Ed Seykota, 2003 - 2005 ... Write for permission to reprint.

Ed Seykota's

Frequently Asked Questions

FAQ Index & Ground Rules  ...  Tribe Directory - How to Join

TTP - The Trading Tribe Process  ...  Glossary

  TTP Workshop  ...  Resources

 

November 11-20, 2004

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Questions

(Quotes from Ed in Red)

Answers

Sat, 20 Nov 2004

 

Davis Visit

Hi Ed !

What a powerful meeting. The process lights up that whole big judgment thing I really like to do. Thank you. I see each member gets just what he needs. Thank you for coming to Davis.

Yes, judging can be fun.

 

Well, Your Honor,

my client keeps acting out his drama

so that his Conscious Mind

can experience his anger.

 

And, if I may, Your Honor,

your judgments of him

are just keeping him stuck.

 

Clip: http://www.fbckenner.org/

cartoon/slideshows/jan2001/

images/judge.gif

Sat, 20 Nov 2004

 

TTP San Jose - thanks



Hi, Ed -- it has been quite interesting preparing to go on our family vacation to NY after Thursday's TTP.

 

I realized that I had not raised my concerns about this particular trip at this time to my wife -- relating to fear of being angry, raised in my hot seat session Thursday night.

 

I was able to talk with her about this, and she observed that this is a typical pattern where I sort of let myself be talked into something I don't want to do, and hold the anger inside.

 

It then can come out sideways. What is quite interesting is the observation that you made at TTP -- that I actually enjoy this feeling of being angry at not having voiced my own feelings. It is sort of like an addiction.

Anyway, with this issue on the surface, I feel positive about the vacation. Thanks for your help.

Yes,  dissolving passive/aggressive drama is a nice piece of work.

 

And then you take the #3 Train

to right here behind the head

of this this very accommodating

passive aggressive woman

 

Clip: http://www.coldbacon.com/

pics/passive.jpg

Sat, 20 Nov 2004

 

Thank you for your visit

Hi Ed,

I appreciate your visit to the San Jose Tribe. We check-in, we talk about our feelings and issues, and our discussion goes nowhere. We drum, and go into the hot seat. We encourage hot seat participants to experience and bring together all of their different forms. We have a long session, and we are tired.

Our tribe experiences a metamorphosis, and we go to the next level. We feel our feelings along the way. I commit to making progress, and my fellow tribe members do the same and move toward the right livelihood.

I am ready, I do it now, and the Under Fred Network appears.

You are welcome.

 

 

Metamorphosis

 

is an apparent change in form.

 

Clip: http://jhunix.hcf.jhu.edu/

~shahn1/metamorphosis.jpeg

Fri, 19 Nov 2004

 

Since Fifteen Years

 

Hello Mr. Seykota;

It has been quite a long time since we talked both on the phone and when I came up to Tahoe. Hard to imagine 15+ years have gone by. Anyhow, I took some time off to travel and started two businesses which I ran and sold. Currently running my third business.

I am sure you have been busy in these past years and will likely NOT remember who I am. Nevertheless you were an inspiration to me to stay methodical, and systematic which I have always done. For this I thank you greatly as it has not only been helpful in trading, but in business and in life. I am a simple, price based system trader (no goofball indicators allowed).

The purpose of my email is to rekindle our old dialog maybe even start a tribe in Newport Beach, California.

Nice to hear from you.  To start a tribe, see the Directory Page.

Thu, 18 Nov 2004

 

Magazine Cover Signal ...


[Is this the end ] ... for KMRT / S ?

 



Lampert has some interesting forms to synthesize. 

 

Perhaps Sears + Kmart ==> A softer side of the blue light special.

 

Note: the cover seems to celebrate a recent high in both stocks.

Thu, 18 Nov 2004

 

Trading Tribe in Melbourne Australia


G'day Ed,

I was wondering if you had any contacts to join a trading tribe in Melbourne Australia?

See the Directory Page.

Wed, 17 Nov 2004

 

Charts Section

Is the information in your charts section currently available? I find the information contained your system development example (system1) to be quite valuable and would appreciate continued access to your approach on system definition and design.

The Incline Village Tribe is currently preparing a series of research reports.

Wed, 17 Nov 2004

 

Wants To Join


Mr. Seykota:

I live in Orange County and I'm a beginner in futures trading (only have traded the e-mini's for 1 year using Traders International trend following system).

I would like to start fresh and learn everything I can from you. Would you recommend I start a Community with your guidance and / or guidance from others or contact the Los Angeles Community?

Please advise. Thank you.

FAQ does not tell people what they should do.  See Ground Rules. To join a Tribe or start one of your own, see the Directory Page.

Tue, 16 Nov 2004

 

Meeting Formats


Ed,


I am very open to the idea of having extended TTP/ intensive meetings, but more lead time is helpful for me.

By the way, my last hot seat experience is proving to be very productive. Thanks.

Sincerely

The IV Tribe is hosting a TTP / Breathwork weekend Dec 17, 18, 19.  See above.

Tue, 16 Nov 2004

 

I Can't Get No ...

Mr. Seykota,

I am now a sophomore in a university in [State]. I have been trading for a year now. When I initially began trading, with my limited experience, I made 90% of my initial investments in 4 months. Now for almost six months I have been doing quite badly within the market and do not know what system to use.

 

I have been researching my college library for books on the market structure, momentum etc but with no positive result. I want to keep on fighting though I can't, since I cannot afford to spend all my part-time job earning on market losses.

 

What should I do, do you have any suggestion, any books I should start reading.

 

How did you begin trading? What stopped you from quitting after big losses? Where did you find the motivation to keep on fighting the market? How did you develop a stock selection system? How many hours a week did you research stocks for? I understand that these are quite personal questions and you not answering them will be understandable since you don't even know me but please at least give me a glimpse of where to veer my perceptional apparatus on the ultimate market chaos.

I know that joining the tribe would solve many of my problems but unfortunately I don't have adequate time to spend since my academia is very competitive, and studying consumes most of my time. I would love to join after my graduation but until then my schedule will remain constrained.

Thank you

People say they do or do not have "time" for things according to their priorities.

 

Your priorities seem to be:

 

1. Trade the markets - and -

2. Research the library - and not -

3. Join a Tribe.

 

Joining a tribe might give you an opportunity to explore your feelings of "not having enough,"  "life is chaotic," "trading is an intellectual challenge," and "I can do it later."

 

FAQ does not tell people what they should do. 

 

 

These Two Might Be

Enough for Anyone

 

Denise Richards and Sophie Marceau

in the James Bond Film,

The World is Not Enough

 

Clip: http://home.zonnet.nl/w.de.bruin/

img/denise%20richards%20-%20sophie

%20marceau%20-%20the%20world

%20is%20not%20enough.jpg

Tue, 16 Nov 2004

 

SVO-p seems Clumsy

Hi Ed !

 

[Sometimes SVO-p seems clumsy and un-natural - for example, I don't know how to say "I finished going through the list of stocks," in SVO-p.]

[I try] I remember going through all the stocks on the list.

 

[Or I try] I report a working memory of visually inspecting a each chart.

 

For SVOP I need a new word which conveys a present memory of a recent set of actions. 'Remember' and 'recall' seem too broad ... some word that means: "I report on a recent set of snapshots which is alive in my short-term memory at this moment."

Clumsy SVO-p indicates cloudy thinking.

 

In this case, "going through a list" is a bit fuzzy.

 

A clear goal, "finding breakouts," leads to smooth SVO-p.

 

I now have a list of every  breakout.

 

I write FAQ in SVO-p. 

 

 

 

Clarity Implies Attention to Detail

 

The clear computer image of the tiles

on the bottom of the right half-sphere

 

results from an intricate process

of tracing individual light rays.

 

Clip: http://www.coolfun.com/~mike69/

contest/pix.imlc9807/pic27.html

Tue, 16 Nov 2004

 

Buckets and Holes

HI Ed,

The Trading-Tribe workshop last week had been very interesting and I have changed my mind-set about quite a few things. I am glad that I have attended it and interacted with you.

 

Below is an E-mail that I was hesitating to send. I would really appreciate your time and candid feedback - it would mean a lot to me. Thank you very much for taking the time to read through.


---


First the bucket-math story: This kept me busy in my spare-time at work for the last 4-5 days.

I remember your writing of complicated - looking double - integral with multiple parentheses separating numerator and denominator with derivatives - and, your calling it bad-math.

 

Funny thing is that was how I learned Math and I always felt that Math is the only exact-science probably because I was good at it! I changed my perspective when I listened to your lecture. Math is useless without solving problems in real-life. I wish I listened to someone like you earlier in my life.

I have spent the last few days trying to develop an equation that expresses the
in-flow versus out-flow and differentiate it to get the flow-rate.

 

I first approached the problem with volume change using a simplified cylinder as the bucket rather than a chopped-off cone. Cone led to the not-so-simple looking equations below. Cone of-course has the volume of 1/3 (r-square) h - but, the top-radius of the water-level changes on a continual basis and my derivation of top-radius at a given water-column of height h came to:

r2 = h * tan x + r1

where r1 is the base radius, r2 is the water-top radius, h is the height and x
is unchanging angle of the glass determined by tan x = ( bucket-top-radius - bucket-bottom-radius ) / bucket-height

The volume of the water in the bucket at a given instant is (where r2 is taken
from the above formula):

V = 1/3 pi (r2-square) * h - 1/3 pi (r1-square) (r1 * tan x)

This volume is equal to the volume of the water coming out through the little hole of radius r:

v = pi (r-square) l

where l is the water-length within the receiving cylinder assuming water goes
out through the hole into a frictionless tube/pipe of cylinder shape.

v = V based on law of conservation of mass!

I can then come up with the flow-rate of water differentiating l: (dl/dt)

This, of-course, yields an expression that has (dh/dt) everywhere and I have to
determine the dh/dt at a given water-column height! I also realized that there were serious flaws in my thinking because neither the viscosity nor gravity found a place in my very simple equation!

I then went about deriving gain in kinetic energy of the water coming out of
the hole and comparing it with the loss of potential energy of water from the drop in the water level.

 

Every time I get a break at my work, I have been working on paper using g (gravitational acceleration) and d (water density) - as I continued through this exercise and came up with something that I thought is a solution that addresses flow-rate in unreal "frictionless" world, I found that a great-gentleman named Bernoulli came up with a better-formula just for such a scenario 260+ years ago.

That ended my pursuit and it was a very humbling experience in the end.

 

---


I am strongly interested in your guidance for research into the markets. Would
you be okay with that? I do not trade full-time. I have a full-time consulting job in ERP-software [Company] and I would be happy to take a break from it some-time to be able to work for you.

I have always been passionate about coming up with some original thought process - I do know how difficult it is to come up with clear and simple original simple thinking. My basic assumptions are as follows:

1. Looking for patterns, Elliot-wave or Fibonacci, isn't the right way to look.
Heisenberg uncertainty principle comes to mind.


2. Patterns and cycles fail under the weight of their popularity.


3. Human attitude doesn't change - I doubt the basic motivation changed from
the time men started "trading" with each other! The speed may have changed, but, the mind-set didn't.


4. It is a "capital" mistake to theorize before one has all data - a quote by Sherlock Holmes

At a fundamental level, I would like to create something in my life - be an author, movie-director, builder of "original" construction etc. I do like trading too
and I was struck by the ring of truth in your statement "95% of everything is [organic compound]" !

 

This is one of the important statements, along with "Everybody gets what they want", that I would always keep in my mind. For me, coming to your class was an exercise in evaluating myself - can I "ever" be a superior trader and I think I will be. I have avidly read through your interviews and am using your statements.

I read somewhere that you have an ability to gain an insight into the attitude
of anybody.

 

In that context: I have had some problems in my family in my childhood, but, I am hoping that those things are not burdening my mind any more. I "must" say, though, that I didn't grow up as a normal-boy.

 

I read Ayn Rand when I was 16 and those books also caused some significant shift in my thinking.

You are one of the few mentors in my life that I have deep-respect for. And,
hopefully I would have the privilege of hearing from you and working for you. For me, money from trading is a by-product - more important is thinking for myself and having resources to create things that I like creating. The goal is to have "control" over my destiny.

Eagerly looking forward to hearing from you.

Bucket Math is a framework for analyzing dynamic systems.

 

1. Divide the system into buckets and holes.  You can only measure the levels in the buckets; you cannot measure the flow through holes - except by using other buckets.

 

2. The levels in the buckets exert pressures that determine the flows through the holes.

 

3. The flows integrate into the levels in the buckets.

 

4. To simulate the behaviour of your system, use stepwise integration;

(A) determine the flows from the levels; (B) compute the new levels after a small dt interval; (C) go to (A).

 

This method works to simulate the behavior of many dynamic systems:

 

A bucket with a hole in it drains in an exponential fashion.

An inventory control system with perceptual delays can generate endogenous oscillations - that management incorrectly imputes to "the market."

The Hog Cycle, Kuznets Cycle and Kondratieff Wave appear in simple Bucket Math models.

A Bucket Math model of the Coyote / Rabbit ecology generates the classic population cycles.

Casting equations as integrations rather than as differentiations has a conceptual advantage; we normally experience water flowing into a bucket as the "reason" the level rises.  We do not perceive the rate of change of the level as the reason for the flow into the bucket. 

 

Casting the model as a series of integrations helps us clarify the "cause" of the flow rate; it is likely a valve that responds to a hand.

 

If you wish to pursue these topics, and build some Bucket Math models, you may apply to the Incline Village Tribe.

 

-----

 

You might take your desire to invent something, your feelings about your childhood and your feelings about Objectivism to your tribe meeting.

 

 

There's a Hole in the Bucket

Dear Lisa, Dear Lisa

 

Actually, Henry, there's more than one

hole in the bucket,

topologically speaking,

if you consider the handle.

 

 

Clip: http://www.dragon-tongue.com/

DragonTsoundEarlyVoice/funny/

visual_jokes/bucket.jpg

 

 

 

 

Tue, 16 Nov 2004

 

There is no Past

Outside of the Present!

Hi Ed,

Greetings from Malaysia! Now!

I benefit from your FAQ now and every now and then I benefit. I find this website interesting ...

 

http://www.tardyon.de/time.htm  .

Cheers now.

Few scholars agree on the definition of time.

 

The FAQ position is that time does not exist - at least in the present - and "past" and "future" do not exist.

 

 

 

Methods for Measuring Time

don't actually measure time.

 

They just count things

in the ever evolving

moment of now.

 

Clip: http://landfantasy2.free.fr/

Figurines/TheFranklinMint/

Merlins%20Crystal%20Hourglass.jpg

Mon, 15 Nov 2004

 

The Forms of Fear
Under Fred Network at Work


Study: Posture Able to Communicate Fear
15 November 2004 By RANDOLPH E. SCHMID, Associated Press Writer

WASHINGTON - A fight breaks out, and even though people at the far side of the crowd can't see what's going on, they are immediately on edge.

 

Now, a Harvard researcher has an explanation for this fear contagion, the quick spread of emotion through a crowd.

Seeing someone adopt a fearful posture triggers areas of the brain that express emotion and get the body primed for action. It's a response that can race through a crowd like wildfire.

"We are extremely sensitive to emotional body language, and we react to it without us being aware of it," said Beatrice M.L. de Gelder of Harvard Medical School ... This, she said, "is very good, because that puts us in a position to act."

Most previous studies of the human response to emotional situations have concentrated on facial expressions, de Gelder said.

She wondered if body reactions, as well as the face, could communicate to other people. The results are reported in Monday's issue of Proceedings of the National Academy of Science.

De Gelder and colleagues photographed actors who posed in a variety of positions, showing happy, neutral and fearful stances. They blanked out the faces and showed the photos to four men and three women, while using magnetic resonance imaging to study their brains.

People looking at the happy and neutral images showed a response in only the part of the brain that processes visual images, they found.

When looking at fearful postures, however, the viewers' brains responded with activity in the visual, emotional and motor action areas.

It shows that emotions are communicated nonverbally, de Gelder said. "It's really communicated without any conscious processes involved. It's really communicated from body to body."

<http://story.news.yahoo.com/

news?tmpl=story2&u=/ap/

fear_contagion>

Yes.  Fast transmission of forms tends to enable a school of fish to turn all at the same time, a flock of geese to take flight all at once, and a pit of traders to try to exit a stock all at the same moment.

 

 

 

The Fear Factor

 

is one of the ways traders

 synchronize their actions.

 

Clip: http://www.rosescafe.net/

cards/afraid.jpg

 

Mon, 15 Nov 2004

 

Oneness


Dear Mr. Seykota


Re: Oneness and Peace - Nov 7 2004.

 

When I feel I want to be one then I cannot be one because wanting to be one means I don't have a one feeling.

 

A want of one feeling will only show me all the don't have to be one and therefore give a feeling of loneliness, rejection and disappointment - the opposite of peacefulness.

 

I know because I wanted to be one so I thought. I wanted to be noticed to be approved of only to be disappointed because I never got what I really wanted.

 

The feeling of peace inside me. I am a DIM and am continually releasing my feeling of one through visualization.

 

I believe Mr. Seykota that you are already one because you don't have a want for it.

Thank you for your site and I enjoy FAQ.

To get to the zero point, you might take your feelings of loneliness, rejection and disappointment to a Tribe meeting to experience them.

 

The DIM (Do It Myself) process typically intends to rid you of unwanted feelings.  This invalidates them, blocks Fred, further isolates the forms, and compounds your dramas.

 

Willingness to experience life, in all its forms, typifies the zero point.  From there you can increment to one-ness.

 

 

 

Oneness Is Not Necessarily

Some "Good" Feeling

 

It is willingness to experience

all your feelings

 

and, ultimately, all the feelings

of everyone on the planet.

 

Clip: http://reikifire.ca/school/images/

t-oneness.jpg

Mon, 15 Nov 2004

 

New Haven Tribe = 0

Chief Ed,

I see on TTP FAQ that a person sends an email to the New-Haven-Tribe email address and gets no response, so I check it out.

Previous to this, there are only two email inquiries in total, regarding the New Haven Tribe. One is casual, and one is from a genuine TTP workshop attendee.

[He] and I meet. I show him my meeting space. He likes it. We chat about TTP and decide to wait it out, for a few more inquiries to materialize. Months pass.

Now I see 4 new TTP / New Haven inquiries in the inbox, all at once in November, and two of them actually call me ... after I email-reply. I find myself having nice conversations with these people, one of whom may start a tribe in Maryland.

While I digest and understand a great deal of TTP from the TTP site, I am entirely uncomfortable leading TTP meetings here, simply because:  (recent communication with the originator of TTP) = (null)

Please advise.

Per your notice, I am removing your listing from the Directory.

 

You might examine your tendency to post other's actions as reasons for your feelings. 

 

The "you are the reason" form of syntax typically indicates an attempt to control / manipulate people.

 

The strategy relies on making people feel guilty against their will in hopes of inducing compliance.

 

The strategy is ineffective with people who are willing to experience guilt and celebrate its positive intentions.

 

 

 

A Positive Intention of Guilt

is to sustain integrity

 

People who don't like to experience guilt

are subject to manipulation

by people who threaten

to make them feel guilty.

 

Clip: http://www.smh.com.au/ffxImage/

urlpicture_id_1061368355568_2003/

08/20/so-devine,0.jpg

Mon, 15 Nov 2004

 

Maryland Tribe

Hello Ed,


I would like to start a MD tribe in the  area. I have been corresponding with other tribe members via email and a bit by phone and I feel as though I fit in well with the crowd.

 

 

Welcome

Columbia, Maryland !

 

 

Columbia, Maryland

 

 

Clip: http://www.city-data.com/

city/maps/fr295.gif

Mon, 15 Nov 2004

 

Spare Cash

[I'd like to sponsor a] school as soon as I can spare $17K in profits.

http://www.cambodiaschools.com/

Edwin LeFevre, in Reminiscences of a  Stock Operator, tells a story about the folly of trying to trade to "earn" money to buy a fur coat.

 

You might consider either sponsoring the school or not, with what you have now.

 

 

Santa Claus

Avoids Trading QQQ on Margin

 

since he needs

a consistent source of income

 

so he can deliver toys

to girls and boys

 

year after year, consistently.

 

Clip: https://www.blackhillssecure.com/

mistletoeranch/images/santahead.jpg

Mon, 15 Nov 2004

 

I would like to meet and talk with you.


I am currently Regulatory Counsel for the [agency] that covers most of [State]. I am in charge of ... $3 billion [project].

 

This effort has taken a lot of my time. I have an interest in economics and trading. I have read the sections in Market Wizards that relate to your trend following work as well as the sections covering various of the other traders.

 

Your website has been extremely interesting in terms of adding to my knowledge on the subject. I would very much like to meet you sometime.

 

I get to Incline Village on occasion, or if you are in the Sacramento area, please give me a call and I will buy dinner.

Best Wishes for a Happy Thanksgiving.

 

I am not clear as to the purpose of meeting. 

 

Perhaps you might like re-write your note in SVO-p.

 

You have a wonderful opportunity to take "clear communication" into high levels in government.

 

 

 

Ladies and Gentlemen

This Report is Ambiguous,

Unclear and Misleading ...

 

I commend you on your good work !

 

Clip: http://fourh.ucdavis.edu/4hresource/

clipart/people/pics/meeting.gif

Sun, 14 Nov 2004

 

Evolution


Hi Ed,

Thanks for your reply on Mon, 8 Nov 04.

I knew you would address "there needs to be evolution" syntax ;) how about - in order to survive a system evolves. most evident in living system. But, yes - even a rock evolves - thru wind, water, erosion etc. The conditions change -> rock changes.

A trading system - I have certain entry, exit rules (micro) and go with the long term trend (macro). The markets get choppier, conditions change - the same rules don't work as well as before. I need to change/modify my rules (micro), but I still stay with the long term trend (macro) -> evolution.

You prefer a mechanical approach to the markets. But unchanged over 20+ years?
What I am asking is:


is there a point where you decide the old rules are not effective, time for changes? or how could you assess that this is only a bad period?

In his book about the chaos theory and markets Edgar E. Peters says, that every system of set rules is bound to loose it's effectiveness after some time in an evolving market ... Any comment on that?

Sometimes markets trend smoothly.  Other times they chop.

 

A long-term trend following system provides direction for all types of markets.

 

Having "rules to modify your rules" sounds like you are just building a  playground for Fred.

 

The basic Trend Trading rules are:

 

Trade with the Trend

Cut Losses and Ride Winners

Manage Risk

 

The definition of Trend  is specific to individual traders.

 

 

The Ten Commandments

work well, century after century

 

if you follow them.

 

Clip: http://www.operationsaveamerica.org/

articles/articles/images/alabama/

The-Ten-Commandments.html

Sun, 14 Nov 2004

 

Borderline


Enjoyed your site - especially the Fractal Poem, Borderline.

OK.

 

 

Lovers Know as they Entwine

Life is Just a Borderline

 

Sat, 13 Nov 2004

 

Third Tribe Meeting

Hi Ed !


One member checked out with this comment:

 

I was tired and there was a lot of traffic, so I didn't feel like coming to the meeting, but I remembered my commitment, so I did. Now after the hot seat, I feel full of energy, and have many 'aha's' about my issue. I see the power of commitment, and am really glad I came. My employees note that I seem nicer lately.

Yes.  Commitment carries power and magic.

 

 

Commitment

 

takes many forms.

 

Clip: http://www.bharatforge.com/

insidepages/commitment/commitment.asp

Fri, 12 Nov 2004

 

Ed Seykota the Subject of Speculation


Greetings,

There is an individual posting on a public website making some rather [mean spirited] comments about Ed Seykota. This after taking some shots at [another trader].


I don't know Mr. Seykota from Adam, but he is a fellow traveler on this planet so I thought it important to at least make an attempt to let him know what was being said in a rather public forum.

Your Blogger might be trying to enroll others in his drama. 

 

You might invite him to address FAQ directly,

 

People who learn to experience  feelings constructively do not have to act them out dramatically.

 

 

 

Anger

 

One positive intention

is to define boundaries.

 

Clip: http://www.coral-lab.org/~gac1/

images/angry.JPG

Fri, 12 Nov 2004

 

Connecting

Ed, 


I live in Ottawa, Canada and there is no TT exists in it (according to Tribe directory on your site).

 

Yet I am sure there are many people who are interested.

 

I wonder if having a bulletin board type of discussion on your WEB site would assist people from different regions to see each other?

 

This will connect many like-minded people together and will speed up Tribe creating process around the world and bring lots of other benefits to people.

 

I'd be happy to assist you in that if this idea makes sense.

Best regards,

See Tribe Directory for instructions on starting a Tribe. 

 

You can also start your own Blog, 

 

 

Bulletin Boards Seem to Work Best

 

in low to moderate wind conditions

 

Clip: http://www.sistersofstjoseph

brentwoodny.org/Bulletin%20Board.htm