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September 21 - 30, 2007

 

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Note: The intention of inclusion of charts in FAQ is to illustrate trading principles - The appearance of a chart does not imply any kind of indication or recommendation to buy, sell, hold or exit any positions.

 

 

Questions

(Quotes from Ed in Red)

Answers

Sun, 30 Sep 2007

 

Helping (fixing?) Other People


Ed says, "You might consider taking your feelings about <who gets todetermine "the best" and "unhealthy"> to your Tribe.

Thanks Ed. I am considering.

I agree that in an ideal case, each person gets to determine his / her own "best" interest and what's "good" for them.

I also want to be fully supportive of others, to be just the way they are. For example, a tribe member who has been very supportive decides to stop participating. I feel sadness and an emptiness in the heart. I take the feelings to the hot seat. The member later wrote me many kinds words and expressed gratitude, but just felt the need to stop. I notice that this is his pattern and I just encourage him to stop. I feel good about it.

I find it a lot difficult when the subject involved is a close family member though. I also want to support them to be exactly the way they are. Yet, just like you can't share feelings with someone who is drunk or on a drug, I find it difficult to genuinely support others who is clearly on a destructive pattern.

If say a person decides that the "best" way to deal with the trouble in his life is to use alcohol to numb his feelings, do you just support him to keep denying reality? He probably doesn't think it is "unhealthy" at all despite it is clear that heavy drinking is harmful to his liver.

How can I provide support?

You might consider taking your feelings of <wanting to provide support> to your Tribe.

Sun, 30 Sep 2007

 

Health Care and Fundamental Rights


Hi Ed,

Somehow I turn on TV and there's Oprah. It's one in which she istalking about health care. She poses a question that keeps me pondering, "Do you believe, that a poor kid has a fundamental rights to receive health care, as a rich kid?"

Sir, can you please share your answer to the question? Also, is your answer the same if we replace "health care" with "education"?

 

Many thanks.

A right is an entitlement or claim on assets.

 

In a private property system there are no "fundamental rights."  There are only rights that one entity voluntarily awards another entity.

 

As government grows, it uses the "fundamental rights" and "fairness" arguments to manufacture rights for itself and to take rights from the citizens.

 

Government sometimes awards services, such as health care, as a way to justify taking rights. 

 

Government rarely awards rights, such as the right to take the salary or the power of any of the government employees.

 

Health care tends to increase in quality and availability in a free-enterprise system and to decrease in a socialist system.

 

 

 

The Bill of Rights

December 15, 1791

 

This set of ten amendments

to the US Constitution

limits the power of government.

 

 

Clip: http://imagecache2.allposters.com/

images/pic/OWP/2331B~Bill-of-Rights-Posters.jpg

Date: Sun, 30 Sep 2007

 

Wants a Baby - Doesn't Trust Men



Dear Ed,

now I know where the bear is hanging. (see below) Again tremendously practical advice on this page (I don't read many others).

Ed says: You might consider getting into your empty feeling.

I am not sure whether I do it or not. The next morning I have a very vivid and lasting dream about me breastfeeding a baby.

 

My fears about risking my health by having one are gone. I note that the day before I looked at FAQ of Mon 25 Jun, 2007 where you can see two lovely mothers breastfeeding their babies. Nevertheless this is exceptional, because I don't dream very much and if so, the dreams leave no lasting impression. This one does for a day or so leaving me in a great mood.

I also do note that my snapshot about partnership looks more like "Parasites and lazybones, beware of the dog. The dog is going to bite your head off".

 

I recognize that I have a collection of those around me when I go out for lunch and stop going there for awhile. I piss-off a guy at the phone and personally and have to realize that this is my story. The guy is just laughing. Now I am at the point where I was when I read your book.

 

I do realize that I just don't trust the guys (great place to put it in here). It then happens in real time. I call one up for going to cinema and he says: Guess what? I am not [home], I am in [another city], visiting my girl-friend. Wow, the same guy wanted to talk me into going with him after we meet ... Sunday. I just don't feel really good right now. I know ...

Strangely enough at the same time the mental block to remove the jungle in my flat vanishes. Something like: if you can piss the guys off verbally, you don't need to have a jungle in your flat so that none of them can visit you. Instead the un-feeling is back. Time for a Monday and some nice work, I suppose.

I read the TTP alternative about treating a daughter with great interest. (see below) I hope you point out more of these TTP alternatives in your new book.

 

The TTP alternative concerning relationships your current book impressed me very much and clearly showed me my k-nots about relationships as described above.

All the best ...

Thank you for sharing your process.

 

You might consider taking your feelings about <having a baby> and <trusting men> to your Tribe.

 

 

 

Family

 

The Essential Tribe

 

 

Clip: http://www.stevensaquatics.com/

FamilyKidsRecreationalSwimming.asp

Sun, 30 Sep 2007
 

Snapshots and TTP


Dear Ed,

you mentioned a Milton Erickson on your page and I read a book about him: Milton H. Erickson, M.D.: An American Healer.

I note: Wow, it is happening ... without Milton. My friend is sitting here with glassy eyes, describes his snapshots and then he starts solving his problems on the spot.

 

He really likes Snapshots. And I am a little bit envious because I am not progressing as fast as he is. He doesn't even read your material, I suspect.

In TTP, on the other hand, he was actually going for me and I was hit. I can bring him back on track but don't know how to deal with the fact that I get his anger right in my face (criticism, complaints, power struggle).

 

I get angry, too, and cannot deal with it really. I suppose we have to talk about it or are there certain rules you propose for group situations like that? (We just had four TTP processes up to now and just one is finished).

Thank you for sharing your process. 

 

You might consider taking your feelings about <dealing with anger> to your Tribe.

 

 

 

Anger

 

One positive intention

is boundary management.

 

 

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

uploaded_images/anger2-747499.jpg

Sun, 30 Sep 2007

 

Out-of-Limits Pain

 

Ed,

 
Ed says, "Pain is any feeling you are unwilling to experience." (FAQ, 12/24/06)

Hi Ed, this sounds very different from the everyday usage of pain that we are familiar with. Can you please elaborate what you mean by pain as ANY FEELING we are unwilling to experience?

I go through a lot of feelings I am initially unwilling to experience during my various hot seat sessions: frustration, annoyance, lethargy, grouchy, sadness ... all of which I don't quite willing to experience but none of which I'd classify as pain (as in physical suffering or distress, mental or emotional suffering or torment, according to the dictionary definition.)

In fact, I notice in a way, as long as the pain is within limits, sometimes I am quite willing to experience (e.g. the pain associated with working out really hard).

Thanks.

-----


P.S.
As I'm writing, I recall the pain I had during my last Breathwork session at your place with an excruciating painful leg cramp. It brings back good memories.

When you experience your out-of-limits pain, you convert it from an adversary to an ally on your emotional instrument panel. 

 

A supportive container, such as the TTP healing field of acknowledgment is essential to encourage you through this process.

 

 

 

Some People Try to Avoid Pain

 

others line up for it,

 

and some go to Tribe,

to work through it,

and move on.

 

When you become willing

to experience

 what you think is painful,

it ceases running your life.

 

Clip: http://www.spankinggate.com/spanking.jpg

Sun, 30 Sep 2007

 

Associates Program:

Different Simulation Results

for NYSE, AMEX and NASDAQ
 

Hey Ed,

About 2 weeks ago I setup a database of equities from CSI that includes all listed and delisted stocks from the NYSE, NASDAQ, AMEX since 1982 and I up my computer's memory capacity to 8 gigs to handle the 28,000 + symbols.

 

After running numerous back-tests on different subsets of the database, I realize that the parameter settings that work well on NYSE stocks don't work as well with NASDAQ stocks, have you seen this phenomenon in your testing as well?

Widely different results on different portfolios may indicate instrument-specific optimizations and / or other curve-fitting complications.

 

Robust stock-trading systems tend to generate similar results for random selections of 50-100 stocks.

 

If you come up with a simple system that shows substantially different results for 100 random-selection stocks from NASDAQ and NYSE, let me know.

 

Note: Some data bases stop publishing a stock price series when the company fails and / or the stock goes off the board - so you may also have some "survivorship bias" in your data.  This effect may be stronger for new high-tech companies than for the old blue chips.

Sat, 29 Sep 2007

 

TV as a Market Indicator


Hedge Funds in Hollywood
TV and movies have rediscovered Wall Street.
Time to sell!


By Daniel Gross
Posted Wednesday, Sept. 26, 2007, at 4:37 PM ET
http://www.slate.com/id/2174790/fr/flyout

Popular culture, which is created by some of the least business-savvy people on the planet, has always been slow to latch onto business and economic trends. The covers of large-circulation magazines are a good contrary indicator. And TV, movies, and books are even worse. Twelve to 15 months can elapse between the first formal pitch of a new sitcom and the debut of the pilot. With movies and books, the lead times are even longer. By the time the film hits the multiplex or the book shows up on Amazon, the business phenomenon it describes has frequently gone bust-which is why hedge-fund managers and their investment-banking cousins should be very worried about the onslaught of Wall Street-themed pop culture.

We've seen this before. Tom Wolfe's Bonfire of the Vanities timed the zeitgeist-and the market-perfectly, debuting in October 1987, the month the 1980s bull market came to a crashing end. But Oliver Stone's Wall Street didn't hit the theaters until December 1987 and tanked at the box office as a result. After a few punk years, Wall Street caught fire again in the mid-1990s. But programming executives didn't catch on to the new wave until much later.

 

Darren Star, who had neatly captured a cultural moment with HBO's Sex and the City, rolled out The $treet on Fox in the fall of 2000. This show about the professional and personal lives of attractive employees at a New York brokerage firm arrived at a time when Wall Street was falling out of favor, and lasted just 12 episodes, one more than Bull, which was also about the professional and personal lives of attractive employees at a New York brokerage. The real-estate bubble produced the ABC sitcom Hot Properties, a bawdy send-up of the lives of four attractive real-estate brokers. It debuted in the fall of 2005, just as housing prices were about to peak, and went into foreclosure after 13 unfunny episodes.

Real estate has been replaced in the public's imagination by hedge funds, private-equity firms, and really rich people-who are enjoying record bonuses, a degree of income inequality not seen since the Gilded Age, and a popular-culture renaissance.

 

For the last several months, analysts (and envious journalists) have been eager to call a top in the phenomenon of extreme wealth creation, pointing to phenomena like the explosion of hedge funds, or Blackstone founder Steve Schwarzman's over-the-top birthday party, or this summer's credit crunch. But the best signals of the impending fall of the ultra-rich can be found in TV Guide.

The fall slate includes Dirty Sexy Money, an ABC drama about an insanely rich and charmingly dysfunctional American family based in New York ("they put the upper in Upper East Side"). And Big Shots, an ABC drama about four insanely rich and charmingly dysfunctional corporate hot shots based in New York. And Cashmere Mafia, an ABC drama about four insanely rich and charmingly dysfunctional female corporate hot shots based in New York. (Frances O'Connor plays Zoe, a "top investment banker.") The sidekick on CBS's new vampire show, Moonlight, is "eternally young, wealthy and mischievous Josef, a hedge fund trader who relishes his uniqueness."

And there's more to come. Doug Ellin, who developed Entourage for HBO, is making an HBO series based on a hedge fund. He hired writers this summer and hopes to launch the series next summer alongside Season 5 of Entourage. Ellin and his crew better hurry, though. If this fall's TV slate isn't enough to make you think big, New York-based money is overplayed, other news coming out of Hollywood should.

 

Fortune reports that Michael Douglas has committed to reprise his role of Gordon Gekko in a sequel to Wall Street. By rights, the new Gekko should have evolved from a corporate raider into a hedge-fund manager or a private-equity honcho. But at least one Hollywood-type has learned from history. Cognizant of the fact that movies can be extremely poor market timers, screenwriter Stephen Schiff is hedging his bets. "I don't want to date the film," Schiff told Fortune when asked about Gekko's professional life. "With what's going on right now, the question is: Where will the unassailable money end up? It might not be hedge funds."

Thank you for the link.

 

Here are some other shows you might see:

 

How about a sitcom with a balloon vendor who leaves home at an early age to eventually become Chairman of the Fed: The Runaway Inflator

 

 

Or a show about a carpenter who remodels old homes and finds the costs of upgrading the garage exceeds the original purchase price of the house: This Old House Goes Through the Roof

 

 

Or one about a mortgage broker who wears a mask and carries a pistol with silver bullets: The Loan Arranger

 

 

 

The Loan Arranger and Don't-Owe

 

tail some Florida condo speculators

who fall behind

on their variable-rate mortgages.

 

 

Clip: http://www.lsjunction.com/facts/fiction.htm

Sat, 29 Sep 2007


Getting to Bliss


Hi Ed,

I feel like sending a note. I am reading the FAQ more and more and feel it benefits me, in that I know I need to dive in deeper.

 

I trade (live life also) and notice all sorts of feelings that arise. I follow the system I get feelings; I break rules I get feelings, I go thru the day I get feelings. I try to feel them, but only a bit. It is different; I am more willing and aware of them.

I become aware or sense there is a lake or pool of feelings in me that I judge as “bad” and thus feeling them is uncomfortable. I do feel them but my sense is I need to be willing to swim in the lake, even drown in it if that is what is called for. I feel a resistance to do this, like “if I am sad all day or week what would that be like?” I judge it as “knot” good.

So I take a breath I feel and feel, I sit in front of the PC and just feel. I remember [Name] talking about people who just sat and looked at their mind till they got to the bottom and went thru all sorts of incredibly powerful emotions and at the bottom was “Nothing”; then I think about feelings as helpful, useful and much needed. I think “Judging, good and bad who gave me those ideas anyway?”

I am typing again and feel willing to feel more. I send you an order for the TT book and send an email to the closest tribe asking to visit. I feel peaceful, calm and alive! I listen to an artist who as you put it “they don't have the talent-the talent has them”

http://www.youtube.com/watch?v=Ayc7oBR1ZGA&mode=related&search=

One just is not enough:

http://www.youtube.com/watch?v=sTsHn9a9u1c

Wow, to trend the way Phil Keaggy is the guitar, that is bliss function, would you agree?

Continued and growing thanks to you and the Tribes for all the help!

Thank you for sharing your process.

 

People who just sit and look at their mind rarely get to the bottom of anything.

 

People who sit with others - and encourage each other to stay with their feelings typically get there.

 

People who sit and play like Keaggy (and, of course, Fleck) are likely already there.

 

 

 

Meditation

 

can be a form of

 

medication.

 

 

Clip: http://universalblogger.files.

wordpress.com/2007/05/meditation.jpg

Sat, 29 Sep 2007

 

Ice Cream or Candy


Hi Ed,

Here's an encounter between my brother-in-law and his 2-year-old daughter:

Daughter takes candy and ice-cream.

Father: Remember what the doctor says about your health? He says you need to cut down your sugar. So how about this, you can have only candy or ice-cream, but not both.

Daughter picks candy.

Father says, "So if you pick candy, you cannot have ice-cream, OK?"

Daughter pauses for a moment, then picks ice-cream.

Father says, "So if you pick ice-cream, you cannot have candy, OK?"

Daughter picks ice cream and starts eating.

After finishing the ice cream, the father later catches his daughter ignores the agreement and starts having candies too.

At this point, the father has a mixture of feelings: feels a little funny about the his daughter's behavior, a little disappointment to her daughter's failure to honor her words, a little angry about the violation of a contract, and a little worried about her health as the doctor's words ring in his head.

So how would you  feel if your little kid violates an agreement with you? What would you say to the kid?
 

Here's a TTP alternative:

Doctor: Your daughter needs to cut down on sugar.

 

Father: What does that mean?

 

Doctor: Sometimes it's OK to eat sugar.  Just try to cut down in general.

 

-----

 

Father: The doctor says he wants you to cut down on sugar - that too much sugar can harm you.  I wonder how you feel about that.

 

Daughter: I like sugar.  How do you feel about it?

 

Father: I like sugar too and I love you.  I also want to support you in making your own decisions and in running your own life. I feel that sugar makes me kind of buzzy, and then sad later, and that if I do not exercise properly, it can make me fat.

 

Daughter:  I love you too, daddy.  Thank you for telling me about sugar. I like the sugar buzz and I like to exercise and I think I can cut down on sugar sometimes.  All this talk about sugar is giving me a sweet tooth right now!  Do we have any candy or ice cream around.

 

Father: We have both.

 

Daughter: I'd like a small portion of both.

 

Father: OK. I think I'll join you in that.

 

-----

 

 

In the scenario you present, the Father does not share his feelings. He invokes higher authority to set a rule.  He then invents a rule for his daughter without discussion.  He then teases her by showing both and telling her she must deny herself one of them.

 

The father appears to medicate his fear of intimacy by being domineering and making others squirm.

 

He is teaching his daughter that her feelings don't count, that men don't share feelings and that they are mean and capricious.

 

Daughter is likely to grow up to select boy friends, bosses and a husband with characteristics similar to her father's.

 

This pattern is quite common. 

 

Since neither the father or daughter is writing me about this or complaining to me, I do not see either one feels they have a problem with the way their Rocks co-operate.

 

The father and daughter are likely not asking you for help, either.  Nevertheless, you appear to feel some need to intervene.

 

You are the one writing me about this so you evidently have some feelings about it that you are not sharing. In this way, you resemble the father.  If you wish to continue this thread, please present your feelings about this situation.

 

 

 

Fathers and Daughters

can relate in many ways.

 

-----

 

People who medicate their own feelings

about the behavior of others

by intervening in others' affairs

without invitation

 

typically intensify conflict

 

in families

and in countries.

 

 

Clip: http://www.termlifeoptions.com/

Fri, 28 Sep 2007

 

Bear Hangs On

 

Ed,


http://www.tahoedailytribune.com/

article/20070918/Region/109180037

Thank you for the link.

 

 

 

Metaphor

 

 

Clip: http://www.tahoedailytribune.com/

article/20070918/Region/109180037

Thu, 27 Sep 2007

 

Addiction to Feeling Successful #4

see previous

 

Ed,

 

At this point I don't have much to write to FAQ as the "form" or whatever you like to name has gone down into the guts in the form of a slight inner pressure or tension. At this point I am alone I think, and there is nothing you can do. I don't have a Tribe either.

Your insistence to tell me that I might take this or that feeling to my tribe (that I don't have) doesn't seem to help either.

 

It doesn't feel "receptive". I think the "alternative approach" works better, even though it feels like so distant, impersonal and thoroughly systematic that I wonder if I am communicating with a machine.

Thank you for sharing your feelings.

 

To continue along these lines, you can form a Tribe and start practicing TTP, per the examples on this site, the instructions in the Trading Tribe book and/or the training at the Workshop. 

 

You can then report your experience of sharing your feelings to this column to clarify your process and to inspire others.

 

 

Thu, 27 Sep 2007

 

Drama-Less
 

Ed,


The drama is gone.
 

And there is this remarkable lack of pain in my chest.
 

Whatever should I do ???
 

You might write something up for FAQ.

 

Thu, 27 Sep 2007

 

Addiction to Feeling Successful #3

see previous


Ed,

Two Posts of "Addiction to Feeling Successful" are very interesting. Some feelings come up when I read through them. I don't know how to write these feelings out, but I enjoy experiencing them. I also enjoy the feelings of medicating myself by writing to FAQ now.

Experiencing the feelings of "Trend following is hard" might benefit to people who embrace trends.

Thank you for sharing your AHA.

Thu, 27 Sep 2007

 

Helping (fixing?) Other People
 

Dear Ed,

My understanding of TTP is that we do not try to fix other people but just celebrate and support the way they are. We work on fixing ourselves instead, for it is an inter-connected/systemic universe. When we fix ourselves, in a magical way it affects others in the process.

Two questions come to mind:

1) How far would you go in "supporting others to be just the way they are"? Fully, unreservedly, without question, no matter what?

If you see something that feels clearly "wrong" (e.g. being irresponsible), can you genuinely encourage the person to be "as irresponsible as possible", just the way he is? I find it difficult, especially if that person is a closed one. I feel that my desire to "wish them the 'best'" interferes with my desire to "support them to be exactly the way they are."

When I see how their habitual behavior likely would result in a destructive, unhelpful and unhealthy consequence to them, it is difficult for me not to "do something to help them."

2) I know, I know. The way to "help them" is to work on myself. But how is it a more effective way to, instead of working directly with the subject, work indirectly and rely on the inter-connectedness of a system to deliver the change?

Many thanks!

You might consider taking your feelings about <who gets to determine "the best" and "unhealthy"> to your Tribe.

 

 

Picking the Best Spice Girl

 

requires

 

a picker.

 

 

Clip: http://evilbeetgossip.film.com/wp-content/

uploads/2007/06/spice_girls.jpg

Thu, 27 Sep 2007

 

Population, Income and Longevity
 

Ed,


You might like to check out drop down menu in top right of screen to change chart data

Link: http://tools.google.com/gapminder

OK.

Wed, 26 Sep 2007

 

Associate Program - Progress Report


Hi Ed,

I complete a new version of the TSP EA that allows me to backtest multiple markets. I backtest my equity strategy to see how the results look.

 

The strategy trades the 9 SPDR ETFs that make up the S&P500. The growth rate (icagr) increases with heat and the MAR is higher than trading the S&P500 alone.

 

It seems that diversifying even within a broad index can improve risk / reward. These ETFs only go back to the end of 1998, so I cannot see how the system fairs on Black Monday in 1987. I am working on further refining the results of my strategy.

I am next focusing on optimizing my system parameters.

My experiment with my first trend trade continues. I am still long GLD as my stop is not hit. I feel more calm about my position. I try to let the system do its thing instead of worrying about what is going to happen. I tend to check the market less throughout the day.

 

When I feel anxious, I take a break from my work and do some deep-breathing. It tends to alleviate the tightness in my chest.

Tomorrow morning, I intend to move up my stop and increase my position to maintain a 1% risk on the trade.

Thank you for sharing your process.

 

You might consider continuing to increase your simulation study heat until your MAR peaks and then falls.  In this way, you can determine your optimal heat.

 

Your substitution of deep breathing for fussing with your market position is an excellent example of replacing medicinal behavior with pro-active behavior.

 

If you are fixing to add-on to a long-term position (the mor[e]on rule) you might like to consider back-testing your method for doing so.

 

 

 

To Find The Optimal Point

 

you try a wide range of values of k.

 

 

 

Functions Show Optimal Values

 

where the trade-offs balance.

 

 

Clips:

 

http://www.math.uah.edu/stat/urn/Strategyk.png

 

http://telstar.ote.cmu.edu/environ/

m3/s6/09management.shtml

Wed, 26 Sep 2007

 

Learning to Trade - On the Road

see Fussing with Crude


Ed,

On Wednesday, I am down over a little over $350 on the Dow Jones trade. I am also in the process of writing up all of the information and feelings relating to the Crude Oil trade I got out of and then back into and am now out of again. I spend the day today traveling and should have more access to markets tomorrow.

OK.

 

 

 

Being in an Airplane

(and not having access to the markets)

 

provides a dandy

place for (or)

 excuse for not

 

dealing with feelings.

 

Clip: http://www.math.uah.edu/stat/urn/

Strategyk.png

Wed, 26 Sep 2007

 

Addiction to Feeling Successful #2

see previous

 

Ed,

 

Ed Says: You might consider taking the feeling of <success = being willing to follow a system regardless of the short-term performance> to your Tribe.

I wonder what other forms of medication you and the author of the article use to maintain the "perpetual high" you both seem to need in order to function.


I don't know much about the author. I read though that he feels a kind of compulsion to put on paper whatever he is thinking about, so he likes writing articles and books.

About myself, I think have a myriad of minor medications that make up my existential medication. Trading discretionarily used to be one. Browsing the Internet, embracing new challenges, looking for knowledge, exploring my mind, feelings and inner potential or limits among others might also be some forms of medication. Incidentally, over the past few years, I derived the most satisfaction from an intimate friendship with a great female friend of mine, from increased spirituality and from participating in a folk dance group since last November. Now I contemplate the possibility of moving back to my hometown, owing to professional reasons, and so having to leave the group and my friends. That breaks my heart.

Now I am also thinking: if writing to FAQ might also be a medication form to me, how do our rocks fit ?

Thank you for sharing your process.

 

Nice insight about your using FAQ as a form of medication.  This opens an opportunity for me to consider my own role in the drama.

 

To the extent that you keep writing and do not (1) join a Tribe or (2) get into your feelings, one of your medicinal rocks may be <ready, aim, analyze, analyze, analyze ... >.

 

To the extent that I am willing to indulge you, and gently suggest you to join a tribe and get into your feelings, one of my medicinal rocks may be <be patient, gentle and pontificate>.

 

I wonder if you might be willing to join a Tribe and get into your feelings so I can stop pontificating.

 

The alternative approach is for me to stop responding to the analytical part of your emails.

 

 

 

When You Identify Your Pattern

 

you help me

 

identify mine.

 

Clip: http://www.masternewmedia.org/news/

2006/08/09/opensource_networked_

journalism_meets_smartmobs.htm

Wed, 26 Sep 2007

 

Back-Tests

 

Ed,


Ed Says: You might consider taking your feelings about <clueless> to your Tribe.

I have made some additional back-tests and I have found that my (inner) refusal to work with in-sample/out-of-sample data might just have been one of my biggest mistaken assumptions with regard to back-tests. Very interesting how this TTP thing works. AHA.

OK.

Wed, 26 Sep 2007

 

Gold Standard



Ed says: Deflation increases the value of money and helps raise the standard of living for people who save; it penalizes those who borrow; it entrains low (even negative) interest rates.

 

I wonder if the Japanese feel this way.

Based on your words, one might think you're an athletic supporter of deflation.

Here's what Milty says:

The Fed permitting the U.S. money supply to shrink by one-third brought on the Great Depression. With one-third less money available to bid for goods and services, prices had to fall. With the falling prices, borrowers were unable to repay loans and depositors withdrew their money, thus, the money supply shrank further as banks collapsed.

You might consider going directly to the source and asking "the Japanese" how they feel.

 

Business cycles, like the cycles in your own body, have a positive intention. Your breathing system, blood delivery system, eating system and elimination system are all essentially cyclical.  If you attempt to "overcome" or "stabilize" these cycles you become ill. 

 

Business cycles help to transfer resources and manpower from inefficient firms to efficient ones and from old technology to new technology. The supply of money and the rate of interest vary to support the process as the cycle proceeds.

 

In a free economy, banks receive deposits and make loans; you might choose to accept the "paper" of some of the most stable banks as currency. Thus you automatically apply local market incentives to motivate sound loan policies.

 

In the Fed system, you have no choice about accepting the paper or not, since all system bank loans atomically become "legal tender." Thus bank loan policies are relatively free from market forces.

 

Absent the periodic cleansing effect of free market business cycles, the economy tends to head toward debt addiction and may wind up balancing precariously between credit collapse and run-away inflation.

 

 

 

The Fed Bankers Meet Periodically

 

to medicate their feelings

about credit collapse.

 

They typically decide

that the best fix

is more credit.

 

Clips:

http://www.williampark.net/addictionL.jpg

http://www.scenta.co.uk/_db/_images/addiction.jpg

Wed, 26 Sep 2007

 

Parallel Universes
 

Ed,

I thought you might like this. I wonder if our intention determines which reality we play out individually.

Source: http://www.breitbart.com/article.php?id=

paUniverse_sun14_parallel_universes&

show_article=1&cat=0 

Seems pretty far out there.

Parallel universes may very well exist - in some parallel universe.

 

 

 

Parallel Objects

 

do not intersect

 

 

 

 

The Parallel Universe Theory

 

includes branching

 

that is essentially non-parallel

 

 

Clip: http://fizyka.phys.put.poznan.pl/~pieransk/

Physics%20Around%20Us/Parallel%20groves.jpg

Wed, 26 Sep 2007

 

Coming to Trend Following

Dear Ed,

i have only been involved with trading for a year ... i have no problem admitting to being a cub in this field. over this short period of time, i've studied both systems and descretionary type trading and found that the latter does not and ultimately can not make sense in the real world. the first few months i participated in the trading arena, i was beaten up psyhcologically....my account was suffering too. i then stopped trading and took the time to educate myself further. to make a long story short, i was privileged to experience a huge AHA! moment when i discovered something that was staring me straight in the face the whole time; that markets trend regardless of (insert reason). i still cannot understand why people (myself included) make things more complicated than they really are. anyways, i just wanted to say thanyou for your support and helping me come to "know thyself" better.

p.s. this post script is a bit selfish in nature as i was hoping you could critique my trading philosophy (see below). obviously i am not reinventing the wheel; in fact, i may be guilty of some plagiarism. you know what they say, "if it ain't broke ..."

 

Trading Psychology

1. Cut losses
2. Ride winners
3. Trade with the trend
4. Keep your bets small
5. Follow your method and your rules, no exceptions


Always keep in mind the following

a. Emotion is the enemy of trading
b. You can’t control the market.
c. The market doesn’t care about you.
d. Draw downs are the cost of doing business.
e. You can be right less than half the time and still make a fortune.
f. Losers average losers.

"Remember that markets don't exist to make investors rich (although we all hope they do!), they exist to provide liquidity; the ability to buy or sell a stock, bond, or other asset quickly and easily at a current consensus price of what that asset is worth."
- Christopher Smythe -

Trading only tolerates people led by objective reasoning (see below).

1. In trading, reality exists as an objective absolute—facts are facts, independent of one's feelings, wishes, hopes or fears.


2. Reason (the faculty which identifies and integrates the material provided by man’s senses) is man's only means of perceiving reality, man’s only source of knowledge, man’s only guide to action, and man’s basic means of survival.


3. Man—every man—is an end in himself, not the means to the ends of others. He must exist for his own sake, neither sacrificing himself to others nor sacrificing others to himself. The pursuit of his own rational self-interest and of his own happiness in trading is the highest purpose of his career.


4. The ideal political-economic system is capitalism. It is a system where men deal with one another, not as victims and executioners, nor as masters and slaves, but as traders, by free, voluntary exchange to mutual benefit.
 

Thank you for sharing your process.

 

You might consider at your "keep in mind" points: create alliance relationship with your emotions rather than an adversarial one.

 

You might consider, at your objectivist points: identify the logical, objective reason that people have feelings.

 

 

 

Movie Robots are More Effective

 

when they display emotion.

 

 

 

Clip: http://www.persianstudents.org/

archives/robots.jpg

Tue, 25 Sep 2007

 

Learning to Trade - Fussing with Crude Oil


Ed,

On Tuesday, I am down over $1900. Most of this is attributable to the Crude Oil trade I re-opened yesterday. I reopen this position not because of the charts or because I had a plan, but because I misunderstood something you say. Not a very sound rationale for making a trade.

 

A good bit of learning there for me to trust my own thoughts and feelings though. Also, soybean oil hits its stop, as does Canadian dollar. So, I am now out of everything except for my short Dow Jones position. I feel a little anxious not being in more positions and wanting to make back what I have lost from this Crude Oil trade.

 

This is similar to the feeling I had when I missed out on the wheat trade and tried doubling up on the Dow Jones only to see it take me out with a double loss.

 

The situations are different, but the feelings are very close to same feelings. So, this time rather than jumping back in and trying to make it right back, I am going to sit with this feeling, watch the markets and wait until I see a situation that meets my criteria of an entry with a potential exit to deliver 5-10x.

You might consider taking your feelings of <wanting to make it back> to your Tribe.

 

You might also consider enumerating all the factors that you recall motivating the exact timing of all the entries and exits of your Crude Oil short-term trading.  You might start by printing out an intra-day chart and marking your executions on the chart.

 

If you do this carefully, and discover your real trading system, you can then give someone else the raw data and observe them coming up with the same trades.

 

 

 

October 2007 Crude Oil

 

Day-trading volatile markets

provides many opportunities

for drama.

 

 

Tue, 25 Sep 2007

 

Addiction to Feeling Successful



Ed,

 

I found this interesting quotation from Thomas Stridsman:

 

"A good system should have a maximum flat time of no longer than 18 months. In this case, with a flat time of little more than 400 days, we come pretty close to what is tolerable. If you started to trade this system just prior to this drawdown, you would have started out losing, stuck it out for approximately 1.5 years just to get your money back, and eventually broke even. But don't despair; drawdowns are simply something you have to learn to live with and the truth of the matter is that even the most robust and profitable trading strategies will keep you feeling on your way down more often than on your way up... The average time for this system spent in a flat is 86 bars, and the average time between equity lows is 66 bars.

 

In "psychological terms" this means that only about four times per year, on average, will you be allowed to feel like a really successful trader, setting a new equity high; you will spend five times every year feeling really rotten, setting a new equity low before the markets finally start to move your way again. Most institutional investors will not tolerate a drawdown over 30 to 35% of total equity, or a maximum flat time of more than 18 months."

A very interesting point and funny "read" (rather than the experience) of the Uncle Point, and why trend following can be so hard.

You might consider taking the feeling of <success = being willing to follow a system regardless of the short-term  performance> to your Tribe.

 

I wonder what other forms of medication you and the author of the article use to maintain the "perpetual high" you both seem to need in order to function.

 

 

Feel-Good Drugs

and medicinal trading behavior

 

 

can have side effects.

 

 

Clip: http://kyletabor.tripod.com/Art/

Kyle_-_Branching_Out.gif

Tue, 25 Sep 2007

 

Ahmadinejad's speech at Columbia


 

 

"They (implying the US government), in fact, wish to justify their own wrongdoings, though. By creating nonexistent enemies, for example, and an insecure atmosphere, they try to control all in the name of combating insecurity and terrorism ...They create an insecure psychological atmosphere in order to justify their warmongering acts in different parts of the world."



Somehow the part on "creating nonexistent enemies" and "insecure psychological atmosphere" remind me of some of your responses on the FAQ regarding the War on "Terror" (a feeling). Surprisingly it comes from Ahmadinejad also.

This kind of rhetoric is characteristic of people, groups or nations that are contemplating war.

Tue, 25 Sep 2007

 

Amuse Our Mind or Enjoy the moment of NOW

Ed,

I feel that our mind likes to be busy all the time. It seems that our mind also has the tendency to find reasons for "whys".

 

More interestingly, our mind searches the reasons that it wants, and filters out the reasons that it doesn't want. So most of time we might just fool ourselves and live in fantasy. The main "benefit" of this might be that we don't have to feel all sorts of feelings that come out in real life every day.

Models of TTP promote living in now. We follow what is happening and taste all flavors of it. More I practice TTP, less I desire to figure things out. I just follow the flow. It tastes good.

Thank you Ed for all your work and support.

Thank you for sharing your process.

Mon, 24 Sep 2007

 

Learning To Trade


Ed,

On Monday, I lose a little over $500. I re-open out my position on Crude Oil and then watch it go down by almost a $1000 almost immediately. I have not hit my stop so I am standing still on this.

 

This evening after looking at the Canadian chart, I tighten my stop. I feel a little bad because I did not follow my plan on the Crude (I intended to wait until tomorrow to decide whether to get in again or not).

 

I do not mind so much taking losses as I do in not following my plan.


I am looking for setups that give me a potential 5x or 10x return. Right now, the short Dow Jones looks to have potential to deliver 5-10x return in exchange for risk of one unit.

You might consider going back over the Crude Oil trade to identify all the feelings that surround your decision to get out, to get back in and to get out again.

 

The systems on the TSP page do not day-trade. Indeed, they rarely trade at all.

Mon, 24 Sep 2007

 

Joke


When the new patient was settled comfortably on the couch, the psychiatrist began his therapy session.

"I'm not aware of your problem," the doctor said. "So perhaps, you should start at the beginning."

"Of course, of course," replied the patient.

"In the beginning I created the heavens and the earth .... "

In TTP we come to the point of view that each of us creates our own reality - and the opportunity to experience it.

Date: Mon, 24 Sep

 

Testing

 

Ed Says: Yes. If you have questions about back tests, you can find out answers by running your own back tests.

OK. I am trying to figure out ways to answer these questions about curve-fitting through back-testing. I have always thought that (as there is no way to "forward-test") such work requires practical knowledge and involves discretion to the most part.

 

I have a new program to run the tests. So I feel like studying the programming language and also doing some research on books that deal with the subject of building systems.

 

I feel rather "clueless" about it. For instance, I find the reasoning of using in-sample and out-of-sample price history a bit strange and illogical: if I keep on searching for optimal results in the in-sample history and "confirming" whether it's "truly optimal" in the out-of-sample history, I might end up with the same parameters as if I did the optimization process on the full price history, which seems more logical. Whatever.

You might consider taking your feelings about <clueless> to your Tribe.

Mon, 24 Sep 2007

 

Maybe Baby


Hi All,

 

I'm struggling to be in the Now. Ed, Any chance you can let me know of next workshop in 6 months in advance so I can give the mine that I work in notice that I WILL NOT be available for work duties I feel I could just offer you a flight to my homeland and see you then. Or I could maybe take to my tribe how I feel about meeting Mr. Ed Seykota.

You might consider taking your feelings about <commitment> to your Tribe.

Sun, 23 Sep 2007

 

Upper Trend of Share


Sir,


i want to know about technial chart trading and upper trend of share

You might consider getting someone to help you with your English.

Sun, 23 Sep 2007

 

Learning to Trade - Wants to Add On


Ed,


On Friday, I have mixed day and end up slightly down (a few hundred dollars). I close out my positions on Gold and Crude Oil.

 

I open another short position on the Dow Jones. The closed equity of my account, after 5 weeks of the experiment (and just 4 weeks of actual trading) is up 150% to almost $25,000 from $10,000 starting position.

 

I spend a few hours today looking at the charts and try to find markets that I might take a position in. I also give some thought to how I might add on to positions.

You might consider taking your feelings of <wanting to add to positions> to your Tribe.

 

Sometimes the results of the last trade make the now chart look more or less attractive.

 

 

Sun, 23 Sep 2007
 

Bug in TT Chart Server

 

Ed.

I try to add stock charts and receive the following error. Is the problem on my end?



Server Error in '/tribe/Charts' Application. Access to the path

 d:\Hosting\seykota\tribe\

charts\export\subs\ 

is denied. Description: An unhandled exception occurred during the execution of the current web request. Please review the stack trace for more information about the error and where it originated in the code.

Thank you for the catch.

Sun, 23 Sep 2007

Rome Tribe

 

Hi,

 

Attached is the form to found a tribe in Roma, Italy.

 

 

Welcome

 

Rome,

Italy

 

Sun, 23 Sep 2007
 

Wants Reference

Hello Ed,

I'm a member of your Tribe and I came about an interesting trader and before making a commitment I want to check basic facts. Among many well known people he has done (or claims to have done, that's what I check) trading work with are a broker of Livermore and you.

[Name]  says "I was taught by Ed Seykota to learn how to breathe properly once a week. I would go over to his house or he would come over to mine on a Saturday and we would spend the day doing deep breathing and eating fruit."

Is this basically correct?

Note: FAQ does not endorse people or commercial products. See Ground Rules.

 

The story does not ring a bell.

 

Sun, 23 Sep 2007


Curve Fitting Fear #2

see previous


Ed Says: You can determine answers to back-testing questions by back testing.

Could you elaborate on that?

Yes.  If you have questions about back tests, you can find out answers by running your own back tests.

Sun, 23 Sep 2007

 

Curve Fitting Fear

see previous

 

Ed Says: Part of your system is the math. Another part is your willingness to follow the math when you don't feel like it.

I would like to trade only FOREX majors. The part I don't like of this mathematical reasoning is that I can come up with (in back-testing) a very good system profitable on a highly diversified market, or on a few FOREX markets only. But not on both. I am afraid the latter (only on FOREX) is curve fitted.

You might consider taking your feelings of <not liking the reasoning> and <fear of curve fitting> to you Tribe as entry points.

 

You can determine answers to back testing questions by back testing.

Sat, 22 Sep 2007

 

Trading and Rocket Science


Ed,

 

Do you think that one has to be a rocket scientist to be a good trader and make consistent profits over the long run?

 

Certainly trend following principles are very simple. However it looks like most of today's managers devote a lot of resources on statistical research and also methods to reduce model risk or equity curve volatility, such as using multi-model approaches.

 

I think they are taking advantage of today's massive computational resources. Although I think that this won't change the nature of markets or trend following itself for that matter, I feel that a lot of these managers might also qualify to work as rocket scientists. Even you might work as a rocket scientist. What do you think?

Now, what's your take on curve fitting? See this quotation of Ralph Vince:

The key to ensuring that you have a positive mathematical expectation in the future is to not restrict your system's degrees of freedom. You want to keep your system's degrees of freedom as high as possible to ensure the positive mathematical expectation in the future. This is accomplished not only by eliminating, or at least minimizing, the number of optimizable parameters, but also by eliminating, or at least minimizing, as many of the system rules as possible.

 

Every parameter you add, every rule you add, every little adjustment and qualification you add to your system diminishes its degrees of freedom. Ideally, you will have a system that is very primitive and simple, and that continually grinds out marginal profits over time in almost all the different markets. Again, it is important that you realize that it really doesn't matter how profitable the system is, so long as it is profitable. The money you will make trading will be made by how effective the money management you employ is.

 

The trading system is simply a vehicle to give you a positive mathematical expectation on which to use money management. Systems that work (show at least a marginal profit) on only one or a few markets, or have different rules or parameters for different markets, probably won't work real-time for very long.

 

The problem with most technically oriented traders is that they spend too much time and effort having the computer crank out run after run of different rules and parameter values for trading systems. This is the ultimate "woulda, shoulda, coulda" game.

 

It is completely counterproductive. Rather than concentrating your efforts and computer time toward maximizing your trading system profits, direct the energy toward maximizing the certainty level of a marginal profit.



If his assertion is true, then consistent profitable long-term trend following trading is only viable in a highly diversified portfolio. How I see this: let's take the example of the simple support and resistance trading system of TSP, or even a Donchian one, or a variation of these two working with two trends and also ATR-adjusted stops.

 

Let's assume we back tested the system on the Silver market back in 1991. Whatever parameters we found to be "optimal" and even the system being a robust one, we would certainly make no money (likely blow or bleed out) in the next 10 years following 1991 given the lack of meaningful trends in that market.

The conclusion I come to is that portfolio selection can be very risky. Trend following basic assumption is the recurrence of market trends. The fewer the markets I trade the more I will be exposed to the risk of variable, suboptimal or even negative performance. In a highly diversified portfolio the greater is the likelihood of meaningful price trends occurring in some of the portfolio markets at all times.

Part of your system is the math.  Another part is your willingness to follow the math when you don't feel like it.

 

 

 

The Best Math

 

requires step-wise integration

 

 

Clip: http://www.art.com/asp/sp-asp

/_/pd-10280531/Persistence.htm

Fri, 21 Sep 2007

 

Euler's Constant

Ed

I have been looking over the part on 'trend' in the Trading System Project section of the website. I was fascinated with Euler and his constant .5772 etc. etc. to millions of decimal places these days. I am trying to understand it better, but don't quite understand its connection to calculating a function to determine the strength of different markets. I am missing some fundamental connection here.

Is there some further reading or exercise you recommend to help me increase my ability to use the Euler-Mascheroni constant in problem solving?

Thanks

Euler's constant, e, shows up in many places in math and science.

 

In trading, if you compute a trailing exponential average, and if the price steps from A to B, then the exponential average, P, follows the form

 

P = A + (B-A) e-(t/T)

 

where T is the "smoothing constant" of the exponential average.  When t = T, the value of P falls to one e-th (1/e) of the way to its target.

 

You do not need to know about Euler or this formula to trade.

 

If you want to take Euler to the max, you can try to derive Euler's formula.

 

e = −1

 

Euler's Formula

 

"E to the eye pie is minus one"