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August 1 - 16, 2007

 

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Questions

(Quotes from Ed in Red)

Answers

Thu, 16 Aug 2007

 

Wants to Know How to Begin



Hi Ed,


I attended your presentation at the Austin Financial Traders Association the other day. Great banjo playing by the way!

 

You mentioned that what mattered most in trading wasn't necessarily the system that people chose to follow, it's actually having the discipline to follow it and not letting their emotional baggage interfere with the way the system is designed to work. I did a little research on the internet and came across this paragraph on systems:

 

"There are three related hurdles for traders. The first is finding a trading method that actually has a statistical edge. Second is following it with consistency. Third is consistently following the method long enough for the edge to manifest itself on the bottom line."


"Be wary of any trading method unless you see a detailed demonstration showing that is has worked for at least five to ten years in a variety of different markets using exactly the same rules."

Ed, I'm not asking you to tell me how you get your success in the marketplace, your system or method (unless of course you want to tell me), but can you offer any pointers on where to start as a beginner in the commodity markets about how to put together a system or method that, if followed, should produce some good returns?


Thank you, I appreciate your input!

The person writing the paragraphs you cite may have some issues with authority figures.

 

If you wish to begin, you might consider hanging out with some successful traders.

 

You might also consider signing up for the Reno Workshop.

Wed, 15 Aug 2007

 

TTP Question


Hi Ed,


I order your book a year ago, contact several TTP groups and then stop due to my location, which is a small island in the Caribbean.

 

I study trading forex and intend to test and trade soon. I realize some of my emotions may interfere with the right livelihood. Unfortunately, there are no TTP groups near by and it seems that the DIM process may not work (?).

 

Do you think I could do this with an intimate friend who is very open to bettering herself as well? It's my only chance to utilize TTP. See, the interesting part is that the "negative" emotions that I think may interfere with my trading come directly as a result of an intimate relationship(s).

 

So I wonder if there may be a twist in the TTP once done with such [intimate] person.


I appreciate your advice.

Tribes seem to work best with about half a dozen members. 

 

You might consider attending the Reno Workshop to find out how to form and manage a Tribe.

Tue, 14 Aug 2007

 

Associate Program


Wow, Mr. Seykota it’s an honor to have received a reply from you … I have purchased several books on trading and read them each numerous times, as far as my learning is concerned, it has been a challenge. Understanding the formulas for developing entry / exits utilizing the mathematical formulas as illustrated have been unfortunately difficult for me in terms of system development as I am not the greatest at the world of math.


However, trading is pointless unless there is equity management that is strictly adhered to. I have recently joined the fitness center to relieve some of the everyday stresses that we encounter from time to time, this has enabled me to mentally be sharp during this venture, and it has also helped in my studies.

 

I would like to join this tribe, but do not know of its requirements or if it is a private inner circle? Any help would be appreciated. Again thank you for your time, I know you are very busy and I appreciate your reply.

P.S. Any internships available? I will fly, crawl, scratch, jump, drive, for 60 minutes of your time!

You’re the best!

You can find out how to join a Tribe and how to join the Associate Program by following the links above.

Tue, 14 Aug 2007

 

Wants to Stop Attracting Betrayal



Hi Mr. Seykota.

Hope you are well. I'm enjoying the New Rocks. I've been noticing that every time I go through Rock Process I come up with other incident in the past affecting my life. On the way back from Reno in June, I found out deeper incident which I felt was ruling my action. Fellow [city] tribe members helped me to get Medicinal Rock. I feel very grateful for their support.

Now our tribe is committed than ever. We are meeting with no no shows. Totally committed and willing. Some members are taking significant positive changes in their life situation to get away from unnecessary drama.

Since my last Rock Process with local tribe, I noticed that I have a bad rock that always assume to get betrayed by girl friend, business associate, friends, my own brother and company etc, etc.

 

I look forward changing the this rock. I have no idea how this rock is affecting my trading but I am confident that I am going to find out. I feel that this rock was established when back years ago when I had intense relationship with this girl that I was in love with and was apart from each other for few months.

 

Every day I make phone call to her, things were great and when I came home my girlfriend is telling me how my best friend ( I mean we grew up together) was hitting on her and playing tricks behind my back.

 

I avoided to confront him however he smelled there was something wrong and basically I told him to never to call me again. Few month later my girl friend and I stopped communicating I knew she was gone. Typing this letter right now I vividly remember the moment when my best friend called to explain to me and my girl friend sitting right next to me.

 

I got to change this rock because I feel everybody is out there to betray me, at least majority of them. I look to confirm this rock during snapshot process.

Just wanted to share our progress and keep in touch.

Looking forward to seeing you soon.

With Gratitude,

Thank you for sharing your process.

 

 

 

Feelings About Betrayal

 

may come up for you

about anyone who attempts

to assist you to experience

 

your feelings about betrayal.

 

 

Clip: http://www.trauma.org/images/

image_library/chest0044b_thumb.jpg

Tue, 14 Aug 2007

 

Associate Research Paper


Hi Ed,

As of today, I do not have the paper complete. I am currently migrating all of my design ideas into [software] and abandoning using my partner' proprietary testing platform that he was coding in C#.

 

I got to the point where I felt it was time to perform all coding and testing on my own, my partner does not seem to have the willingness to create a trading business at the same speed I want.

Interestingly, as soon as I took the programming and control of the project in my own hands, my anxiety towards this project / business has come down to a manageable level and I find myself happier more often. In order to test the expo stop idea, I now realize all the other elements that I need to include and program; needless to say new tasks pop up everyday to think about, program and test. One item I was happy about was figuring out how to load daily trade opportunities by a stock's strength rank that I define.

Also I have come up with several other ideas to test and include in a research project after my Expo Stop paper:

1. Dynamic Risk Threshold based on a Trailing N-day Drawdown; the idea here is to be able to target a max allowable drawdown over a trailing N day period. (eg. if max allowable DD is 35% over 60 days, we decrease the risk threshold proportionally for every % in DD ultimately reaching a risk threshold of zero when the max DD is hit. As the system ticks forward the N-day drawdown look back function decreases and the system slowly increases its risk threshold to normal levels again. Its kind of like an Equity Risk Clutch I guess.

2. Accepting / Rejecting trades based on the trend on an Index. (eg. Accept trade if sp500 100EMA > 200EMA.)


Ed, every time I program a small element of my overall vision for my first trading system I run a back test and look at how my results change and think about what is going on. My expectations change dramatically from when I initially test on a portfolio of 1000 CAN stocks to 6300 US stocks over 17 years ending 2007, the best risk-adjusted returns I have been able to get in back testing so far on an ATR channel Breakout system is mid 20s% CAGR with approx mid .40s MAR. That tech bubble really seams to screw up my MAR lol !!! (note, I am testing long trades only so far).

I am wondering if my two ideas above, ie. the Equity Risk Clutch idea and the Index Trend Validation, is an outgrowth of looking at my simulated equity curve during the tech bubble and subsequent 2.5 year malaise period. Hmmm ... I wonder if I came up with those 2 ideas because of my unwillingness so far to test long and short trades aha! As I write this right now I recall reading many times on the Internet that you can't make money shorting stocks using Trend Following..

The next thing I am going to do is test long trades when SP500 100EMA > 200EMA and short trades when SP500 100EMA< 200EMA! Maybe since equities correlate so much with each other this is the way to go. Time to back test!

Am I focusing on the wrong things??? Your guidance is most helpful. Thank you for your email Ed, it feels good to have someone think about me and support my cause.

Your Equity Risk Clutch idea sounds more like a trading brake.  You might find it acts to bring you to permanent rest at the bottom of a dip.

 

My hunch about your S&P trading filter is that it would have little effect.

 

I encourage you to proceed with testing and let me know what you learn.

 

 

 

On a Roller Coaster

and in the markets

 

if you put the brakes on

during a dip,

 

you might take quite a while

to emerge again on the upside.

 

 

Clip: http://publish.uwo.ca/~jpalmer/plo/ploconf.html

Sun, 12 Aug 2007

 

Mechanical Trading


Ed says: In Emotional Trading, you try to figure it all out, and then take a position to find out if you are right (or wrong).

In Mechanical Trading, you come up with a method and then mechanically apply the method to many situations.

Mechanical Trader simply (or not so simply) follows his system, without concern about individual trades having to be right or wrong.
(FAQ, May 28, 2006)


As I am reading it, a thought somehow hits me: Most (losing) mechanical traders, even (seemingly, or consciously trying) not concern about INDIVIDUAL TRADES having to be right or wrong, are still concerned about the SYSTEM being right or wrong (profitable or not), especially when after a loooooooooong string of series of trades that go wrong (losses).

 

There is still an element of needing to be right. It seems very difficult (if not impossible for most folks) to remove the emotional element to trading.

To paraphrase, "They backtest to try to figure it all out, and then take a system to find out if they are right (or wrong)."

Successful traders follow some basic principles:

Trade with the trend

Ride winners

Cut Losses

Manage risk

System traders implement these principles through mechanical systems while discretionary traders implement them as an art form.

 

In either case, traders who are willing to experience their feelings tend to be able to treat trading as a business;  those who have feelings in k-nots typically wind up using  the markets as a theater in which to run dramas that invoke the feelings in the k-nots.

 

 

 

A Stage Upon Which to Produce Drama

 

is the view of the markets

you have when you are unwilling

to experience your feelings.

 

 

Clip: http://www.4rcc.com/theater/index.htm

Sun, 12 Aug 2007

 

Judgment


Ed says, "TTP suspends belief in the JCT trilogy: judgment, causality and time." (June 26, 2004)

Ed says, "Trying to be non-judgmental presupposes a judgment about being judgmental. You might consider validating your feelings about being judgmental." (May 17, 2006)

How can one validate the feelings about being judgmental if he is to suspend the belief in judgment? Isn't it, logically inconsistent?

Thanks. As always, I wholeheartedly appreciate your teachings.

You can have feelings about being in a spaceship, even if you are not in a spaceship.

 

You might consider taking your feelings about requiring logical consistency to your Tribe as an entry point.

 

 

 

In Trading - And In Life

 

requiring logical consistency

can place you

at a disadvantage.

 

Clip: http://www.visitingdc.com/images/new-york-stock-exchange-address.jpg

Sun, 12 Aug 2007

 

Logically Inconsistent Reasons


Ed says: "All reasons are logically inconsistent." (May 17, 2006)

Can you please elaborate? Your post seems to indicate that, if we keep asking "why" questions to any reasons given, eventually it becomes un-answerable.

But I don't see how "all" reasons are logically inconsistent.

Logically inconsistent to me is "if A then B" and "if A then not B" happens at the same time.

For example, Why does the apple drop to the ground? Because of gravity. Why do I see lightning first but hears the thunder later even though they are the result of the same event? Because light travels faster than sound.

These "reasons" do not appear to be logically inconsistent to me. On the contrary, they seem to make a lot of sense. Of course if one keeps asking "Why is there gravity" and "Why light travels faster than sound", very soon we approach a limit where human knowledge cannot explain (it is just the way it is). Yet, this limitation doesn't seem to render the earlier explanations useless or inconsistent.

Reasons and the "why" question, exist in the causal model.

 

If you inhabit the causal model and ask, for example, "Why does the apple drop to the ground," you invite an infinite array of responses.

 

A: Because of gravity.

A: Because the orange was behind it.

A: Because the catcher dropped it.

 

Each of these "answers" invites an infinite chain of follow-on questions.

 

Q: Why did the catcher drop it.

A: He couldn't see it.

Q: Why couldn't he see it.

A: The sun got in his eye.

Q: etc.

 

If you run some of these Q and A exercises you come to see that a question, by itself, does not define an answer.  Q and A implies a context for the question and this context gives the question meaning.

 

Physicists, fruit merchants and baseball players may post the three answers above.

 

The causal model and the corollaries, guilt and blame, support the Western legal and political systems.

 

In the system model and in TTP, we communicate our intention and useful information simply shows up.

 

 

Why is the Ground Accelerating Upward

 

to smash into the floating apple

and then suddenly stop?

 

 

Clip: http://www.dkimages.com/discover/

Home/Science/Scientists/Scientists-36.html

Sun, 12 Aug 2007

 

Objective Lapses of Time Do Not Exist

Hi Ed,

Thanks for the fantastic work you are doing for the Website and for everything you do for the Tribes around the world. I support you and all the Tribe members as much as I can.

I notice you say on time on 19th October 2005:
"Time: Some think of it as an interval, others think of it as a point. No one can prove it exists at all."

I feel you and other Tribe members maybe interested in reading Kurt Godel's ideas on Time. In 1949 he proved that, in any universe described by the Theory of Relativity, "time" cannot exist.

OK.

Sat, 11 Aug 2007


Experiencing Hard Times


Excuse me for attributing my own life draw downs to you – I’m just a bit tired, lonely and probably I do this to get some attention - so I can continue with excusing myself and then saying what I really want to say, like that I’m tired, lonely and that I resent what you did when I visited Incline.

 

From that point on, I just plunge and take risks and neither are paying off right now, so I’m frustrated and generally out of tune. Not that it has anything to do with you or your Tribe Members or my mother or “girlfriend” anybody else.

 

I’d probably ask for some help and support but I know I won’t get any, since I’m in the “getting a hard time” part of my growth.

Thank you for sharing your process.

 

 

 

Hard Times

 

When you become willing

to experience the feelings of hard times,

Fred no longer has to set up

hard times for you to experience

in the outside world.

 

 

Clip: http://www.dvdbeaver.com/film/

DVDReview/hardtimes/showdown.jpg

Fri, 10 Aug 2007

 

Cramer on Meltdown


Check out this rant:


http://www.youtube.com/watch?v=SWksEJQEYVU 

Cramer is one of the only commentators who are willing to express feelings about the markets.

Fri, 10 Aug 2007

 

Dropping a Line


Hi,

My latest news:


1) got kicked out of home by mom
2) left to capital city
3) negotiated (with no success) some fund manager positions
4) going broke
5) wondering how long the depression (I call the Seykota depression - after all you said "enjoy it while you can...") will last
6) guessing Jason won't answer my calls more than once a week
7) volunteering initiative renewed - looking for opportunities in city - willing to work for free every day until found job
8) realizing that institutions take ages to make a simple decision
9) almost got a job as an arbitrage trader - everything perfect except for my clumsy CV - apparently I'm very careless
10) sent around 50 CV's (this time proof-read) to London seeking trader position offers


here's one I couldn't understand until the last sentence:

A Top Tier Bank is seeking the key Quantitative Trader to drive their Global Non-Linear Proprietary Trading business.

This is a rapidly expanding global operation working on the next generation of Non-Linear Trading strategy. The group sits alongside cash and linear trading, working across frequency with the remit to build a mix of asset-classes (credit vs. equity spread, CDS) in to its models. Technology driven, this proprietary business emphasizes cooperation with integral components of the bank's existing franchise - quantitative analytics, research (on and off site) and IT. You will come from another leading non-linear trading group or have a strong track record in: convertible bond; merger; index; volatility; statistical - arbitrage trading or equity derivatives (correlation / dispersion) trading with a quantitative PhD/MSc in Mathematics, Statistics, Physics or Quantitative Finance.

The ability to find a common language with pure quantitative analysts and traders is essential.

The common "language" for many "non-linear, Ph.D. quantitative derivative traders" may be the feeling of fear.

 

 

 

Fear

 

is an essential (and missing) ingredient

 

in a lot of quant shops.

 

Occasionally, Under Fred

arranges swift market reversals

to assist fear-suppressive traders

(and lenders)

to experience fear.

 

 

Clip: http://images.allmoviephoto.com/

2002_Panic_Room/2002_panic_room_005.jpg

Thu, 9 Aug 2007

 

The Feeling in the Pit of my Stomach



Dear Ed:

 

I need to tell you about that feeling right in the pit of my stomach. It comes on with a sense of dread, a sense of wanting the Now to disappear, and for the moment to be over. It is accompanied with an ability to "hear" silence which puts me in mind of what blood may sound like going through my body.

I remember as a child experiencing moments when I know what the Now is. I vividly recall riding in a car (I am in the second grade because I remember the road of the town) and a feeling coming over me that, "This is it ... This is all there is ... right here ... right Now."

 

In a way, I am disappointed because I am hoping for "more," but otherwise I feel calm because at least I Know. Knowing is very important. This moment of Now only seems to last a second or so. I recall feeling it many times that year ... and for a few more years.

 

Looking back, there is something very special about these moments, but ... I no longer experience these moments as an adult. I Know when I do again, I will be better ... I will have my childhood back ... and can start over.

I need to put this on paper (well, not really paper, but you know what I mean), but I am cautious because I am not always truthful on paper. I like written words because of my ability to control them. Spoken words are not so easy to control ... sometimes they just happen.

 

Truth ... like Knowing ... is very important. I also see that I can not do this myself. I know I need help to stop the noise in my mind, so I can feel.

I am unable to concentrate on much of anything these days. My productivity is down to about four hours a day at best, but I don't care. I see the positive intention of this not caring as a willingness to allow my mind to slow down its endless chatter. I know you support me in this not caring, so that makes it even more fun.

Thank you for sharing your process.

 

When you come to celebrate the positive intention of the feeling in your stomach, it ceases to be an adversary and becomes an ally, another resource on your emotional instrument panel.

 

 

 

The Feeling in Your Stomach

 

may also form on your face.

 

 

Clip: http://desligar.blogs.sapo.pt/arquivo/

GIRL_CRYING_HOMESTEAD_POEM_JPG.jpg

Tue, 7 Aug 2007


Happy Birthday Ed !
 

Thank you.

Tue, 7 Aug 2007

 

August 7th, 1946
 

August 7th, 1946 the earth is Ed-ified.

Congratulations on your continuing existence & contributions.

I anticipate many more to come.

All the best,

Thank you.

Mon, 6 Aug 2007

 

Fighting Abuse


I'm afraid
I want to cry
It's not fair
They did this to me

Yeah, a lot of feelings
So now what.

FIGHT FOR YOUR LIFE

Thank you for sharing your process.

 

 

 

If You Have To Fight and Win

 

be sure to bring enough resources.

 

Clip: http://www.japaneselifestyle.com.au/

travel/images/nagasaki_bomb.jpg

Mon, 6 Aug 2007

 

Underdog
 

Damn,

How evil can parents be to (subconsciously) train their kids to be underprivileged under their own rooftop?

bastards.

In the TTP Rocks process, we do not see parents as evil. We see them as unwitting carriers of Rocks.

 

During role playing we refuse to accept the rocks from our parents. In this way we forgive the Rocks (give them back) and do not have occasion to forgive the parents.

 

 

 

Grandparents

 

are also frequent Rock donors.

 

 

Clip: http://www.spps.org/sites/

dd77441e-b117-423c-90a1-6fcbdcc68b6f/

uploads/GrandParents.jpg

Mon, 6 Aug 2007

 

A Rocks Resource for Babies

Ed,

Thank you for your support calls today.

I thought of another possible resource a baby could have in the birth process.

View the event in third person. Although a baby may not have any concept or knowledge what third person is, they might be able to view the events outside of their body where the feelings and emotions are not so strong. Another way to say it is that they could disassociate during the intense part.

What do you think?

Disassociation tends to be a form of medication.

 

Babies of all ages might do well to simply go with the flow and experience feelings.

 

 

 

The Birth Process

 

delivers an early

sense of accomplishment

to the child

who willingly traverses

the long and winding road.

 

Clip: http://www.epigee.org/images/delivery.gif

Sun, 5 Aug 2007

 

Fredian Slip
 

Hi Ed,

Just notice that on the FAQ (4/13/06, Looking for soul mate), you have "Adam Hands Eve a Piece of Judgment Fruit (the fruit of the tree of the knowledge of good and evil) and they loose their lease on paradise."

According to the Bible, and also as it seems from the picture, it is Eve who hands Adam the apple. I find this Freudian slip of yours very interesting so just wanna share it with you ;-)

Thank you for the catch.

Thu, 2 Aug 2007


BS

Hello Ed,

Are you beyond all the BS, or are you just an expert at experiencing it?

It's all BS and there is no getting beyond it, if you like to see it that way.

 

 

With Bulls - and with Bull Markets

 

you pretty much wind up with

whatever you intend

to wind up with.

 

Clip: http://search.cpan.org/src/MJD/

txt2slides/Example-2/bullshit-lg.jpg

Wed, 1 Aug 2007
 

Intention = Result
 
Hi Ed,

My situation with my trading system development is changing. My partner has decided for personal reasons that he no longer wants to work on the project full-time. His reasoning seems illogical to me, but I am trying not to figure it out. Rather, I try to accept his decision and move forward.

 

I feel that results come from intention. His lack of progress and frustration make it clear to me that he did not want to finish the program. I am in contact with a professional programmer here in LA. She is very gracious to take time to teach me. Programming is something I should be learning anyways. I feel that progress is happening more quickly with her experience and knowledge and the intent I have of finishing my system.

Not working with my partner makes me feel sad. It reminds me of the sadness I feel breaking up with my ex-girlfriend,.. I feel that my strong intention to complete tasks seems to push a lot of people I feel close with away from me, but I feel that I am learning a lot from my experiences.

With my girlfriend, it takes several months for me to face my feelings that she will not commit to our relationship. Once I accept my feelings, I am more comfortable not being with her.

With my partner, I decide that his not working on the project is the “stop” on our partnership. I write him an email making my feelings clear. I accept and even feel happy to be moving forward without him.

I feel sad about many different things. I wonder if I feel sad because I remember sad events or if I think of sad events because I feel sad and want to have a reason why.

Helping others gives me a strong feeling of satisfaction. My younger cousin is staying with me for a week in August to learn more about trading. For his Birthday a few months back, I give him “Reminisces of a Stock Operator” as a gift. I think about a good approach to supporting my cousin’s study of the markets. I am guiding him towards learning basic definitions, psychological aspects, and start learning to program. I hope to not push him towards any particular philosophy or strategy as I believe everyone has to find their own way. I really enjoy supporting other’s learning.

Writing to you helps clarify my thinking.

Thank you for your continuing support.

Thank you for sharing your process.

 

You might consider taking your feelings of sadness to your Tribe as entry points.

 

 

 

The Positive Intention of Sadness

is loss control.

 

If you are unwilling to experience sadness,

Fred is likely to engineer loss for you

so you can experience it.

 

Popular vehicles people use

to manifest loss

are relationships

and trading accounts.

 

 

Clip: http://healthinmotion.files.wordpress.com/

2007/05/sad.jpg