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September 21-30, 2004

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For a long time it had seemed to me that life was about to begin. But there was always some obstacle in the way, something to be gotten through first, some unfinished business, time still to be served, a debt to be paid. Then life would begin. At last it dawned on me that these obstacles were my life.

~ Alfred D Souza


Children have neither a past nor a future. Thus they enjoy the present, which seldom happens to us.

~ Jean de la Bruyere

 


Anyone can be a genius,

if he will pick just one specific subject

and study it diligently just 15 minutes each day.

~ Albert Einstein

 

 

Questions

(Quotes from Ed in Red)

Answers

Thu, 30 Sep 2004

 

Wants Tribe in Boston Area



Ed, I read FAQ and feel happy when contributors announce the progress they make in their personal development. I think the work you do on the site to facilitate personal development is great.

Yesterday, I read a contributor's passage that causes me to think about some of my thought patterns. I believe that my consistent need for love and attention manifests itself in behaviors that serve this need, but do so in ways that otherwise cause me pain.

 

I have memories of what I now recognize as this pattern that go back to my very early youth. The behaviors have changed, but the pattern is the same. I now know it consciously. I believe your site is the catalyst that precipitated my awareness.

I thank you for publishing the TT site. It helps me in my development as a trader and in other areas of my life.

I live in [City] which is approximately 110 miles from Boston. I believe that my progress might be more rapid if I participate in the TT Process. Do you know anyone in the Boston area who is interested in forming a tribe? If  so, may I have that person's contact information?

Thank you.

See Tribe Directory, above, for a Tribe near you - or you can start one of your own.

Thu, 30 Sep 2004

 

TTP Best Award


Hi Ed,

Thanks for providing this site for all of us crazy traders and I also trust everything is well with you and yours these days.

Many of the insightful posts I have read during the last couple of years on your TT website have been extremely helpful to me in my own self development phases, but one in particular shines like a huge diamond.

The post of Sept 12th from an IV tribe member, detailing his Hot Seat experience on Sept 2nd, really describes the process to perfection and was the most helpful “single post” I have seen for general guidance in

TTP. He covers everything from Fred’s persistent messages, to diving deep to locate feelings, being alone with just feelings, dissolving them and also your most important love, for family …

Everyone should closely read / and absorb the many messages in this very comprehensive post. (If you ever do give an award for the Best single post - this one will certainly get my vote, so far anyway.)

Best regards,

OK - I am registering your vote.

 

 

 

If You Get Enough Votes

 

you might get a song on your birthday.

 

Clip: http://stellargraffiti.com/

My%20Pictures/

Uzo%20Girl's%20best%20friend.jpg

Wed, 29 Sep 2004

 

November 2004 Workshop

Hi Ed,

(+5000% -75%)

My last post to your FAQ was on April 29 this year.

I have continued to keep myself up to date with developments on your site. However, as I had mentioned in an earlier post, I have not yet "experienced" the Trading Tribe Process.

There is still no Mumbai Tribe, and the only Tribe in India (Chennai) is still starting up. I've been in touch with ... leader of the Chennai Tribe, and I want you to know that [he and another man] (who privately consulted with you a few years ago, and has kept in touch with you through FAQ since), and I have been in touch with each other. We met in Mumbai a few weeks ago, at [consult guy's] home. We spoke about our approaches to trading, and "discussed" TTP.

I was thrilled to read about the November workshop in Reno, and have decided to attend it. I have dispatched my Check and Registration Form to you today. Please reserve a place for me in the workshop.

Finally, having never experienced TTP live, I thought I might benefit by attending a Tribe meeting - ANY Tribe meeting - before the workshop. So I contacted ... leader of the San Jose Tribe, and asked him for permission to attend the San Jose meeting of Thursday, November 4. [He] was quick to welcome me to that meeting of his Tribe.

Ed, is there anything else you recommend I do, in order to make the most out of the November workshop?

Thanks, and regards.

You might consider listening carefully to the feelings of your family members and friends - and make it a point to validate and encourage their feelings, no matter what they are. 

 

When you get good at it, you might try validating and encouraging your own feelings.

 

 

 

 

Clip: http://www.wels.net/sab/

clipart/img-ca/encourage.gif

 

Mon, 27 Sep 2004

 

Back Testing



Dear Ed,

In system development, you stress a lot on clarity (e.g. "Please define "when it appears a second time") and the importance of staying in the NOW ("I don't know how to enter a MOC order after the close"). You suggest that we backtest the system and feel if it is one we can live with, and also optimize it.

 

It brings me awareness to things such as survivorship bias, and I fully embrace the concept that the best system is the system I can stick to.

Two questions here:

1) A backtest that gives a P&L curve implies there is some entry and exit price, so even if the entry signal is clear, there is actually an assumption that we have infinite liquidity at that particular trade price where I can trade unlimited shares. As such, the actual results deviate from backtest/theoretical. How do you estimate slippage for your backtest?

2) You mention optimization as part of the goal of System 1, along with defining, encoding and back-testing. A lot of literature cautions over-optimization that may lead to curve-fitting. So from your experience, how much is too much?

 

What are some guidelines to properly do optimization while not over-fit the data, especially when trend-following seems to bet on rare events that don't happen frequently?

Many thanks. I appreciate your answers.

Slippage:  you can try simulating various estimations for slippage per some fraction of the distance from the non-slip price to the worst price of the day. 

 

If your results are sensitive to your slippage, you might consider reducing your trading frequency.

 

Too Much: The idea is to build a mitten that fits most hands - a glove that fits a couple hands extremely well, likely does not fit others at all.

 

 

 

A Good First Step in Back Testing

 

is to find a back to test.

 

 

Clip: http://www.artpacifico.com/

item400628.ctlg

Mon, 27 Sep 2004

 

Risk Measures


Hello Ed,

I do have a few questions,
I wonder how you define the following:

1) static money management
2) dynamic money management
3) how can one incorporate these in terms of system development and considering specific personality issues?

 

I realize that there are a few moments in life when a trader can stand much more volatility and risk more, especially when lots of subjective pieces fall into place.

Insight would be immensely appreciated

PS.


Maybe you could refine the risk management paper and add portfolio issues. That would be a great thing!

I do not define either - as these are terms you are bringing to FAQ. 

 

Perhaps you might like to check the source of these terms for definitions.

 

 

Dynamic Money Management

 

Clip: http://members.cox.net/webrewards/

Mon, 27 Sep 2004

 

November Workshop

I have not received a reply to this message I sent you on the 17th. It occurred to me that if you replied by e-mail, it might have been mistakenly sent to the spam folder. If this is the case would you please resend your response? Adding the additional address of :


It also occurred to me that you feel that I should work out the answers to the questions myself. The part I am stuck on is the makeup of the community of participants.

 

Some offerings of this type appeal to dreamers, sometimes they can attract people with demonstrated records of accomplishment. Some information about workshop attendees, past and (ideally) present would be most helpful.

Thanks

 

-----


I am interested in your workshop, but am not sure if it is appropriate for me. I would appreciate the chance to discuss it with someone ...

I have been a futures trader in my personal account since 1977, and have been successful for the last several years, I am past the point of grappling with the demons of following ones system and losing confidence in the methodology.

My interest in the seminar is twofold:


1. a desire to refine my "trend capturing" methodology which is different than the fundamental approach used in the mutual fund

2. Gaining insight on the issue of whether it is better to work alone, or in a group. If the answer is a group, how best to go about it.


So, my questions are these:


Would I be a good person to have at the seminar? Would the seminar be helpful in regard to my interests? What other types of people will be in attendance?

Best regards,

The Workshop can address your two interests: (1). Refining your methodology and (2) Exploring how to best relate to colleagues.

 

Per your questions: I do not know if you would be a good person.  I do not know if the Workshop would be good for you.   I do not publish the identities of the participants.

 

 

 

The Wood Bee

would be

 

on the right

 

 

Clip: http://www.oznet.ksu.edu/hfrr/

HortImage/Carpenter%20Bee%20and%20

Bumble%20Bee.jpg

 

Sun, 26 Sep 2004

 

A question About an Image


Do the copyrights for [the images on FAQ] belong to you?

 

Someone took the picture and used it on [Website] saying that it qualifies as fair use, according to this notice on the FAQ page:

 

Anyone may assemble and conduct meetings to discuss, teach and use anything on the Trading Tribe Site - as long as it is (1) not-for-profit, (2) absolutely free to
participants, (3) at the risk of the presenters and participants."

Please let me know if picture copyrights belong to you, as I just want to make sure it is fair use to use on [Website]. If it is not I will delete it.

Thanks,

FAQ is unable to award permission to use clips from other sites.  To gain such permission, follow the credit link under the clip you want to use.

 

The intention of the permission is to promote the formation and operation of Intentional Communities.  It does not extend to publication of materials.

Sat, 25 Sep 2004

 

The Past


Dear Sir,

I appreciate your introduction that neither the past nor future exists except as a concept in the NOW.

 

It is very shocking and it opens a new door for me. It definitely helps me more aware of the NOW moment.

 

There is still one lingering question that I have in mind: isn't it true that the sunlight that we are receiving NOW - actually is the sunlight of the PAST (roughly 8 mins ago)?

 

Or at night when we look up in the sky and the beautiful stars that we see NOW may be dead and have vanished already at this moment of now, yet we are seeing the light it emitted in the PAST?

Thank you very much for your insights.

You see the light now, that reaches you now.

 

The sun emits light now, although you do not see that same light now.

 

Practicing using SVO-p, helps you to keep your thinking in the now, your sense of responsibility with yourself.

 

 

The Clever Scientist

 

can find ways to not see, now

the light that arrives, now.

 

Clip: http://www.explodingdog.com/

august6/sunshine.html

Sat, 25 Sep 2004 02:42:13 -0400

 

Jademaster

Hello

I have great interest in trading and as such I endeavored to read as much as I
could on the subject from the pragmatic to the narrative. The most striking thing I have
discovered about becoming a trader in my readings and through my own thoughts on the subject is that becoming a good trader has more to do with an individual's mastery of their self than anything else.

I recently read New Market Wizards, which featured the story of the Jademaster
excerpted from the The Traders Window. When I read the story of the Jademaster and the eager young student it captivated me, I could not stop thinking about it and I puzzled over it for months.

 

Finally I put myself in the shoes of the student. I envisioned the moment of realization when the student discovers that what he is holding is not real jade I saw myself as the student feeling greatly frustrated and blurting out to the Jade master “I came here to learn about jade, and this is not even real jade …” When I had this epiphany I realized the great degree of self-mastery required if one is to be a successful trader.

Sincerely

Yes.

 

 

The Trick

 

is to know when the Jade is real

and when the Bull is real.

 

Clip: http://azani.com/DS0136-4.jpg

 

 

 

Fri, 24 Sep 2004

 

Update


Hi Ed,

At the end of the last workshop the group commits to keeping a "System 3" commitment. The commitment is for each workshop participant to act consistently with three rules he creates for himself over the course of the workshop. Additionally, each person commits to communicating once each week with three other participants to report progress and clarify his intention.

 

In turn, each person acts as a receiver / supporter for three other participants to help them keep their commitments. We commit to all of this through June 30th. About one business quarter elapses since that time, and I am getting in touch with my System 3 receivers to catch up a bit.

I have tremendous progress in clarifying and simplifying my trading system. I am no longer cutting any winners short, but rather every exit meets my definition of a trend change or a protective stop loss. My stop losses effectively cut losers short, and my risk management is improved and simplified based on some ideas your auditing inspires. Also, my system is more robust, by my personal definition, when tested against differing portfolios, timeframes, and parameters.

Performance is consistent with my tested results thus far. It seems that my methods of simulating rolling over positions, accounting for slippage and commissions, etc. adequately match the actual values. I am in a drawdown at present. Looking at the charts of the markets I trade this does not surprise me. However, some trends are beginning to show up, and I am a bit off the equity curve trough.

Traders categorized by the investment world as systematic trend followers are in a pretty good sized drawdown as a group according to the performance numbers I see. I notice that historically when that happens, performance in the next reporting period is above average. This does not prove much except as a rule: markets trend for a while, then they don't. Then they trend again. It is interesting to make the distinction between noticing that market tendency versus making a prediction about when trends show up again. At any rate, I follow my system when markets trend and when they don't.

I do have some recent drama that I take into TTP concerning short term trading. I decide a couple of months ago that I could develop a further edge in the markets by diversifying into short term trading as well as long term trend following. I investigate and question what I perceive as my own negative bias toward short term trading.

 

I am concerned with frictional costs and small reward to risk ratios, but decide to continue further anyway. My math indicates that with the ultra low commissions available on electronically traded products slippage may not kill the system. Etc., etc., drama and so forth. I never go so far as to really start trading short term intraday, but I certainly explore it in depth. My conclusion: I don't like it. There are traders that could not stand to trade like I do, and they may have methods that beat mine all to pieces, but I just don't enjoy short term trading. Even when systematized to the same extent that my long term trading is, I have a lot of feelings that come up that warn me away from trading this way.

When I take my feelings to the hot seat, I really find that I have very few feelings about short term trading aside from thoughts like "disinterest" and "don't want to do it". These are typical avoidance phrases indicating a k-not. However, as I do TTP and go deeper, other forms present that are not primarily about trading (short or long term). I use these forms to enroll in a totally different recurring drama involving several judgments and forms. I stay on the hot seat for quite a while, but I am unwilling to fully experience the feelings and I stay stuck.

 

Normally I am good at getting into the feelings and staying with them. With this one, all I want to do is talk about it. It must be one I am really avoiding. Since the last tribe meeting I experience less of the drama, and I am surprised at the improvement since there is no zero point with this set of forms yet. I take these forms back into TTP again, and I commit to really staying with it at my next hot seat.

When we talk last at the end of June, we speak about holotropic breath work and a session you are considering doing with some TTP folk. You suggest that I may want to get familiar with it by finding an experienced practitioner in my area and doing a session or more. I Google and search my local resources, but I don't find anyone that offers sessions.

 

There is one outfit that does seminars, but the next one is in January. I decide my intention must be weak about this work if I don't follow through and take action in the last three months. I order some materials (books and music) from Stan Grof's site in order to familiarize myself with the process and spark some further movement of the universe in the direction of my intention to do breath work. Right now, I wait for those materials to arrive.

All in all, I feel like I chop wood and carry water and it feels good. Thanks for receiving, Ed. Best wishes to you and your teachers from me and mine.

Yes.

Thu, 23 Sep 2004

 

Fast


Hi Ed,


Thank you for the reply. I don't have a desire to fast or abstain nor do I express one in my previous email.

 

I do have a desire to experience my emotions and their positive intentions. I wonder how fasting and/or abstaining organically affect the TTP process.

The relationship between fasting, abstaining and TTP likely varies from person to person.

 

Where forms of self-denial are an issue, or where their not being an issue is an issue, they may serve as  entry points for TTP.

 

 

Fasting in Style

 

Clip: http://umanitoba.fitdv.com/new/

articles/images/0803/fasting.jpg

Thu, 23 Sep 2004

PPR


Dear Ed,

I like the PPR but find it difficult to implement sometimes, especially on properties that the family members just have to share?

 

Say if we only have one refrigerator, one toilet, one TV, one computer at home ... it seems strange to say, "OK, Dad is the owner of the toilet, and whether one can wait or not, no one can use the toilet unless he has permission from Dad."

 

And it isn't like we can have four or five bathrooms or we can assign each person a period during the day since we don't know when we'd need it. How do we apply PPR on those things?

Thanks

In PPR (see glossary) , everything has an owner.  If you own a house with one toilet, you likely also own the toilet. 

 

Visitors and non-owner residents use it at your invitation, not without it.

 

When your children realize you are granting them a license to use the toilet, the refrigerator, their beds, the electricity and water, they get closer to the idea that someone has to own (and pay for) these things.

 

PPR induces respect for property owners and the desire to become one.

 

There's no such thing as a little bit pregnant or a little bit Socialist.

 

 

Full Service Trading Throne

 

by invitation only.

 

Clip: http://www.kurilka.com/cards/toilet.jpg

Thu, 23 Sep 2004

 

Italian Stocks

Dear Mr. Seykota,


I am an Italian electrical planner and I have read wonderful things about your way to lead trading.


As I am a beginner in the matter, I gently ask you if you could teach me your
"philosophy" especially related to Italian stocks market.


I tried to read in your site "trading Tribe" a few informations but as I do not get away well in your language, I did not understand the things.


I would very appreciate your eventual questions.

Sincerely,

I do not know of any major location specific differences between stock markets; they all trend, sometimes.

 

 

 

One Rule that Applies to All Markets:

 

give your losers the boot.

 

Clip: http://www.bueker.net/trainspotting/

maps/italian-network/italian-network.gif

Thu, 23 Sep 2004

 

Carl Rogers

Hi Ed,

You write in regards to Carl Rogers:

"Rogers' techniques include subtle forms of assuming a solution and then
transferring the assumption to clients."


Would you be more specific? I haven't heard that before

The statement is just a hunch on my part, basis reading about him.  I have no specific evidence.

 

 

The Hunch-Over Look

(dejection and withdrawal)

 

may result from basing

too many actions

on hunches.

 

Clip: www-personal.umich.edu/.../ website/hunch.html

Thu, 23 Sep 2004

 

Hey Ed,


Been a long time ... I've thought about you many times the last few years; I'm sorry I haven't contacted you before now.

I saw [famous trader] last weekend and we discussed the important role that you had played in each of our lives. I told [him] that outside of my parents, that you had the greatest effect of anyone on where and who I am today. I wanted you to know how much I greatly appreciate the contributions that you have made in my life - educationally, spiritually, emotionally, financially and intellectually.

 

As an adult, you have been my single greatest teacher. I don't know if you knew that I felt this way, so I didn't want another moment that I thought about you to go by without taking the time to reach out and say thanks.

I hope that life has been treating you and your family well these last years. Other than the passing of my parents ... [we] have truly been blessed. We're all healthy (at least physically!) and have prospered financially. We certainly have nothing to complain about. Although I am not making my living from trading, as I intended to when I began in this business, my brokerage business has been successful.

 

[Trader] and I have begun some dialogue regarding me raising money for him in a new fund he's thinking of starting next year. I would like to transition out of brokering toward placing money with traders, helping traders grow their business, helping traders trade better. I've always felt that as much as I enjoyed playing tennis, that I taught it better than I actually played it. Perhaps it is the same way with trading. I'm still finding my way like everyone else.

It would be great to hear from you, Ed. I miss seeing and speaking to you. I'm still living in [City], I'd love to see you if you're ever in the area for business, taking the kids to Disneyland, etc. I know that you are extremely busy, but it would be nice to catch up with you if you have some time.

I wish you and your family peace and prosperity.

Thank you for your nice note. 

 

Note to readers: plenty of money is out there looking for good traders.

 

 

 

Money Looks

 

for good traders.

 

Clip: http://www.boroscopes.com/

Money_eyes1.jpg

 

Tue, 21 Sep 2004

 

Judging the Judge

A FAQ's contributor: I sometimes use sex, food, alcohol, and other substances to avoid experiencing certain feelings.

Ed: When you convert your feelings from adversaries to allies, you lose your desire to avoid your feelings. Abstinence, then, becomes just another sexual preference. You might consider taking your desire to fast and abstain into the process.

Self examination is subject to side-tracking by self-protection.


Ed,

I read your response to the FAQ's contributor who has a drama about using sex, food, alcohol and other substances to avoid experiencing certain feelings. I also recall other instances where you suggest readers who have drama about being fat to take their feelings about doing regular exercises into the process.

I just would like to add that, perhaps, their knotty feelings are about using sex, alcohol ... and about being fat, etc ... rather than something else.

I say so as I have a similar drama, although in a lesser degree. I have a sedentary job and lifestyle and as such regular exercises and a healthy diet are warranted.

 

I am also at the risk of becoming fat and to a slight degree I am becoming so (my belly more specifically). Self protective agendas go like this: 1 - I eat more than I need and I procrastinate the diet for a later date; and 2 - I look at myself in the mirror and I say to myself: "No, your belly is not getting bigger. Moreover, just a little exercises and you'll make it for the extra meal you've taken."

And in this case, I guess I may choose to experience the feelings of getting fatter or enroll myself into the drama of becoming a fully grown one.

So, my send is: I have a hard time accepting the fact that I am getting fat, even though in an unnoticeable speed, and that I need regular exercises and a healthy diet.

In TTP, analyzing what our feelings are about, is just more distraction from the work of sending and receiving feelings.

 

In the post-process moment of aha, we tend to re-frame our feelings as allies, so whatever historical connections they have tend to disappear.

 

 

When the Coin Disappears

 

we get a sudden aha!

 

Clip: http://www.magicbob2000.com/

resources/Pencil%20coin%20vanish.gif

 

Tue, 21 Sep 2004

 

Questions and Answers

Ed,

Is it true you find it good

to answer questions with a hood ?

 

Perhaps being direct is a jest,

because finding the answer yourself is the best.

 

I wonder if this method limits those

who are able to uncover the fold ?

OK.

 

 

 

Thank You for Such Flattery

 

uncover the hood - find a battery.

 

Clip: http://www.killacycle.com/hood.JPG

Tue, 21 Sep 2004

 

Position Sizing Calculator

 

Hi Ed,

I have wrote in many times during the last few years, and you have helped me through a lot with your writings.

Last Spring I sent some emails to you on the formula for position sizing for futures contracts, and made a commitment to bring a web based futures position sizing calculator to the public. I have followed through on this commitment and here is the result: [on my brokerage website]

Also if you have any suggestions to enhance its function let me know.

Your calculator looks pretty good; it divides your risk budget by your risk per contract to find your number of contracts.

 

FAQ does not endorse people or commercial products (or link to brokerage sites). 

 

If you would like to send a stand-alone version of your program to FAQ, I can post it for download.

 

 

 

 

If the Trade Doesn't Work Out

 

you can always blame the calculator.

 

 

Clip: http://www.tolsonmessenger.co.uk/