21-30 , 2004
from Ed in Red)
Wed, 30 Jun
I am committing to start a Trading Tribe in the Las Vegas area.
Meeting time and frequency will be updated following consultation with
fellow tribe members.
Thanks for all your help and support to achieve this goal
the Directory Page
Vegas at Night
Mon, 28 Jun 2004
Acid Test of
I am on my way up to cottage country for a quick golf getaway and will be
out of touch for a few days. Thus, I am sending you my confirmation a
couple of days early that I have stuck to my commitments made at the
While I am gone, my wife will be executing the trading system for me.
This is a simple, effective process for sticking to and getting clarity on
commitments. We have now put into place in [our] Tribe.
Mon, 28 Jun 2004
Trust you are doing well. Since FAQ has not been updated in 20 days, I
assume your regular business, book, and other wonderful activities filling
up your life. I so appreciate what you done for me and others with your
TTP. Any thing I can help with book or trading just ask.
you would like to edit and have skill and experience in publishing, send
me your qualifications.
Sun, 27 Jun 2004
Has anyone come forward to start a Dallas area tribe? I may be interested
in doing so. Any thoughts or suggestions?
you convert "I may" to "I intend" the tribe appears.
Date: 26 Jun
I was re-reading FAQ and I noticed that on Fri, 21 Mar 2003 there is a
stated analysis regarding the number of moves white could mate under the
chessboard picture. One move will just not do:
Rd1 + Kc2
Actually white cannot even mate in two moves, the unprotected bishop will
taken in any next check combination.
Let's play some chess through the net, may I dare challenge you.
careful about betting too much on a sure thing, particularly one with a
strong logical argument.
to Mate in One
She may be hiding in the castle.
Fri, 25 Jun 2004
I have spent 1 hour navigating through your website.
I want to learn trend following trading system.
I did not see the system rules, charts, examples etc.
Can you please help me ?
not sure what kind of help you want.
you might like to check the Ground Rules, above, to get an idea about what
this site is (and isn't).
Thu, 24 Jun 2004
Words cannot describe adequately my gratitude for the experience given me
as a member of the tribe. When I first arrived I expected to learn how to
"tweak" my system of buying support and selling resistance.
Instead, I found
something that I cannot attach a value to which is this: buying the
support of my family and selling their resistance is a recipe for a life
You see it all changed last week when I asked my wife, "tell me what
you like about yourself?" The answer I was sent, "nothing."
At that point in time I knew the ideology of the tribe needed to become my
way of life.
awakening came about thru my 4 year old boy. He asked me a few days ago,
"Daddy can you read me this story?" My reply, "not now son,
Daddy is trading." Within seconds I had an epiphany, my son will only
be four once. My son will only want Daddy to read him a story before my
son will want to borrow money to be with someone else.
I had become a
babysitter to my children, trading had become my life and they (my wife
and children) were missing a DAD. So I am giving up my trading life and
becoming a full-time supporter of my wife and children's emotional wants
and needs, for that is the role of a Father. A role that I have neglected
for too long.
So I thank you Ed Seykota for sharing the tribe with me. I will be
grateful the rest of my life.
might wind up being a good father and a good trader.
Thu, 24 Jun 2004
Tribe in Washington DC
I would like to start a tribe in the Washington, D.C. area. Please let me
know if you require any more information from me.
Thanks for FAQ!
the Directory Page
From Tribal Capitol
would like everyone's support
exploring and experiencing my feelings
Thu, 24 Jun 2004
Dear Dr. Ed -
After reading the reviews of your latest seminar online, I decided to put
myself on the hot seat. The only problem was that I was all alone. But it
didn't matter. I sort of went into a trance. I just asked myself which of
the rules I wasn't following. Trading w/ the trend? Yes. Cutting Losses?
Yes. Managing the risk? Yes. Following my system? Yes, for the most part.
Riding my winners? HELL NO. So I asked myself, "Something happened to
you in your life that is preventing you from riding your winners. What is
it?" So I started going through all the big emotional events in my
life. It didn't take long. It was the first one.
Growing up, I watched a lot of those buddy/buddy detective shows like
Simon & Simon and Magnum PI. This taught me how friendships should be
based, how you should stick by your friends through thick and thin.
surprisingly, my "friends" learned how to take advantage of this
and I became sort of a slave to them. This contributed to a lot of self
loathing which I only recently in the last 4 years overcame.
It felt like someone had smacked me in the back of the head with a
baseball bat. I couldn't ride my winners because I thought they were
friends about to betray me. There might be some other reasons too but this
had to be 90% of it.
Keep up the great work,
to logical conclusions about the "causes" for problems might be
a clever way to avoid experiencing forms you don't want to experience.
can be a detour
Thu, 24 Jun 2004
Living in the
I've been thinking about your suggestion to "live in the now."
Actually most people associate that with doing the things they would like
to do, instead of doing the things they think they should do. It all comes
down to laziness. I've found out that your definition is quite different.
The following sentence changed my view: "Trend Following systems that
use stop-loss techniques automatically stay in the now moment as you
respond just when the trend changes."
My experiences of trend following comes from trading my system in the
stock market. I have used a system that fits my personality in my present
situation. It seems to work out well so I'm hooked. Therefore I would like
to approach other things in life as a trend follower too. Soon I
discovered that to be able to be a trend follower, in life, you have to
define what a trend is and what my signals are. Most things can be
translated directly from trading; like entry, exit, bet size, sitting
tight - so one successful area can spread into other areas.
One thing I wonder is why it seems I have to do models of everything. Why
can't I work naturally as a human being like people in common? It seems
like I have to complicate everything (for example building a model on how
to communicate with people or how to train or eat). Sure, simplicity comes
after figuring out the complexity, but I think to much! I would like to
feel more and think less but that is not easy.
Since intention equals results I must like to have hard mind breaking
dilemmas. Maybe I do on a subconscious level, but on a conscious level I
feel stupid when I let minor things become huge problems.
So if I
understand you correctly, I have to work on the part that stand between
what I want to accomplish and my feelings. I thought I had, but the
endless stream of thoughts can't all be handled at the same time. Can you
dissolve to much, I mean, can it become counterproductive at a certain
You know, my thoughts are exactly like this message - it starts somewhere
and suddenly there are so many things I have thought about, so I just keep
on writing ...
Thanks again, you have already helped me a lot on my path to freedom!
might take your feelings about thinking too much - to tribe meeting, and
develop the form more fully.
Mr. Dittmars, remember:
new brain is only temporary
don't think too hard with it.
Thu, 24 Jun 2004
[When] you speak about your vision, we recognize that our vision is very
similar to yours. My business partner and I intend to form an organization
of traders with strong intentions, strong commitment, and a focus on TTP
that underlies the organization and helps to provide a drama-free
It appears we may have a shared vision and we intend to join forces with
you to realize it!
I envision an organization with a deep commitment to personal growth -
that also serves the financial community.
plan to further define the vision and invite
participation around mid-August.
Thu, 24 Jun 2004
of Joining Tribe
Dear Mr. Seykota,
I am currently a student of History and Politics in [College, Country]. I
am aged 21 and have completed three years of what is a four year course. I
am currently in the process of negotiating a deferral of my studies for
one year with the authorities in my university.
I have been very much inspired by reading your interviews and your FAQ
page. It is not so much that it is the trading that inspires me, but it is
more that you tend to ask of people what they feel they really want to
commit to and achieve in their life.
This appeals to
me very directly, especially your emphasis in the Trading Tribe process of
developing a very firm notion of one's intuition, and of one's creative
capability. I feel that when we reach that level of commitment, success
and clarity, that we are doing what we really ought to be as human beings,
or as you have said we find our call, what makes us tick, or become
I think think
this notion of really finding what we must do, through total perseverance,
and the parameter of total success, contentment and contribution, is what
must be aimed for as humans. I think it is our human instinct to break
through emotions, share them and express them, until we have found how we
fit in seamlessly to the world.
This at least is my understanding of what I think I ultimately would like
to achieve in my life, and it seems very much to me that you are an expert
in discerning and drawing out this element, in those who are suited to
your particular area of influence which is trading.
Although I have not so much in terms of capital at the moment this does
not hinder my ambition. For I recognize in risk and focus the ability to
overcome what are only short term impediments. If I could excel at trading
I think now might be the time to do it, but I am trying to get a feel for
what I think is right. Some part of me thinks if I could excel at trading,
then I am nostalgic for what may be left behind, that is perhaps, youth.
The most striking thing I find about you is your apparently relaxed
temperament, or at least that is the way you come across. My other options
at the moment are such things as to travel with old friends for some
months, on what would be an expense subsidized from elsewhere.
Save that, I
could set out alone, perhaps to distant parts of the world and get
involved perhaps in some volunteer work, or to travel, to write, or
perhaps I would love to visit beautiful places such as monasteries, or
perhaps learn an Asian language, and immerse myself in some way, in some
The point is I think the time has come perhaps to really take some action,
in one or another way. I definitely think I would aspire to excel at
trading, for the prospect of developing systems, making bets, controlling
risk and seeing things clearly tends to excite me. But when I am not sure.
I appreciate very much that this is a rather crude outline of my
intentions and what I aspire to and perhaps I am withholding a significant
amount. But ultimately I am trying to get places and you seem to be the
guy who gives direct and very tactful advice. My ambition would be to
someday design a system of my own, akin to yours, that I would monitor and
enjoy. I think I would really enjoy doing this.
But I am youthful and I intend in earnest to take everything this
privilege of being young has to offer.
My knowledge of trading is not borne of experience nor of extensive
monitoring of markets. In fact it is rather crude. I do not spend time
following markets. It is just I am somewhat motivated by what could be
possible if I applied myself. I am more seized by the idea of being able
to trade many markets and not just one, and also by the notion of the
personal discipline of being able to cut loss, and to get in sync with a
trend, to ride it, to have the nerve to stay with it.
appreciate is a rather crude appreciation of the very intricate art that
you are a master of. But I think my point is that it is the idea of
winning in this fashion that appeals to me, through nerve and
satisfaction, that seems to draw me.
Perhaps I am cutting things too loose here. I regret if you find this to
be inappropriate, or too vague a statement of intention. It is just at
present I am seized by the idea to live big, and you seem to be an expert
in this area.
If you could make some reply to me I would be especially grateful, for
I sincerely admire your level of personal expansion, and furthermore the
contribution you make. If you have some suggestions or pointers in
relation to affirming direction, they will be heeded with sincere
In awe and admiration of the standards you compel in your own life and in
the lives of those around you.
might take your feelings to a Tribe Meeting.
you might consider writing long and ambiguous essays as a way to avoid
Wed, 23 Jun 2004
I Have a
Dream ... With You In It
I had a dream last night and you were in it!!!! It's so strange!!!
The setting is that we are talking on the phone, just like you do when you
follow up with me on how I'm sticking to my System 3. And I forget what
the issue is, but I think in the end, I say my solution is to attend this
particular new tribe's meetings. In fact I remember I correct myself as I
say, "OK, right, my current commitment to (something else) runs till
June 30th ... OK, I am committed to attend all of this new tribe's meeting
until July 30th."
And then you say, "And how do you feel about that?"
I pause for a moment and say, "I feel I will do it because it is a
commitment that I make ... although I feel like I will do it grudgingly
because I am not sure if it'd really help and it is not necessarily
convenient for me."
And then you say in an "aha" tone, "Ah, you will do it but
you will do it grudgingly."
That's when I remember I said the same thing several weeks ago when we
talked. I said my procrastination on my tasks gives me the feelings that
towards the end of the day when time is running out and I need to finish
the tasks that I listed in the morning, I have no choice but to force
myself to work on the task, perhaps even grudgingly. Then you said you had
a wild guess that it may be because of some issue with authority, that I
may have that rebellion and so I do what I have to do, albeit grudgingly.
And then I ask, "But isn't that what athletes ... athletes (in fact,
how I mispronounce the word in my dream) do too? I mean, the football
players wake up for a 6am drill. They may not like it, and they do it
grudgingly. But this is what the coaches demand, and so they do so despite
they really want to have extra hours of sleep. This is how they build
their character and their mentality for peak performance in the game,
And then somehow I wake up ... without getting to hear your response.
Dear Sir, what would you say if we were having that conversation on the
we were having that exact conversation on the phone, then I would say
exactly what you recall me saying.
Wed, 23 Jun 2004
hi ed: if possible please post my ... email for those interested in the
Miami group in Spanish.
Thanks for the
kind words on the site.
mucho placer. Vaya al directorio a ver su email. Quizás usted puede
escribir algo en español, para el FAQ.
Tue, 22 Jun 2004
Lying is Just
Check out the “Listed Principals” of this firm ... [website] ...
seems [person] had a compliance issue just recently.
The Under-Fred network seems to magnetize all the liars into
And this is our competition? With our support team, I will go head to head
with [any] of these ... clowns and put my foot so far up their [body
parts] they will have trouble blinking.
know such sites and such people - and receive mail letters from people who
have sorry experiences with them.
same names keep coming up from time to time.
might do well to check people out very carefully before dealing with them.
Wed, 23 Jun 2004
How an I learn
your system of trend following and can I buy the software.
I just finished reading Trend following by Covel and Tool and Tactics of
Day Trader by Velez & Capra. I also just set up a direct access
account with [Firm] and funded by account with $13,000.00 I am just
Thanking you in advance,
claiming to have software for sale that contains formulas or methods of Ed
Seykota is likely just incoroperating
(see below) - beware.
the Trading Tribe Growth Engine software, part of the
vision, is not for sale.
Wed, 23 Jun 2004
Tribe of Two
As an aside, my tribe has finally sprouted wings and the process has
begun. Although there are only two of us, we are both motivated and
already many interesting feelings have sprouted and been given voice. It
is hard to explain the wonderful difference between reading and
Many thanks for leading this process.
all relationships proceed in segments of just two at a time.
Tue, 22 Jun 2004
Our NY Tribe has researched facilities for holding a weekend (Fri evening
Sun afternoon) workshop in NY.
[Several] hotels can provide ... conference spaces with catering ... in
the mid September through mid November time frame.
Let me know if any weekends in that time frame will work for you? Also, if
you have any preference for hotels?
the Ground Rules about using Trading Tribe methods and terminology.
you wish for me to attend, send me a complete description of your
Tue, 22 Jun 2004
First of all, what you have done with the TTP process I find really
fantastic. For many years, when I was in San Francisco, trading, we
thought we wanted to re-create your “legendary” trading tribe process
in the [Restaurant] group and then with a few trading buddies. We took the
[Trading Coach] stuff, did a lot of good work and experience built, but it
was nothing like we do, now, in TTP here in NYC.
We never understood, nor pursued the right techniques. I guess our
intentions were not correctly aligned. However, I lived for three years in
Asia from 2000 until early 2003. When I came back, I immediately searched
and found the all these TTP groups all over the world. At first I was
[Name] can tell
you we talked on the phone. Exchanged emails, talked more, and I agreed to
do a meeting, but was not very sure how the process could be so broadened
after many years of what I considered secretiveness in the process.
I was happily reward by going! I have attended ever since the second
meeting in January and the personal and tribal evolution for the Wednesday
TTP group is remarkable. We seem to be going deeper every session and
people who feared the hot seat, refused to accept issues and feelings,
etc. are now eagerly jumping at the opportunity to experience their
feelings. It is a cleansing process to say the least.
I have noticed that for me, the hot seat process has become more abstract
in terms of conceptualizing or articulating what I am feeling. I don’t
find childhood drama. I can’t articulate nor clearly depict what
sometimes occurs inside me, but I do find that powerful feeling and energy
are constantly demonstrated as plain for others to see, and myself to
experience. In short, we all are experiencing feelings!
Anyway, what prompted me to email you was that [Name], a person whom I
like as a person, but unsolicited, sent this mail out to many in the
Monday group, today. I really don’t know the Monday group outside of
[Names]. Out of respect for you, and your methods, I was prompted to
clarify a statement that [Name] made.
I want you to know that I respect what you have done for us very much. I
also respect your privacy and rights of concept. I also want you to know
that what you have taught me directly, or vicariously, has made my life
markedly better as both a trader and human being.
I suspect we will see each other at some point here in NYC or somewhere in
the world, and just want to pass this email directly to you, out of
respect, and say thank you.
Just for clarification, purposes. It is true that I carried on a
protracted fax/mail dialogue with Ed in the early to mid 1990s focused on
money management, and specifically math and techniques that apply to my
“controlled risk plunging” approach to investing.
Over the years, I also hired a former apprentice of Ed (re-joined me
recently to run a fund), and I have met Ed at Bay Area events. Also, in
the [Name] Group of Marin California I got to know [Name] (another Ed
apprentice) as we did weekly meetings for several years in California. So,
Ed’s methods are very much celebrated and incoroporated into all of
our trading ecologies ...
... has a great money management product ... which was designed with
Ed's assistance and incorporates Ed's money management concepts.
curious term "incoroporated," might be a Fredian
synthesis of "incorrectly - appropriated."
seems to be implying some kind of relationship with me. You might
encourage him to take his feelings about adequacy and deception into the
Tribe as an entry point.
for incoroperating banks
Tue, 22 Jun 2004
copy of email
I don't care what Ed says ... or anyone else for that matter! I am right.
I told you all that I would be one of the biggest traders in the World and
today I became that. Your conversations helped me to galvanise my
thoughts ... and I owe you one.
he can find someone to help galvanize his spelling.
Tue, 22 Jun 2004
Here is some more moronic correspondence ... enjoy!
I am not suggesting day trading at all. If I use Shorts as Stops in a
different account to my Longs ... my Short Stops could be put much further
away than my opening price ... because I'm hedged. My testing shows that
my Short Stop would not be hit often ... when it were hit ... it
would effectively lock in my profit. I would then put Stop losses for the
Long and Short so that, should one of the Stop losses be hit ... I would
start making money again with the other trade. I would then get a little
bell to ring ... indicating that I needed to put my Stop back on and voila
... I would continue on my way to becoming one of the richest men in the
trouble with these guys is that while they share their ideas freely, they
are typically stingy about sharing whatever it is they are smoking.
is statistically effective
removing excess equity
Tue, 22 Jun 2004
I hope you are well.
I had an insight this afternoon while entering into some email
correspondence with one so called "system designer" who got my
details from the trading tribe directory.
It amazed me, that someone with absolutely no common sense, no
practicality, no experience etc. could have such grandiose opinions of
himself, and put himself in a different league to the likes of you.
Some of his ideas, and concepts we beyond belief, utterly ridiculous. For
example, he suggested having 2 accounts, one long one short, and then if
long 1000 shares of something, then go short of 1000 shares of it in the
other account " to hedge". After explaining at length to him
that this is the same as closing the initial long outright, but with the
added hindrance of making more commissions and interest payable on the
He replied with this statement......
Hehehehehe ... I know I'm right. That two account system is the way
you do it ... that's a fact! It's easy ... has 2 indicators ... fully
hedged when the market goes sideways ... I don't even have to code it to
know that it works.
I have everything Seykota has ... and more ... because I taught myself
... whereas he had to be taught by Commodity Corps ... I am in a
completely different league to him ... much higher up.
I'll be joining him on his 80% per year ... because no-one can stop
me ... You'd better tell him to move over ... because I'm coming thru!
This is utterly incredible to think that someone can have such an warped
opinion of himself.
The insight I gained from this brief correspondence, was that knowing if
there are idiots like this trading the stock market, then it makes it
clear to understand the reason why good well grounded traders makes such
Simply because they are getting filled on their orders by idiots.
I was wondering, is it possible you could mail me a draft copy of your
like your correspondent has a method to stay high, and another method to
avoid using stops.
might examine your own feelings about him - as he might represent some
disowned aspect of your own situation.
trading a mechanical system
an emotional support team.
Tue, 22 Jun 2004
The Best in
I'm copying this to Ed. I have nothing to fear. I am the best trader in
the World. And I am copying to TT!
you method merely loses money. I am emailing Ed now, to tell him what an
idiot you are ...
suppose I'm the real idiot here for publishing this stuff.
Tue, 22 Jun 2004
Dear Ed Seykota,
Let me ask a number of questions.
1/ When trading I experience the phenomenon reported in some psychological
works – we apparently store memories in emotional rather then logical
order and therefore an experience of loss, known to every trader, tends to
bring back memories of other losses, unrelated to trading. This is at
least how my Fred works. Going through a series of such painful
memories does little to keep me in the now. Well, this is not exactly
a question but rather a kind request for your comment.
2/ What is the importance of volume changes relative to price
changes in the art or science of trend following? Is it the price action
alone, or price with some additional attention given to the volume action?
I tend to eliminate volume from most decisions just because I want to have
a simple entry/exit system, it seems that ambiguity is still too difficult
for me to cope with and also I believe that less is better as far as
criteria for trading decisions are concerned (quite possibly a wrong
3/ You said (on March 18, 2003 FAQ) that it’s a nice thing for us trend
followers to be out during choppy whipsaw markets. How do you (or a trend
followers in general) make peace between the need to avoid any
anticipation, to stay in the now, and an apparent giving up on a
signal of a starting trend just because, say, recently we have spent a
long time in a range and we still within the range and chances are this
signal will be a false one? Not to mention guessing that we are just about
to enter a choppy period. Sorry if this is too naïve a question.
4/ What do you think about importance of experience in trading
given that some of us may have long bad experience (and then I guess need
to unlearn a lot) while others ... were trained the right way from the
very start and apparently succeeded without the ingredient of their own
This leads me to
another question. I have started trading just a few months ago and thanks
to the net had this luck of finding Reminiscences, Wizards, Your website
and a few other books, sources. Where should I stop with these studies?
I mean Seneca advised to limit one’s library to a few best books re-visted
again and again.
successful traders say they read everything on the markets and always find
some useful bits of information. What do you think, Sir ?
Thank you and all the best,
TTP works by experiencing forms. TTP makes no claim that going
through memories keeps you in the now.
Importance depends on judgment, and is specific to the trader. A
thing might be important to one trader, unimportant to another.
The desire to make peace between (1) a need to avoid anticipation and (2)
an appearance of giving up - might be unique to you. You might take
the feeling of this desire as an entry point into TTP.
See #2, above.
does not tell people what they "should" do. See ground
a List of Important Things
ranks high up
breathing drops of water
Tue, 22 Jun 2004
It just occurred to me that I might be a gambler.
"Problem gambling is gambling behavior which causes disruptions in
any major area of life: psychological, physical, social or vocational. The
term "Problem Gambling" includes, but is not limited to, the
condition known as "Pathological", or "Compulsive"
Gambling, a progressive addiction characterized by increasing
preoccupation with gambling, a need to bet more money more frequently,
restlessness or irritability when attempting to stop, "chasing"
losses, and loss of control manifested by continuation of the gambling
behavior in spite of mounting, serious, negative consequences."
Is this about me? AGAIN?
can bet on death and taxes - although it's hard to find someone to lay you
any good odds on the other side.
might take your feelings about gambling - to your tribe.
Bet Your Life
secret word is gamble.
Tue, 22 Jun 2004
Just after I sent the e-mail below, I tested the “Tribe Directory”
link again, and it worked. I can see that there is no [Nearby] tribe. I am
not serious enough to start one at this point. I’m still trying to
understand more about the process.
I’m both intrigued and a little spooked by some of the descriptions
of the most recent workshop.
You are cut from
a different mold. That was evident in the Market Wizards interview. It is
also what sparked my interest in finding out more about you. My interest
in China was originally all about learning more about Taoism and Buddhism.
After learning the language and graduating from college (1987), I turned
to the world of finance to earn a living for me, my wife and two children.
might consider exploring your feelings about intrigue and spookiness.
for the Hot Seat
Mon, 21 Jun 2004
Hope everything is going fine for you. Here ... everything is going fine.
My tribe meetings are becoming more and more enjoyable, and the Process
spontaneous. We have been able to dissolve strong barriers of judgment and
resistance, and family dynamics is becoming healthier and stronger. I have
been also adding (or discovering) a new dimension in my spiritual life,
emotional alike. Thanks for your initiative in sharing with us your
Now, I write you as I have been experimenting with system testing and
implementation, and I would like to get some ideas about realistic
expectations. Particularly, I read your article about risk management and,
perhaps, you might clarify a few things for me.
Ed Says: "Traders seem to spend considerable
time and effort trying to change their luck and their payoff, generally to
no avail, since it is not theirs to change. The risk is the only parameter
the risk manager may effectively change to control risk.
... since the bet stays proportional to the equity, it is theoretically
impossible to go entirely broke so the official risk of total ruin is
zero. In actual practice, however, the disintegration of an enterprise has
more to do with the psychological UNCLE POINT.
In particular, one of the most important, and perhaps under-acknowledged
dimensions of fund management is the UNCLE POINT or the amount of draw
down that provokes a loss of confidence in either the investors or the
fund management. If either the investors or the managers become
demoralized and withdraw from the enterprise, then the fund dies. Since
the circumstances surrounding the Uncle Point are generally disheartening,
it seems to receive, unfortunately, little attention in the
So far, I have considered a simple system which suits best myself and the
market I am going to trade. One of my concerns is about the theoretical
drawdown and what I might realistically expect. So I am attentive to its
degree of robustness and I have done some tests over a portfolio of
different markets. Once I get the overall picture and I see the system has
a good degree of robustness, I proceed to test the best performing
instruments so as to have an idea about the drawdown to expect.
Yet, I myself knowing how markets are likely to change, I would like to
understand better how you define UNCLE POINT. Specifically, I
understand that testing provides us only with a theoretical performance,
which is subject to stress under real conditions. I also notice that fund
managers and investors generally agree upon a maximum drawdown at which
both will withdraw from the enterprise, and that's part of the risk
So, my doubt is:
UNCLE POINT means a drawdown that goes beyond the theoretical, or the
condition of approaching the maximum allowable one? I also understand
that, as the account grows bigger, high performing systems will likely
expand the equity volatility and the enterprise will likely have large,
long-term drawdowns, which are beyond the guts and patience of most
investors and managers, and I guess that you name this condition of UNCLE
Thanks for your clarification about this.
Uncle Point is the psychological point at which confidence
may or not the same point as the theoretical maximum drawdown. It
might not be the same point at which the investor and manger agree to
abandon the enterprise.
manage your risk."
Its been almost 1 year since the beginning of my maniacal transaction. 750%
in two months then all lost in a 10 month process. I figure I blew up
simply because my gut is too weak.
I feel a bit
lost and confused, because I don't know if I want to trade anymore. I
devoted much of my time and made many life mistakes just to deepen my
knowledge such as quitting college just to "concentrate on the
Now I look
around and feel like a looser and lonely. I still live my mother, not
bad for a 27 year old. I regret the whole year I left behind.
Actually I regret many more years trying to reach something which now
looks impossible for me to reach.
BTW, thanks for
the Toxic Parents, I felt like I wrote 2/3 of the book myself, had
a big headache and decided to go to therapy to clear a few issues. I
haven't started the therapy but I intend too. I also intent to go back to
college and get my masters in computer science, even though it may take a
I recall a pain in my chest. I quit smoking and the pain goes away. Thanks
for the TTP. The craving feeling is just my body saying hi! to me.
It has been 4
months+ smoke free. I also started working out and joined a martial arts
group and already got my first degree. It feels better, but sometimes I
just want to crack:
I miss my girlfriend
who left me. She thinks I'm a gambler or something. She's got bulimia.
I want to help her. I think I still love her.
Did anybody here feel like starting everything over again and in the end
continued nevertheless without regretting?
750 % gain in two months might indicate rather aggressive risk preferences
- and a desire to self-destruct. You might take your feelings of
regret to a tribe meeting.
TTP to find
Mon, 21 Jun 2004
Having read so much on Ed's FAQ about service to others, I now volunteer
at a local soup kitchen one Sunday a month. This is [name] group, we meet
up to cook and serve meals to senior citizens at a local church.
people are always looking for opportunities to help others. Unsuccessful
people are always asking, "What's in it for me?" -- Brian
Like To Help Each Other
someone forces them to do so
Mon, 21 Jun 2004
A sitting Fed Board member recently said,
much about the inflation process we do not understand, and I have been
surprised at the extent of the pickup in core inflation this year.”
Coming from the
Fed, this is a bothersome statement. Especially given that
inflation and deflation are very simple phenomenon.
Inflation is a decline in the purchasing power of money, or in other
words, an increase in the average price of goods and services. Two factors
determine the rate of inflation - money growth and the amount of goods and
services in an economy. Inflation is caused when too much money chases too
few goods. Deflation is the exact opposite. It is caused by a dearth of
money in the system.
The Federal Reserve has complete control over the money supply and
therefore has complete control over inflation and deflation. As a result,
any deflation that existed in the late 1990s and early 2000s was entirely
due to Fed policy mistakes.
There can be no
other explanation. The Fed did not add enough liquidity to the economy to
absorb the increase in output. When output grows rapidly, the economy
needs more money to avoid deflation. However, too much money can cause
inflation whether the economy is hot or not. This is the problem today.
Unfortunately, measuring money has become virtually impossible. So instead
of targeting money growth, the Fed has targeted interest rates.
This simple fact
has done more to obfuscate the “inflation process” than any other
development in the past 20 years. The public, the press, and even Fed
members have become focused on interest rates and actual economic data
instead of money. Because of this, many are mystified by shifts in
But it does not have to be a mystery. The Fed does not control interest
rates; it controls money. It is by manipulating bank reserves (buying and
selling securities) that the Fed controls the federal funds rate. If the
Fed wants the funds rate to fall, it injects reserves into the system.
When it wants rates to rise, it subtracts reserves or slows their growth.
So, when the Fed holds the funds rate below its natural rate, it does this
by adding excess liquidity. This excess money causes inflationary
pressures to increase. Sensitive market indicators - such as gold,
commodity prices, the dollar, and the yield curve - are the first
indications of either inflationary or deflationary monetary policy.
In the late 1990s, these sensitive indicators (gold fell from over
$400/oz. to $256/oz.) all pointed to deflation. Since then, these
indicators have all turned around and gold prices have climbed again.
There should be no mystery here. Fed policy causes inflation, the markets
signaled it was coming, and it did.
try to map events into a linear, local, causality model.
one study for which economists have perfect data - and the one study they
rarely publish - is the correlation between their own predictions and what
Fed Provides Assurance
someone understands the situation
can take care of the flock.
Mon, 21 Jun 2004
Village Trading Tribe
In December I made a 6 month commitment to commute to the IV-TT beginning
in January (about 3000 miles, round trip). I wish to extend my commitment
with no deadline. IV-TT has become the epicenter of change in my life. I
am excited to be a part of such a dynamic and cutting edge group.