Befriended by an old college professor, Larry Pesavento’s first introduction to the markets was way back in the 1959 during his professor’s statistics class. Whilst he didn’t start out trading the financial markets, his trading took the form of treasury bonds where he was able to double his money on a regular basis until he hit $47,000 profit.

Even with this success Larry went into full time employment until 1975 when he realized he was having more fun and making more money as a trader. Since then he’s worked as a floor trader and at a commodity corporation, up until 1986, when he became a full time self-employed trader.

In the show Larry shares:

  • 6 price patterns that have made him a small fortune
  • Special levels he lives and dies by
  • The best way to use fundamental analysis
  • Important lessons in trading psychology
  • What oscillating indicators to use and why

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67: Larry Pesavento Reveals the 6 Price Patterns & Magic Numbers that Made Him A Fortune
00:00:00 00:00:00

“This is a business of making money. It’s not a business of being right or wrong.”

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Broker & Platform

  • Goldman Sachs & Commodity Quote Graphics

Key Lessons

  • Don’t expect it to work all the time, every time
  • Pattern recognition is a leading indicator
  • Oscillators are lagging indicators
  • Focus on how much you’ll lose versus win
  • Winners think how much money will I lose. Losers think how much money will I win
  • All currencies should be trade-able within 50 pips risk
  • All the time frames don’t always align (but when they do it’s ideal)
  • Once you’ve made that money after say an hour, move your stops to lock in the profit. Just like a doctor who has worked an hour would do.
  • Try to keep a big profit from making a loss
  • The smart man learns from his mistakes, the wise man learns from the mistakes of others
  • Those that stick with it will eventually stop making errors that cost them money and start making money
  • Don’t think you’re smarter than your mentors
  • If prices are going up there are more buyers, if it’s going down there are more sellers
  • It’s impossible to ignore Natures Law (Fibonacci)
  • Get a belief system to help you stop making mistakes
  • 85% of trading is mental
  • A professional trader doesn’t think about a loss for even a second
  • 5 Fibonacci levels meeting at the same time is a strong signal
  • Don’t ever give up
  • Don’t let anyone talk you out of trading
  • Don’t put your stops too close or trade without stops – this is a sign you don’t know what you’re doing

Larry’s Trading

  • Took $30k to over $1m
  • Studied Fibonacci in 1972
  • Studied under Brice Gilmore
  • Trades EURUSD, USDJPY, GBPUSD, US Treasury Bonds, E-mini, Soybean & Crude Oil
  • Uses pattern recognition – head/shoulder, triple bottoms/tops, pennants, ABCD (thunderbolts) , 3 drive to a top, Gartley patterns, Butterflies and flags
  • 2 out of 3 times he’ll pick a winner
  • Loses now and again by knows a streak is on its way
  • Starts with 4 hour chart (6 weeks’ worth)
  • Moves down to a 60 or 30 min chart to pick entries
  • Looks at Daily charts
  • 1.5/2 risk to reward
  • Uses Fibonacci raitos 1.27, 1.618, 0.618 and 0.786
  • Sometimes he’ll pick the “falling safe” where the market keeps giving it to you but they happen only a couple of times a year
  • Sells lower highers on the downside and buys higher lows on the upside
  • All the time frames don’t always align (but when they do it’s ideal)
  • You can run through these things in approx.15 minutes a day
  • Trades 4am- 1pm on an average day
  • Trades run from 5 minutes (if stopped out) to 2 weeks for big moves
  • Favorite entry setup is when the market has expanded 1.618 times from a prior swing (the major Fib Expansion number). Typically results in 3:1 reward to risk.
  • Stop Losses: 50 pips on currencies, $8 on Gold, $1 a barrel on Crude, 0.5 points in Bonds

Larry’s Strategy of the Week

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HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES, OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES, ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM, WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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Forex, futures and options trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. Our website, product contents, and materials are neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our website or in any materials. The past performance of any trading system or methodology is not necessarily indicative of future results. Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets.

Don't trade with money you can't afford to lose. Nothing in our course or any materials or website(s) shall be deemed a solicitation or an offer to Buy/sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.

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-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.