Ed Seykota, 2003 - 2004 ... Write for permission to reprint.

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May 15-20, 2004


Questions

(Quotes from Ed in Red)

Answers

Wed, 19 May 2004

May 7-9 TTP Workshop Follow-Up

Hi Ed:


Thanks for the [attendance] list and the wonderful, productive weekend workshop.


Quite a surprise from what I expected. I'm getting good feedback ... on my increased ability to clarify my emotions and respect them (and me) enough to express them.

 

Less anxious in trading arena too.


Kudos.

OK.  For more follow-up see the link on the Workshop page.

Wed, 19 May 2004


Toxic Parents

I find that the book is difficult to read. The fact that I have trouble staying on task lets me know how important it is for me to stay with it. (My experience with TTP is invaluable to this process.)

I find myself unable to address many of the issues and questions put forth in the book because I conveniently block most of my childhood out of my mind- I remember only brief flashes.

The book brings up a lot of deep feelings and provides a fertile field of issues to take to tribe.


Thanks for recommending it!

Your tribe can help you locate and experience k-nots you don't even know you have.

 

 

It takes a Team

 

to raise a feeling.

 

Clip: http://www.uwgb.edu/

anthro/gallery/team.jpg

Wed, 19 May 2004

 

FAQ

Hi Ed!


You made a good point when you said "Talking about it is not the same as experiencing it." 

 

If we go on in that direction I begin to believe that everything that is said in moods of irritation, frustration, anger, and so on, are actually dramas.

 

Communication with others should only consist when there is positive intention, otherwise it is best felt and experienced by myself.

The following question will of course be how it is possible for the TTP to work as good as it does when the TT-process is to "talk about it".

 

Shouldn't it be better to just experience the feeling instead of telling the whole TT about it since it transforms into a drama then? (I mean if you have the discipline to experience it instead of avoiding it by yourself)

You think I try to do everything too much by myself. That might be correct and perhaps I should examine the big responsibility I put on myself, but who can be blamed but myself, and to what purpose should I involve other persons when you have told me what to do?

You really opened my eyes when you said that feeling should be experienced, because I understand I've been avoiding them for quite so me time. I didn't understand that it was so important to experience them. My view was that since it hurts it must be negative, but now I have a completely different view about it.

I recall that my family always wanted me to be happy all the time, almost as if I wasn't allowed to feel sad or angry. Since then I have always found distractions to avoid the hard feelings, not knowing I was just pushing it further on, and still have to go around with it pushing me down. I like your statement in the pollinator page; "The nature of stuck feelings is that the feeling that run your life are the feelings you don't want to feel".

 

That is exactly the way I feel! For me the big problem was that I used the wrong model. Nobody has ever explained with such simplicity and straight forward way how to get the cure as you have done. Now I know it's constructive to experience the feelings, whatever it is, so I simply do that and I am more free than ever.

Is this exercise only needed for traders (losing traders) or do everyone need this? I think this process can help a lot of people with psychological problems. I consider your therapeutic way to be much more right to the problem than common therapy since it is natural. I think this will grow!

What's the status of your book? I would like to read it when it's finished, but you seem to be a little unspecific about it due to earlier questions.

Kind regards,

You seem to have a good grasp of TTP.

 

My book seems to be assuming its own identity and demanding more

intention.

 

 

 

Dusty Word Processor

 

Clip: http://www.squeep.com/~fek/

misc/sepia-backgrounds/

writing-2.png

 

Tue, 18 May 2004


Follow-Up to Stock Correlation

Ed says:
If you really have the ability to outguess the indices, you are better off just trading index futures.

My question was unclear, I wasn't referring to outguessing the indices.

Ed says (on Wed, 19 Feb 2003):
You might like what Old Turkey has to say in Reminiscences of a Stock Operator.


Firstly, thank you for referring me to Old Turkey. It is a great recommendation. One line that constantly comes to my mind is ...

I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, "Well, you know this is a bull market !" he really meant to tell them that the big money was not in the individual fluctuations but in the main movements -- that is, not in reading the tape but in sizing up the entire market and it's trend. (Page 68)

My revised question ... Do you find it important to size up the entire market and it's trend before going long individual stocks?

I understand that the entire market trend and an individual stock's trend are two different things, I might be unclear.

Thanks for your help and generosity

I trade stock indices according to their trends.

 

I trade individual stocks according to their trends.

 

Sometimes they trend together and sometimes they don't.

 

 

 

Swingers

 

sometimes swing together

and sometimes they don't.

 

Fundamentalists

 

who want reasons for things

sometimes have trouble

formulating clear questions.

 

Clip: http://www.travelswithtigger.com/

mam0999/swings.jpg

Tue, 18 May 2004


Ed's Book

If I had a word processor like that I'd forget about the book. You may need someone to remove your distractions before your book can be completed. Good Day

OK.

 

 

Rusty Word Processor

 

Clip: http://www.law.umkc.edu/

faculty/projects/ftrials/hiss/typewriter.jpg

Mon, 17 May 2004


Stock Correlation

Hi Ed,

It seems to me that most stocks correlate very highly in terms of direction / trend in any given period.

 

As an example, over the last 12 month period, there were times when as many as 70% of all NASDAQ stocks were above their individual 50 day moving averages (50 is just an arbitrary number).

 

Do you find it important to determine the general market trend (the trend of the market indices) and only trade in the same direction as that trend or is that just complicating the process of simple trend following?

regards

If you really have the ability to outguess the indices, you are better off just trading index futures.

 

Hybrid systems invite complexity and provide lots of Fred room.

 

 

Hybrids

 

may demonstrate

interesting complications

 

Clip: http://www.geekjosh.com/other.htm

Mon, 17 May 2004

 

Book

Mr. Seykota:

Further to my e-mail earlier this month and your subsequent response, can you give me an idea of when you expect to complete the book and have it available for purchase?

Regards

Thank you for your interest in my book.  I am working on it with my trusty word processor.  I expect to publish sometime this year.

 

 

 

Trusty Word Processor

 

Clip: http://www.asahi-net.or.jp/

~sa3c-od/writing.jpg

Mon, 17 May 2004


Relative Importance of

Trend Following System Components

Ed,


Based on your experience, would you please rank the following from most to least important with respect to the profitability of trend following systems: entry rules, exit rules, money management, diversification, optimization.

Thanks,

The elements in a trend following system, like the organs in the body, all work together or the system fails.

 

 

 

In Many Systems

 

the Important Organ

is the one

that isn't working properly.

 

Clip: http://www.ha.org.hk/qeh/

images/anatomy.gif

 

Mon, 17 May 2004


Can't Feel Anything

Ed says: "Perhaps one way for you to become a more effective converter might
be for you to experience some of your feelings, like poverty, frustration,
anger, etc."


If I'm not feeling them now, then I don't know when I will start feeling them!

Ed says: "If you carry a strong vision around, such as "not getting off the ground," your vision might self-fulfill as a way for Fred to get you to feel some of your k-nots."

It will self-fulfill because it is dependent on other people. I have absolutely no doubts about my abilities. And if it were only dependent on me, and I got my true reward for my efforts, then I would be one of the most successful trend followers in the world. Unfortunately the world doesn't work like that.

Ed says "Your post also reminds me that people who run big dramas, do so to justify their k-nots - so they have little use for, even resent, advice."

There was no advice in your comment. If you had said to me "Your system is wrong and needs to be improved in this way" or "you need to approach this type of person in this way" or "I found this approach was good for raising funds" etc etc then I would be all ears.

 

Instead, you chose to use the derogatory phrase "hit on people." Use of such a phrase, suggests to me, that you don't know your own philosophy. Are you a Capitalist or a Communist?

You might consider contacting a Tribe in your area.

 

 

 

Ok, I'm telling you one more time

 

I am not, I repeat,

not, not, not, not, not

feeling anything.

 

Clip: http://www.epc-tv.com/funstuff.html

 

Sun, 16 May 2004

Tribe Application

Ed,

I now have a better understanding of TTP and wish to start a tribe in Bristol, UK.

Sincerely,

 

 

Welcome

Bristol, UK

 

 

Bristol

 

Clip: http://www.bris.ac.uk/university/

maps/bristol-uk-small.html

Sun, 16 May 2004


TTP and Trading Performance


Hi Ed,

I am reading how the TTP improves ones performance ...


I know that there is more to good trading than the return, but do you think that there is a limit to how high you can go?

As a matter of fact, what are in your opinion (and experience) the characteristics of a good (to You) trend-following system in terms of return and drawdown (annualized)?

 

I have a system - 30% annually and 35% drawdown in testing - robust in most markets, in some doing poorly, but usually in positive. I am not committing bigger money to it, while I am still searching for a better one but maybe I am expecting to much? Maybe its already good?

FAQ does not publish specific parameters or reveal personal information. See Ground Rules.

 

For anecdotal indications of effects of TTP on trading, read through FAQ and, recently, the Workshop Testimonials on the Workshop Page.

 

The difference between various optimizations of your system is likely much less than the difference between sticking to it and not sticking to it - and that's where TTP comes in.

 

Testing the limits of how high you can go might be a setup for drama per: the higher the up they rise, the lower the down they fall.

 

 

Icarus

 

Despite warning from his father, Daedalus, to not fly too close to the sun, as it would melt his wings, Icarus grows exhilarated by the thrill of flying and gets careless.

 

His wing wax melts and he suffers a huge drawdown.

 

Clip: http://www.dsgordon.com/

murals/icarus.jpeg

Sun, 16 May 2004


Poverty


Ed says: "When your mission becomes about serving others by managing their money,
rather than about avoiding experiencing poverty by hitting on rich people,
you might become attractive to serious investors."


So now I'm "hitting on rich people" eh? I can't do enough can I? Isn't 4 years devotion of my life, to build this system enough?

"My philosophy, in essence, is the concept of man as an heroic being, with ... productive achievement as his noblest activity (Rand)"

Have I no right to try and turn the massive amount of energy that I have expended, into money?

"Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them (Rand)"

In the same way that I knew I could write a trend following system ... I also know that I am destined to never get it off the ground.

 

That leaves me in a very dangerous position ... because I am unemployable and have no money.

 

I have no escape, except that offered by Rand - "Give me liberty or give me death."

 

Maybe you should think about that when you're publishing your responses. Some of us put massive effort into our lives ... and end up with nothing through no fault of their own.

I suggest that you take your need to denigrate and humiliate people into your next tribe meeting.

I support converting energy into other forms, such as money.

 

Perhaps one way for you to become a more effective converter might be for you to experience some of your feelings, like poverty, frustration, anger, etc.

 

If you carry a strong vision around, such as "not getting off the ground,"  your vision might self-fulfill as a way for Fred to get you to feel some of your k-nots.

 

FAQ does not tell people what they should do.

 

Thank you for your suggestion to take another look at my own feelings about denigration and humiliation.

 

Your post also reminds me that people who run big dramas, do so to justify their k-nots -  so they have little use for, even resent, advice.

 

 

 

Patrick Henry

 

Well known for the phrase,

Give Me Liberty or Give me Death.

 

Some people might confuse

Patrick Henry with Ayn Rand,

who also sports old-timey hair

and way cool glasses.

 

Clip: http://www.loc.gov/exhibits/

religion/f0505s.jpg

Sat, 15 May 2004

 

Missing Something


Hello Ed,

While eyeballing many charts daily, I can't help but feel, I'm missing something regarding the terrain, dimension, ambiance, and overall structure of the data I'm perceiving ... I feel, at some level, these relationships get washed away through a persistent and ever feeble perceptual filter.

 

How can I get a better feel for these qualities I just mentioned?

I remember, sometime ago, you suggested I arrange bi-variable system test results in a 3-D pattern. My question now is how can I go about producing 3-D graphical representations of tabular market data outputs?

P.S. the current ambiance of the one dimensional graphical tabular data outputs I'm observing are characterized by feelings of low-key lighting, deep shadows, and hidden dimensions ...

Terrain, dimension, ambiance are not so much properties of data as they are interpretations that you bring to data.

 

You might consider taking your feelings about missing something to Tribe.

 

You might consider re-writing "are characterized by" in SVO-p to assist you in discovering just who is doing the characterizing.

 

If you want assistance with specific system design, data arrangement, back-testing, etc., see Consulting at the bottom of the Ground Rules Page.

Sat, 15 May 2004

 

Missing a Tee Time

Dear Mr. Seykota,

Please accept my apologies for missing the "Trading Tribe" session last Thursday. I run a program ... for 13 and 14 year old [golfers] ... While my intention was for them to finish their playing portion after 7 holes, I could not overlook one of my student's need to play all nine holes, since it was his desire to do so at the time. He was playing superbly and wished to complete all nine.

I must as a rule be there when they finish, as they are my responsibility and any shirking of this duty would be unacceptable for management and me personally. I could have made it by 7:30, but I decided it would be more appropriate to miss the session altogether, rather than intrude in mid-session.

If the consequences for my absence are harsh, I accept them, as I consider my presence there a privilege and not a right.
Please advise.

You might have a look at your feelings about setting limits and keeping agreements.

 

Breaking rules may lead you to consequences that bring up feelings Fred wants you to experience.

 

If you wish to apply for re-admission to the tribe, email evidence that you can follow the requirements (see Directory Page).

 

 

Golf

 

Many ways to play it.

 

Some people use it to teach children

that it's not OK to break agreements

even if you wish to play a few more holes.

 

http://www.markovic.sk/big/golf.jpg

Sat, 15 May 2004

 

Accepting Uncertainty



Ed,

Your response from your FAQ section, Mar 20, 2003:

There is no math to get you out of having to experience uncertainty.


If you have trouble with the feeling of uncertainty, then instead of feeling it, you wind up cutting back and / or cranking up your trading at just the wrong times.

If you want to trade consistently, without the swings in confidence, then you have to learn to accept, even celebrate, the feeling of uncertainty.


Brilliant IMO. The uncertainty issue caused me to "optimize" my trading approach for several years, until I came to this conclusion. It has made a huge difference.

Terrific job on the Trading Tribe site. Many thanks.

Most Un-Certainly.

 

If you stay in the moment, you can know the price or the trend - not both.

 

 

Werner Heisenberg (1901 - 1976)

Photo circa 1927

 

Heisenberg's lively discussions with Albert Einstein, Erwin Schrodinger, Louis de Broglie, Niels Bohr and others leads to the Principle of Indeterminacy, now The Heisenberg Uncertainty Principle:

 

The more precisely

you determine position,

the less precisely

you can determine momentum

in this instant,

and vice versa.


-- Heisenberg, Uncertainty Paper, 1927

 

Clip: http://www.aip.org/history/

heisenberg/p08.htm