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July 15 - 31, 2007

 

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Questions

(Quotes from Ed in Red)

Answers

Tue, 31 Jul 2007

 

Alcoholics Anonymous


Dear Dr. Ed -

I am in drug rehab and it is based on the AA 12 step process. I noticed many similarities between the trading tribe and AA meetings. I found that you don't need to be an addict to make use of steps 2-12.

 

May I suggest that you attend a few meetings and read the AA big book to get some ideas for the trading tribe.

Thank you for the suggestion.

 

TTP is empirical. As such, we study and incorporate things that work from many other disciplines, including AA.

 

The Big Book contains testimonials from people standing on the threshold of success and then turning to drink as a last-minute way to derail the process.

 

The Big Book does not seem to identify this pattern as medicinal behavior or propose substitute pro-active behavior in response to feelings of success.  TTP does both.

 

Nor does the The Big Book identify alcoholism (and other medicinal behavior) as a symptom of judging feelings.

 

The origin of AA appears to be part of a campaign by a church in England to increase the reach of their teachings; AA still carries a strong religious flavor including a degree of proselytizing.  It also advocates adoption of the omnipresent, arguably failure-affirming surrender-mantra, "I am an alcoholic."

 

AA appears to be the largest and oldest organization for supporting alcohol recovery.  The literature on success rate seems sparse and conflicting.  Some claim the recovery rate is about the same as for people having no treatment at all.  Others claim it is much higher.  Some AA members attend multiple meeting sites and adopt the program as an essential part of their social life.

 

TTP emphasizes encouraging the expression of feelings and the adoption of pro-active resources in response to feelings. It does not promote any particular religion and seems compatible with most belief systems, including AA.

 

One characteristic of some AA meetings is that some members seem to develop judgment about alcohol use and then transfer it over to judge each other about their use of two other substances: namely, tobacco and coffee. 

 

Some meetings feature the physical arrangement of the attendees into one of four quadrants depending on their judgments about these two substances: Smoking coffee drinkers; Non-smoking coffee drinkers; Smoking non-coffee drinkers; Non-smoking non-coffee drinkers.

 

 

The AA Big Book

 

includes the twelve steps.

 

Note: The Thirteenth Step

is a bar over on 5-th and Madison.

 

Clip: www.alcoholism.about.com 

Mon, 30 Jul 2007

 

BudDhIsM and DIM


Ed Says: Buddhism is inherently a DIM (Do It Myself) process." (FAQ, 3/17/06)

Hi Ed,

TTP Glossary defines DIM as as attempt to execute TTP without benefit of a Tribe, and typically falls off track.

I don't see how Buddhism is inherently a DIM process though, and also not aware that Buddhism typically falls off track. Can you please expand on your thoughts regarding Buddhism and DIM? Thanks.

A through examination of the Four Noble Truths and Eight-Fold Pathway of Buddhism is beyond the scope of this column.

 

Solitary meditation is inherently a do-it-myself activity.

 

 

Do-It-Myself

 

as a group exercise.

 

Clip: http://www.yogameditation.com/

articles/short_introduction_to_yoga_

and_meditation/meditation

Mon, 30 Jul 2007

 

Overcoming Nature


Ed Says: There is no way to "overcome" the nature of things. (FAQ, 3/14/06)

Hi Ed,

It seems we human keep trying to overcome the nature of things. For example, instead of going over a mountain or swimming across a river, we build tunnels so that we can easily go through to the other side and "overcome" nature.

Or, our minds tend to fill with all kinds of thoughts popping up here and there, appearing and disappearing. That is the nature of how a mind is. Yet, some Buddhist monks, through meditation, seem to be able to "overcome" this nature and make the mind quiet.

So am I misinterpreting you when you say there is no way to 'overcome' the nature of things? Thanks.

You might consider taking your feelings about misinterpreting to your Tribe as an entry point.

 

 

 

 

Overcoming

 

the desire to overcome.

 

 

Clip: http://web.missouri.edu/

~leemyoung/meditation.jpg

Mon, 30 Jul 2007

 

CASA


Ed says: A more precise TTP term for Right Livelihood might be CASA: Community Activity that Supports and Acknowledges. (FAQ, 3/17/2006)

Can you please expand on what you mean by CASA (and Right Livelihood)? Support what? Acknowledge what? Many thanks.

You might consider telling me which words you do not understand.  This might help me make mi casa su casa.

Sat, 28 Jul 2007


Tar Lungs


Hello Ed , Do you have any idea or know someone who might have some knowledge on the removal of tar on a lung. There may be a chemical to help dissolve and eventually work the lungs clean? It could possibly be inhaled to give the process a head start while dissolving the tar?

Tar dissolves in various solvents, such as tuluol, trichloroethane and naptha.  Warning !!!  These chemicals can be extremely dangerous to inhale.  Wait until the lung is safely separate from the rest of the body before dunking it in tuluol.

 

See TTP and Smoking, below.

 

 

Lung, with Tar

 

Clip:

http://www.nysmokefree.com/newweb/

CME2images%5Cemphysema.gif

Thu, 26 Jul 2007

 

How one Tribe Leader Screens Applicants

I ask each applicant to read Ed's book and FAQ, then interview them to see what their motives are, and assess how they would fit in.

We currently have three applicants who are reading the material. For idly curious, of course, this becomes an insurmountable obstacle. So they winnow themselves out.

We ask that no-one come as a spectator. Each should be willing to work. Occasionally, someone does all the study, and answers the questions, but when they get on the hot seat they realize they are unwilling to experience their emotions. This is ok, and they are politely and mutually excused from further meetings.

Thank you for sharing your process.

 

 

Essential Reading

 

for some Tribes

 

Thu, 26 Jul 2007

 

Magic Manifestation


Hi Ed !

My magical inspiration occurred at an Incline Village Tribe meeting a year ago.  I am still creating magic.

Thank you for sharing your process.

Thu, 26 Jul 2007

 

Stock in Uptrend


Hi Ed !

I am long [Stock], which is an inverse ETF for real estate. It goes up as homebuilder stocks go down.

Since your email, I notice the stock has substantial volatility, including a reaction from 117 to 95, or about a 20% decline. 

Tue, 24 Jul 2007

 

Three Contract Wipe Out


Hello Mr. Ed Seykota


I learned trading second hand some of your students. I thank you for your apparent commitment to truth and teaching.

I read Reminiscences of a Stock Operator and [other books]. I am into my fifth or six career depending on the definition of career. Now I practice law. Before that I was a motion picture cinematographer, before that I was a trader, I also had a international promotion company, and before that I was a broker, starting in muni bonds, then learning to trade futures and living from it. I was able to take profits from the market. Stopped trading when lost big % overnight on invasion of Kuwait. The Low in the Brit. lb that night was me getting screwed when I had to cut my losses with a "no market" quote. I said get me out and got the 100 point skid. That's me the low that night with my three contracts. Aug 1, 1990. only dabbled in grains in the mid 90's since then. Went to law school 94-98. Just getting started again, re-read Schwager's interview with you. Inspiring still, some 18 years later.

I wrtie because I can, to give myself identity to you, to thank u as above, and to also thank you for the wonderful poem I believe you authored:


Hope is dope, an opiate
Fear confirms the trend,
Pride arrives late in the ride
Greed comes at the end.


When quoted by me, to define politics as well as markets, it is well received. I always give you attribution.

I feel a wave coming, or waves I should say. I believe they will be tsnumai like.

Winning is as winning does ... I win and I like it.

A note to say your reach is far, and again I thank you.


All the best,

Thank you for sharing your process.

Tue, 24 Jul 2007

 

Still Wants Reasons

see Previous, 9 July 2007

Dear Ed,


You are probably right that I am fishing for some form of encouragement from traders and role models I respect, but I would just like to point out that 90% of the posts to this forum are implicitly looking for encouragement and/or validation, otherwise mere self-awareness of the insight would have been enough.

 

Be that as it may, I am convinced that my basic question: “What are good reasons to take the risk of trading-for-a-living?” is not invalidated solely by a need for encouragement, which seems to be common enough even for Market Wizards starting out (see the book).

 

I am also convinced that the answer is not meaningless just because it is subjective or clichéd, but powerful and life affirming for a young trader generation when it is offered by somebody who has the experiences and wisdom to distill it to a pure form. So your insight would really mean a lot to me.

My insight, per your request is that you might benefit by taking your feelings about (1) seeking encouragement and (2) justifying your actions  and (3) wanting reasons - to your tribe as entry points.

 

 

 

Fifty Reasons

 

not to change

 

 

 

 

 

Five Reasons

 

to take it easy on Krispy Kreme

 

 

Clips:

http://www.inter-actions.biz/blog/50%

20reasons%20not%20to%20change.jpg

http://www.ianai.net/jokes/

5ReasonsNotToEatKrispyKreme.jpeg

Mon, 23 Jul 2007

 

Robustness and Optimization



Ed,

 

How do you see the issue of robustness versus over optimization? I mean: when I design a technical system, I am tempted to choose the rules which give me the best possible overall performance.

 

However I am working with past price history. So, at least theoretically, the most optimal system designed this way is likely relying on the actual price history rather than on trend following.

 

Well, you know, there seems to be a delicate balance here. How do you see it? Do you think that there is a technical solution to this issue or it is something very personal, depending upon the trader's discretion and preferences such as working with one or two trends, etc.?

I do not know what you mean by "robust" and "over-optimize."  I suspect you do not have a precise definition for them.

 

If robustness is important to you, you can include a metric for robustness in your optimization algorithm.

Mon, 23 Jul 2007

 

TTID of Tribe Bonn / Mainz
 

Dear Ed,

Beneath you find our updated TTID.
Thank you so much for your good ideas.

We hope you have a wonderful summer.

Kindest regards,

Thank you for the update.

Mon, 23 Jul 2007

 

Workshop / Incline Tribe Meeting Query



This is a note re: the upcoming workshop and not so much an FAQ contribution.

If I can get my act together (i.e. work and personal commitments) I would very much like to attend this workshop. I would also, with your permission, like to attend your Incline Village tribe meetings as a guest member / pollinator just before the workshop and just after the workshop.

Could you please let me know if this can be done as I am very keen to experience and participate in the new Rocks process in a Tribe meeting setting as well as the more formal workshop setting.


If it is ok with you (and of course, with the other tribe members), could you please advise on the dates you would meet at Incline just before the workshop and just after the workshop as I would like very much to be in attendance.

I have already attended one workshop (i.e. Reno 2006), I have read the TTP book many times and I follow the discussions at FAQ on a regular basis, hence I am familiar with the work being done.
I believe that this would provide valuable experience and would help greatly in the running of our local tribe.

Thanks Ed,

Best Regards

p.s. I note from your Website (under the 'Workshop' link) that the 'Early Bird' price rates are quoted, however I am unable to find mention on when 'Early Bird' expires.

Workshop graduates qualify for admission to the Incline Village Tribe. 

 

The early-bird rates expire when I achieve critical mass and confirm the Workshop - generally at about a dozen attendees. 

Mon, 23 Jul 2007

 

Book Recommendation


Ed

I think of you now as I finish reading [book]. I have a bookshelf full of amazing books but I find this the most profound since Emotional Intelligence. I feel I should share this with you and the tribe.


Kindest Regards

If you wish to recommend a book, please state your experience of how it is improving your life.

22 Jul 2007

 

Shorts GOOG at 547


Hi Ed !

Though I recall that pride cometh before, etc, I want to tell you Thursday afternoon I shorted GOOG at 547 and made thousands in a few minutes. Feels good.

regards,

Thank you for sharing your process. 

 

You might like to report your method for timing this trade as well as the method for the subsequent order to cover the short.

 

 

Google

 

Showing short sale on July 19, 2007.

 

Sun, 22 Jul 2007

 

Marriage and Divorce



My wife and I seem to live out the same drama every few months and it is causing tremendous stress to our relationship and may end up leading to divorce.

 

The majority of the time our relationship is going well, however every three or four months we have a massive argument over a seemingly minor issue.

 

An example of this is a few days ago my wife and I were getting on each others nerves and I called her a “nag” and she quickly called me an “asshole”. Things quickly escalate and lead to days of anger, name calling and arguing over a host of other issues.

 

My question is in your post of July 12th you reply that your students teach you “problems are invariably mine” and I’m wondering if this applies to this situation. The old saying in relationships is it takes two to tango?

I know I should take this issue to tribe.

Your ongoing drama might be functional - as part of the way you and your wife medicate (cover up) deeper issues about not being in right livelihood and / or fully intimate.

 

If you and your wife are willing to give up the drama, you might consider appearing together at Tribe. You can might consider running the drama consciously for the members to see.

 

Each of you can then discover what "Rocks" you are carrying, and how your complimentary rocks interact to create gridlock.

 

At that point you can reframe your periodic episodes as opportunities to experience your feelings and move through them.

 

You and your wife might consider attending the October Workshop.

 

 

Medicinal Gridlock

 

 

 

Simple Intimacy

 

Clip: http://www.paulabecker.com/blog/

images/if_oppo1_72.jpg

Sun, 22 Jul 2007

 

Order Execution Issue (Continues)

see below



Ed,

I have another inquiry and response. I think the
broker just doesn't want me to know the detail.

---

My question:

07/20/2007

5 minute opening range? My order is filled at 9:51:38 AM EST. Do you mean Sugar market opens at 9:50:00 AM EST?

Broker's response:

07/20/2007

The sugar market is electronic and trades most of the day. You were filled near the open of equity trading hours.

OK.

Sun, 22 Jul 2007

 

Ed Seykota Influence at www.TurtleTrader.com  

Link: http://turtletrader.com/tribe.html

OK.

Sun, 22 Jul 2007

 

Nonlinear Dynamics


Hi Ed,

I discover for the first time that price time axis has non-linear dynamics, a third dimension, it may move 100$ in and only move 5$, purity = 100 / 5 = 20 %.

Price moves up as much as it moves down on the long run, the mean and speed keep changing.

Trading is like people driving 10 cars on an un-even road with random turns, one need to change tires and speed (risk) according to the terrain, all cars help each other so they always reach somewhere together.

When we get injured or in an accident we don’t get a choice about what to feel, it is usually fast uncontrolled reactions of moving away, fainting, screaming, fear and defense because the risk is affecting us directly physically and human body is built for survival which makes managing risk not of our choice.

In the market, when we get hit by a loss, this loss of money doesn’t directly affect us physically because we don’t see the whole picture, even worse we tend to pick and choose from many feelings we have accumulated from our day to day living and relate it to the situation, this maybe because from the time we have a loss, to the time we get a margin call, to the time we find that we have no more money, to the time we look forward to borrow money, to the time we feel depressed and so on, during all this time we haven’t felt pain yet and the feeling changed dramatically because it is sensitive to initial condition.

So the more time we take to decide the more deferent our feeling will be.

See Analysis Paralysis, below.

Sat, 21 Jul 2007

 

Helping Others



Now, I have no doubt that professional trading is about taking care of others. My volunteering experience is creating a new (and yet a long missed) feeling of importance and mission and I connect this feeling with the trading service I wish to provide.

BTW, you said that the hospital experience can be very intense. I don't feel that way, on the contrary, it's quite peaceful. Maybe I'm missing a point here? I do have a break from it right now, since I moved to a new city to meet some new investment funds and I can't believe most managers here don't have a clue about mechanical trading systems.

All the best PS. You told me once that you have a plan for me - may I know what it is?

Thank you for sharing your process and for volunteering to help others.

 

My plan is to support you in being your self.

Fri, 20 Jul 2007

 

Hot Seat Report - Analysis Paralysis


Ed says, You might consider asking Hot Seat to develop the form of 'difficult to bring up emotions from a still picture.' This might lead to commitment issues.

Yes, it seems your intuition is right on again, Ed. In the following meeting, the member who claims to have difficulty bringing up emotions from a still picture does not keep his commitment at all. When I ask how he feels about not keeping his commitment, he says he doesn't feel bad at all, and then justifies that by saying it just wasn't the "right" issue he needed to be working on in the first place, as he just made a hasty commitment and then realized it was silly after a day of trying and there's no point in continuing.

He agrees to go on the hot seat in our next meeting. Interestingly though, I am already feeling nervousness and doubtful if he can be a willing sender, and wondering what I can do to support him.

Another member who is new to TTP went on the hot seat. At check-in, he was describing how his wife had some very serious disease, thankfully escaping death but unfortunately she is far from back to normal either. He was showing signs of heaviness as he speaks, so naturally I have him on the hot seat.

To get him started, I ask him how he's feeling. He described tension in his face, his eye socket and etc. We encourage him to experience that feeling, squeezing his eyes tight and focus on the tension he has in his face. He tried, but then he kind of stopped. He said he felt tension in his chest, and we asked him to experience that, crank it up, and more of those feelings. He tried, but then he got back and gave a pretty good description on the tension he has in his face. I notice the pattern that once he gets deep enough he starts to verbally describes the feeling. So instead, I try to use the trick and ask him to keep describing, analyzing and explaining the feeling. He does that for a little bit, and then he stops and gets back to his original posture with the tension the face.

That lasts for a while until he gets a little deeper and he starts giving details to explain his feelings again. We try to cheer him on when he appears to be feeling something, but that always follows with more description. We keep going round and round in this feel -> describe -> feel -> describe cycle.

I asked if he is willing to just experience his feelings and he nodded and says he is willing. For a while, he did spend considerably more time feeling rather than describing. But it seems that he is still very conscious about the whole process, trying to figure it out. So I follow along and ask him to keep thinking and trying to figure it out, and he does that. He can't figure it out and he feels confused and stuck, feels like he can do it better, then he feels guilty and really heavy in his eyes. I thought we are finally getting through, and we try to cheer him on and ask him to keep feeling all those feelings, the guilt, the heaviness, and all of that. (Those sound eerily similar to what he described about his wife's situation at check-in)

Unfortunately, then he got right back into talking, describing his feelings and etc.

We didn't get to the Zero Point. I don't know how else to proceed when he keeps saying that he is willing to experience feelings, yet he also keeps explaining the feeling once he gets closer.

Any suggestion on how I can best support these two members? Many, many thanks.

You might try more frequent testing for willingness.  In the event you detect unwillingness, you can ask if the subject is willing to experience the unwillingness.  This may collapse the "stack of judges."

 

If he is actually unwilling to proceed, simply conclude the process and turn to other business.

 

 

Analysis Can Provide

 

a way to avoid issues

by medicating symptoms.

 

Clip: http://www.freud.org.uk/aboutpsa.html

Thu, 19 Jul 2007

 

More Brokerage Issue

see: below


Ed,

Things are getting more interesting. The issue seems to narrow down to a 5-minute open range.

---

My inquiry:

07/19/2007

I like to know what is your time frame of the open range you mention. But I do know there are trades of price between 9.92 and 9.95 before 9:45 AM EST. Between 9:45 and 10:00, Oct Sugar trades between 9.94 and 10:14. Two transactions are very interesting, I want your comments on them.

 

1. At 9:51:38, 15 bid at 9.96, 15 offer at 10.02, one lot fills at 9.97.

 

2. At 9:51:38, 4 bid at 9.97, 14 offer at 10.02, one lot fills at 10.02 (this is the fill for my order).

Broker's Response:

07/19/2007

5 minute opening range.

Your order was triggered accordingly. You placed a buy stop order and were filled at 10.02, the best offer in the marketplace from the open.

Thank you for sharing your process.

Thu, 19 Jul 2007

 

Cure for Fear

MIT researchers say they may soon be able to make a pill to cure fear:

http://pressesc.com/01184528191_cure_for_fear
 

A cure for fear might negate the positive intention of fear.

 

Fear is, itself, the "cure" for the situation directly below.

Thu, 19 Jul 2007

 

Pairs Trading / Statistical arbitrage - Snake Oil?
 

Dear Ed,


I trade for a long / short equity hedge fund and having experienced some of the most relentless bull markets recently, I can identify with your long term trend trading philosophy.


Recently, I am seeing lot of traders in the hedge fund community talking big about statistical arbitrage and pairs trading as "alpha" generators.


Most of these appear to be mean reverting strategies or convergence strategies.


Most of these traders seem to see themselves as enforcers.


They seem to like buying securities that are going down and selling securities that are going up, which I personally find difficult to do.

As a trader with a strong mathematical/statistical background, do you have any opinion on such mean reversion strategies.


Intuitively the mean reversion paradigm does not appeal to me , as the relationships in most cases are not stationary. In the few cases, that such relationships have been stationary, there is no guarantee that the relationships would remain stationary in the future.


Also , since change is the unchanging rule in nature, it surprises me that such unchanging relationships exist at all.

I would like to know your thoughts on this? To me, this looks like a ploy by brokers to get commissions on 4 legs of the trade. Or am I missing something?
Your response will be appreciated.

Yes. Mean reversion strategies seem to medicate fear of volatility.

 

 

 

Stat-Arb Trading Room

Circa July 19, 2007

 

Head trader studies how to extract

a few more nickels

from in front of the money machine

while Ph.D. staff, junior traders

and the press

look on in admiration.

 

A few weeks later, the head trader

extends the trader's lexicon: namely,

he gives a new meaning for the term

"getting flat."

 

Clip: http://home.earthlink.net/

~clovenhoofpress2/steamrollerprints/

Thu, 19 Jul 2007

 

Finally, an explanation for the markets


Price movement density and synchronization maybe what drives market price.

 

Ph. D. = Pile higher and Deeper.

Wed, 18 Jul 2007

 

Record Highs - No Limit to Running Room

Hi Ed,

My colleague tells me about a Yahoo "Top Story of the Day" written by David Leonhardt at New York Times about the recent new record highs in the US stock market ( http://tinyurl.com/yugtxe  ).

What amazes me is that the author, seemingly a very bright person who has a degree in Applied Math from Yale University, can suggest that a record high means little running room, or that the stock market even at a record high HAS NOT BEEN a good investment:

"If the market isn't really at a record high, it may still have a lot of running room."

"Stock market's record high does not mean that stocks have been a wonderful investment lately. They haven't been."

Contrast that with trend followers who see unlimited running room when things break into new highs!!

ciao,

See item directly below.

Wed, 18 Jul 2007

 

Trading Update: +15% for June


Ed,

Trading update: going very well. I am trading using non-systematic instrument selection and extremely systematic risk controls. The computer generates the candidates, I take my selections from the candidates. This seems to suit me much better than having my computer select the stocks basis purely technical criteria.

In my stock account I have a >15% ROI in June, with most of my positions continuing to trend strongly higher. Yesterday I sell the refiners (TSO, VLO, MRO) and FTK. I am still long RIO, FSLR, FCX, BHP, AAPL, BIDU, XTO, FLIR, CCJ, and CZN.

In futures, believing that the sugar trend changes I initiate a long position (a while back) at 9.34. I'm too early as the the sugar price becomes choppy and position draws down a bit. However, it doesn't stop out. I am seeing more and more evidence that sugar might be trending higher.

Regards,

Thank you for sharing your process.

 

 

Dow Jones Cash Chart

 

Red Ellipse Indicates Receipt of this Email

 

Wed, 18 Jul 2007

 

TTP and Smoking

From 3-Packs per Day to Zero

Hi Ed,

Just a short note to let you know that I haven't smoked since 07/07/07. So far, it's been almost effortless, and the best part is, the whole process is turning out to be practically free of withdrawal symptoms.

Once I have a bit more than 12 smoke-free days under my belt, I'll write something up for FAQ.

Meanwhile, thanks for your concern and support.

Thank you for sharing your process ... and for being willing to experience your feelings.

 

 

Smoookin'

 

Clip: http://www.movieactors.com/freezes-

super-pages/carrey-mask29.jpg

Wed, 18 Jul 2007

 

Research Topic


My research project seeks to answer the following question:

How much capital do I need to starting trading a multiple-instrument, multiple strategy long/short/flat system?

Reviewing Ed's FAQ, there are several times that he is mentioning that one needs a minimum of 500,000 to begin trading a system in the futures market. Although knowing his opinion is important, I want to find the reasoning behind his answer in order to show myself that 500k is indeed a reasonable minimum. Although I trust that Ed has fully thought his answer through, it is important that I do the work for myself as the most difficult part of system trading is sticking with the system. I hope that by understanding this issue as best as I can, I will have the confidence to endure periodic draw downs and not feel that I am attempting something without proper preparation. I find it very important to feel that I complete all my homework. I know that there is going to be plenty of unexpected, unforeseeable events that will occur while trading my system. I do not want margining to be one of those issues.

I believe that attempting to trade a system without enough capital will have a high chance of failure. At my prior position trading at a proprietary firm, I was never made aware of margining issues. The risk controls used by management was contract limits. I could trade x contracts of a particular instrument or y contracts of a particular inter-market spread. My former employer has a very large line of credit that we would draw upon as necessary. Now that I am trading for myself, capital minimums become a very important issue. It is certainly the issue in which I am most unfamiliar.

I will attempt to find a possible answer by finding the margining requirements for each instrument I intend to trade, understanding the specific margining process that my broker (Interactive Brokers) uses, and determine minimum position sizes. Once I know what the minimum position size should be, I can use heat parameters to determine a minimum amount of capital. This is at least the plan. I intend to speak with [brokers] tomorrow to begin researching this topic. I also intend to follow Ed's recommendations for using different heat parameters to test system performance.

I hope this is decent explanation of my interest in this topic. If you have any more questions, please let me know.

My Rule of Thumb derives as follows:

 

Professional, business-like trading generally indicates risking about 1/2 % of the Account on a trade.

 

Set max loss per trade = 1/2 %.

 

Also notice some contracts may easily move $2,500 from entry to a logical stop. Note: Overnight, August 15-16, 2007 the Yen / Australian Dollar spread changes about $7,500.

 

From 1/2 % Account = $2,500.

we get Account = $500,000.

 

If you are willing to risk 5% per trade, then you might begin with $50,000.  

Tue, 17 Jul 2007

 

On-Line Brokerage

Execution Issue - Continues


Ed,

I list the second round inquiry below. It seems the agent doesn't want to help me out. The time and sales report is only available during trading hours, so I look into it when it is ready. Then I write them the third inquiry. I think the open range mentioned in the agent's response is incorrect.

---

My Inquiry:

07/16/2007

Sugar seems liquid enough to fill my one-lot order on the open. I would like you to send me the 'time and sales' report of Oct. Sugar on July 13, 2007. I like to see what is the first offer price of the day.

Broker's response:

07/17/2007

Please pull up a chart of OCT. Sugar ... Time and sale data is located there.

You will see that on Oct. 13th, the market opened at
.0997, and traded up to .1014 on the open.

Let me repeat. This is an illiquid market. Your orders
will suffer considerable slippage.

Thank you for sharing your process.

Tue, 17 Jul 2007

 

New  Equity Highs

 
Hi Ed!

I haven't seen you in a while. I was still recovering from jetlag and a brief illness after a wonderful trip to Africa as of the last Tribe meeting, and I missed it.

Here is an update on my trading and money raising progress. As of now, my trading program is at new equity highs, recovering fully from the drawdown that it endures since inception in May 2006. Returns are well into positive territory for the year. [See the attached PDF that I send out to my selling partners as of yesterday. Please do not post this PDF to FAQ as by NFA regs it is not for public distribution.]

I find myself talking to lots of new potential investors and covering even more ground by bringing on new firms as selling partners. I anticipate raising a lot of money. I intend to stick with it and market and sell both now and during whatever performance comes next, be it draw-up or draw-down.

Since my last report to you, I am up from about $2.1 million to right at $2.4 million under management now. I intend to increase the pace of money raising to many times that rate. Thanks for all your support along the way!

Best,

Good Work !

Mon, 16 Jul 2007

 

Free Advice from the Net - Beware !!!

OTC-Advisors.com and bullishalrets.com Issue Watch Alert On SZSN

Shandong Zhouyuan Seed and Nursery Co., Ltd (SZSN) $0.33 UP 37.5%

Market watchers are already alerting investors that SZSN in on the rise and moving fast. Read the news and get on SZSN first thing Monday morning!

This kind of advisory shows up in my email in-box.  For example, note the dates of the advisory and the likely fill range on the chart.

 

 

Chart of The Recommendation Stock

 

Showing The Date of the Email

and the likely buy price.

 

 

Sun, 15 Jul 2007

 

When is Later ?


Ed says: Hard Work Often Pays Off Later ... Procrastination Pays Off Now" (FAQ 1/21/06)

My first reaction is that I like this funny yet profound quote.

Then on second thought, I begin to ponder as this doesn't sound like your typical answer since future (later) doesn't exist. So hard work only pays off in some non-existing "later"?

Yes, the hard work, the procrastination and the payoffs all occur in the moment of now.

 

 

Sun, 15 Jul 2007

 

Rocky


Ed Says: You may be able to gain inner freedom by advising your relatives only when they ask for your advice; otherwise advise them by setting an example.

Yes. I want to. Thank you.

OK.