CHUCK HUGHES (CARMEL, CALIF.) 2009 WORLD CUP

CHAMPIONSHIP OF STOCK

TRADING: 122%

2007 WORLD CUP CHAM-

PIONSHIP OF STOCK TRADING: 229%

2005 WORLD CUP CHAMPIONSHIP OF

STOCK TRADING: 30%

1999 WORLD CUP CHAMPIONSHIP OF

FUTURES TRADING: 315%

Hughes is the only trader to win three World Cup stock events.

No guts, no glory. I love this line. It pretty much sums up how I approach competitive trading. The best competi-tive trading takes some guts. A volatile market can really test your discipline and resolve. You need to gut it out and stay disciplined when you are aching to stray from your plan. It takes guts to acknowledge when you are wrong and that you may need to tweak or rethink your game plan.

It takes tremendous guts to pull the trigger. Even the best traders can struggle with the stress. Should I bail? It takes guts to know when to push the envelope and then actually do it. It

Trading competitions have created and shaped some of the best traders in the world. From Larry Williams’ 11,376% return in 1987 to Andrea Unger’s 2008-2010 three-peat, the World Cup Championship has fostered drama, achievement, exhilaration and disappointment. Eight former winners share their thoughts on important lessons learned on competitive trading’s biggest stage.

If you want to start second-guessing yourself and feeling insecure, start looking around.

takes courage not to look around and check out how your competition is do-ing. If you want to start second-guess-ing yourself and feeling insecure, start looking around. If you want to stay fo-cused and win, keep your eyes focused on your game.

I used to own a Shelby race car. For me, competitive trading and racing are similar. In both, I would see how far I could push my limits. There is noth-ing more exciting! What a rush it is to test your capabilities and to look at your potential.

I’ve learned to bring pieces of my competitive trading to my daily trad-ing. It gives me the edge. It has helped enhance my profits and returns. I, like most investors, am not in the position to take high-risk trades and potentially crash and burn on a daily basis. I want to make great profits, but I am not will-ing to jeopardize my safety.

I have been competing my entire life. As one of 11 children, I learned early the importance of competition. I learned not only how to compete, but more impor-tantly how to win and how to lose. Losing never felt good to me. It still doesn’t.

LARRY WILLIAMS (ST. CROIX, U.S. VIRGIN ISLANDS) 1987 WORLD CUP

CHAMPIONSHIP OF FU-

TURES TRADING: 11,376%

Trading primarily Treasury bonds and S&P futures, Williams ran a $10,000 account to more than $2,100,000 before ending the year with a $1,137,607 net gain. The spectacular (and still unpar-alleled) performance ignited a chorus of misguided naysayers.

The biggest lesson I learned from win-ning the World Cup Championship in 1987 is that such accomplishments, life-time achievements if you will, become targets of attack by many, many people.

If I had $1 for every time I have had to defend my 1987 championship, I would never have to trade again. To this day, people claim there were two accounts, that it was rigged or in some fashion the contest was jimmied. The most obvious fallacy in these allegations is the fact that at the $10,000 account went to $2.1 million at one point. Then it slipped to $750,000 before ending the year up $1.1 million. If there were two accounts or in

The championship was proof positive for me that I could succeed, even beyond my wildest expectations, under a great deal of pressure.

some fashion the trading championship was tilted, why such an equity gap?

In Australia, it is called the tall poppy syndrome — the thought that the tallest poppy in the field is the one that gets cut down first. There are some people (unfor-tunately they appear to be in the minor-ity) who can appreciate and accept some-one else’s trading success. The majority of traders seem to be vitriolic losers who turn on their weed cutters to bring other people down to their level. They have lost money, so they figure anyone who is win-ning is duplicitous. It is easier for them to destroy than to build.

This experience has made me appre-ciate the success of others, to acknowl-edge people and be glad for their ac-complishments. On the negative side, I think I have become a bit bitter at times, certainly frustrated and perplexed as to why people would attack me.

The championship was proof positive for me that I could succeed, even beyond my wildest expectations, under a great deal of pressure. I fully realize that 1987 was unique. Margins were correct for rapid gains, and I was totally focused

and in an amazing trading zone. True, I was following a decent system (at least usually following), but being in the zone at a time when margins were low and markets highly volatile had a lot to do with my total dollar profit.

I learned something else about human nature: Accomplishment can inspire oth-ers to pick up the challenge. Many of the subsequent World Cup Championships have been won by traders who studied with me. Certainly these individuals de-serve full credit for what they did; they were the ones who made the trades, took the risks and succeeded.

Several of these trading champions have become friends as well as students, and I’m so excited and pleased for their suc-cesses. For me, that truly has been the big-gest benefit from winning the competition.

ANDREA UNGER (MALTIGNANO, ITALY) 2008 WORLD CUP

CHAMPIONSHIP OF FU-

TURES TRADING: 672%

2009 WORLD CUP CHAMPIONSHIP OF

FUTURES TRADING: 115%

2010 WORLD CUP CHAMPIONSHIP OF

FUTURES TRADING: 240%

Unger is the only trader to win three consecutive World Cup titles.

Competing in a yearlong contest is completely different from other kinds of competitions. A 12-month format forces you to fight not only against other

competitors, but first of all against your own weaknesses. My own behavior showed me how weak human nature can be when pulled to extreme corners of stress. My reactions often were the wrong ones, because the human pulling the trigger was weaker than a machine performing the same task. So why not

use a machine? It can be done, but there is always a human being behind the machine switching it on or off.

As I competed, my main concern was the next publication of the standings. It was not about money; it was about what impact my performance could have on other people. Looking back, each update gave me another opportunity to under-stand how things could have been better if only I had traded with full discipline. Yet the high psychological pressure often led to choices that deviated from what the system was telling me to do. There are plenty of ways to move closer to becoming a more disciplined trader, and each competition helps me to improve a little bit more.

Losses and hard times shaped me as a person more than victories and suc-cesses. A 12-month contest is much more than a simple competition; it is an important life experience.

Losses and hard times shaped me as a person more than victories and successes.

MICHAEL COOK (LONDON, ENGLAND) 2007 WORLD CUP

CHAMPIONSHIP OF FU-

TURES TRADING: 250%

Cook is a former institutional market-maker and senior trader.

The thing about competitive trading is, you spend the entire year balancing on a precipice, on the edge of disaster. If you don’t, you are probably not trading aggressively enough to win the contest. Competing revealed the exact level of risk I could tolerate psychologically.

Another thing I learned was just how competitive traders are. This shouldn’t be a surprise, but no matter how laid back they appear when you speak to them or meet them in person, almost all the seri-

ous competitors I know who enter the contest are checking the standings every day. They may laugh and joke about the contest, but they are serious about win-ning it. I think the money is pretty much irrelevant to them. It is the desire to be the best that is the driver for them.

I also learned how much fun it is to try design a program of trades that will make the maximum return with rela-tively few constraints. So much of trad-ing other types of accounts is limited

by account size, type of trades, types of order, types of product and the like. It re-ally is exhilarating to just free yourself of all those constraints and aim for victory.

TIM REA (RICHMOND-NELSON, NEW ZEALAND) 2008 WORLD CUP CHAM-

PIONSHIP OF CME GROUP

E-MINI INDEX TRADING

(THIRD QUARTER): 83%

2011 WORLD CUP CHAMPIONSHIP OF

FUTURES AND FOREX TRADING, 104%

Rea also finished third in the 2010 fu-tures/forex competition with a 157% net return. His trading is fully automated.

I learned that I have a competitive nature when it comes to trading. I generally have taken the approach in sports and business that you should enjoy what you do, and how well you actually do at it is secondary. Trading brings out a side of me that wants to win both competitively and financially and not just enjoy the ride.

Until I started trading, I thought I was a disciplined person. I found out something quite different applied when trading. Many traders never grasp (let along master) the importance of disci-pline, and it took me several years to get a good handle on it. Discipline is needed to recover when drawdowns occur and when you are doing well. It’s tempting to stray from your plan and take more or less risk than predetermined. The

Competing revealed the exact level of risk I could tolerate psychologically.

goal is not to let emotions influence you to change your plan.

I learned that fear is a stronger emo-tion than greed. Many want big profits

from leveraged trading. They think they can handle the losses along the way that go with aiming for big returns, but many actually stop trading at the worst possible time. While greed may drive them ini-tially, often fear will override that when trying to protect what they have left. Most traders probably would be better to cut in half what they think their own tolerance for risk is. That’s probably closer to what they can handle emotionally.

How well your trading is doing can at times also have an influence on your personality if you don’t keep it in check. It’s easy to get cocky when doing well or get a bit down if trading is not going so well. The speed at which you can have success or failure is faster in trading than in other businesses.

I’ve learned that I needed to keep pride in check when leading in the standings. While my goal was to win the contest, I had to accept I may not do so well against others. My trading is the result of a bunch of mathematical

equations used in the market that seem to work well for me, but there are many talented traders I compete with that could do better than me at any time. The contest helps me to find the edge of the envelope for risk that I can take.

KEVIN DAVEY (CLEVELAND, OHIO) 2006 WORLD CUP

CHAMPIONSHIP OF FU-

TURES TRADING: 107%

Davey’s victory followed a 148% second-place performance in ’05. Davey also placed second in 2007 with a 111% return.

The biggest lesson I have learned from winning and competing in the World Cup Championship, is to trade with humility. The market tends to punish those with big egos. It is one thing to trade well, but something completely different to trade well while everyone is watching you. Your ego wants to perform well, and that stress can impact your trading.

Trading in the contest turned me into a more humble trader, and I have ben-efited greatly from that. I used to think I was the greatest, and I’d win the contest

Most traders would probably be better to cut in half what they think their own tolerance for risk is.

Traders do not understand the role of ego in trading. I ’m glad the World Cup competition taught me that lesson .

easily. Now, when other traders tell me things like “I have supernormal abil-ity to know what the market will do all the time,” I just have to laugh. They do not understand the role of ego in trad-ing. I’m glad the World Cup competition taught me that lesson.

ROB MITCHELL (CARLSBAD, CALIF.) 2008 WORLD CUP

CHAMPIONSHIP OF CME

GROUP E-MINI INDEX

TRADING (FIRST QUARTER): 57%

Index futures continue to be Mitchell’s area of expertise.

When trading for a competition, the name of the game is to pump up the risk and hope for the best. At one point during the 2008 competition, I was up more than 100%. I decided to take the risk and shoot for another 100%, but the trade did not work out, and I ended up booking 57%. But I still won. I learned you have to manage according to your trading and according to where you are in the championship as well.

Rationally speaking, trading should always be a game of calculated risks. When trading a small account, you of-ten can double it quickly if you are ag-gressive. Of course you have to main-tain perspective in the face of greed, such as when it is near the end of the competition and you see an opportu-nity. In order to win a championship,

you have to survive a certain number of all-in encounters.

Choosing which situations you will allow yourself to get into involve calcu-lated risk. Ideally you want to be more than 80% advantaged in these situa-tions. So less randomness has influ-ence over your outcome, because you’re always subject to chance. You just try to stack things in your favor.

Trading is an immediate feedback instrument to what you really are as a person. For me, trading always has been reduced to (for lack of a better descrip-tion) a kind of spiritual issue. Not that trading itself is religious, but the real issue you are always facing is dealing with yourself. Are you confident enough in your conviction to stay with a posi-

tion? Is your faith or belief unshakable, or will you waver with alternating emo-tions? Being constantly faced with these kinds of issues has shaped me as a man, and it is an ongoing evolution.

It has been said most people lose money trading, and it is my observation that to trade with no conviction is the sur-est way to accomplish this. So, the most

It has been said most people lose money trading, and it is my observation that to trade with no conviction is the surest way to accomplish this.

important thing I have learned is that a traders must know themselves as the ut-most priority in order to be successful.

KEN GOLDBERG (SEATTLE, WASH.) 2007 WORLD CUP

CHAMPIONSHIP OF CME

GROUP E-MINI INDEX

TRADING (THIRD QUARTER): 121% Goldberg specializes in Elliott Wave and Fibonacci predictive market theories.

I learned that objectivity is the key for trading consistency and success, but it is hard to maintain for most humans, due to our ego. In order to help myself with this hurdle, both in competition and in other trading, I use a simple question that acts like a micro cost/benefit analysis in the moment I ask it. That is: If I had no mon-

ey in the particular market, would I com-mit fresh money as a buy or a sell action?

If I’m already long, and the objective answer is buy, I stay long or add more long exposure. If already short, and the answer is buy, I must exit my long. If flat, I must get long. On the other hand, if the answer is sell, and I’m

long, I must exit. If I’m short, I stay short or add short exposure. If flat, I must get short. Nowhere in this cost/benefit analysis does the current profit or loss of my position come into play. It isn’t even an input to my analysis, because that is where ego exerts its leverage on our emotions.

I learned that to the extent I operate this decision-support engine objectively, letting the chips fall where they may, the net liquidation value of my account tends to rise. That is really the only thing that matters. Consequently, I no longer need to have ego attachment to an entry or exit decision based upon its profit or loss, since these parts are not as important as the whole of the account value.

In the years since winning the quarterly E-mini championship, nothing has meant more to my trading success than this.

Chuck Frank was a broker and independent trader in the 30-year Treasury bond pit at the Chicago Board of Trade from 1981 to 2000. Since leaving the floor, he has been managing director of WorldCupAdvisor.com. 

I use a simple question that acts like a micro cost/benefit analysis in the moment I ask it.

In 2012, the World Cup Championship of Futures & Forex Trading® has drawn a robust turnout with commission rates lowered to a discount-level $2.97 per-side all-in for electronic futures and $30 per $1 million for forex trades. Minimum account size also has been lowered to $10,000. The event is co-sponsored by PFGBEST.

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