar Open And Next Bar Open < Low And Next Bar Close < Low And Next Bar High > Low.3 Or Next Bar High > Low. 1 Or Next Bar High > Low Or Next Bar High > Low.4 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

IN ON AND OUTSIDE DAY IF Next Bar Open < Low And Low.2 <= Close.3 And Not True Inside Bar And Next Bar Open < High THEN BUY Next Bar at High STOP Long Entry . long 112 bailout ORGNL IF Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open STOP Long Exit False

MARKS MDC BUY-2 IF Next Bar High < Low And Close < Close. 1 And Close. 1 < Close.2 And True Inside Bar = False And Next Bar Close Of Tq > Bonds Or Next Bar Close Of Tq > Bonds.3 1 Or Next Bar Close Of Tq > Bonds.35 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

MARKS MDC BUY-3 IF Next Bar High < Low And Close < Close. 1 And Close. 1 < Low.2 And True Inside Bar = False And Next Bar Close Of Tq > Bonds.8 Or Next Bar Close Of Tq > Bonds.35 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

MARKS MDC SELL IF Next Bar Low > High And True Inside Bar. 1 = False And Next Bar Close Of Tq < Bonds.3 And Close - True Low < Range. 1 And (Inside Bar And Next Bar Open > High. 1) = False THEN SELL Next Bar at MARKET ON CLOSE Short Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleNarne: Rule Text:

Action:

ONENOONEBUY 1 ? $ $ IF Low. 1 < Low.2 And High. 1 >= Close.2 And Low < Low. 1 And Next Bar Open < Low. 1 And Open > Low. 1 And True Inside Bar.2 = False And Range < Avg True Range (10) * 1.5 And Bonds > Bonds.49 Or Bonds > Bonds.29 Or Low > High.7 Or Low > High.9 And Next Bar Open > Low THEN BUY Next Bar at Low. 1 STOP Long Entry

the one NO ONE #1 IF Next Bar Open < True Low And (Bonds > Bonds. 1 Or Bonds > Bonds.2 Or Bonds > Bonds.9) And Next Bar Open > Low. 1 1 Or Next Bar Open > Low.32 Or Next Bar Open > Low.22 And True Inside Bar = False And Close > Close. 1 And Close < Open = False THEN BUY Next Bar at Low STOP Long Entry

the one NO ONE #5 IF Thursday And (Close < Open Or Close < Close.1) And (Next Bar Close > Close.2 Or Next Bar Close > Close.3) And (Next Bar Close Of Tq > Next Bar Open Of Tq Or Next Bar Close Of Tq > Close Of Tq) And (Next Bar Close < Close Or Next Bar Close < Open) And (Open > Low. 1 Or High >= Close. 1) And (Next Bar High <= High And Next Bar Low >= Low) = False And True Inside Bar. 1 = False And Next Bar High > Close And Next Bar Close > Low.2 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

tuesday gapper MOC IF Next Bar Open < Close And Close - Next Bar Open > Range * 0.57 And Next Bar Close < Close And Next Bar DayOfWeek = 2 THEN BUY Next Bar at MARKET ON CLOSE Long Entry

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Ronald Reagan meets Roy Rogers.. %R meets Rsi and a trading system emerges for short term overnight traders.

AS SIMPLE AS IT GETS--TREND IDENTIFICATION---We will use a 21-day Rsi (Wilder/Northcot) as our measure of trend. When it is greater than 50 we only take buys. When less than 50 we only take sells.

BUY SELL ZONES---Here we use a 4-day %R (Williams) as our measure of anti-trend Or to show a pullback within the primary trend as identified by Rsi. ENTRY RULES-We

have only three entry rules; 1. ORIGINAL OOPS! 2. DELAYED OOPS! 3. SHORT TERM "RINGED ( H.W. Chase) FORMATION

EXIT RULES $ STOP LOSS---FIRST PROFITABLE OPENING

%R GOING TO OVERBOUGHTISOLD TRAIL A STOP AND PRIOR DAYS HIGHLOW FIRST PROFITABLE OPENING

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An Explanation of the Entries..

1) ORIGINAL OOPS!---For a buy we must open below the prior days low and then buy on a stop at that low. For a sell, we need to open above the prior days high and then decline to that high were our sell stop is elected;

OPEN ABOVE THE HIGH SELL THE HIqH

OPEN BELOW THE LOW BUY AT THE LOW

2 ) DELAYED OOPS!---For a buy we need to open below the 2 days ago, buy on a stop at that price. For a sell, open greater than the sell 2 days ago, then sell on a stop at that high. OPEN ABOVE THE HIGH 2 AGO SELL THERE

OW THE LOW 2 AGO BUY THERE

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3) FORMATION OFA RINGED HIGHILOW---Trading above the prior days high a buy, trading below the prior low a sell. I

INTRADAY SECRETS OF MARKET ACTION Cross Sectional Market Returns Brett N. Steenbarger, Ph.D.

"From 12/6/74 to 211 1/04, the last hour has been profitable in each of the above time segments. During that time, the Dow gained 10,160.10 points. A total of 833.35 points were gained in the first hour; 2866.10 points in the middle hours; and 6460.65 points in the final hour. Notice the pattern of large gains in the first hour during bull markets (6125162 - 1/8/73; 4/4/94 - 9/6/00) and large losses in the first hour during bear markets (118173 - 8/12/82; 9/6/00 - 311 1/03). Notice the consistent positive returns in the final hour of trading since 1973. O 2005 Lany Williams - Million Dollar Challenge

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The time periods chosen for the table above were chosen because they correspond to important market highs and lows for bull and bear markets. What we see here is the markets most consistent time to rally is during the last hour. From 1962 thru February, 2004 the market gained a total of 10,200.93 points. Over 60% of this gain, 6,152 points, came in the last hour of trading.

Here we break the day into nine equal 45 minute segments on the SP futures (415194 - present; N data from Tick Data Inc). We're looking for the SP point change attributable to each of the 45 minute segments. Note that the Ns are not equal for each of the segments because of shortened trading days on holidays. = 25 17 days; continuous contract, back-adjusted

TOTAL SP POINT CHANGE OVER THE PERIOD: 372.20 Point change occurring during overnight gap: 283.75 Point change occurring 9:30 10:15 ET: -330.25 Point change occurring 10: 15 11:00 ET: 301.65 Point change occurring 11:00 11:45 ET: -149.50 Point change occurring 11:45 12:30 ET: -145.95 Point change occurring 12:30 1:15 ET: 155.30 Point change occurring 1:15 2:00 ET: 181.20 Point change occurring 2:00 2:45 ET: -316.55 Point change occurring 2:45 3:30 ET: 141.55 Point change occurring 3:30 4.15 ET: 251.OO

Here the idea is that the market consists of two components; one responsive, one initiating. When viewed as independent processes and cumulated separately, some interesting relationships emerge. The responsive component is the number of S&P futures points that are gained or lost between yesterday's close and today's open. I call this responsive because the U.S. markets are responding to overnight news, events, and trading, particularly in Asia and Europe, as well as pre-opening domestic economic reports. The initiating component is the number of S&P fbtures points gained or lost from today's open to today's close. Here the market is reflecting news and events initiated largely within the States. The total change in the S&P futures for a given day is the sum of the responsive and initiating changes. From 4/4/94 through the end of April, 2004 (2520 trading days), we have gained 362.50 S&P futures points (continuous, back-adjusted, data set created by TickData Inc.). Of those, 293.85 were responsive (occurring between the prior close and the current open) and only 68.65 were initiating (occurring during the U.S. trading day). A day trader who bought the open and sold the close each day made less than 10% on his money over a 10 year period. If we look at bull and bear highs and lows, we can see the interplay between these two components. From 4/4/94 to 7/17/98, we gained 644.10 points. A total of 292.25 of these points occurred between the prior close and the current open (responsive), and 35 1.85 of them occurred O 2005 Lany Williams -Million Dollar Challenge

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between regular trading hours (initiating). During the subsequent bear swing between 7/17/98 and 813 1/98, we lost 238.60 SP points. In the hours between the prior close and current open (responsive), we actually gained 16.20 points, but during market hours (initiating) we lost 254.80 points. Jumping ahead to the bull move from 10/2/02 to the recent highs at 2117/04, the SP futures gained 385.80 points. Of these, only 76.50 occurred between the prior close and the current open (responsive) and 309.30 occurred during regular trading hours (initiating). In short, the day trader who bought at the open and sold at the close each day (who underperformed from 4/4/94 to 10/9/02) caught most of the recent bull market."

That's all well and good.. .now what we need are rules to take advantage of this influence. Here are mine;

YOUR FIRST TRADE OF THE DAY

4-MINUTE BARS As I have discussed for years markets open due to an influx of public orders, bounce around for a bit, then start their move for the day based on floor and professional activity. I have always known we could take advantage of this pattern, but until we programmed my ideas we were not absolutely certain of how to best take advantage of this daily energy field blast. Now we are! I have been actually trading this event for some time, with rules gleaned from general observation. My initial impression was to take a breakouthreakdown of the first 5-minute bar for a quick 300 to 400 point move. That does make money.

In researching we first went for the best days of the week and then the best stop. We found one day not to trade---Monday---and probably with a pretty good reason. Think about how hectic the fmt 3 to 12 minutes on the first day of the week must be, tons of orders coming in, lots of cross currents, so we will wait for later in the day (see the 30 minute breakout to follow).

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TradeStatiart Strategy Performlance Repart - FMBO SP-OIH.ASC4 win.

Performance Surnmary: All TI-ades $85,350.00 $214,875.00

Total Net Profit Gross Profit Total # o f trades Number w~nningtrades Largest winning trade Average winning trade Ratlo avg winlavg loss Max consec. Winners Avg #bars in winners Max intraday drawdown Profit Factor Account size required

26 1 195 $1,450.00 $1,101.92 5621 14 ($9,1OTJ.00) 1.66 $9,100.00

Open position P f Gross Loss Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & loss) Max consec. losers Avg #bars in losers

Max #contracts held Return on account

20 40 60 80 100 120 140 160 180 200 220 240 260 Trade Number

A combination of the two methods offers the best of both worlds. By trading two units and trading them separately we can take our quick profit on one unit and let the other ride the trend.

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30-MINUTE BREAK OUT Our second opportunity for the day Once the high of the first 30 minute bar is taken out, on the up or downside, price has a distinct tendency to continue in that direction...for a while. We have found the best days to take such buy breakouts to the upside, plus 1 tick, are Monday and Wednesday. The best sells that are selling at the first 30-minute bar minus 1 tick come on only one day of the week, Tuesday. Your stop should at least be the flat dollar stop 063,750, but you may consider a parabolic. TARGETS This is the critical part, for longs, take profits at the high of the bar + 55% of that bars range.

For sells you can use 100% of the range, shown here, or if you are particularly greedy (bearish) 2 15% of the range. 30BrkTDOW SP1.ASC-30 min 01/27/1999 -3/14/2000

BUY Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg winlavg loss Max consec winners Avg # bars in winners Max intraday drawdown Profit factor

Performance Summary All Trades Open position P/L $12060.00 $221 10.00 Gross loss 37 Percent profitable 32 Number losing trades $2080.00 Largest losing trade $690.34 Average losing trade Avg trade (winlloss) 0.34 15 Max consec losers 2 Avg # bars in losers $ -6340.00 2.20 Max # contracts held

MON $0.00 $ -10050.00 86% 5 $ -3795.00 $ -.010.00 325.95 1 8 1

30BrkTDOW SP1.ASC-30 min 01/27/1999- 03/14/2000

BUY Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg w d a v g loss Max consec. winners Avg # bars in winners Max intraday drawdown Profit factor

Performance Summary All Trades $16730.00 Open position P/L Gross loss $33195.00 Percent profitable 51 Number losing trades 44 1argest losing trade $3205.00 Average losing trade $754.43 0.32 Avg trade(win & loss) 20 Max consec. losers 3 Avg # bars in losers $ -7235.00 2.02 Max # contracts held

WED $0.00 $-16465.00 86% 7 $ -3795.00 $-2352.14 328.04 1 8 1

30BrkTDOW SP1.ASC-30 min 01/27/1999- 03/14/2000 SELL Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg wdavg loss Max consec. winners Avg # bars in winners Max intraday drawdown Profit factor Account size required

Performance Summary: All Trades $69615.00 Open position P/L Gross loss $1 10510.00 58 Percent profitable 37 Number losing trades $ 8055.00 Largest losing trade $ 2986.76 Average losing trade I .53 Avg trade (win & loss) Max consec. Losers 4 8 Avg # bars in losers $ -13280.00 2.70 Max # contracts held $ 13280.00 Return on account

O 2005 Larry Williams - Million Dollar Challenge

TUE $0.00 $-40895.00 64% 21 $-3795.00 $-1947.38 1200.26 4 9

1 524%

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THE FIRST THREE STEPS UP Our third opportunity for the day

Run away markets are often indicated by three consecutive up closes on the 15-minute bars. The rule is pretty simple, wait for three bars that each close greater than their open, These must be consecutive and they must be the first three bars of the day, after that there can be no set up. If this occurs, then buy long at the highest high of the last two bars. Entry may be on the third bars high, or later as this entry gives us a buy point should prices begin to dip that acts as a trailing stop to kick us into the trade. Most of the time" however, you will be buying at the high of the third bar. The exit is a stop of $3,500 or moc. The results are as follows YEAR

#TRADES

AV.WIN

1996 1997 1998 1999-2000

17 27 21 35

7,047 8,960 16,005 9,600

414 33 1 762 274

THE NOON BALOON Ourfourth opportunity of the day

For years traders have been infatuated with the idea that following lunch Chicago time, (1 1 :30 PST) markets start a move based on floor traders getting back into the pits. There is more than some truth to this matter based on research I did in 1999. I looked at the relationship of the % hour bars closes to see if there was a pattern the "back from lunch" crowd liked to rally or decline.

O 2005 Lany Williams - Million Dollar Challenge

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TWO... OR THREE STEPS DOWN It appears there is method to this madness. While there are over 30 possible patterns that can unfold the ones we found to be the best were; 1. Two down closes, i.e., the 11 am and 11 :30 am (PST) are both lower than the prior close. You can trade all days of weeks, but excluding Thursdays produces the best results, as shown below. The $30,195 profits used a $3,500 stop (which w- never hit) or exit moc. The entry was simply rallying above the prior bars high.

2. Our next pattern is exactly as above but we require three consecutive down closes of the half hour bars. This can be traded all days of the week for the $19,,300 profits. Notice it has a very high average profit per trade. Mid Day Reversal

SPI .ASC-30 min 0 112711998- 0311312000 Performance Summary: All Trades

Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg winlavg loss Max consec. winners Avg bars in winners

$ 30195.00

$49445.00 84 49 $3705.00 $ 1009.08

1.83 6 1

Max intraday drawdown $ -6340.00 Profit factor 2.57 Account size required $6340.00 Mid Day Reversal

Total net profit Gross profit Total # of trades Number winning trades Largest winning trade Average winning trade Ratio avg winfavg loss Max consec. winners Avg # bars in winners Max intraday drawdown Profit factor Account size required

Open position P L Gross loss

$0.00 $ -19250.00

Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & loss)

58% 35 $ -2170.00 $ -550.00

$359.46

Max consec. Losers Avg # bars in losers

6 1

Max # contracts held Return on account

1 476%

SP1.ASC-30 min 01/05/1998 -031 1312000 Performance Summary: All Trades $ 19300.00

$29425.00 45 30 $3330.00 $980.83 1.45 11 1

Open position P L Gross loss Percent profitable Number losing trades Largest losing trade Average losing trade Avg trade (win & loss)

$0.00 $ -10125.00

67% 15 $ -2 170.00 $ -675.00

$428.89

Max consec, losers Avg # bars in losers

$ -4780.00

2.91 $4780.00

O 2005 Larry Williams - Million Dollar Challenge

Max # contracts held Return on account

1 404%

Page 112

3. Finally we will be looking for three consecutive up closes going into the close of the 11:30 (PST) bar .You then have a choice, either buy at the next bars open, as the f ~ sclip t shows, or buy at the preceding high as the second clip depicts. Total net profits are almost $65,000 and most interesting is that at no time was the $3,500 stop elected. To apply this technique just wait for the 1 1:30 bar, check to see if there have been 2 or 3 down closes or 3 up closes. If so then place the order, skipping Thursdays if there have been only 2 down close bars. Mid Day Reversal

SF1.ASC-30 rnin 011105/1998 4111 312000 Performance Summary: AU Trades Total net profit $ 13915.00 Open position P/L Gross profit $20435.0Q - Gross loss 38 Percent profitable Total # of trades Number winning trades 27 Number losing trades Largest winning trade $3030.00 Largest losing trade Average winning trade $756.85 Average losing trade 1.28 Avg trade(win & loss) Ratio avg winlavg loss Max consec. winners 7 Max consec. Losers Avg # bars in winners 2 Avg # bars in losers Max intraday drawdown $ -3765.00 3.13 Max # contracts held Profit factor Account size required $3765.00 Return on account SP1.ASC-30 min 0110511998- 0111312000 Performance Summary: All Trades Total net profit $ 14370.00 Open position P/L $0.00 Gross profit $20455.00 Gross loss $ -6085.00 44 Percent profitable 70% Total # of trades Number winning trades 31 Number losing trades 13 Largest winning trade $2830.00 Largest losing trade $ -1270.00 Average winning trade $659.84 Average losing trade $ -468.08 1.41 Avg trade(win & loss) $ 326.59 Ratio avg win/avg loss 5 Max consec. losers 3 Max consec. winners 2 Avg # bars in losers 2 Avg # bars in winners Max intraday drawdown $ -2180.00 1 Profit factor 3.36 Max # contracts held Account size required $ 2 180.00 Return on account 659% Mid Day Reversal

HOW IT SETS UP MON TUES WED THUR FRI

4 MINUTE NO YES YES YES YES

3 UP TRADE YES YES YES YES YES

O 2005 Larry Williams - Million Dollar Challenge

30 MIN TRADE YES SELL YES NO NO

NOON BALOON YES YES YES NO YES

Page 113

"SWEET SPOT" TRADING Traders often talk about and 'end of the day" rally ascribing it to short covering, rigging the market by the fimds and a host of other reasons. They are correct in pointing to this interesting part of the day for short term focus. Frank1 ,I think the reason this takes place is late in the day markets tend to extend the major move o f t e day...hence a late rally.

However, if we have been declining there can be and end of the day sell off. You got it, if it doesn't 80 up it might go down! We need more than that as traders, lots more. Here is some basic insight into how powefil this phenomena can be from Brett Steenbarger;

END-OF-DAY DAY TRADER The question this insight presents is with is how to trade the end of day rally. My work fiuther defines Tuesday and Thursday as the days the rally is most apt to take place. This can be bolstered by requiring that price, with 4, 15 minute bars, left in the day are higher than the close of the first bar. This sure makes sense.. ..price is higher close to the close, so there is a good chance short will capitulate on the close, selling MOC, driving price higher yet. The results of this End-Of-Day strategy are presented where with rules;

Summary All Trades Report

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

Profit Factor ($Wins/$Losses): Winning Percentage: Payout Ratio (Avg WinILoss): Z-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f:

Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win:

Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss:

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: s u ! u! ~ s e a 40 # 6 ~ v :SUM 3asuo3 40 # 6Av : s u ! 3asuo3 ~ lsoyy :U!M u! u ~ o uny a 6~v :U!M u! d n uny 6 ~ v

Stratem:

END OF DAY day TRADER Commission/Slippage: $45.OO

Data Info: Identifier Market 1 TQ

Security S&P 500 Index (Pit) Cadj Liq Day T-bonds Cadj Liq

Bar Period 15 Min

Sec T m e F

Svmbol SP-067

15 Min

TQ-067

Rules: RuleName: Rule Text:

Action:

RuleNme : Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text: Action: Exit on Entry Bar: RuleName: Rule Text:

Action:

end of day with bonds IF Bars Left In Day = 4 And Not Wednesday And MovingAvg (Bonds, 30) > MovingAvg (Bonds ,30).2 Or MovingAvg (Bonds ,80) > MovingAvg (Bonds, 80).2 And Close > Close.24 And Close < Close. 16 And Not Thursday THEN BUY Next Bar at MARKET Long Entry

Exit Long: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN SELL Next Bar at MARKET ON CLOSE Long Exit False

Exit Short: At End of Day #02 IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN BUY Next Bar at MARKET ON CLOSE Short Exit False up voVstocks last hour buy IF Bars Left In Day = 4 And Close > Close.24 And MovingAvg (Close , 130) > MovingAvg (Close , 130).2 And Next Bar Day Is ("TUESDAY") Or Next Bar Day Is ("THURSDAY") THEN BUY Next Bar at MARKET Long Entry

O 2005 Larry Williams - Million Dollar Challenge

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SU!M L O$ 8901SE$ SOL'L C$E'8Z 1 02'8 L EPG$ 069 OO6'PLE$

89'0 SEPZ'O % 1'690' L OSL'L I.$%O'ZE 9'0 82' L %S'LG EL' L

8P.6 L LE'Z 0L OL8$LE L 'E$ OL8$GPG'P$OEE'E L$ LEZ'Z$ S88'S88$ L6E

9P.9 L OL' L 9 LOGIZ$GZO' L$ GZO' L$ GOL6L$ GPE68$PPL' C$G86'0 1%E6Z

GZ.'EE.'EO POOZ 'GZ

:yeaJlS jua~~n=) :&!nba uado :pa~!nbau az!S luno33v :UMOPM~ $no-pasol=) J~ xeyy :JeaA ad sapeJl4o # 6 ~ v :apeJl u! sJeg 40 # 6 ~ v :apeJl a6eJaAv :sapeJl lelol :l!JoJdlaN lelol IleJaAO

urajsAs Jeq ajnu!ur s~ - heururns

-81npey ,,my:, lo uaans, uo paseq op ue:, noA l e y 01 ~ ~ouadnsmj am sqnsaJ asayl padsns I '~:,ej UI - s m a JJnoA ~ u a d n lea y w 01 s x l asn UE:, s ~ o l e : , l puo ~ paseq 8 q e ~kl p noA jo asoyl ley1 am s~y8noqlA n .s1aymru laylo 11e 01 paqdde aq UE:, A a y ~-00sd ~ ay18u~ex1 s Aep ruog s a p ~FMOIIOJ aqljo sllnsal a q am alaH jAq a p w pue Aq a q 01 s a p j o I I ~ SI J ajq

By Year Report

Year

Net Profit

Win Pct

Trades

Win Avg

AvgTrade

1999 2000 2001 2002 2003 2004

$56,135 $133,625 $70,455 $49,990 $49,890 $14,805

54.9% 58.4% 60.3% 54.1% 59.3% 60.8%

142 125 126 133 113 51

$2,393 $3,190 $2,160 $2,218 $1,609 $1,120

$395 $1,069 $559 $376 $442 $290

Strategy: April 2004 15 min amalgamation Commission/Slippage: $45.OO From

ate: 12/30/1998 To Date: 05/24/2004

Data Info: Identifier Market 1 TQ

Securitv S&p 500 Index Cadj Liq Day T-bonds Cadj Liq

Bar T m e 15 Min 15 Min

Sec Type F F

Symbol SP-067 TQ-067

Rules: RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry: Invut Stpmulti RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry: Stpmulti

AVG RANGE Exit #00 1 IF Position = 1 THEN SELL Next Bar at Entry Price - MovingAvg (True Range ,30) * Stpmulti STOP Long Exit False

Value 2

Ovtirniz OFF

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To Val

Step Val

AVG RANGE SHORT Exit #00l IF Position = - 1 THEN BUY Next Bar at Entry Price + MovingAvg (True Range ,30) * Stpmulti STOP Short Exit False Value 2

Optimiz OFF

O 2005 Larry Williams - Million Dollar Challenge

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To Val

Step Val

Page 118

RuleName: Rule Text: Action: Exit on Entry Bar: RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry:

Exit Long: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN SELL Next Bar at MARKET ON CLOSE Long Exit False Exit Long: Breakeven Stop IF Max Position Profit >= MovingAvg (True Range ,30) * Stpmulti * 250 THEN SELL Next Bar at Entry Price STOP Long Exit False

Invut Stpmulti

Value 2

RuleNarne: Rule Text:

Action: Exit on Entry Bar:

Action: Exit on Entry Bar: RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry:

Value 3500

Step Val

Ovtimiz OFF

From

To Val

Step Val

Exit Short: Breakeven Stop IF Max Position Profit >= MovingAvg (True Range ,30) * Stpmulti * 250 THEN BUY Next Bar at Entry Price STOP Short Exit False Value 2

To Val

Exit Short: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN BUY Next Bar at MARKET ON CLOSE Short Exit False

Stpmulti -

From

Exit Long: Stop Loss IF True THEN SELL Next Bar at Entry Price - Dollars to Price (Stop Loss Amount) STOP Long Exit False

Input Stop Loss Amount

RuleName: Rule Text:

Optimiz OFF

From

To Val

Step Val

02005 Larry Williams - Million Dollar Challenge

Page 119

RuleName: Rule Text:

Action: RuleName: Rule Text:

Action: Input Const Mu1ti

RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry: RuleName: Rule Text:

Action: Input Num Steps

RuleName: Rule Text:

Action:

Long IF Time > 930 And Time <= 945 And Open < Low + Range * . l And Not Outside Bar And Range > Range. 1 THEN BUY Next Bar at MARKET Long Entry

Long Entry 15rninDT #00 1 IF Close > Lowest ((High + Low) / 2 ,Const) + (MovingAvg (True Range , Const) * Multi). 1 And Close > Close. 1 And Time > 0930 And Time <= 1600 And Bonds > Bonds. 18 And (Bonds > Bonds. 17 Or Bonds > Bonds.5) And ADX (14) > 17 And ADX (14) < 40 THEN BUY Next Bar at MARKET Long Entry Value 7 2.73

Optimiz OFF OFF

From

To Val

Step Val

long exit IF Position = 1 THEN SELL Next Bar at (Low.FirstBar0fDay (0)) - Range * .25 STOP Long Exit False

LW First Three Steps Buy IF Next Bar BarOfDay > Num Steps And Consecutive (Close > Open).Bars Since (BarOfDay = Num Steps) >= Num Steps And Not Traded Today And DayOfWeek = 1 Or DayOfWeek = 2 Or DayOfWeek = 3 Or DayOfWeek = 5 And Bonds > Bonds. 1 Or Bonds > Bonds.9 Long Entry Value 3

Optimiz OFF

From

To Val

Step Val

Short IF Time > 930 And Time <= 945 And Open > High - Range * .15 And Not Outside Bar And Not Thursday And Not Tuesday And Range > 2 THEN SELL Next Bar at MARKET Short Entry

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RuleName: Rule Text:

Action:

Imut Const Multi

RuleName: Rule Text:

Action: Exit on Entry Bar: Linked To Entry:

Short Entry 15minDT #00 1 IF Close < Highest ((High + Low) I 2 , Const) - (MovingAvg (True Range , Const) * Multi). 1 And Close < Close. 1 And Time > 0930 And Time <= 1600 And Bonds < Bonds. 1 And (Bonds < Bonds. 16 Or Bonds < Bonds.28 Or Bonds < Bonds. 19 Or Bonds < Bonds.6) And ADX (14) > 14 And ADX (14) < 46 And Not Wednesday And Not Thursday THEN SELL Next Bar at MARKET Short Entry

Value 7 2.73 .

Optimiz OFF OF$

From

To Val

Stev Val

short exit IF Position = - 1 THEN BUY Next Bar at (High.FirstBarOfDay (0)) + Range * .25 STOP Short Exit False

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THIRTY SOMETHING

While I prefer to trade off of 15 minute bar charts there is a place for using 30 minute bars as well. The â&#x20AC;&#x2DC;â&#x20AC;&#x2DC;Thirty Something" method relies on what we have learned, that stocks rally better when Bonds are in an up trend at the same time stocks are in an up trend. On top of that condition I simply wait for a large move away from the opening; in this case I want to see a move of 160% of the prior bars range added to the next bars open for our entry, when the bondlstock set up has taken place. We will take this trade on all days except Tuesday. Here are the results and the rules. The system was not as effective prior to 1997-1998 I suspect this is in part due to the contract split that took place and smaller ranges we saw back then.

Name:

A MDC 30 MINUTE MUST (Long Entries Only)

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

$101,448 127 $799 8.42 18.2 -$10,930 $29,298 $0 3 Wins

O 2005 Larry Williams - Million Dollar Challenge

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): 2-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

Page 122

Equity Curve

Running Total of Equity

Equity M4

Strateev: A MDC 30 MINUTE MUST Cornmission/Slippage: $45.OO

Data Info: Identifier Market 1 TQ

Security S&p 500 Index Cadj Liq Day T-bonds Cadj Liq

O 2005 Larry Williams - Million Dollar Challenge

Bar Period 30 Min 30 Min

Sec Type F F

Symbol SP-067 TQ-067

Page 123

Rules: RuleName: Rule Text: Action: Exit on Entry Bar:

RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Target Amount RuleName: Rule Text:

Action: Exit on Entry Bar:

Input Stop Loss Amount RuleName: Rule Text: Action: Exit on Entry Bar: RuleName: Rule Text:

Exit Long: At End of Day IF Bars LeR In Day = 1 Or MinutesPerBar = 0 THEN SELL Next Bar at MARKET ON CLOSE Long Exit False

Exit Long: profit Target IF True THEN SELL Next Bar at Entry Price + Dollars to Price (Target Amount) LIMIT Long Exit False

Value 5500

Optirniz OFF

From

To Val

Step Val

Exit Long: Stop Loss IF True THEN SELL Next Bar at Entry Price - Dollars to Price (Stop Loss Amount) STOP Long Exit False

Value 3750

Optirniz OFF

From

To Val

Step Val

Exit Short: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN BUY Next Bar at MARKET ON CLOSE Short Exit False Exit Short: Profit Target IF True THEN BUY Next Bar at Entry Price - Dollars to Price (Target Amount) LIMIT

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Action: Exit on Entry Bar: Input Target Amount

RuleName: Rule Text:

Action: Exit on Entry Bar: Input Stop Loss Amount

RuleName: Rule Text:

Action: Exit on Entry Bar: RuleNarne: Rule Text: Action: Exit on Entry Bar: RuleName: Rule Text:

Action:

Short Exit False Optimiz OFF

Value 5100

From

To Val

Steu Val

Exit Short: Stop Loss IF True THEN BUY Next Bar at Entry Price + Dollars to Price (Stop Loss Amount) STOP Short Exit ' False Value 3650

Optimiz OFF

From

To Val

Stev Val

short exit at limit IF Bars Since Entry >= 6 And Next Bar Open < Entry Price THEN BUY Next Bar at Next Bar Open - Avg True Range (6) * 0.3 LIMIT Short Exit False SHORT LAST GAP EXIT IF True And Bars Since Entry > 10 And Close > Entry Price THEN BUY Next Bar at MARKET Short Exit False thirty something IF Not Tuesday And Close > Close. 18 And Close > Close. 12 And Outside Bar = False And Bonds > Bonds.5 And Bonds > Bonds. 15 THEN BUY Next Bar at Next Bar Open + Range * 1.60 STOP Long Entry

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TRIPLE TREND TRADING SYSTEM A day trading system for all markets, all time frames MAKING THE ART OF DAY TRADING MORE MECHANICAL

Contrary to what you may have heard, day trading is no piece of cake, it is very difficult, time consuming, perilous and demanding work. There are as many systems and strategies for skinning this cat as there are traders. Typically, traders seek to sell when overbought, buy when oversold, and predictably, loose their grubstake. Others try trend lines, time periods, or point and figure. What few systems do, though, is get in phase with the trend ...and the trend is the only place there is money to be made, in my humble opinion, regardless of the time frame. Time is not only money, as the old saying goes, but is a commodity. Consider the more time you have better deal you can get, the less time, the more it costs.

...

The longer you can hold a trade the more opportunity for profits

AND NEVER FORGET THE TREND IS THE BASIS OF ALL PROFITS

My Triple Trend Trading System approach has been engineered to first establish the longer-tern trend as being up or down. Once that is known we use a shorter-term measure ofANT/-TREND to buy oversold zones in an up trending market, sell overbought zones in a down trending market. Finally we have targets, stops and entry levels plus a rule to prevent us from taking action too late in the trend move.

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TREND IDENTIFICATION THE LONGER TERM--After years or trying to make this as simple and mechanical as possible I have tried many approaches to determining the "long term trend" for short term trading. We've used RSI, ala the R-N-R system, MACD from my old buddy Gerry Appel. The simplest and most mechanical is Will-Trend using 66 bars at 3.2. This means we take the average of the last 66 bars multiply that by 3.2 and addfsubtract from the highest/lowest mid point seen so far in the move. This acts as an ultimate stop as well as telling is when price closes above this line the trend is up and we want to buy pull backs, a close below means to look for sells on short term rallies. We will be using 15 minute charts for actual trading. THE SHORTER TERM; ANTI-TREND---Another old, old index is used for this, my %R, also from the 1960's. A 6 bar %R is used, when above 75% we are in the selling zone, when below 25% in the buying zone. This is used to tell us when the very short term is near exhaustion, at which point we expect the longer-term trend to kick back in. It is critically important that you wait until your time bar has finished before you determine this condition has been met. Frequently %R will be in the buylsell zone, when in the last few minutes the index backs out, rendering no signal. ENTRY RULE TO BUY 1. Closes are above Will Trend 2. % R < 2 5 3. Buy at open of next bar ENTRY RULE TO SELL

4. Closes are below Will Trend 5. % R > 7 5 6. Sell at open of next bar

STOP LOSS RULES A close above/below the Will Trend line If long If short

Low - Avg True Range ( 3 ) * 1.25 High + Avg True Range ( 3 ) * 1.20

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EXIT RULES WHEN LONG AND %R CLOSES > 75 EXIT WHEN SHORT AND %R CLSE < 25 EXIT

THE FINAL FILTER---VERY IMPORTANT No trend lastsforever- this first law of our jungle. Due to this first law we will only take the first 3 trades on a 15-minute chart, the first 2 on a 30minute chart. After that it's too late in the game. Yes, we will miss some trades ...some really good ones...but our accuracy will be much better.

THE IDEAL TRADE IS THE FIRST ONE AFTER THE TREND CHANGE There you have it, a set up to be in phase with the longer trend, an entry, stop and target. Now I've placed it all together on the following chart for us to review, as well as two charts for your to "trade" on your own with the answers to follow...don't peek ahead...the markets don't let us!

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AND NOW FOR AN EASY---LAZY---WAY OF' DAY TRADING

As I said earlier, day trading is not and easy way to skin the cat of speculation.. .looking at 1 or 5 minute bars is a sure way to become unbalanced in life. I wanted an easier way to do this, so turned to some old patterns and wrote some new ones as well. These patterns typically set up an explosive one day, at least, situation. What I like is the ease of trading this way, place your orders, go fishing or whatever, and exit market on close, every day. Not it trades'a little more than once a week.. .I also like that.. .I do not know of a way to make money, every single day, day trading.

LAZY DAY TRADER RESULTS Overall Total Net Profit: Total Trades: Average Trade: Avg # o f Bars in Trade: Avg # of Trades per Year: Max Closed-out Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

$903.768 89 1 $1,014 NIA 58.3 -$6,765 $26,383 $0 6 Wins

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): Z-Score (W/L Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

YEAR BY YEAR RE-CAP

By Year Report Apr 19, 2005 08: 17: 16

Name:

Louise A Lazy Day Trader (grmny)

Symbol:

SP-067

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Statistic to chart Profit, Position selection All trades, From date 01/05/1990, To date 04/18/2005, lgnore trades <= -999,999,999, lgnore trades >= 999,999,999, lgnore big wins 0, lgnore big losses 0, Profit is >= 0.00, Show cents No

Year

Profit

Trades

Net Profit

Win Pct

1990

$15,563

64.00%

1991

$9,015

$24,578

53.45%

1992

$9,813

$34,390

63.64%

1993

$10,768

$45,158

1994

$9,303

$54,460

55.17%

1995

$6,290

$60,750

58.49%

1996

$26,395

$87,145

72.88%

1997

$56.473

$143,618

71.93%

1998

$104,090

$247,708

69.12%

1999

$101,720

$349,428

70.37%

2000

$166,425

$515,853

76.36%

2001

$138,685

$654,538

87.10%

2002

$121,510

$776,048

74.63%

2003

$76,645

$852,693

78.26%

2004

$47,205

$899,898

73.77%

2005

$3,870

$903,768

57.14%

' '

O 2005 Lany Williams - Million Dollar Challenge

P Win Avg I

66.67%

Page 13 1

LAZY MANS RULES

S t r a t e ~ Louise A Lazy Day Trader (grmny) Commission/Slippage: $45.00 Bars Required to Test: 260 Estimated Length of Longest Trade: 260 Pyramiding Off From Date: 0 1/03/1990 To Date: 0 1/07/2002

Data Info: Identifier Market 1 $trin

Securitv S&P 500 Index (Pit) Cadj Liq NYSE Short Term Trading lndex Day T-bonds Cadj Liq

Bar Period Daily

Sec Type F

Symbol SP-067

Daily

$TRIN

Daily

TQ-067

Rules: RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Action: RuleName: Rule Text:

Use: Action:

A TQ TEST IF Next Bar Open Of tq - Bonds > (Tick Move Of tq) * 12 And Next Bar Open < Close And Inside Bar THEN BUY Next Bar at MARKET Long Entry AAA SP Daily Tester Sell 2 IF (Monday Or Wednesday Or Thursday) And Open < Low. 1 And Close > Close. 1 And Not Outside Bar And Next Bar Open < Close And Next Bar Open > Close. 1 THEN SELL Next Bar at Close. 1 STOP Short Entry blast of up close sell IF Close > Close.1 And BLAST OFF! (1) > 15 And BLAST OFF! (1) < 20 And Outside Bar.3 = False And Bonds > Bonds.40 Or Bonds > Bonds.55 And Inside Bar.5 = False THEN BUY Next Bar at MARKET OFF Long Entry

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text: Action:

Input percent

BLASTER SELL < OPEN IF BLAST OFF! (1) > 85 And BLAST OFF! (1) < 95 And Close > Close. 1 And Inside Bar = False And Inside Bar. 1 = False And Next Bar Day Is ("tuesday") = False And Bonds < Bonds.25 And Next Bar Open <= Close And Next Bar Open >= True Low THEN SELL Next Bar at MARKET Short Entry BLASTER SELL > open IF BLAST OFF! (1) > 65 And BLAST OFF! (1) < 95 And Close > Close. 1 And (Next Bar Open > Close Or Next Bar Open > High. 1) And Inside Bar = False And Inside Bar. 1 = False And (Volume < Volume. 1 Or True Range < True Range. 1) And Next Bar Day Is ("tuesday") = False And ~ o n d < s Bonds.25 THEN SELL Next Bar at MARKET Short Entry

buy dips IF Close < Close. 1 And Close. 1 < Close.2 And Range > Range. 1 And High > High.22 THEN BUY Next Bar at Close - MovingAvg (True Range , 7 ) * 1.20 LIMIT Long Entry buy first day every month IF Next Bar Trading DayOfMonth = 1 And Next Bar Trading Days After Holiday > 1 And Next Bar Open <= High And Close > Close.7 1 Or Close > Close.5 Or Close > Close.48 Or Close > Close.35 Or Close > Close.4 Or Bonds > Bonds. 1 And Next Bar Day Is ("Thursday") = False THEN BUY Next Bar at MARKET Long Entry

buy limit IF Close > Close. 1 And Bonds > Bonds. 12 THEN BUY Next Bar at Close - (percent 1 100 * Close) LIMIT Long Entry

Value 3

Optimiz OFF

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From

To Val

Step Val

Page 133

RuleName: Rule Text:

IF Next Bar Open < Projected Low And Next Bar DayOfWeek <> 4

Action:

And Bonds > Bonds.3 And Not Outside Bar And Low. 1 <= High.2 And (Close > Close.1 And Close < Open) = False And (Close < Close. 1 And Close > Open) = False And Next Bar Open Of tq > Bonds. 1 And Close Of $bin < vara / 100 THEN BUY Next Bar at Projected Low STOP Long Entry

Invut vara

RuleName: Rule Text:

Action:

RuleName : Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Use: Action:

buy moc tests

Value 0

Outimiz OFF

From

To Val

Step Val

buy strength IF Outside Bar = False And Close > Low + Range * 0.7 And Next Bar Open > High And Next Bar Open < High + Range * 1.3 And Next Bar Open < High. 10 Or Next Bar Open < High. 11 Or Next Bar Open < High.3 1 And Low. 1 < Close.2 And Low < Close.2 And Not Inside Bar THEN BUY Next Bar at Next Bar Open + Range * 0.5 STOP Long Entry consecutive - closes IF Close < Close.1 And Close. 1 < Close.2 And Close.2 < Close.3 And Close.3 < Close.4 And Close.4 < Close.5 THEN BUY Next Bar at MARKET Long Entry

day trade if down close IF Next Bar Open < Close.5 And Next Bar Open Of Tq > Bonds And Bonds > Bonds.3 And (Bonds > Bonds. 1 Or Bonds > Bonds.2) And Inside Bar = False And Outside Bar = False And (Low.2 < High.8) And Next Bar DayOfWeek 0 5 And High > Low. 1 And (Close < Close. 1 And Close > Open) = False And Close < Close. 1 And Close < Open And Next Bar Open < Close And BLAST OFF! (1) < 95 THEN BUY Next Bar at Next Bar Open STOP Long Entry

double daily gap IF High < Close. 1 And Next Bar Open < Close And Close - Next Bar Open > Range * 0.46 And Not Inside Bar. 1 And (High. 1 < High.3 And Low. 1 > Low.3) = False And High. 1 > High.4 Or Low. 1 < Low.4 THEN BUY Next Bar at W T OFF Long Entry

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RuleName: Rule Text:

Use: Action:

RuleName: Rule Text:

Action:

RuleName : Rule Text:

Action: Exit on Entry Bar:

Input Stop loss amount

RuleName: Rule Text: Action: Exit on Entry Bar:

RuleName : Rule Text: Action: Exit on Entry Bar:

double gap IF High < Close.1 And High > Low. 1 And Next Bar Open <= Close And (Next Bar Open Of tq < Bonds Or Bonds < Bonds.2 Or Bonds > Bonds.3 Or Bonds > Bonds.2 Or Bonds > Bonds.27) And Not Inside Bar And Not Outside Bar.2 And Volume < Volume. 1 Or Range < Range. 1 Or Close - Next Bar Open > Range * 0.7 And (Up Range. 1 And Open. 1 > High.2) = False And Inside Bar. 1 = False And (Close. 1 > Close.2 And Inside Bar.2) = False And Low.2 <= High.3 THEN BUY Next Bar at MARKET OFF Long Entry DT SELL OPEN >55% < 105% IF Next Bar Open > Projected High And Next Bar DayOfWeek 0 4 And Close < High.21 Or Bonds < Bonds.6 And Inside Bar = False And Close > Close. 1 And Close > Open And Not Down Range THEN SELL Next Bar at Projected High - Range * 0.35 STOP Short Entry Exit Long: day of Stop Loss IF True THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False

Value 6500

Optimiz OFF

From

To Val

Step Val

Exit Long: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN SELL Next Bar at MARKET ON CLOSE Long Exit False

Exit Short: At End of Day IF Bars Left In Day = 1 Or MinutesPerBar = 0 THEN BUY Next Bar at MARKET ON CLOSE Short Exit False

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RuleName: Rule Text:

Action: Exit on Entry Bar: Input Stop Loss Amount

RuleName: Rule Text:

Action: RuleName: Rule Text:

Use: Action: RuleName: Rule Text:

Use: Action:

RuleName: Rule Text:

Action:

Exit Short: Stop Loss IF True THEN BUY Next Bar at Entry Price + Dollars to Price (Stop Loss Amount) STOP Short Exit False Value 6500

Optimiz OFF

From

To Val

Step Val

fill the gap tests IF Next Bar open < Close And Next Bar Open > Low + Range * 0.90 And Close < Close. 1 THEN BUYNext Bar at Close STOP Long Entry for petes sake IF Next Bar Open < Close.5 And Next Bar Open Of Tq > Bonds And Bonds > Bonds.3 And (Bonds > Bonds. 1 Or Bonds > Bonds.2) And Inside Bar = False And Outside Bar = False And (Low > True Low. 1 And High < True High. 1) = False Or High. 1 > Low.2 THEN BUY Next Bar at Close.5 STOP OFF Long Entry gap down then up IF Close < Open And Close < Close. 1 And Next Bar Open > Open And Next Bar Day Is ("Monday") THEN SELL Next Bar at Open STOP OFF Short Entry

GAP UP BUY LIMIT IF Up Range And Close > Open And Next Bar Open > Open And Next Bar Open <= Close And Low > Close. 1 And Next Bar DayOfWeek 0 1 And (Low > High. 1 And Low.2 > High.3) = False THEN BUY Next Bar at Open - Range * 0.08 LIMIT Long Entry

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RuleName: Rule Text:

inside outside eliminator IF Next Bar Open < Close.5 And Next Bar Open Of Tq > Bonds And Bonds > Bonds.3 And (Bonds > Bonds. 1 Or Bonds > Bonds.2) And Inside Bar = False And Outside Bar = False And (Low.2 < High.8) And Next Bar DayOfWeek 0 5 And High > Low. 1 And (Close < Close. 1 And Close > Open) = False And (Down Range And Open < Low. 1 And Close > Low. 1) = False And High. 1 > Low.5 And Inside Bar.2 = False And (Close < Low. 1 And Close. 1 < Low.2 And Close.2 < Low.3 And Next Bar Open < Low. 1) = False And (Inside Bar. 1 And Next Bar Open > High. 1) = False And (Close > Close. 1 And Close < Open) = False And High.3 > Low.4 And (Open.1 < Low.2 And Close. 1 > Close.2 And Close < Low. 1) = False And (Outside Bar. 1 And Close. 1 < Close.2 And Close > Close.1) = False THEN B m Next Bar at Next Bar Open + Range * 0.05 STOP

Action:

Long Entry

RuleName: Rule Text:

LARGE UP RANGE BUY WEAKNESS IF Up Range And Close > Close. 1 And Close. 1 > Close.2 And Low > Close. 1 And Next Bar Open < Close And Next Bar Open > Open And Close > Close.4 Or Close > Close.5 And Low <= High. 1 And Close > Open And Not True Inside Bar. 1 THEN BUY Next Bar at Open LIMIT Long Entry

Action: RuleName: Rule Text: Use: Action:

RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Action:

mdc test IF Down Range And Close > Low. 1 And Next Bar Open < Low THEN BUY Next Bar at MARKET OFF Long Entry

mon thurs buy IF Close > Close. 1 And Next Bar Day Is ("monday") Or Next Bar Day Is ("thursday") And Bonds > Bonds.4 Or Bonds > Bonds.5 Or Next Bar Open Of tq > Bonds Or Close > High. 1 And Close > High.3 Or Close > High. 10 And Not Inside Bar THEN BUY Next Bar at Next Bar Open + Range * 1.O1 STOP Long Entry

MON THURS o >OPEN IF Close > Close. 1 And Next Bar Day Is ("monday") And Bonds > Bonds.4 Or Bonds > Bonds.5 Or Next Bar Open Of tq > Bonds Or Close > High. 1 And Close > High.3 Or Close > High. 10 And Not Inside Bar And Next Bar Open > Open THEN BUY Next Bar at Next Bar Open + Range * 1.O1 STOP Long Entry

0 2005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

RuleName: Rule Text: Use: Action: RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

NEW SP BUY 3 IF Close - Low < Close. 1 - Low. 1 And Close < Close. 1 And Close. 1 < Close.2 And Close.2 < Close. 12 Or Close.2 < Close.3 Or Close.2 < Close.8 And Close Of Tq > High.1 Of Tq And Next Bar Open < Close Range * 0.10 THEN BUY Next Bar at MARKET Long Entry

oday < close buy IF Outside Bar And Close < Close. 1 And Next Bar Open < High THEN BUY Next Bar at High. 1 STOP OFF Long Entry outside trap sell IF True Outside Bar And Next Bar Open < High And Next Bar Open > Low And Next Bar Day Is ("friday") THEN SELL Next Bar at Low STOP Short Entry

PROJ HI SELL IF Next Bar Open > Projected High And Next Bar DayOfWeek 0 4 And Close < High.21 Or Bonds < Bonds.6 And Inside Bar = False And Outside Bar = False And Next Bar Open Of tq < Bonds THEN SELL Next Bar at Projected High - Range * 0.35 STOP Short Entry

SADAAM SELL 2 IF Next Bar Day Is ("Monday") Or Next Bar Day Is ("TUESDAY") And Next Bar Open >= Close And Next Bar Open > Close + Range * 0.3 And Next Bar Open > High.4 Or Next Bar Open > High.5 Or Next Bar Open > High.6 And Outside Bar = False And Inside Bar. 1 = False And (Outside Bar. 1 And Close. 1 > Close.2) = False And Close > Close. 1 And (Close > High. 1 And Close. 1 > High.2 And Close.2 > High.3) = False Short Entry

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sell as Bonds open < IF Next Bar Open > Close And Next Bar Open > Low + Range * 0.65 And Next Bar Open Of Tq < Bonds And (Bonds < Bonds.5 Or Bonds < Bonds.2) And Next Bar DayOfWeek 0 4 And Next Bar DayOfWeek <> 5 And Outside Bar = False And Low < High. 1 And ADX (10) > 15 And ADX (10) < 50 And (Close < Low. 1 And Close < Low.2 And Close < Low.3) = False And (Outside Bar. 1 And Close. 1 > Close.2) = False And (Open < Close. 1 And Open > Open. 1 And Close < Close. 1 And Close > Open.1) = False THEN SELL Next Bar at Next Bar Open - Range * 0.20 STOP Short Entry

RuleName: Rule Text:

Action: RuleName: Rule Text:

short sell 45/65 IF (Next Bar DayOfWeek = 1 Or Next Bar DayOfWeek = 2) And Low < High. 1 And Outside Bar. 1 = False And Outside Bar = False And Next Bar Open Of tq < Bonds And Next Bar Open > Close And Next Bar Open > (Low + Range * 0.45) And Close > Low.7 And Low < High.6 Or Low < High.3 1 THEN SELL Next Bar at Next Bar Open - Range * 0.15 STOP Short Entry

Action: RuleName: Rule Text:

St Croix Special IF Close < Close.3 And Next Bar Open < Projected High And Next Bar Open > Low And Inside Bar = False And Close > Close.6 And Bonds > Bonds.8 And Bonds > Bonds. 11 And Bonds > Bonds.41 And Projected High < Projected High.3 THEN BUY Next Bar at Projected High STOP Long Entry

Action:

td up range < close TRAP IF Up Range And Close < Open And Next Bar Open < High And Next Bar Open > Low And (Bonds > Bonds.3) THEN BUY Next Bar at High STOP Long Entry

RuleName: Rule Text:

Action: RuleName: Rule Text:

TRAP INSIDE DAY BUY IF True Inside Bar And Close > Close.1 And Next Bar Open < High And Next Bar Open > Low And Low < Close. 1 And MovingAvg (Close , 80) > MovingAvg (Close , 80). 1 Or MovingAvg (Close ,40) > MovingAvg (Close ,40). 1 THEN BUY Next Bar at High + Range * 0.25 STOP Long Entry

Action: -

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RuleName: Rule Text:

Action: RuleName: Rule Text:

Use: Action:

TRAP INSIDE DAY SELL IF True Inside Bar And Next Bar Open < High And Next Bar Open > Low And Close < Close. 1 And Next Bar Day Is ("fiiday") Or Next Bar Day Is ("Monday") THEN SELL Next Bar at Low - Range * 0.25 STOP Short Entry trap outside buy IF True Outside Bar And Next Bar Open < High And Next Bar Open > Low And Bonds > Bonds.33 Or Next Bar Open Of tq > Bonds And Next Bar Day Is ("thursday") = False And Next Bar Day Is ("fiiday") = False Long Entry vic IF Close < Close. 1 And Close.1 < Close.2 And Close.2 < Close.3 And Close.3 < Close.4 And Next Bar Day Is ("thursday") = False And High. 1 > Low.2 And Outside Bar.3 = False And Inside Bar = False THEN BUY Next Bar at MARKET OFF Long Entry

RuleName: Rule Text:

Vienna Sell 7-A IF Tuesday And Close < Close. 1 And Close. 1 > Close.2 And (Open Low) < (High. 1 - Open. 1) And Close < Open And Close > Close.7 And Low. 1 < High.2 And Next Bar Open < Low And (Low. 1 > Close.2 And True Inside Bar Or Outside Bar) = False THEN SELL Next Bar at MARKET

Action:

Short Entry

RuleName: Rule Text:

x-BLAST-TRTN AWAY IF BLAST OFF! (1) < 30 And Next Bar Open Of $TRIN < 0.75 And Not Inside Bar And Next Bar Open <= High THEN BUY Next Bar at MARKET OFF Long Entry

Use: Action:

RuleName: Rule Text:

Use: Action:

x-TRIN BUY IF Next Bar Open Of $trin < 0.8 1 And Next Bar Open >= Low And Next Bar Open <= Close THEN BUY Next Bar at MARKET OFF Long Entry

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RuleName: Rule Text:

Use: Action:

RuleName: Rule Text:

Use: Action:

RuleName: Rule Text:

Use: Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

x-trin buy #2 IF Next Bar Open Of $trin < 0.8 1 And BLAST OFF! (1) < 20 And Next Bar Open < High + Range * 1.1 And (True Inside Bar And Next Bar Open > High. 1) = False And (High < Low. 1 And Next Bar Open > High And Outside Bar. 1) = False THEN BUY Next Bar at MAIZKET OFF Long Entry

x-trin sell IF Next Bar Open Of $trin > 1.55 And Close < Close. 13 Or Close < Close.96 Or Close < Close. 19 Or Close < Close.93 Or (Close > Close. 1 And Close. 1 < Close.2 And Close < Close.3) And Next Bar Open > Low And Next Bar Day Is ("Monday") Or Next Bar Day Is ( ffTuESDAY1f) THEN SELL Next Bar at MARKET OFF Short Entry

x-TR-OOPS! IF Next Bar Open Of $trin < 1.10 And Next Bar Open < Low And Next Bar Day Is ("thursday") = False And Next Bar Day Is ("fiiday") = False THEN BUY Next Bar at MARKET OFF Long Entry

YADAYADA SELL 1 IF Close Of Tq < Close.4 Of Tq And Low >= Close. 1 And Close > Close. 10 And Next Bar Open > True High And (Close > Close.3 Or Close > Close.4 Or Close > Close.7) And (Bonds > Bonds.40 And Close < Close.40 Or Bonds > Bonds.45 And Close < Close.45) = False THEN SELL Next Bar at MARKET Short Entry

yales IF Down Range And Close < Close. 1 And Down Range. 1 And Close. 1 < Close.2 And Down Range.2 And Close.2 > Close.3 And Next Bar Open >= Close And High. 1 < Close.2 THEN BUY Next Bar at MARKET Long Entry

02005 Larry Williams - Million Dollar Challenge

Page 141

ZPI a%ed

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Strategy: golden oops Commission/Slippage: $45 .OO To Date: 07/06/2004

Identifier Market 1 TQ

Security Comex Gold Cadj Liq T.Bonds Comb 30 YR CAdj Liq

Bar Period Daily Daily

Sec Type F F

Svmbol GC-067 US-067

Rules: RuleNarne:

delay golden oops

O 2005 Larry Williams - Million Dollar Challenge

Page 143

Rule Text:

Action: RuleName: Rule Text: Action: Exit on Entry Bar: Input Vara Varb RuleNarne: Rule Text:

Action: Exit on Entry Bar: Input Stop Loss Amount

RuleName: Rule Text:

Action: RuleName: Rule Text:

IF Next Bar Open > Low And Next Bar Open < Low. 1 And Next Bar Day Is ("Tuesday") Or Next Bar Day Is ("wednesday") Or Next Bar Day Is ("thursday") And Outside Bar = False And MovingAvg (Close , 18) > MovingAvg (Close , 18).1 And Bonds < Bonds.6 Or Bonds < Bonds.36 THEN BUY Next Bar at Low. 1 STOP Long Entry delayed Long: LW Bailout IF Bars Since Entry >= Vara And Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open + Tick Move * Varb LIMIT Long Exit False Value 3 1

Optimiz OFF OFF

From

To Val

Step Val

Exit Long: day of Stop Loss IF True THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False Value 500

Optimiz OFF

From

To Val

Step Val

gold oops sell IF Next Bar Open > High And Inside Bar = False And Not Outside Bar And Bonds < Bonds.21 And Close > Close.8 And Next Bar Day Is ("Monday") And Not Inside Bar And Close > High. 1 THEN SELL Next Bar at High STOP Short Entry

Action:

gold opps sell IF Next Bar Open > High And Next Bar Day Is ("wednesday") And Not Inside Bar And Not Outside Bar And MovingAvg (Close , 5) > MovingAvg (Close , 5). 1 THEN SELL Next Bar at High STOP Short Entry

Rul eName:

golden oops!

02005 Lany Williams -Million Dollar Challenge

DH- 9

Page 144

Rule Text:

Action: RuleName: Rule Text:

Action: Exit on Entry Bar: Input Stop loss amount RuleName: Rule Text:

Action: Exit on Entry Bar: Input Delay Ticks Above Open

IF Next Bar Open < Low And Not Inside Bar And Next Bar Day Is ("Monday") Or Next Bar Day Is ("tuesdsay") And Comm Proxy IDX (8) > 25 And Comm Proxy IDX (8) < 65 And Bonds < Bonds.25 Or Bonds < Bonds.30 THEN BUY Next Bar at Low STOP Long Entry mon oops IF Down Range And Next Bar Day Is ("Monday") And Next Bar Open < Low And Low. 1 > High.2 Or Close. 1 > High.2 THEN BUY Next Bar at Low STOP Long Entry Short gold exit IF True THEN BUY Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Short Exit False Value 500

Optimiz OFF

From

To Val

Stev Val

short gold exit delay IF Bars Since Entry >= Delay And Next Bar Open < Entry Price THEN BUY Next Bar at Next Bar Open - Tick Move * Ticks Above Open LIMIT Short Exit False Value 3 5

Optimiz OFF OFF

From

To Val

Step Val

THIS MODEL DOES NOT TRADE OFTEN IT LOOKS LIKE IT WILL DO BEST WHEN GOLD I N A WELL DEFINED BULL MARKET

O 2005 Larry Williams - Million Dollar Challenge

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OOPS! FOR SOYBEANS AS WELL

Earlier this year, in conjunction with Genesis Data, we did some work in this market. Since then I have added some more rules and begun trading this market. Here are the complete rules;

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

$56,788 267 $213 2.82 23.0 -$3,050 $4,548 $0 1 Losses

Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win:

O 2005 Lany Williams - Million Dollar Challenge

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): Z-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Page 146

Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

-$203 $535 -$203 26 6.08 2.60

Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

$197 $197 -$a84 2 1. I 4 4.00

Stratew: BEANS SYSTEM ComrnissiodSlippage: $0.00 Bars Required to Test: 260 Estimated Length of Longest Trade: 260 Pyramiding Off From Date: 0 1/04/1993 To Date: 06/25/2004

Data Info: Identifier Market 1 CR Weekly

Securitv Soybeans Cadj Liq Crb Index Cadj Liq Soybeans Cadj Liq

Bar Period Daily (Default) Weekly

Sec T w e F F F

Symbol S-067 CR-067 S-067

Rules: RuleName: Rule Text:

Action: Exit on Entry Bar:

Znput Stop Loss Amount RuleName: Rule Text:

Action: Exit on Entry Bar:

Input percent days stop loss

Exit Long: day of Stop Loss IF True THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP Long Exit False

Value 1600

Optimiz OFF

From

To Val

Step Val

Exit Long: GW Market Action exit IF True THEN SELL Next Bar at Entry Price - Max ((percent / 100 * Avg True Range (days)) ,Dollars to Price (stop loss)) STOP Long Exit False

Value 175 3 750

Optimiz OFF OFF OFF

O 2005 Lany Williams - Million Dollar Challenge

From

To Val

Step Val

Page 147

RuleName: Rule Text:

Action: Exit on Entry Bar:

Znt>ut delay ticks above open

RuleName: Rule Text:

Action: Exit on Entry Bar:

Invut percent days stop loss RuleName: Rule Text:

Action: Exit on Entry Bar: Input Stop Loss Amount

RuleName: Rule Text:

Action: Exit on Entry Bar:

Exit Long: The Bailout IF Bars Since Entry >= delay And Next Bar Open > Entry Price + Tick Move * 2 THEN SELL Next Bar at Next Bar Open + Tick Move * ticks above open LIMIT Long Exit False

Value 1 3

Ovtimiz OFF OFF

From

To Val

Stev Val

Exit Short: GW Market Action IF True THEN BUY Next Bar at Entry Price + Max ((percent / 100 * Avg True Range (days)) ,Dollars to Price (stop loss)) STOP Short Exit False Value 90 3 800

Ovtimiz OFF OFF OFF

From

To Val

Stev Val

Exit Short: Stop Loss After Entry Bar IF True THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP Short Exit False Value 900

Ovtimiz OFF

From

To Val

Step Val

Exit Short: The Bailout IF Bars Since Entry >= delay And Next Bar Open < Entry Price - 2 * Tick Move THEN BUY Next Bar at Next Bar Open - Tick Move * ticks below open LIMIT Short Exit False

O 2005 Larry Williams - Million Dollar Challenge

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Input delay ticks below open

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

RuleNarne: Rule Text:

Action:

RuleName: Rule Text:

Value 0 2

Optimiz OFF OFF

From

To Val

Step Val

GW Soy DP buy 1 IF Close < Close. 1 And Not Inside Bar And Next Bar Open < Low And COT Commercials Index (3) > 50 THEN BUY Next Bar at Low STOP Long Entry

GW Soy oops sell 1 IF Next Bar Open > True High And (CRB < CRB. 11 Or CRB < CRB. 19) And Close > Close. 1 And Close. 1 > Close.2 THEN SELL Next Bar at True High STOP Short Entry

loops 2 IF Next Bar Open < True Low And Not Wednesday And COT Commercials Index (1) > 50 Or Close > Close.48 And Next Bar Open > Low. 1 THEN BUY Next Bar at Low STOP Long Entry

lwoops IF Next Bar Open < True Low And Not Wednesday And COT Commercials Index (1) > 50 Or Close > Close.48 And Next Bar Open < Low. 1 THEN BUY Next Bar at True Low. 1 STOP Long Entry

pro jo lo 4 beans IF Next Bar Open < Projected Low And Next Bar DayOfWeek 0 4 And Close < Close. 1 Or Close < Close.5 Or Close < Close.6 Or Close < Close. 12 And Next Bar Day Is ("Monday") Or Next Bar Day Is ("tuesdayl') THEN BUY Next Bar at Projected Low STOP Long Entry

sbean thurs oops IF Next Bar Day Is ("thursday") And Next Bar Open > High And Not Inside Bar And Close > Close. 12 Or Close < Close.8 THEN SELL Next Bar at High STOP

O 2005 Larry Williams - Million Dollar Challenge

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Action:

Short Entry

RuleName: Rule Text:

thurs short beans IF Next Bar Day Is ("thursday") And Next Bar Open > Projected High And Not Inside Bar THEN SELL Next Bar at Projected High STOP Short Entry

Action:

FACTS ON THE DAX

While the Dax is not my trading vehicle of choice, due to time zones, I am interested to know what moves this index. This is one of those market with a real hture and is widely traded around the globe. Here are some insights from my research; SEASONAL WEEKLY CHART

O 2005 Larry Williams - Million Dollar Challenge

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SEASONAL DAILY CHART FIRST 6 MONTHS OF THE YEAR

O 2005 Larry Williams - Million Dollar Challenge

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ZSI azed

The following table tells us some days in the Dax are better than others to be a buyer or a seller. What is shown are the results of buying on the opening and exiting on the close of the same day.

By Week Day Report Statistic to chart Profit, Position selection All trades, From date 10/23/1997, To date 09/08/2004, lgnore trades <= -999,999,999, lgnore trades >= 999,999,999, lgnore big wins 0,lgnore big losses 0, Profit is >= 0.00, Show cents No

Week Day Monday Tuesday Wednesday Thursday Friday

Trades 344 349 349 348 344

Win Pct 52.0% 48.7% 45.0% 50.0% 49.1%

Win Avg $1,364 $1,255 $1,284 $1,369 $1,379

O 2005 Larry Williams - Million Dollar Challenge

Loss Avg $-1,467 $-1,457 $-I ,414 $-1,722 $-1,381

AvgTrade $6 $-I36 $-ZOO $-I76 $-25

Profit $1,970 $47,393 $-69,943 $-61,335 $-8,593

Page 153

Let's next turn our attention to the trading days of the month.. .as you know a month can have up to 23 days that we can actually trade. Forget calendar days, its trading days (TDOM) that really matter and allow us to focus on the specifics. Here I use our bail out exit or a stop of $3,500. HOLIDAYS I N THE DAX---My next clip show the effect of buying on the opening one day before holidays with the $3,500 stop and bail out exit. This is a very good trade set up for your consideration.

DAY BEFORE HOLIDAY BUY Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinILoss): Z-Score (WIL Predictability): percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f:

$42,273 37 $1,143 1.35 5.7 -$5,795 $8,463 $0 5 Wins

Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win; Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Gonsec Losses: Avg # of Consec Losses: Avg # o f Bars in Losses:

LISTED BY TDOM FOR ALL MONTHS

Test# I-1

Win% Trades Wins Losses Ava Win

1 2 3 4 5 6 7 8 9

61.4% 78.3% 65.1% 74.4% 57.3% 65.9% 63.4% 73.2% 80.5%

1 2 3 4 5 6 7 8 9

83 83 83 82 82 82 82 82 82

51 65 54 61 47 54 52 60 66

Net Profit

Ava Trade

32 18 29 21 35 28 30 22 16

O 2005 Larry Williams - Million Dollar Challenge

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The best buy days are TDOM 9,10 and 17, the best sell days have been 1,5,11 and 13.

BUYING THE FIRST TRADING DAY OF EVERY MONTH

By Month Report Month September April October May June November December March January July February August

Trades 5 4 5 2 4 4 5 5 0 5 4 4

Win Pct 100.0% 100.0% 80.0% 100.0% 100.0% 100.0% 80.0% 80.0% 0.0% 60.0% 50.0% 25.0%

Win Avg $2,448 $1,780 $2,633 $3,018 $1,464 $1,446 $1,693 $1,177 $0 $855 $1,743 $530

AvgTrade $2,448 $1,780 $1,258 $3,018 $1,464 $1,446 $645 $233 $0 $-go5 $-1,176 $-2,526

Profit $12,238 $7,120 $6,288 $6,035 $5,858 $5,783 $3,225 $1,163 $0 $4,525 $4,705 $-10,105

FAKEOUT BUY SIGNALS IN AN UP TREND IF Up Range And Close < Open And Close < Close.1 And Up Range. IAnd Close.1 > Close.2 And Close > Close. I 3 Or Close > Close.31 Or Close > Close.18 BUY AT H . l STOP

Position selection All trades, From date 05/15/1986, To date 04/26/2004, Chart By Date, lgnore trades <= -999,999,999, lgnore trades >= 999,999,999, lgnore big wins 0, lgnore big losses 0, Profit is >= 0.00, Show cents No, Show Max lntra No, MA Type Simple. MA Periods 75

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Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

$13,110 42 $312 3.76 2.3 435 $4,768 $0 11 Wins

Profit Factor ($Wins/$Losses): Winning Percentage: Payout Ratio (Avg WinILoss): Z-Score (WIL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

Equity Curve

O 2005 Larry Williams - Million Dollar Challenge

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OOPS! BUY SIGNALS By trade day of week

Day 01 Day 02 Day 03 Day 04 Day 05

Profit $22,728 $10,473 $-I 1,005 $18,533 $5,485

Trades 23 22 34 36 27

Win Pct 82.6% 68.2% 70.6% 58.3% 70.4%

Win Avg $1,943 $2,195 $1,215 $1,547 $1,910

By trade day of the month

Win% Trades Wins 65.6% 742 487 65.3% 744 486 65.3% 744 486 65.2% 742 484 65.3% 744 486 65.3%743 485 65.3% 743 485 65.2%742 484 65.5% 744 487 65.3% 744 486 65.2% 744 485 65.2% 742 484 65.2% 742 484 65.2% 742 484 65.2% 742 484 65.1% 743 484 65.1째h743 484 65.1% 743 484 64.9% 744 483 65.1% 742 483 65.0%743 483 65.1% 744 484 64.7% 743 481

D 2005 Larry Williams - Million Dollar Challenge

Losses Net Profit 255 $32,923 258 $31,283 258 $31,083 258 $30,423 258 $29,258 258 $28,978 258 $28,678 258 $28,348 257 $28,170 258 $27,533 259 $27,033 258 $26,748 258 $26,285 258 $26,273 258 $26,273 259 $25,603 259 $25,578 259 $23,953 261 $20,295 259 $16,173 260 $15,390 260 $14,958 262 $1 1,640

OOPS! SELL SIGNALS By trade day of week

Day 01 Day 02 Day 03 Day 04 Day 05

Profit $12,200 $4,198 $1 1,035 $2,633 $-12,485

Trades 30 42 32 34 28

Win Pct 83.3% 78.6% 71.9% 76.5% 64.3%

Win Avg $1,197 $1,017 $1,719 $1,243 $1,299

By trading day of the month

Win% Trades Wins 88.9% 9 8 90.9% 11 10 92.3% 13 12 100.0% 11 80.0% 5 4 84.6%13 11 75.0% 12 9 80.0% 5 4 100.0% 8 77.8% 9 7 85.7% 7 6 7 77.8% 9 73.3% 15 11 7 77.8% 9 80.0% 5 4 0.0% 0 0 63.6%11 7 71.4% 7 5 78.6% 14 11 62.5% 8 5 60.0% 5 3 0.0% 2 0 50.0% 14 7

O 2005 Larry Williams - Million Dollar Challenge

Net Profit $1 1,845 $1 1,830 $9,103 $7,468 $6,425 $6,190 $6,060 $5,900 $5,078 $3,770 $3,610 $2,370 $1,538 $733 $688 $0 $-I20 $-3,0 15 $-3,018 $-5,635 $-6,338 $-7,090 $-15,843

Page 158

Summary All Trades Report Name:

dax attacks

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak:

$108,998 112 $973 1.30 16.7 -$13,038 $13,083 $0 11 Wins -

Stratem: dax attacks Corntnission/Slippage: $45.00

Data Info: Identifier Market 1

Bar Period Daily

Securitv Dax Index Cadj Liq

Sec Type F

Symbol GX-067

Rules: dax attax L. 1 IF Down Range And Next Bar Open >= Low And Next Bar Day Is ("Monday") Or Next Bar Day Is ("tuesday") And Next Bar Open <= Close And Close > Low.3 Or Close > Low.32 Or Close > Low. 14 THEN BUY Next Bar at Low. 1 STOP Long Entry

RuleName: Rule Text:

Action: -

O 2005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

Action:

RuleName: Rule Text:

Action:

DAX fakeout sell IF High < High. 1 And Low < Low. 1 And Close > Close. 1 And Not Wednesday And Not Thursday And Next Bar Open > Close THEN SELL Next Bar at Low. 1 STOP Short Entry

DAX LONG TESTER IF Next Bar Day Is ("Monday") And Close > Low.3 Or Close > Low.32 Or Close > Low. 14 And Next Bar Open < Low THEN BUY Next Bar at Low STOP Long Entry

RuleName: Rule Text:

DAX SHORT TESTER IF Next Bar Day Is ("tuesday") Or Tuesday And Close > Close. 1 And Next Bar Open > Projected High THEN SELL Next Bar at Projected High STOP

Action:

Short Entry

RuleName: Rule Text:

dax trailer IF True THEN SELL Next Bar at Lowest (True Low, vara) STOP OFF Long Exit False

Use: Action: Exit on Entry Bar:

Inuut vara

RuleName: Rule Text:

Action:

RuleName: Rule Text:

Value 0

Optirniz OFF

From

To Val

Step Val

dax trender IF Inside Bar = False And Next Bar Day Is ("monday") And Next Bar Open < Close And Not November And Not September And Next Bar Open < Open. 1 THEN BUY Next Bar at Next Bar Open + Range * 0.20 STOP Long Entry

Exit Long: Day after Stop Loss IF Bars Since Entry >= 0 THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP

O 2005 Larry Williams - Million Dollar Challenge

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Action: Exit on Entry Bar:

Input Stop Loss Amount

RuleName : Rule Text:

Long Exit False

Ovtimiz OFF

Value 3300

From

To Val

Step Val

Action: Exit on Entry Bar:

exit short 1/2 bailout IF Next Bar Open < Entry Price THEN BUY Next Bar at MARKET Short Exit False

RuleName: Rule Text:

IF Bars Since Entry >= 0

Action: Exit on Entry Bar:

THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP Short Exit False

Input Stop Loss Amount

RuleName: Rule Text: Action: Exit on Entry Bar:

Exit Short: 1 Day after Stop Loss

Value 3300

Ovtimiz OFF

From

To Val

Step Val

long 1/2 bailout ORGMd IF Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open STOP Long Exit False

O 2005 Larry Williams - Million Dollar Challenge

Page 16 1

SPECIAL BONUS#I

SEQUENTIAL A special bonus, a special tool for calling major market highs and lows in stocks and commodities. Created by Tom Demark and Larry Williams in 1978. Here we have a timing, and to some extent a selection tool, that is almost akin to playing with the Devil. When you consider some of the uncanny and amazing calls this tool has had from when we developed it 26 years ago, you can only shake your head in amazement, as you will soon see. I like to use this when a market is set up with the commercials and I am willing to call a top or bottom...to identify in advance...the end of a trend. The rules are real simple;

SEQUENTIAL BUY SIGNAL There must first be 9 consecutive closes lower than the close 4 bars (days, minutes, weeks, whatever your time period is) ago. This we call the set up. Once a set up is in place, starting with the gthconsecutive close we go into countdown for the buy. Countdown consists of 13 closes lower than the low 2 bars ago. These do not have to be consecutive. Day 13 must be below day 8. If another set up of 9 consecutive closes appear begin the countdown all over.

SEQUENTIAL SELL SIGNAL There must first be 9 consecutive closes greater than the close 4 bars (days, minutes, weeks, whatever your time period is) ago. This we call the set up. Once a set up is in place, starting with the gthconsecutive close we go into countdown for the sell. Countdown consists of 13 closes greater than the high 2 bars ago. These do not have to be consecutive. Day 13 must be above day 8. 1.1 another set up of 9 consecutive closes appear begin the countdown all over.

O 2005 Larry Williams - Million Dollar Challenge

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xoq :dn)as A g bas sly :u~op)uno3i n g bas a~Suely:h)u3i n g bas xoq :dnjas 118sbas s,# :uMopjuno3 118sbas

As you can see this works on stocks and commodities and on all time frames. It is a remarkable tool, yet it can be wrong, so it is important to use it in well set up markets and with stops.

O 2005 Larry Williams - Million Dollar Challenge

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SPECIALIST TRAP IN NEWS CORP Here's a specific price pattern I have used for years in stocks and commodities. In the case of a buy I look for a market that has been in a strong down trend, and then moves sideways for 6 or more days. What's happening, is it looks like the down trend may be over, that the market is in the process of bottoming out, base building is going on, it terms of 'chart speak. I then wait for a break to new lows, a close below the trading range. This is a new low close, not just an intra-day low. As I see it, this action scares the public out of the longs they have recently acquired.. .and on the break down it usually means they went short as well ...and may be caught in a trap. The trap takes place if within 3 days of the new low close price rallies back to the hiqh of the dav prior to the new low close. In the example here the trading range occurred from 11117/03 to 12/05/03, and on 12/08/03 the new low close was seen. What should have happened, what usually does, is price keeps going lower. But, if price can immediately rally back to the high of the day prior to the break down buy signal is given, in this case at 34.08.

O 2005 Lamy Williams - Million Dollar Challenge

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NOW LET'S LOOK AT A SELL The sell pattern is just the reverse. I look for a large up trend, then a sideways market, resolving i,tself with a new high closing price. Most often price continues higher. What we are looking for is an immediate reversal of this price formation. The new close sets the trap. If price immediately collapses, I define that as getting back to the low of the day prior to the break out, a sell signal is issued. Here is one in NewsCorp;

O 2005 Lany Williams - Million Dollar Challenge

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Traders will see this pattern on weekly, daily and intraday carts. It is one I have used since 1966 and found to be one of the very few effective 'chart patterns". It is a pattern that it reflects is the state of rnind of traders. They all get bullishlbearish on the new highlnew low close. The triggers off all sorts of public and fund buying and by all rights THE MARKET SHOULD CONTINUE THE TREND MOVE...the telling point is that it does not, can not and reverses. The entry point is that low the day before the new high close of the high the day prior to the new low close. Study your charts and you will see quite a few of these, in "our" markets; here, there and everywhere.

O 2005 Larry Williams - Million Dollar Challenge

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:sass01 u! sleg 40 # 6hv :sass01 3asuo=)40 # 6hv :sass01 aasuo=)$sow :ssol u! UMoa unu 6hv :ssol u! d n unu 6hv :ssol u! yead 6hv :ssol u! yead l s a 6 ~ e l :ssol p a 6 ~ e l :ssol a6eJahv :SSOl SSOJE)

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We can also buy on the opening of the 8thday before the holiday for a little more gain, but end up with one loss, in 1977; Buy on the opening of the gthtrading day before the holiday Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

$13,611 26 $524 2.85 1.o -$I ,670 $5,116 $0 25 Wins

S&P 500 THANKSGIVING TRADE---The best rule is to buy on the opening of the day before the holiday and again we will use the same rules as used in the MDC system for trading this market. Here are the results; (1987 was the only losing year)

O 2005 Larry Williams - Million Dollar Challenge

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Buy on the opening of the trading day before the holiday Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Drawdown: Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

$20,785 22 $945 1.68 1.o -$3,645 $22,781 $0 16 Wins

I am sure there are many other ways of skinning this cat, of using what we know to buy morehuy earlierhold longer, etc., but in any event this is a time of the year when we get to place with loaded dice. Be thankful!

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BONUS REPORT #&-- FULL MOON OVER THE MDC?? Look, I don't know if full moons and new moons have any impact at all on the market, I have no vested interest in this argument. But, when Genesis added the function giving us the ability to test buying and selling around fulYnew moons, you know I went to work. What I found out was of great interest. I will let you decide what the following data tells us and then present a trading strategy we should watch to see if it's for real or the results of data mining.

The first chart is the result of buying on the opening when there is a 111 moon and the position of the Moon is between 152 and 208 degrees with regards to the sun.

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Finally, you may consider this chart and trade rules as I have them in Genesis;

Summary Long Trades Report Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Account Size Required: Open Equity: Current Streak: Winning Trades Total Winners: Gross Profit: Average Win: Largest Win: Largest Drawdown in Win: Avg Drawdown in Win: Avg Run Up in Win: Avg Run Down in Win: Most Consec Wins: Avg # of Consec Wins: Avg # of Bars in Wins:

$95,925 135 $711 2.81 6.0 -57,090 $28,158 $0 6 Wins

Profit Factor ($Winsl$Losses): Winning Percentage: Payout Ratio (AVg WinlLoss): Z-Score (WlL Predictability): Percent in the Market: Max lntraday Drawdown: Return Pct: Kelly Ratio: Optimal f:

Apr 19, 2005 07:57:45 4.16 91.9% 0.37 0.2 6.5% -$10,840 340.7% 0.6977 0.79

Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

TRADE RULE

IF New Moon (11).21 And MovingAvg (Close , 125) > MovingAvg (Close , 125).2 And MovingAvg (Bonds 6 ) > MovingAvg (Bonds, 6).2 Or MovingAvg (Bonds, 7) > MovingAvg (Bonds, 7).2 Or MovingAvg (Bonds, 95) > MovingAvg (Bonds, 95).2 BUY AT NEXT DAY OPEN

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TRADING THE Aussie SPI'S WITH A MECHANICAL SYSTEM Here it is pretty much the same rules as last year Australia's hot stock index

...rule based tradingfor

Equity Curve

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OROVER COMPENSATED FORTHE IMPACT, I F ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS I N GENERAL ARE ALSO SUBJECT TO THE FACT THATTHEY ARE DESIGNED WITH THE BENEFIT OF H1:NDSIGHT. NO REPRESENTATION I S BEING MADE THAT ANY ACCOUNT WILL OR I S LIKELY TO ACHIEVE PROFIT OR LOSSES SIM1:LAR TO THOSE SHOWN. DO NOT RISK ANY MONEY YOU CAN NOT AFFORD TO LOSE.

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Sumrnary All Trades Report Name:

SPY ON YOU

Symbol:

SPI-067

Overall Total Net Profit: Total Trades: Average Trade: Avg # of Bars in Trade: Avg # of Trades per Year: Max Closed-out Account Size Required: Open Equity: Current Streak:

$141,875 346 $410 2.19 23.7 -$3,275 $4,675 $0 3 Wins

Jun 7, 2006 15:45:32

Profit Fador ($Winsl$Losses): Winning Percentage: Payout Ratio (Avg WinlLoss): 2-Score (WIL Predictability): Percent inthe Market: Max lntraday Diawdown: Return Pd: Kelly Ratio: Optimal f: Losing Trades Total Losers: Gross Loss: Average Loss: Largest Loss: Largest Peak in Loss: Avg Peak in Loss: Avg Run Up in Loss: Avg Run Down in Loss: Most Consec Losses: Avg # of Consec Losses: Avg # of Bars in Losses:

TRADE RULES Strate~v: SPY ON YOU Cornmission/Slippage: $0.00 .. Bars Required to Test: 100 ~stimatedLength of Longest Trade: 100 Pyramiding Off From Date: 01/04/1990 To Date: 01/04/2000

Identifier Market 1

SPI 200 Index CAdj Liq

Bar Period Daily

Sec Tvue F

Symbol SPI-067

Day T-bonds Cadj Liq

(Default)

TQ-067

Rules: RuleName:

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Rule Text:

IF Up Range And Close < Open And Down Range. 1 And Close. 1 > Close.2 And Down Range.2 And Close.2 < Close.3 And Close.1 < Close.4 Or Close < Close.9 THEN B W Next Bar at High. 1 STOP

Action:

Long Entry

RuleName: Rule Text:

a a sept test IF High < Low.1 And Close < Open And Next Bar DayOfWeek = 2 And Low > Low.31 Or Low > Low.21 And Bonds > Bonds.38 THEN BW Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

a gap in st croix-11.17.03 ' IF High < True Low.1 And Open < Projected Low. 1 And Next Bar Open < Low. 1 And Open. 1 > Close. 1 And Next Bar Open > High THEN B W Next Bar at Low.1 STOP

Action:

Long Entry

RuleName: Rule Text:

A KEY REVERSAL TEST- 1 IF Down Range And Close > Close. 1 And Down Range. 1 And Close. 1 < Close.2 And Next Bar Open < High And Next Bar Open > Close And High < Low.4 THEN B W Next Bar at Low.3 STOP

Action:

Long Entry

RuleName: Rule Text:

a outisde/inside IF Inside Bar And Outside Bar. 1 And Close. 1 < Close.2 And Next Bar Open > Low And Inside Bar.2 And Low <= Close. 1 THEN BW Next Bar at High STOP

Action:

Long Entry

RuleName: Rule Text:

a tick move sell IF Down Range And Close < Close. 1 And Close > Open And Close. 1 < Close.2 And Down Range.1 And Open > Low. 1 And Range > Range. 1 * 0.80 THEN B W Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

aa louise IF Low.2 > High.3 And High. 1 < High.2 And Low.1 > True Low.2 And Close < Close.1 And Next Bar Open < Low.2 THEN B W Next Bar at Low.2 STOP

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Action:

Long Entry

RuleName: Rule Text:

buy first day of month IF Next Bar Trading DayOfMonth = 1 And Not February And Not May THEN BUY Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

dallas outside BUY IF Outside Bar And Close < Low. 1 And Next Bar Open < True Low. 1 And Open < Close. 1 Or Open < Close.3 Or Open < Close.2 THEN BUY Next Bar at True Low. 1 STOP

Action:

Long Entry

RuleName: Rule Text:

delayed Long: LW Bailout #02 IF Bars Since Entry >= Vara And Next Bar Open > Entry Price THEN SELL Next Bar at Next Bar Open + Tick Move * Varb LIMIT

Action: Exit on Entry Bar:

Long Exit False

InJg Vara Varb

Value 1 0

Optimize OFF OFF

From Val

To Val

Steu Val

RuleName: Rule Text:

delayed Short: LW Bailout IF Bars Since Entry >= Vara And Next Bar Open < Entry Price THEN BUY Next Bar at Next Bar Open - Tick Move * Varb LIMIT

Action: Exit on Entry Bar:

Short Exit False

hJxJ Vara Varb

Value 0 0

Optimize OFF OFF

From Val

To Val

Step Val

RuleName: Rule Text:

Exit Long: Stop Loss IF Bars Since Entry >= 0 THEN SELL Next Bar at Entry Price - Dollars to Price (Stop loss amount) STOP

Action: Exit on Entry Bar:

Long Exit False

IgxJ Stop Loss Amount

Value 900

@tirnize OFF

O 2005 Larry Williams - Million Dollar Challenge

From Val

To Val

Step Val

Page 187

RuleName: Rule Text:

Exit Short: 1 Day after Stop Loss IF Bars Since Entry >= 0 THEN BUY Next Bar at Entry Price + Dollars to Price (Stop loss amount) STOP

Action: Exit on Entry Bar:

Short Exit False

Input Stop Loss Amount

900

Ovtirnize OFF

From Val

To Val

Step Val

RuleName: Rule Text:

First Notice Day Bonds a u y 2A IF (Trading DayQfMonth = 10 Or Trading DayOfMonth = 22) And (Month = 3 Or Month = 6 Or Month = 9 Or Month = 12) And (MovingAvg (Bonds , 6 ) > MovingAvg (Bonds, 6).1 Or Bonds > Bonds.3 Or Bonds > Bonds.17) And Next Bar Open >= Low And Next Bar Open <= High And High >= Close. 1 And High.2 >= Close.3 And (Low > High. 1) = False THEN BUY Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

holiday spirits in Brsbane IF Next Bar Trading Days Left Before Holiday = 2 And January Or April Or December THEN BUY Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

holidays in sydney IF Next Bar Trading Days After Holiday = 1 And (Close < Close.1 And Next Bar Open > High) Or (Close > Close.1) THEN BUY Next Bar at MARKET

Action:

Long Entry

RuleName: Rule Text:

holliday bowl 1/04 IF Next Bar Trading Days After Holiday = 1 And Next Bar Open > High And Next Bar Open < Projected High.3 Or Next Bar Open < Projected High.4 THEN BUY Next Bar at MARKET

Action:

Long Entry

RuleName:

INSIDE DAY GAP UP

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Rule Text:

IF Inside Bar And Close > Close.1 And Low > High.5 And Low.1 > High.5 And Low.2 > High.5 And Next Bar Open < High. 1 And Next Bar Open >= High THEN BUY Next Bar at High. 1 STOP

Action:

Long Entry

RuleName: Rule Text:

INSIDE UP CLOSE X . 2 IF Inside Bar And Close > Close. 1 And Next Bar Open > Close And Close > Highest (Close ,2). 1 THEN SELL Next Bar at Low STOP

Action:

Short Entry

RuleName: Rule Text:

JAN 2001 BUY 4.O.Day ' IF Not Tuesday And Open < Close. 1 And High < High. 1 And Low < Low. 1 And Close > Close. 1 And Close. 1 < Close.2 And Next Bar Open < Close And Outside Bar. 1 = True And Close > Low.4 Or Close > Close.7 THEN BUY Next Bar at High STOP

Action:

Long Entry

RuleName: Rule Text:

MEDIA HYPE IF Next Bar DayOfWeek = 1 And Range < Range. 1 And Close > Close. 1 And Close. l > Close.2 And Next Bar Open > High. 1 And Next Bar Open < High And (Low > High.3 And Low > High.20 Or Low > High.4) And High. 1 > High.2 Or High > High.4 And Low > High.3 Or Low > High.4 And High. 1 > High.2 Or High > High.4 THEN SELL Next Bar at High. 1 STOP

Action:

Short Entry

RuleName: Rule Text:

MEDIA HYPE INSIDE

Action:

Short Entry

RuleName: Rule Text:

monthly sweet spot IF Trading DayOfMonth = 19 And October Or February Or January Or July THEN BUY Next Bar at MARKET

Action:

Long Entry

IF Inside Bar And Close > Close. 1 And Close > Highest (Close ,9). 1 And Next Bar Open > High. 1 And Next Bar Trading DayOfWeek = 1 THEN SELL Next Bar at High. 1 STOP

O 2005 Larry Williams - Million Dollar Challenge

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RuleName: Rule Text:

TDOM 6 SELL IF Trading DayOfMonth = 6 And August Or September THEN SELL Next Bar at MARKET

Action:

Short Entry

RuleName: Rule Text:

won i missed IF Outside Bar. 1 And Close.1 < Closed And Down Range And Close > Close. 1 And Next Bar Open < Close.3 And Next Bar DayOfWeek o 5 THEN BUY Next Bar at Close.3 STOP

Action:

Long Entry

RuleName: Rule Text:

YADAYADA SELL 1 IF Close Of Tq < Close.4 Of Tq And Low >= Close.1 And Close > Close. 10 And Next Bar Open > True High And (Close > Close.3 Or Close > Close.4 Or Close > Close.7) And (Bonds > Bonds.40 And Close < Close.40 Or Bonds > Bonds.45 And Close < Close.45) = False And Close > Low.6 Or Close > Low.4 And Next Bar Day Is ("Monday") Or Next Bar Day Is ("Friday") THEN SELL Next Bar at MARKET

Action:

Short Entry

Thank you Larry Williams Sydney Australia June 12 2006

02005 Larry Williams - Million Dollar Challenge

DH- 9

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