15 - 31, 2005
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from Ed in Red)
Wed, 31 Aug 2005
You recall my last email when I tell you my equity is $5,000 and I trade
0.1 lot of EUR/USD with every stop-loss set to $100 = 2% of equity?
Every stop-loss cost me $100, therefore when ever I get a stop loss I
would pay it directly from my salary, so by adding $1,000 each month from
salary; it would allow me to cover the losses of 0.2 lot more, may be 0.1
Crude oil and 0.1 Share CFD (Contract for Deference) so I would total to a
big 0.3 lot.
We have a market maker here that allows trading Crude Oil and Shares on
margin with small contact sizes, this market marker might not be very
trustable in case I make a big killing, yet like Jesse Livermore says “The
beauty of doing business with a crook is that he always forgives you for
catching him, so long as you don’t stop doing business with him” and I
know that my system has a statistical edge on the upside because I tested
it a lot, it is very simple and it was always profitable in trending
markets that come after sideway markets, it lost in long term sideway
markets just like any other system but now I am diversified to 3 markets
which suppose to decrease the effects of long term sideways when it
The point is that markets can be traded even if you don’t have a the
equity for it, one may pay the stop loss from his salary or from a
business like a restaurant for example, if I make some money I would leave
the market, start a business and bring its profits back to the market and
so on, this would allow more stability and diversification.
you can add $1,000 / month from your salary to your $5,000 trading
account, you get a 20% increase in your account the first month and a 240%
increase for the year - all with no drawdown.
your trading compares favorably with a savings plan, you might consider
postponing trading until your account can handle normal volatility.
a small account has implicit requirements to keep equity swings small and
this can conflict with riding out normal ups and downs.
might consider taking your feelings of impatience and to your Tribe as
the small ones
harvest the big ones
Tue, 30 Aug 2005
Thank you for the Trading System Project.
I was able to duplicate your results using Excel down to the third
decimal. From the fourth decimal my results are slightly different
probably due to rounding.
I also optimized for Bliss. My optimal solution for Heat = 0.15 is Bliss =
0.255, at Slow EA = 800 and Fast EA = 25. However, CAGR is only 0.097.
Also, this result is an outlier.
A better result may be Slow EA = 950 and Fast EA = 45 which gives Bliss =
0.2322. Please see the attached file for a 3D model of the results. I
averaged the results from adjacent data points to come up with a more
job. For more about EA Trading Systems, including reader
contributions, see the link to TSP, above.
Mon, 29 Aug 2005
I am including an Excel spreadsheet that contains my verification of the
test runs you recently post to the Trading System page.
link to TSP, above.
Mon, 29 Aug 2005
Futures / Trading Cash
I’ve been popping into the TSP area occasionally and have noticed either
an oversight or an issue that, up to now has not gotten addressed.
As the test applies to a S&P 500 futures contract and not basing the
testing on the futures data for then trading the cash.
TSP, above for information on this and other questions.
Sat, 27 Aug 2005
Easy to Read
The book arrived this afternoon... 11:30 AM at local time.
I like so much... It is easy to read ... But Some pages are not so easy to
I read and understand these pages with my brother in law. He is an English
teacher at the university.
I know English to reading a little bit but I can't able to write.
On the other hand I am glad to hear you live at Lake Tahoe since the first
book Market Wizards. So you didn't change your life, for exp. go to in a
big city like New York.
It is very important to me. Because you are not only one of the best
trader and master of the trading psychology for me but also you have a
peaceful and calm life style at at Lake Tahoe.
Thanks your help so much.
Fri, 26 Aug 2005
Meeting of August 18
Here is the report for FAQ. I enjoy writing it. My last hotseat is a
tremendous experience for me with all that came up. I find the Incline
Tribe such an amazing group of people and place for personal growth.
I found a new attorney after interviewing more. I keep my eye on the prize
and let the drama arise and keep going all while fully feeling any
resistance that arises. Now, I have an excellent attorney with a top firm
in SF that specializes in hedge funds. My attorney specializes in
executive compensation and taxation within hedge funds. I speak with him
about the current version of my compensation agreement on Tuesday before I
head to NY to negotiate further. I prep well with him before I go in. I
don't sign anything in NY. I consult with him again. This is a really
Below is what I write for FAQ. I update it as my process unfolds.
Incline Hot Seat
I arrive at our tribe meeting without hotseat issues after a six week
break from TTP after an intense breath work 42 days prior. In our pre-TTP
meeting where we work on snapshots, important hotseat entry points arise
as I review my progress with the “Board of Directors.”
members find and confront me on inconsistencies between what I say and
what I do. This delta arises from the feelings I am unwilling to feel in
my process to realize my snapshot. Members act as steel traps for BS as
they help me find my hotseat issues. This process is fantastic.
Issues I take to the hotseat:
Difficulty saying “No!” forcefully
Difficulty asking for what I want
Blockage/Drama actually going to get what I really want
Question of “deserving/self worth”
We have a smaller group than usual at our meeting. I have a very light
dinner knowing I have a lot of work to do. It is nice that only one other
person has an issue live for the evening.
I begin to
talk about my issue for about ten seconds before I unconsciously begin
shaking my hands.
encourage me to get into the form and I do. A number of other forms begin
I really get
into all of them as well with relentless validation from the tribe. When
members begin to tease out feelings, they find one that centers around me
begin able to say “No!” forcefully.
me to find the judgment around not liking it. I find it, feel it, and it
passes. I get into the feeling of a forceful “No.” I begin saying it
and tribe members encourage me to get louder and more forceful.
I fully commit
until I am screaming it. One member notices that I only say “no”
forcefully to the floor at the right and left side of my feet. I notice
that I have real resistance to saying No at eye level or higher towards
anyone in the room.
help me locate the resistance, experience the negative judgment, and then
feel the underlying resistance until it passes. In a little while I scream
“No” towards everyone in the room at the top of my lungs and enjoy it.
I notice butterflies in my solar plexus area as I get closer to dealing
with the issue of going for and getting something I really want. I get
into this feeling and get to the point of feeling OK with the feeling.
I reach down and
take a sip of water from my bottle on the floor. The project manager
quickly notices this and ingeniously uses the bottle as a broader symbol
or prop of me really getting what I want.
He suggests that
I use the bottle and getting a drink of water as a symbol of me going for
it with something I really want.
becomes the really great outcome which I go and get. Tribe members help
tease out an outcome a number of levels higher than I choose that stirs
more feelings. They set the bar higher which really activates my forms.
the bottle on the floor away from me and the PM suggests I fully
experience the forms that arise when I walk over to get the bottle and
return to my seat (as a surrogate for going out and getting something I
really want and have deep emotional investment to obtain.)
arise as I go through this exercise. Feelings and forms arise before I can
get off the seat, while I walk to the bottle and when I return to my seat.
The project manager has me put these forms together. I end up on the floor
with my body knotted up, muscles contracting and grunting. I hear the PM
suggest this is a classic and common yes/no double bind form.
experience the very strenuous physical form, I still notice that I have a
blockage to just going and getting the bottle.
At first I don’t
want to feel it. I feel the judgment and then get to the frustration. I
let it come and intensify it. After a bit it passes and the thought of
deserving to get the bottle pops into my head. I go back and forth just
with the thought of deserving to have it or not without much feeling.
My body still remains bound and tense on the floor. Then everything
melts away in one instant as an “aha” pops into my head, “Deserving
or not deserving is completely subjective and whatever I make of it.”
There is no truth in it other than what truth I give it.
This is an
“keep your eye on the prize” pops into my head. The resistance
fades immediately. I fix my eye on the bottle. I purposefully get up walk
to the bottle, pick it up, and walk back to my seat. I feel at peace, calm
and at my zero point. The tribe goes through checkout. I marvel at my
process and thank all my tribesmen for their relentless validation and
Things I notice
take place after my Hot Seat:
I notice that I like the feeing of riding the edge or feeling the suspense
before making an important, emotionally invested step that has the feeling
of self worth involved. It is a cool feeling that I like. Now, I
understand the reason it comes up a lot.
I notice that I notice the above drama. This is cool as before I didn’t
have this level of detachment to observe.
I go along with this feeling but keep my eye on the prize and move forward
toward the prize.
I notice less resistance to getting what I want and getting things done
to get what I want.
I notice that moving through resistance is easier when I let the
resistance come up and get into feeling it at the time it arises.
Suppressing or avoiding the resistance blocks me, whereas going with it
allows it to pass and gives me space to keep my eye on the prize and move
I notice issues of self worth and deserving arise from time to time. I
notice myself notice. This detachment is nice. It helps me side-step the
drama. I just go with the feelings and notice them, sometimes even
encouraging them myself. I remember that its drama instead of getting
wrapped up in it.
I keep my eye
on the prize and remember that ‘deserving” is purely subjective. Do I
want it or not is the real question. Keep my eye on the prize.
I notice I gain an inner strength as I move through my resistance and go
for what I want. It is a powerful feeling that I really, really like
I notice that I find an excellent attorney after choosing to interview
more than the few that I did previously. I find that I quickly gain help
from other attorneys in the matching process that helps me find the one
with the great fit.
I notice that this new process requires vigilance to become a natural
habit that replaces my old way of being.
This is really cool.
you for sharing your process.
email illustrates some important and subtle aspects of TTP.
on excellent work.
you keep your eye on the prize and are willing to experience all the
feelings that arise, the prize soon becomes yours.
Fri, 26 Aug 2005
Hi Ed !
At preliminary meetings with a new client I explain TTP, my perceptions of
it as a profound new meta-technology to get clear expectations between
client and portfolio manager. He understands that client feelings affect
We engage in a hardball process, "What's standing between you and
an equity surge in this account?" A number of strong feelings appear.
We commit to a hardball session every two weeks to continue the process.
Fri, 26 Aug 2005
Discovered in Finance
I recently found this book. The importance of emotions is being
'discovered' by many researchers.
Emotions in Finance: Distrust and Uncertainty in Global Markets
by Jocelyn Pixley, Cambridge University Press, 2004
"Fear and greed are terms that make light of the uncertainty in the
finance world. Huge global institutions rely on emotional relations of
trust and distrust to suppress the uncertainties. Many financial firms
develop policies towards risk, rather than accepting the reality of an
uncertain future." - from the book jacket
"In finance uncertainty is masked (disguised as 'risk', not losses).
It cannot be spoken, for it is the un-sayable. Since uncertainty about
claims is always extreme, decisions rely on future-oriented emotions.
financial firms live and die upon predicting future outcomes which are
unknowable, no matter how rational their calculations of past information.
must project emotions and conventions about the unknowable future, and
through strategies of a pseudo-rational kind, bring these conjectures back
to the present in order to act.
emotions are trust and distrust, whereas the typical convention is to
assume that the future will resemble the past. These are the inevitably
shaky, emotional foundations of finance." - from the 1st chapter
"Global Markets or Social Relations of Money"
heads, thinking alike,
all cut off from their body feelings.
Fri, 26 Aug 2005
Hi Mr. Seykota:
I am a 23 year old guy from Dominican Republic; I have a degree in
business, I love trading and I love to learn. Perhaps my English is not
the best one so please be patient.
I was born in a family where most of the members are pretty good at doing
business, we have been a very united family, we have traveled almost the
whole world together (26 members).
reading TOXIC PARENTS I immediately realized that the price of being so
attached to my family was costing me A LOT. As I kept reading I started to
feel wounded, specially when I read the chapters: Verbal Abusers, Physical
Abusers and Controllers. I did exactly what the book suggests me, I wrote
a letter to my parents and my relationship has improved a little bit but
the family system is still there intact. I am not saying that I am willing
to change that but it hurts me a lot.
A year ago I started working for my uncle in a real estate business; it
was a great opportunity for me to increase my capital as well as to do a
good job. But my uncle is a very difficult person to work with; he not
only made me feel ridicule with personal attacks and many other
techniques, he even kept telling me advices like that the only way to have
money is not to get married and it makes me interpret that it is a good
idea to get rid of my 5 year old relationship with my girlfriend.
By the way she
is an architect and she still working for my uncle and she going crazy.
The thing that really broke me inside was that when I decided to quit
working for my uncle (by a psychologist suggestion), almost my entire
family gave him all the support.
Maybe because he
is the richest man in the family system, and he is being paying all the
trips to almost everyone when we have traveled.
This letter I'm writing you is to thank you for all the support you give
to people as well as to me and I know that if is weren't of you, I would
never realized the problem that I have since I was born (perhaps before I
was born. I strongly feel that if someone like you were part of my family,
things would be very different and better.
As you might have notice I am full of K-nots. However, as soon as I finish
the course I am going to make in Spain (Master in Statistics), I will
attend one of your workshops.
Thanks a lot Mr. Seykota,
you for sharing your process. You en-courage others to take yet
another step along the path.
Thu, 25 Aug 2005
Freakonomics, a best-selling book by Levitt and Dubner, has exposed a
public fascination with economic explanations for real world events. We
share this fascination. After all, that's why we became economists.
Yesterday, the state of Hawaii set off on a real time Freakonomics
The state has
decided to cap wholesale gasoline prices for regular unleaded at $2.15 per
gallon. As far as we can tell, there is no limit on what retailers (who
add taxes and a markup to the price) may charge.
when set below the cost of production, always lead to shortages.
Caps have not been used in the US since the 1970s oil crisis, when they
led to infamously long lines at gas station.
create a lot of drama around their k-nots.
people have an aversion to experiencing guilt, they tend to work dramas
that involve hurting others.
who are fully in touch with the positive intention of guilt generally want
nothing to do with welfare or other governmental schemes for asset
transfer such as price controls.
soon to an island near you.
Thu, 25 Aug 2005
After the last TT meeting I start thinking about the following. The hot
seat starts talking, the receiver is looking for feelings and physical
display (forms), says show me more of <specific form., the rest of us
creates a field of acknowledgement.
going well and after the first round, the sender seems not complete. Now
there are different philosophies how to proceed.
asks the sender to tell again about the issue and slowly get from there to
reporting feelings. Slowly because he first addresses the conscious mind
and encourages story telling.
On the other
hand, as a receiver, I feel that asking about a feeling (that the sender
just had expressed before) right away works better.
you told me about that burning in your stomach. Can you still feel it?
closes his eyes and starts slightly to move his upper body forward as he
tries to sense if the feeling is still there. Rocking back and forth is a
form that was strong before.
sense that something must be still there, otherwise the body would not
start with that motion even before the conscious mind makes up his mind.
So I ask him to
show me more (show me more of that rocking?) and we are in the middle of a
great physical display.
A first time
participant felt that just encouraging a form without connecting it to an
issue by talking about it, feels like "making it up" or
"pretending" for him.
I argue that the
feelings are there and by just repeating the form, all will come up
anyway. It's like smiling at your mirror image for a couple of minutes. It
might be pretending but just by doing it you cannot help but feel better.
Does your experience favor a certain approach?
All the best,
a sender goes into form, I generally keep communications with him on the
level of encouraging forms.
encourage the sender to dis-associate the form from the drama and deal
with the form and the feelings.
the sender with the drama is likely to pull him back into his conscious
might suggest to the first time participant that he consider taking his
feelings about pretending into the process as an entry point.
sometimes a good way
us to find out
Thu, 25 Aug 2005
I notice after the May workshop and the July breath work how my feelings,
especially the ones I don’t like, drive the decisions I make on a daily
Looking back I
see how this has controlled my life and career decisions to this point. I
commit to experiencing all my feelings and attend all local TTP meetings.
resisting things and doing them my way I go with the flow. I do wonder
though, if my perception of the flow is correct or is it what I perceive
to be the flow really just the alternative option to feelings I am
unwilling to experience or feelings I judge as bad.
As an example,
say I am a money manager that is looking to raise capital for investment,
the problem is I am uncomfortable speaking in front of people to sell my
program. Do I take the uncomfortable feeling’s positive intention to
a. This is not my right livelihood I need to find another line of work?
b. Get into the feeling of being uncomfortable and it’s positive
c. Go to the next tribe meeting, take the hot seat, experience the feeling
and related forms with relentless validation and acknowledgement?
Thanks for all your support and your commitment to the Tribe.
your uncomfortable feeling is in a k-not it attracts drama.
it is it not, it attracts right livelihood.
you have a question about it, take it to your Tribe as an entry point.
some, a k-not is
those who view it
Thu, 25 Aug 2005
In late July I start implementing a physical fitness plan that consists of
reducing calorie consumption and increasing exercise. This is inspired in
part by your own commitment to "Body
in Shape" and in part by my breath work experience.
I am down about 30 pounds so far.
I notice that the level of awareness about my eating and exercise habits
that I maintain in order to keep a detailed log of my progress supports me
in sticking to my plan.
Thanks for your inspiration, and congratulations on your own "Body in
Wed, 24 Aug 2005
I am starting a tribe in Richmond, Va.
I have only
attended a couple of meetings
in NYC prior to relocating, but enough to commit to the process.
Wed, 24 Aug 2005
Please can you update the details of [our] Tribe. We have 4 members and
meet every fortnight (2 weeks). I also noticed that the number of world
wide trading tribe members is approaching 150.
Wed, 24 Aug 2005
There you go with your clarity request again..... Very good idea.
First, I would like you to re-test my system (on a portfolio of 15
futures) for the usual win/loss ratios, total profit, equity curve growth
and drawdowns etc. on “random” time frames of 2 - 5 years as far back
as you have the data, just to verify that my test results using Trade
Station are all valid and correct.
Secondly (and much more important) I would like to test for the ideal
position sizing / risk for each of the futures contract, to determine the
correct number of contracts to trade, basis the total amount of account
Of course, I would like to have any other “tweaking” suggestions you
might have on improving any component of my system as well ... FYI, the
system is only up about 11% this year so far, in my actual trading.
you engage in testing, you might like to have some kind of objective
function or, as I like to call it, a Bliss Function, so you can optimize
Tue, 23 Aug 2005
5 most important - "I am proud of you."
4 Most important - "What do you think?"
3 Most important - "If you please."
2 Most important - "Thank you."
1 Most important - "You."
words are mostly important for winning friends and influencing people.
build intimate relationships, you might consider, I feel ...
Tue, 23 Aug 2005
Critical Thinking is what I meant when I told you about reprogramming our
preferences by continuously thinking and understanding why things happen
so we form a logical reaction instead of being driven by the fluency of
our instinct which maybe corrupted during our life time, this kind of
thinking leaves no place for bias and applies a wider understanding;
because when thinking before acting we are able to cover more
probabilities that we couldn’t when we just reacted by instinct.
Read more on Critical Thinking on: http://www.criticalthinking.org/
might consider using critical thinking to analyze the feeling of wanting
to think critically.
Sat, 20 Aug 2005
Soros's Right-Wing Twin
don't seem like twins to me.
Tue, 23 Aug 2005
The Joy of
I trust you are well.
In your Market Wizards interview, Jack Schwager asks you: "Is the joy
of winning as intense as the pain of losing?". And you reply: "The
joy of winning and the pain of losing are right up there with the pain of
winning and the joy of losing."
At the time of reading that interview - and for many years thereafter -
I do not understand what you mean. However, that has now changed ...
During the last couple of months, my system gives me several signals - all
of which I take. Many of those signals result in losses, and hence
depletion of my Trading Capital (and that of my clients).
However, I have been true to my system. And I wish to share with you that
for me LOSING MONEY NEVER FELT THIS GOOD!
It has taken me a long time, but I finally understand and experience THE
JOY OF LOSING.
Thanks for another valuable lesson.
On another note - our Tribe continues to meet regularly, once every 2
weeks. We now have a 4th member. I request you to please update the Tribe
Directory Page to reflect that information.
Ed - you continue to be a huge source of inspiration to me and the
others in the our Tribe. Thanks for sharing your fabulous work with all of
some of my own joy-of-losing experience, see: Body-In-Shape
Tue, 23 Aug 2005
to Test System
I would like you to back-test my trading system. I am willing to fly
advise the costs
like to know what you mean by trading system and back-test.
Tue, 23 Aug 2005
I would like to start a tribe in my city
Mon, 22 Aug 2005
First IV TT Meeting
In a word – Surreal!
I arrive at the IV Tribe meeting and meet a friendly tribe member and then
Ed, peace of mind feelings flow throughout as I get comfortable with the
My first exposure to the Snapshot process is a challenge. One member
correctly points out that my snapshot lacks “feeling”. Generally I get
defensive in such situations, but as I repeat my snapshot to the group I
agree with him, my feelings are limp at best. I commit to work on my
As other group members go through their snapshots I become impressed with
the sincerity and openness of their narratives. The interaction is
productive, as the group poses questions, members working on their
snapshot unveil what is standing between them and their snapshot from a
practical perspective. This leads to further refinement and of course
clarity - simple but powerful stuff.
We break for dinner and then the fun begins. The beginning of the tribe
meeting flows pretty much according to what I understand from the TT Web
Site and Book. After check-in Ed selects a fellow member for the hot seat
For me, it’s un-natural and plain weird to see the sender go through his
process. My mind finds it difficult to comprehend, so I just sit and
receive the member on the hot seat. I get into a state of bewilderment and
amazement as the sender begins to really dig into his feelings. As the
sender gets deeper into the process the receivers encourage him …”more
of this, more of that, okay, back to this one, and that one, okay, all
together now, good, etc ...”. As the process continues and the sender
dives deeper into his feelings, my “reasoning” mind just leaves the
room. The sender concludes a strong session.
And then it’s my turn on the hot seat. In a word, Surreal! Ed tickles a
feeling during snapshot that I take into the tribe meeting. I begin to use
my hands to describe the feeling and a group member shouts out “do more
of that…”. And then BAM, I’m gone. I feel my body moving and hear
distance voices. I begin to sweat, lots of sweating. My body is going
every which way, hands and feet fling, body flops, head spins, hair pulls,
teeth grinds, eyes squints, and then more of the same. I lose track of my
body, and perhaps my mind as well. And then I begin to cry. I have not
cried in a long time.
An image of my mother flashes before me and I’m pulling my hair while
crying and wanting to scream just as she does when she yells at me as a
kid. Ed yells, “be your mom!”, and instantly an image of my dad
flashes in front of me. My father is in his ultimate “judge” pose
(cocked eyebrow, hand supporting chin, a look he’s famous for). Then my
grandmother (in my conscious state, I label her the ‘mother of all
judges’) and then a quick flash of her mother. (Expect for one picture,
I never saw my great grandmother, but there is her image, right in front
of me in Ed’s living room). I get a quick flash of my two older siblings
in order of their births. And then more crying and sweating, don’t even
know if my body is moving at this point. Crying and sweating stop just as
fast as they showed up.
I get a sense of peace, stillness, I feel light headed and exhausted. Ed
recommends I stop as this is my first time in the hot seat. The rest of
the meeting is a fog, don’t recall much of it, we do a check out and I
feel tired and sleepy.
I drive to the hotel and I am exhausted, I sense I can sleep forever. I
check in and find my room. I get ready for bed and them BAM, I can’t
sleep. I’m in bed wide awake, can’t even close my eyes, just like a
drug induced high - can’t sleep. I become a feelings pump, like a busted
oil well gushing feelings all over Texas, the more that gushes, the more
awake I become. I lay awake until early in the morning, don’t think I
even sleep, I just feel feelings all night long. The feeling are difficult
to describe, they keep coming and coming. Next morning I get up and head
to the airport, more feelings. On Friday, feelings, feelings and more
feelings, Saturday is the same but with less volume. Things calm down on
Ed, I don’t know where his is headed, so for NOW, I’ll just experience
my feelings and go with the flow.
Thank you Ed and fellow tribe members for your effort and support, I
greatly appreciate it all.
you for sharing your experience with others.
en-courage others to experience their own feelings.
Mon, 22 Aug 2005
Sorry for the link error. I must be a Type 0 personality.
This works better:
Mon, 22 Aug 2005
Ed Says: You might check to see if any of your other
projects are also stalling out. If so, you might consider taking your
feelings about stalling out to one of the other Tribes.
Yes, All my projects are stalling. Your diagnosis is very accurate and put
me to think a lot on how I create my own experiences. I commit to join a
working and experienced Tribe as the opportunity arises.
for the opportunity to arise sounds like more of the stall.
just something else to do.
Mon, 22 Aug 2005
Hi Ed !
Here is a new development of personality type labeling.
i especially like Type O = those prone to make spelling errors.
... the URL does not seem to work.
Mon, 22 Aug 2005
There is me and there is him.
I come from Moldova, country situated between Rumania and Ukraine, former
He comes from the US, owner of a Bar, where I go regularly.
Both now are on Cozumel Island, Mexico. Both in unison with the rest of
the world want to succeed and make a living.
I cry or laugh as life goes.
He has been working on trade following for past 4 years. He tells me about
I read "Trade Following" by Michael Covel. Runs into the name Ed
Seykota. Opens his web-site like opening a totally different world.
Unknown but perceptible.
I am not afraid
to face my issues. I need guidance. I appeal to Ed's help.
Awaiting a response,
can help your guides by telling them where you want to go.
you tell her what to do.
Sun, 21 Aug 2005
Without a trading plan I feel: scared.
Credit: Software by http://www.apophysis.org/
Sun, 21 Aug 2005
I have not been able to figure this out and it is bugging me. You are the
smartest guy I know of ...
The top figure is 32.5 square units in area, the bottom one is 31.5 square
units. I have printed the diagram and used scissors to cut out the shapes
to no avail ...
let's take some measurements.
something does not add up.
that the triangle on the top is slightly concave on the top while the
triangle on the bottom is slightly convex. The top lines are
the top triangle, if you draw a true straight line from the tip of the red
triangle to the tip of the blue one, the straight line lies above the
crooked convex line.
area above the crooked lines and below the true line is a long thin
triangle with area = 1/2 square.
bottom triangle is 1/2 square short of the true triangle.
you add the two halves together, you get the missing square.
Fri, 19 Aug 2005
Flying to the
Have you ever thought about going to the moon?
have less interest in flying to the moon than in riding markets that do.
Market in Cows
Fri, 19 Aug 2005
Blaise Pascal was a French mathematician, physicist, and religious
philosopher. Pascal's earliest work was in the natural and applied
sciences. His important contributions to these fields include the
construction of mechanical calculators, the study of fluids, and
clarification of concepts such as pressure and vacuum by expanding the
work of Evangelista Torricelli.
Pascal also lent
his pen to the defense of the scientific method. In mathematics, Pascal
did groundwork in projective geometry, writing a significant treatise on
the subject at the age of sixteen.
Following a mystical experience in late 1654, he fell away from
mathematics and physics and devoted himself to reflection and writing
about philosophy and theology. This period was characterized by the
composition of his two most famous works, the Lettres provinciales and the
Mysticism, from the Greek (mueo, "to conceal"), is the pursuit
communion with, or conscious awareness of ultimate reality, the divine,
spiritual truth, or God through direct, personal experience (intuition or
insight) rather than discursive thought; the belief in the existence of
realities beyond perceptual or intellectual apprehension that are central
to being and directly accessible through personal experience; or the
belief that such experience is a genuine and important source of
knowledge. In the Hellenistic world, 'mystical' referred to
"secret" religious rituals.
Mysticism is to experience intuitive knowledge of transcendent dimensions,
beyond the phenomenal or material concrete objects of ordinary perception.
The mystic sees
things that are not part of ordinary experience. William James used the
words "ineffable" (which means that something cannot or should
not be spoken) and "noetic" (from the Greek nous: "relating
to consciousness or intuition'), to describe the mystical experience.
P.S. I work on my own game reflection forms NOW i.e. meditation,
observation, opinion, imagination, speculation, study, thought, view ...
might consider taking your longings for spiritual connection to your Tribe
as an entry point.
by finding it
Fri, 19 Aug 2005
I would just like to point out that there are ways to eliminate the issue
of spam via the trading tribe email contacts.
You can ask your webmaster to use images in place of text for the email
Just take a screen capture shot and save as an image file. Its very very
easy and saves about 10000 junk mails a month to every contact on the
am placing the addresses in a MS-Word Document File. If that doesn't
work, I can go to text image files.
Thu, 18 Aug 2005
What do you think of having some deadline dates set for the Trading System
are part of the goal setting process. They are a function of
non-existing time. Clear visions are a part of the snapshot process.
Trading System Project is following my vision of creating a complete
trading system from scratch.
might consider taking your feelings of impatience to your Tribe as an
do not recall Thomas Edison setting a deadline for coming up with the vote
counting machine, the phonograph, the light bulb ....
find a positive intention
their feelings of impatience.
Wed, 17 Aug 2005
I need to tell you that someone stole my email address ... which I'm going
to change shortly.
I've come to the
site and usually keep up to what is written. I don't trust many people so
if you were sore at me with my former email it was not me.
right! I bet it's not really you sending me this email.
might be you in there
it might not.
Wed, 17 Aug 2005
I don't like being in a crowd. I find myself plenty of times in a group of
people and I am very uncomfortable (almost miserable) while everyone else
seems to have a good time.
Somehow it strikes me today that a lot of my discomfort comes from the
k-not I have about how people see me.
I'm sensitive to
what others think of me, especially when I cannot deny the many weaknesses
that I have. I have relatively low self esteem and I'm trying to avoid
appearing foolish but in so doing make me just that.
might consider taking your feelings of wanting to avoid people to your
Tribe as an entry point.
Matter How Hard
try to run away
Wed, 17 Aug 2005
Stuck on Developing Forms
We have three members in our Tribe. Our meetings are by-weekly.
members have read the Trading Tribe book. I loved the book and I think
that’s great. I learned a lot. I think without the book or participating
in a workshop it would be very difficult to start a tribe.
We do the
exercises in the Trading Tribe Workbook (“what you are thinking now”,
“what are you feeling now” with relative success), but we are
struggling with developing forms.
It is very
difficult. We are unsure how to create the field of acknowledgement and
validation, and how to encourage the senders to feel their feeling, and
show and develop forms. If you have any suggestions or guidance that would
be helpful, we would be grateful.
Our Tribe is receiving the support of the Chief of [another] Tribe. I hope
to go to participate in one meeting, or that he will be able to visit our
In spite of our Tribe having difficulties in developing the forms, I want
to share some improvements in my life since we started the Tribe, and
since I’ve been reading the FAQ’s in the web page.
The first is
Intentions = results. It’s amazing. I’ve been working in a brokerage
house for one year and a half. After one year I asked my boss for a raise
in my salary. He got really upset, nervous and angry. He started to
complain about how I could ask for a raise. He asked me if I thought the
others members also deserved a raise.
meeting, I received an invitation to join another brokerage house in less
than two weeks. I did not accept and talked with my boss. He was very
happy and he now wanted to raise my salary. And he really did raise it.
Intentions = results.
Ed I would like to thank you for your guidance and help and I hope that
our tribe keeps improving and development the whole process.
might consider taking the feeling of struggling with forms into the
process as a starting point.
receivers can cheer you on and encourage you to amplify your physical
movements and mannerisms while you develop your form.
the Form of Frustration
untie its k-not.
Wed, 17 Aug 2005
I have a couple of questions on the Goals Process aka the
I infer (from the Website - FAQ's) that workshop participants have ONLY
ONE snapshot operable or "open" at a time and do hardball on
only that one snapshot or dream or goal.
From your book, I infer that perhaps multiple Goals could be
"open" or in progress at the same time.
Our tribe is ramping up to do this process and I have a list of several
items that I am writing up in proper "snapshot form" (describing
different areas of life).
I would like to start executing the Goals / Hardball process on several
items - one at a time, of course, when we are ready as a tribe. Some of
them are long term goals.
What is your opinion on having more than one Goal or snapshot
"executed or open", before any of them manifest?
Thanks for any thoughts on this,
might consider getting one snapshot very clear before beginning the next.
snapshots is typically hard work.
a new snapshot might be a way to avoid the hard work of finishing the
One Clear Vision
trying to sell
thousand murky ones.
Wed, 17 Aug 2005
or Trend Trader ?
Some quotes from the book "Reminiscences of a stock operator".
The moment I ceased to be satisfied with merely studying the tape I
ceased to concern myself exclusively with the daily fluctuations in
specific stocks, and when that happened I simply had to study the game
from a different angle. I worked back from the quotation to first
principles; from price fluctuations to basic conditions.
...The analysis of the week that had passed was less important to me than
the forecast of the weeks that were to come.
Without faith in his own judgment no man can go very far in this game.
That is about all I have learned - to study general conditions, to take a
position and stick to it...
Based on these quotes do you think Larry Livingston ( assumed to be Jesse
Livermore ) was a trend trader whose trading philosophy was to wait until
the trend confirmed his appraisal of "fundamentals"?
In other words
was he a technical or a fundamental trader ?
Did he try to forecast what would happen in future days/weeks in the
What do you think he meant by "general conditions" ?
I have only read the book a couple of times. Maybe I am taking things too
literally instead of reading "between the lines".
I would appreciate any insight on these questions.
Livermore's history shows alternation between various trading styles.
legacy includes wild plunging in the markets, intense carousing about
town, numerous incidences of gunfire by various family members and,
ultimately, Jesse's suicide.
one part of a drama
risk and anxiety.
Wed, 17 Aug 2005
I am the new chief of our Tribe. My only hesitation of accepting is a
feeling of having my details posted on your website, made me feel greater
exposure, this causes me concern on taking role.
I agreed to take
on the role and accept the greater exposure feeling in all its forms.
I have been
getting lots of spam and I find it rather amusing.
All the best
am changing the format of the Directory page to hide it from the spam
a Good Time
stay the same.
Wed, 17 Aug 2005
Hi, Ed -
I hope you enjoyed a happy birthday last week, and that you will celebrate
many more in the future.
When I click on the "Breathwork" link at the top of this page:
My browser reports:
Page Not Found [etc.]
The URL for the page which doesn't exist is:
you for the catch.
Tue, 16 Aug 2005
Thought you might find this of interest:
James Simons Does
The Math on Fund Returns
THE WALL STREET JOURNAL
July 1, 2005; Page C1
It is getting harder for hedge-fund managers to generate above-average
returns when their funds grow too big, right?
Tell that to James Simons.
Mr. Simons, a world-class mathematician who runs Renaissance Technologies
Corp., is creating a buzz in the hedge-fund world because he is about to
launch a fund that he claims could handle $100 billion -- about 10% of all
assets managed by hedge funds today. It will have a minimum investment of
$20 million, and is aimed at institutional investors, according to early
Mr. Simons, whose net worth has been estimated at $2.5 billion, has seen
Renaissance's $5 billion flagship Medallion hedge fund earn an average of
34% annually since it began in 1988, making it the most successful fund
during the period. These returns, which are audited, come even after fees
that now are -- get this -- 5% of assets and 44% of all investment gains.
That is more than double what other hedge funds typically charge.
So far this year, Medallion is up about 12%, amid losses for the overall
market. Mr. Simons has done it with computer - driven, short - term
trading in various markets. The firm won't divulge details of its
strategy, even to its own investors. Other funds use the same strategy but
are far less successful.
The new fund will take a different approach: focusing on the U.S. stock
market and holding investments for more than a year.
Medallion hasn't been open to new investors for 12 years, and Mr. Simons,
67 years old, has been returning money to existing investors, convinced
that returns would suffer if the fund got too big. In fact, the firm is
expected to return outside investors' remaining money at year's end,
leaving Mr. Simons and his employees as Medallion's sole investors and the
fund about as large as it is now. Dealing with few investors has helped
the publicity-shy Mr. Simons stay below the radar screen.
Mr. Simons declined requests for comment. A Renaissance spokesman wouldn't
comment on the new fund, which will be called the Renaissance
Institutional Equities Fund.
The latest effort -- even if it never reaches the $100 billion mark --
would seem to run up against Renaissance's instincts to keep a lid on
assets. Indeed, many managers have found that more money under management
can put a crimp on results. Investors briefed on the new fund say it will
differ from the existing Medallion hedge fund by aiming for tamer returns
that would enable it to handle the greater sums.
The new fund marks the latest encroachment of hedge funds into the
lucrative market of investing money for pension plans and other
institutional investors, turf that traditional money-management firms like
mutual funds have clung to.
The fund will
use complex quantitative models, developed by the 60 or so mathematics and
physics Ph.D.s on staff. The fund will aim to beat the returns of the
Standard & Poor's 500-stock index but with lower volatility.
Though Mr. Simons isn't well known, even on Wall Street, his track record
likely will spur strong interest in the fund, investors say. Renaissance's
34% annual average returns since 1988 top every other hedge fund in that
time period, according to Antoine Bernheim, who publishes the U.S.
Offshore Funds Directory, which tracks over 1,000 hedge funds. By
comparison, George Soros's Quantum Fund has climbed about 22% annually
since 1988, while the Standard & Poor's 500 rose 9.6% annually.
Medallion, which hasn't had a down month in the past two years, according
to one investor, has distributed so much money to its investors over the
years that they haven't been able to reinvest these gains to take
advantage of the big returns -- likely whetting investor appetite for the
Though prior performance doesn't guarantee the new fund's success, it will
share Medallion's scientific approach, and is based on Medallion's
"technology," according to the marketing materials.
"Renaissance's returns are 10 percentage points higher than legendary
investors such as [Bruce] Kovner, Soros, Paul Tudor Jones, [Louis] Bacon
and [Mark] Kingdon," Mr. Bernheim says. "He's in a different
class from everyone else."
But while Mr. Simons will levy lower fees, such as about 2% of assets, to
attract interest in his new fund, he also may have to disclose more
details about trades than he is accustomed to. That is because pension
plans, and their consultants, usually require a full briefing about
strategies of firms they invest with.
"It's pretty much a black box. People that work there are sworn to
secrecy; it's a proprietary trading strategy," says Jeffrey Tarrant,
president and chief investment officer of Protege Partners LLC, based in
New York, an investor in Renaissance.
Mr. Simons began his career as a professor of mathematics, teaching at the
Massachusetts Institute of Technology and Harvard University. He helped
develop a geometry theorem, called Chern-Simons, that is a critical tool
for theoretical physics.
"It's startling to see such a highly successful mathematician achieve
success in another field," says Edward Witten, professor of physics
at the Institute for Advanced Study in Princeton, N.J., and considered by
many of his peers to be the most accomplished theoretical physicist alive.
After breaking military codes for the government during the Vietnam War,
Mr. Simons turned to money management. He hires specialists in applied
math, quantum physics and linguistics for Renaissance's office in East
Setauket on New York's Long Island. Hardly any have a Wall Street
background. The firm relies on a system to make thousands of
rapid-fire, short-term trades daily to take advantage of small, fleeting
anomalies in various markets.
be able to grow even faster
Wall Street Journal
Tue, 16 Aug 2005
Contracts & Spam
Dear Mr. Seykota,
I sometime find different contract months prices do not coincide in trend
direction. They might even trade in opposite trend directions. Using
synthetic continuous contracts might mean rolling an open position into a
commodity (month) with the opposite trend.
Back testing many "rollovers" might cancel most of this effect
in terms of profit but not in terms of volatility.
Also, if the email addresses on your site were change to a format such as:
tt_95(at)yahoo(dot)com , I wonder if there would be a reduction in spam.
I thank you for your sharing your wisdom.
Agricultural commodities often have one trend in the old crop deliveries
and a different trend in the new crop deliveries.
this way, you might view them as different commodities.
more on Continuous Contracts, see Trading System Project, above.
for going in two directions
the same time.
Mon, 15 Aug 2005
Slowly but surely still reaping the benefits of the Reno Workshop. Here is
a letter to my abusive father's ashes. Thank you again.
I realize I am weary of thinking about you and spending emotional energy
on you. Someone said I am letting you live rent free in my body.
Another person said I do not have to approve or accept in order to forgive
and move on.
I don’t know how to forgive you for not doing or feeling what I
I don’t know how to forgive myself, but I feel I have some promise of
Here is why I resent myself:
being who I could be because you did not like what I said/did.
I did all
kinds of uncomfortable things trying to please you.
I spent a lot
of energy on you trying to make your life easier and caretaking.
I loaned you
I twisted the
way I see, think and feel to meet your expectations.
I trusted you.
I believed you
were smart, kind, generous, honest, and had integrity.
myself because you did not encourage or support me to explore.
tell you to shut up.
I watched an interesting movie the other night about 4 generations of an
estranged family coming together to mend their bloodline. Some major
trauma happened in that family, and although it was just a movie, I
thought, if they can get past that, then I can get past my past.
The lingering issue is what to do with your ashes. They have been sitting
outside in the plastic box behind the garage where I don’t have to see
Frankly, I feel
they belong in the dump and would take some pleasure in heaving them into
the dump with a big scream. However, I don’t want to be responsible for
any blip in the universe due to interrupting your life and death process,
so I am considering throwing your ashes off into thin air from a cliff and
getting you the hell out of my space.
As soon as I get
clear on this, I am LETTING GO of you and your sorry ashes and reclaiming
myself and my life.
say you intend to let go as soon as you get clear.
wonder if you might consider letting go now in order to get clear.
You are Ready to Let Go
easy to find a way
dispose of your problems.
Mon, 15 Aug 2005
Quick update for you. Our tribe ... picked up two new members so we are
five now. We still meet every two weeks.
Also, I've been getting a bunch of emails from Nigeria saying I inherited
$25 million; either I'm a very rich man or some bots are picking my email
off your website.
Thanks for all your work with the tribe.
Tribe directory no longer appears as a web page. It is now in a MS-Word
document, hopefully out of scope for spam-bots.
see you like our solution
your Spam Problem
your keys are now
Mon, 15 Aug 2005
Dear Chief Seykota,
Just checked out FAQ's and saw the posted response to my email question.
Thanks for your prompt and courteous reply.
get a prompt reply if you are the last FAQ before I publish. If you
are the first, the reply is not so prompt.
Train Arrives Quickly
those who show up
Mon, 15 Aug 2005
You have replied with point and figure chart before but I didn’t know it
was an actual chart that is already there.
This is crazy to me, someone had actually discounted time from trading, I
thought I was crazy about this, I mean someone already created a chart
based on price only which is called Point-and-Figure Chart.
You don’t know how happy I am right now, it is like getting credibility
from someone, like finding someone who understands what you are talking
about, I don’t know how to describe my feelings.
I have two
feelings, I feel the logic behind the idea hitting me and I am thinking
fast and I feel extreme happiness, maybe it’s a delayed Aha, see Ed I
told you that regardless of my research being true or not about trading,
it will for sure have a statistical edge because I am using only the price
to trade regardless of time.
I think of: what happens in a sideway market? Sideway markets happen when
the price moves up and moves down approx the same amount which restricts
the price from moving in any direction, also the same thing happens in
slowly developing trends, which means that if price moved from A to B in
10 days it would be faster than when it moved from A to B in 20 days, the
delay in the 20 days example would be because the price moved from B to A
many times along the way from A to B, therefore we can measure which side
the price moved significantly out of that range (lets say in the last 300
point move) which may give us a more accurate identification of sideway
markets and more accurate breakouts mean less losses, don’t get me wrong
I am not against losses or sideway markets but when there is a way it must
be explored even if it results in total failure or in 3% more profit, in
both cases you will have a statistical edge and that is for sure benefit.
You are right; I will create a simulation and provide testing results,
which is the only way to figure this out.
I Said: “The main benefit of this chart is that it will not register a
new bar unless there is a reversal; this means that if we create two of
this chart on the same security using two deferent interval measures and
create a simple moving average for each, the moving average cross over
will not happen in sideway markets because unless there is a big change in
price this chart will not register it, therefore moving averages can run
along without touching.”
Ed Replies: “I do not follow your argument about
how your method avoids whipsaws.”
About avoiding whipsaws, there is no way to avoid whipsaws in a sideway
market, what I meant is that by using a chart with bars made of
price-frame intervals we can create 2 moving averages that don't get
affected by time and can move in parallel without touching unless there
is a significant reversal. We may run 2 moving averages along the same
time frame, first one will be using a large price frame and the second one
will use a smaller price frame, note that the smaller price frame will be
more volatile because there will be more smaller bars created before a
large bar gets created. Note that the X-axis would be a normal time frame,
and the bars would span into multiple time frames. Point-and-Figure chart
is not exactly what I mean, yet it is along the same lines.
I think this is all sounds vague to you; I will build a chart to
demonstrate, just wait I will send it over.
Many people say you are a great trader, I don’t think that matters a bit
or benefits people in any way, what we may learn from you is to remove the
drama and think about things before feeling them, this will allow the
feeling to reform in your benefit, because after understanding why things
go wrong I don’t get frustrated, and when things go right I would have
more appreciation, humans appreciate things that cause survival and hate
things that threatens survival, when we think before we feel then we will
always rebuild our feelings in the right way, patience is the act of
thinking before attempting to feel.
In trading or any other business its not really hard to think about things
and to figure them out, its only a physical effort in trial and error, my
learning is automatic for when I see something I know its right or wrong
and always keep no bias by knowing why that is.
restriction people face is that they don’t want to test systems and fail
and fail until they develop a successful one, they prefer being told from
someone and just do it and make money without having to think.
Its not bad to
learn from someone but you may understand what you are learning and always
develop it from where it stopped progressing by your own findings, I used
to get emotional when my system used to return negative results all the
time, I felt like it would never work but partial gains always reminded me
that I am on my way to something, after approx 7 months now I am sure that
I have an edge, even If my study had resulted to 0 benefits, I am still
gained a lot of knowledge on what not to do and how trading works, from
now on I don’t care about small losses or screw-ups because I know that
anything good or bad teaches me something, for example if the idea of the
price frame moving averages don’t work; then I will know why It didn’t
work and invert it into something that works.
Mon, 15 Aug
to Trading Definition
I feel like contributing to TSP.
I make this little file (see attached file) for TSP and hope it gives some
insight to the community.
The word trend has a number of possible meanings (dictionary of finance
statistics, a trend is a long-term movement in time series (a series of
values of a variable at successive times) data after other components
have been accounted for.
technical analysis of financial markets, trend is the existing general
direction of energy expressed as the relationship between prices. It is
the discovery and monitoring of human nature that leads to the actions
of speculators and investors.
behavioral finance, a trend is interpreted as a three-step market price
upward or downward move due to the reactions of investors as a social
group to known information: 1/ under reaction, 2/ adjustment, 3/
Trend = the general direction of the price of an asset or market.
I believe that Trend definition is an absolute requirement for accurate
I need a trend to make money (no trend no profit).
Trends can be thought of in varying lengths including short, intermediate
and long term. If one can identify a trend, it can be highly profitable as
you will be able to trade with the trend.
From Turtle Trading site:
Question: "...how do I spot when the market is trending to a new
Ed Seykota Answer: "A trend is a general
direction in which something moves. To define a trend, pick a historical
price, and subtract it from the current price. The difference tells you
the direction and magnitude of the trend. A market has no inherent trend.
It only has a price, now. A trend is a notion you bring to the market,
depending on your own definition of trend."
This answer is :
the best definition and a mixing of great insight and tremendous
experience of a Market Trend.
trend is your friend except at the end when it bends.
seem to go on
Mon, 15 Aug 2005
Cut Winners and Ride Losers
Thought you might get a laugh out of this
from the NY Times
... He thinks that it is criminal for fund companies to allow popular
funds to balloon in size, making it nearly impossible for the manager to
beat the market. He hates the way the industry pushes exactly the wrong
fund at the wrong time - Internet-oriented funds at the height of the
bubble, for instance. (He has one example of a Schwab advertisement during
the bubble that is simply devastating.) He notes, as others have before,
that the vast majority of actively managed funds underperforms. He uses
"invidious," "investor-damaging" and "dirty
scheme" to describe the general behavior of the industry.
Even the mutual fund monitoring companies don't help even the odds. Mr.
Swensen absolutely skewers Morningstar, the company that has built its
reputation rating mutual funds. His data shows that, like Moody's
belatedly downgrading a corporate bond, Morningstar downgrades this or
that poorly performing mutual fund only after the damage has been done.
His core point, though, is that the for-profit fund industry has a
fundamental conflict between its desire for corporate profits and its
fiduciary duty to its investors. And the profit motive wins out every
So does Mr. Swensen offer any hope at all? Some. He thinks we'd all be
better off sticking with index funds, instead of trying to beat the market.
should be disciplined in our approach, especially in rebalancing our
portfolio to stick to our diversification targets. Of course, this
invariably means paring back on winners and increasing our investment in
But as sensible, and, in truth, not particularly unconventional, as this
advice is, how many of us will actually follow it? Human beings simply
aren't hard-wired to be good investors. Think about it: how many of us,
really, have the fortitude to pare back our winners and buy more of our
losers? Most of us do just the opposite. Heck, so do most mutual fund
managers, which is why they can't beat the market either.
argument (left) against trend trading seems to lack statistical evidence.
Things in the Market