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Oct 15 - 31, 2008

 

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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 stay out of any positions.

 

 

Questions

(Quotes from Ed in Red)

Answers

Friday, October 31, 2008

 

Wants Breathwork Session

 

Ed,

Today I discuss with [Tribe Member] some ways to extend and improve the work. He suggests trying Breathwork, but none of us has experience with it. Can you imagine to present a Breathwork workshop in IV? If yes, may I attend?


Best regards,

I occasionally conduct Breathwork sessions in Incline Village, in response to demand.

Friday, October 31, 2008

 

Rising Trend in the Use of Force

 

Ed,


The use of Force is trending up in the whole world.

 

There was a time when I tried to persuade my friends and family about the very perils of it. I realize it is useless. You can not fight trends. But I do not want to ride this one either.

 

I know you do not tell people what to do but I appreciate any tip about managing this particular risk (where risk is the possibility of loss of freedom / property).

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

Wednesday, October 29, 2008


Theory Of Everything

 

Ed,

A few months ago I sent you some information about a guy doing some Theory Of Everything work in quantum physics, when he was not surfing in Hawaii or skiing at Lake Tahoe. Here is his TED video, which is quite articulate, owing in no small part to the beautiful computer simulations of E8.

 

http://www.ted.com/index.php/talks/

garrett_lisi_on_his_theory_of_everything.html

The E8 model is a clever way to arrange and view particles; and to locate gaps in the pattern; and to fill these gaps with "there-must-be-one-here" particles.

 

E8 hardly explains everything - for instance your motivation in writing.

 

Wednesday, October 29, 2008

 

Father and Girlfriend Disapprove

Hello Ed,

I am 22 years old . I read a lil' bit about you, I heard an interview with you and you're a person I would like to ask about sth. I have the same passion like you ED, I've been trading index futures for 2 years.

 

The question I would like to ask you is related with my future , you, as a trader veteran are able to advise me which path in my life should I choose.

 

Please take it seriosuly , becasue I realy count on your opinion .

 

So ...the problem is ...Both , my father and my older brother are lawyers , 4 years ago I went to university , choosed law as a subject, not because I had to but I really like it,( finanacial markets regulations mostly ) in the meantime I got into stock market and it became my passion.

 

I read many books about trading ( more than 15 so far) every day for 2 years since that moment I read all financial newspapers and web pages I think about markets 24h.

 

I started second study on University of Economics ( investments as a specialization) , I trade index futures on [Country] market for 8 hours a day. But I can't do all those things.because I am not a robot .and it's time to choose what I want to do in my life .
 

My life target is to become a very rich guy and to do what I like ( I know everybody want this but in fact people do nothing to achieve it).

 

My girlfriend and my family do not want me to be a trader they regard it as a gambling which destroy human's emotions.

 

I know many lawyers who have the money but to be honest with you I know many full time trader who have been trading for years , and they are not rich , they still just dream .they still are uncertain about they future , they still want to beat up the market but they never did.

 

That's why I started to think do I really want to be a full time trader in hedge fund( it's been my dream ).Even top traders l don't talk about how much money they have. I ask myself if You guys are so good why you sell books? why you don't focus on trading ?
 

ED, you're one of the few guys who can answer this question : is it possible to beat the market in longterm and make a lots of money or this is just utopia , about every trader dream but in fact it does not exist???


You are the best traders Are you guys making big money ?respond honestly because on this respond maybe depends my future .

P.S- it's the longest e-mail I ever wrote :)

Thank you ED ,

You might consider taking your feelings about <people invalidating you> to Tribe.

Tuesday, October 28, 2008

Workshop

I would like to know if you guys are going to arrange a new workshop this year.

Likely not this year.

Tuesday, October 28, 2008

 

First Tribe Meeting

 

Ed,

I hope you are doing well. Thank you for calling. I was really impressed by hearing the voice of the frontman from the “Whipsaw song” on my phone.


I feel that the picture in your answer from Thursday, October 16, 2008 (Cover Indicator) illustrates some problems of catching bottoms. A trader can spend a lot of energy trying to catch this kind of bottom. If he succeeds, I imagine him experiencing a severe lack of concentration and a loss of interest in trading. All in all, a futile procedure.

Regarding my Tribe: More members appear, some leave. Several doctors at my University show interest on TTP. I start inviting patients to our meetings. I like riding this trend and have no price goals, just enjoy the feeling.

With best regards,

Thank you for sharing your process.

Sunday, October 26, 2008

 

Seeking and Attaining

 

Ed,

 


Ed says, "Seeking sometimes blocks attaining." (5/23/08)

Ed says, "You might avoid succeeding in these areas in order to realize your real intention of holding on to the feeling of wanting."
(10/5/08)


I can see now your observation that sometimes, the seeking itself becomes the very road block for attaining in order to justify that seeking feeling.

However, I think it's also undeniable that the curiosity, the quest for knowledge, that burning pursuit in truth help scientists maintain the motivation on their works in seeking the true nature of the world we live in.

So it seems to me that in some cases, seeking can block attaining, but it can also drive the pursuit in other cases.

My question is, how can I tell the former from the latter? In your experience, what are some of the differences that distinguishes a person who seeks and keep seeking while never attaining, versus a person who seeks relentlessly and find out the answer? If they are both derived from the feeling of "wanting to know", how come one is stuck in a loop while the other arrives at the answer?

Thanks.

Thank you for your provocative question.

 

I encourage you to further your explorations by taking the issue to Tribe.

 

My own observations associate struggle, the feeling of wanting, the need to know, questions and demand for information with blockage.

 

I associate wonder, delight in knowing, openness, and love of nature with natural learning.

 

 

 

 

Needing to Know

 

 

 

Wonder-full

 

 

Clips:

 

http://www.diabetes.org/ueimages/AfAmMan.jpg

 

http://cyberbrethren.typepad.com/

cyberbrethren/images/wondering.jpeg

Sunday, October 26, 2008

 

How Much is Too Much Speculation


Hi Ed,

I think one of the main purpose speculators serve is to make it more efficient for the society to allocate its resources through actively engaging in the price discovery process.

If you disagree with that premise, what would you say are the main functions of speculators?

If you do agree with that premise, do you think it could be the case that there are "too many" speculators? By "too many", I mean that they do not serve their purpose, but instead, work as to hinder that process.

When credits were cheap and were readily available to speculators in the last several years, they help drive up the prices of many asset classes. If a significant number of speculators use excessive leverage, and when there is a general tightening of credit that forces speculators to deleverage, the speculators' action may lead to prices swing violently that does not contribute to efficient resource allocation but rather make it more difficult instead.

 

(For example, consider the case when banks deny even small business owners who have excellent credit history during the times of credit crunch because they have to hoard cash to protect themselves)

It's just like white blood cells have their own function inside thebody, but "too much" white blood cells may actually be harmful. Can it be the case with speculators too? If yes, does it apply to the financial crisis that we are currently facing?

Thanks.

Speculators (Latin: speculare, to observe) observe conditions and act to discover a price that discounts these conditions.

 

Trend followers assist in moving price to the discount more quickly, typically overshooting the price.

 

Note: The most efficient design for a tracking servo generally includes some overshoot.  For more on this, look up "critical damping."

 

Before the invention of the Federal Reserve System, local private independent banks accept deposits, make loans and issue specie.

 

Community members naturally keep a close watch on the local bankers and keep them in line by staying in touch, seeing them at the town diner, and, in case of apprehension, by moving their assets to banks that seem more sound.

 

The occasional speculative bubble occurs, and some of the more aggressive speculators and banks go under and the system gets back to normal shortly thereafter.

 

In this way, the level of speculation, like everything else in a free market, maintains a dynamic balance with the other elements.

 

Around the time that banking is expanding out from the east coast and across the nation and out of their control, some Eastern ( NY) bankers form the Fed and pass some laws that effectively monopolize banking.  

 

Federal Reserve Notes become the one and only legal tender. US citizens must accept FRN's as legal payment. The issue of specie becomes illegal, except by the Fed. 

 

Lately, the Government gets into the "business" of subsidizing loans to collateral-less homeowners at way below market rates; many banks in the system extend risky loans in order to compete; the low rates attract a whole class of people into the speculation business; people without collateral or steady employment learn that speculating on real estate is a sure fire thing.

 

We are currently experiencing the results of this government tinkering with the market mechanisms.

 

Likely the market is trying to move people out of real estate speculation and out of the service sectors and and into profitable manufacturing.  The government is likely to impede this process, thus slowing the recovery.

 

The enormous power of the Fed to print up money is likely to ensure that Friends of the Fed are likely to survive the speculative aftermath.

 

 

 

The Loan-Arranger

 

trying to convince his client

 

to overcome his reservations.

 

 

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

2007/12/lone-ranger-and-tonto.gif

Sunday, October 26, 2008

 

Microsoft Live OneCare warns on Chart Server

 

Ed,

Thank you for FAQ; reading FAQ I learn about the markets and about myself. Keep up the excellent work!

 

 

 

From The TT Chart Server



FYI: Microsoft Live OneCare is currently warning the TT Chart Server against "a recently identified security risk". The OneCare warning message speaks of threats and vulnerabilities, but the charts show that this warning comes late. I wonder how it could be that Microsoft has only "recently identified" the risk? Perhaps not even Microsoft can predict the non-existent future. LOL :)

Very nice catch and comment !

 

The OneCare message, referring to a computer issue, appears during the TT chart production cycle, and winds up going along on the ride to the chart pages.

 

Curiously typical of market commentators, the warning is, as you note, fashionably late.

 

 

Saturday, October 25, 2008

 

What Seem Seems to Be



Hello Ed,

 

In our language, the verb "seem" has a passive structure and I think it is also passive in English though it doesn't seem to be.

 

I consider usage of "seem" seems to be a wise way for not taking responsibility in the English language.

 

I don't see, it seems :).

 

I wonder your comments on the subject.

 

Sincerely,

Thank you for your observation.

 

Seem can act as the verb, to appear, as in "The computer seems to be working."

 

Seem can also act as a polite-ner, diminishing the force of the following infinitive, as in "I seem to be having trouble communicating with you."

 

Seem can also act as a disclaimer about the level of certainty, as in "The market seems to be rising."

 

The word "seem" does not fit the SVO-p model in that it conceals the S-ubject observer.

 

In SVO-p, we say: I conclude the computer is not working; I feel I am not communicating with you; The analyst says the market is rising."

 

 

 

Hmmm ... she seems to be busting

a bust seam.

 

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

2008/05/boobs.jpg

Friday, October 24, 2008

 

The Seykota Way


Hi Ed !

Glad your other readers are keeping track of the doings on Seykota Way (in California).

The Developer

Hmmm ... I wonder what the price trend is on that street.

October 24, 2008

 

Slicing the Pie


Hi Ed !

Re: "Friday, September 26, 2008 Wants a Piece of the Pie."
 

Here is a slight correction to the author's optimistic math: $85 billion / 200 million is only $425 each. Not $425,000 each.

Thank you for the catch.

 

I wonder what you figure the tab comes to per person in the manufacturing sector, for bailouts likely to be in the trillions.

 

 

 

Government

focuses on dividing up the pie.

 

Producers

focus on making more pies.

 

When government and producers

get together

and get each other's feelings

things work pretty well.

 

When government grows

and develops an interest mostly in itself,

and no longer cares to get the feelings

of the producers,

the system goes under.

 

 

 

When the weight of a system

 

exceeds its displacement

 

it sinks

 

(despite legislation to make it rise).

.

 

 

Clips:

http://www.cookiemadness.net/wp-content/uploads/2007/09/pie-slice.jpg

 

http://www.bbcarchive.org.uk/pmwiki/

pub/localphotos/sinking_ship.jpg

 

Background: http://www.heritage.org/Index/

country.cfm?id=Unitedstates

Friday, October 24, 2008

 

Thank You

 

Ed,

 

Thank you, Ed,  for teaching me about trend following. 95% cash here.

You are welcome.

Thursday, October 23, 2008

 

Wants a Mentor


Dear Mr. Seykota,


Thank you for the wisdom you have shared and continue to share with those of us aspiring to be something in this world. Whilst I can not presume to say that I've read the opinions / thoughts of every great mind, I have to admit that not since reading Einstein's musings, have someone's ideas struck such a cord with me.


I am presently 20 years old, and ever since I can remember I've had a keen desire to at least try to understand the fundamental ideas behind the mind, as well as the universe. That desire has been largely suppressed, whilst always lingering around, up until January of this year when I discovered trading.

 

This has allowed me a certain amount of freedom where I can think creatively for an extended period of time without having to worry about the restrictions of society - memorizing textbooks at university, getting a job, etc.


In my reading, I stumbled upon Market Wizards, and upon finishing your interview I sensed a certain correspondence between the ideas you echoed some 20 years ago, to those I've concluded for myself today. Since then, I've tried to read up as much as I can about you (as well as other great minds/traders), and the wisdom you have all shared over the years, in order to learn, learn, learn and obtain a greater perspective on things.

 

I am now writing to ask a favor of you: Whether you would be kind enough to put your trust and confidence in me, my mind and abilities, so that we could engage in conversations about the mind, psychology, trading, etc.

 

In essence, I am wondering if you would be willing to assume a mentor-like role in my life. I understand that it's a long shot, and that you are obviously busy with your own life, whilst probably receiving hundreds of these requests, but I truly believe that I am different to most, and that you may also find this worthwhile.


Thank you for your time, and regardless of whether you decide to give me a chance, I still want to say thank you for the wisdom you have already given me.

For now, we can conduct the process in this forum.

 

You might start by telling me what to what service you intend to dedicate your skills and energy.

 

 

Thursday, October 23, 2008

 

Wants Doors to Open

 

Dear Mr. Seykota,

I am 22 years old and graduated from college this past spring. I have an inclination for creating and winning. This has transcended into many aspects of my life: poker, sports betting, trading financial markets, golf, and imagining.

 

I am now looking for a place to start, at least to trip over my own two feet, and during this time it is hard to even find a place to fall.

 

I have a passion passion for finance, I trade regularly, but on practice accounts. I have incorporated all of my thoughts, technical analysis, and even some fundamentals, which I sometimes don't even understand, into my positions, and in play money I am rich.

 

Throughout my college career, aside from my education, the one thing I have to show is my invention (a novelty item). My primary concern for writing is this, I know what I want to do, I know I can succeed in trading, but I can't seem to find a person to let me in the door.

 

Someone to guide my potential and point me in the right direction. I'm not asking you to be that person, in fact from your responses on the Tribe FAQ I would think you might tell me to go f--- myself, of course in a more subtle and mindful way.

 

If you can empathize in anyway to the situation I am in, please offer me any kind of advice on where to begin. I hope you don't mind the gigantic block of writing I just had you read, but I had to do this so you wouldn't jump to the asking section.

I appreciate anything you can offer me, and if not, thank you anyway.

Very truly yours,


p.s. I cannot afford your consulting fees, do you have a student rate, or an internship?

Thank you for sharing your process.

 

You might consider taking your feelings about <wanting someone to open the door for you> to Tribe.

 

 

 

An Open Door

 

may presage exciting opportunities

 

for the likes of

 

Hansels and Gretels

and turkeys.

 

 

Clip: http://www.antiquegasstoves.com/

images/cobaltwedge/doors.gif

Tuesday, October 21, 2008


Being in the Now vs. Wanting

 

Hi Ed,

As always your words ring true.

"The essence of the shift is to move from wanting a <level of closeness> to appreciating the <level of closeness> that currently exists."

Gratitude for what actually is in the now moment is so much more fulfilling and enjoyable than wanting what is not so in the past or future. Living in the now and with the flow of life has brought me some wonderful experiences lately.

Read the FAQ tonight and laughed till I cried! The Hitler video is very amusing.

Thank you for your encouragement.

Tuesday, October 21, 2008

 

Wants to Manage Daughters

 

As father of two teenagers, I would like to teach and give them everything needed to make a living by trading. But I am concerned about how this could impact their studying process. Any ideas about how to handle this?

You might consider taking your feelings about <wanting your daughters to be traders> to Tribe.

 

 

 

Female Trader

In Accra's Makola Market, Ghana

 

Clip: http://www.flickr.com/photos/transaid/

310314758/in/set-72157594399015763/

Tuesday, October 21, 2008

 

Boasting

 

Ed,

I like to hear your thoughts when a fund manager writes a letter like this:

http://www.cnbc.com/id/27239479

The letter sounds pretty straightforward to me.

Monday, October 20, 2008

 

Wants a PDF


Hi Ed,

 

I found your website through a friend of mine.

 

He mentioned how useful understanding human emotion is to seeing things clearly.

 

Would it be possible to purchase an electronic copy of the book, in pdf, etc?

 

If not, is there a local place in the SF bay area where I can pick up a copy of the book? I would love to start reading and learning from you ASAP.

 

Thanks,

The book is available on this site, in hard-back only.

 

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

Monday, October 20, 2008

 

Marathon Update

 

Ed,

I have been negligent in sending out an update, but I haven't been negligent in my running.

My primary goal for the summer was to be in sufficient shape to start the Marathon Training Program in September. I met this goal and am well into this training program. My secondary goals for the summer was to increase my distance by 1.5 miles per month and to lose 5 lbs per month. I met the running goal but fell short on the weight loss by about 5 pounds. I'm not letting this derail me from my other goals.

My training is progressing well. I am running 2 hours during my 'long runs', which is around 8.5 miles. I'm continuing to stay on the Marathon Training Program and believe that I will accomplish my goal of finishing the Marathon.

I also want to offer my appreciation to everyone who is supporting me. Just knowing that people are pulling for me helps me to stay on the plan.

Good Job !

Monday, October 20, 2008

 

Update on World Destruction by Hadron Collider


Ed,

 

You might want to consult this site daily for a status report about whether the Collider is messing with the space-time continuum and destroying the world.
 

http://hasthelargehadroncollider

destroyedtheworldyet.com/


PS. Outside of a dog, a book is a man's best friend. Inside of a dog it's too dark to read.

Thank you for the link.

Monday, October 20, 2008


Request for Joining Trading Tribe
 

Hi Ed,

I am very eager to join the Trading Tribe community.

I had sent the mail below to the tribe leader who resides in [City, Country]  (since this region is in my vicinity), but I did not get any response.

Could you please help me out in the joining process, as I am desperate in being a Trading Tribe Member.

Thanks in anticipation.

You might consider starting your own Tribe and then using it to explore your feelings about <desperation>.

Sunday, October 19, 2008

 

Venturi Effect

 

Dear Mr. Seykota,

I read with interest almost your entire radial momentum web site. I don’t work with fluid dynamics, but I had noticed precisely what you say about angle-of-attack being the main component of lift. Based on sticking my hand out the widow of a moving car. But also, take a look at the wing shape of the original Wright flyer

 

http://media.nasm.si.edu/webimages/

highres/SI2003-35575h.jpg  )

 

and the Bleriot plane

 

http://www.pbs.org/kcet/chasingthesun/

planes/bleriot.html 

 

that first flew across the English channel. It is incontrovertible that these aircraft flew, but it would be difficult to use anything but angle of attack and flow separation to explain how those wings worked.

But my real interest has to do with the Venturi effect. Specifically, explaining how carburetors worked. One of your correspondents (unnamed, but dated 09 October 2003) said this, which was exactly what has been on my mind of late:

“Now I know how a carburetor venturi works. The motor provides the energy to accelerate the air, the atmosphere provides the pressure.

Well I knew that, but now I know where the pressure drop comes from and what it means. If there was no venturi, there would be only as much pressure drop present as is required to get the air moving that fast in the manifold (obviously), and that pressure drop comes from the "suck" end causing it to move, not the movement itself.”

I clearly see the venturi speeding up the air and that causes the liquid gas to atomize, but it seems the venturi is also preserving the low pressure developed by the descending piston during the intake cycle. If the venturi weren’t there, it would be difficult to establish the low pressure needed to coax the gas liquid out of the jet. At the most fundamental, it seems that a gas flowing steadily in a relatively large diameter pipe forced into a smaller diameter pipe would move faster (from conservation of mass) but I don’t get how conservation of energy forces lower head pressure. If you look at gas flowing in a pipe of constant diameter, some force F1 on a plunger at one end of the pipe will cause the gas to flow at some velocity v1. If you then add a smaller section of pipe in series, there will be a back pressure that will require a higher force F2 on the plunger to cause the same velocity v1 in the larger pipe, and a higher velocity v2 in the smaller pipe. I would expect that the kinetic energy of the slower and faster moving masses of gas would add up to the new force F2 through the distance the plunger was traveling.

If you can shed any light on the venturi effect in carburetors and atomizers I would appreciate it. I realize you don’t have time to respond to every crank, but if you can point to a useful website or reference I would appreciate it.

Thank you,

Yes.

 

I hold that the conventional wisdom on the topic (below) contains an error.

 

In particular, the device in the illustration can not operate without some motive force to drive the gas.  It also relies on the compressibility of the gas.

 

These conditions invalidate the use of the incompressibility assumption the textbooks use to make the derivation.

 

The conventional wisdom on the topic goes like this:

 

The Venturi effect is an example of Bernoulli's principle, in the case of incompressible flow through a tube or pipe with a constriction in it. The fluid velocity must increase through the constriction to satisfy the equation of continuity, while its pressure must decrease due to conservation of energy: the gain in kinetic energy is supplied by a drop in pressure or a pressure gradient force. The effect is named after Giovanni Battista Venturi, (1746–1822), an Italian physicist.

 



 

The pressure at "1" is higher than at "2" because the fluid speed at "1" is lower than at "2".

 

Notions and Clip: Wikipedia

October 19, 2008

 

Intentions, Results, Right Livelihood and Medication

 

Ed,



Ed says:


"Anything that diverts you from taking that right action in support of your intention is MEDICATION!" (FAQ, Defining Medication 4/22/08)


Sorry, "in support of your intention" is a little bit unclear. Can you please clarify a bit?

For I think in the TTP model, Intention = Result, and so any action that I take is going to give me some kind of result, which by definition, reflects and supports the intention.

 

Or in other words, it seems to me that, ANY action, including inaction and "wrong" actions, support the realization of my intention.

Or maybe, do you mean that "Anything that diverts you from taking that right action in support of your right livelihood is MEDICATION!" ?

If so, can you tell us more what is "the right action"? Thanks.

Yes.

 

I like your formulation of the notion and your use of language.

 

Right Livelihood, in the TTP model flows from committing to service to others.

 

Tribe meetings provide a place to discuss and sort out the differences between medicinal and pro-active behavior.

October 19, 2008

 

New National Emblem

 

Ed,

 

You might like to notice an idea for a new national emblem.

 




 

The federal government today announced that it is changing its emblem from an Eagle to a CONDOM because it more accurately reflects the government's political stance. A condom allows for inflation, halts production, destroys the next generation, protects a bunch of pricks, and gives you a sense of security while you're actually being screwed!

I notice the design fortuitously fits nicely over a flagpole.

Sunday, October 19, 2008

 

Wants Advice, Tips and a Job

 

Hello Mr. Seykota,

I am a junior at [Name] University. Over the past summer, I have become very interested in trend following (I have read Michael Covel’s Turtle Trader and am currently reading his book Trend Following).

 

I am curious if you have any advice or tips on other books or white papers that will help me get started in trend following (or if you know of anyone who would hire me for a summer internship!).


Thank you,

I notice you like to read.

 

Perhaps you can secure summer internship employment in a library.

Sunday, October 19, 2008

 

Whistling past Wahkiakum

 

Ed,

 

This article by Paul Jacob shows what's going on on a local level here in Washington State.

 

 

Agtricle: http://townhall.com/columnists/PaulJacob/

2008/10/19/whistling_past_wahkiakum?page=1

The terminal stages of addiction (to government) are seldom pretty.

Friday, October 17, 2008

 

Telephone Consultation Follow-Up

 

Ed,


I was happy to hear from you. Our discussion had a profound effect on my mood. It has helped me mollify my guilt. My husband is aware of my losses and has been handling it as well as anyone could be expected to. His frustration is leaking out in small increments, which is good. What is really helping now -paradoxically- is that our professionally managed accounts are down 40%.

I read your book. I would appreciate the opportunity to come for a visit or workshop. The timing might be tricky for me, but I believe I would benefit from a TT experience. Please let me know what might be available.

Thanks for your message.

I conduct Workshops from time to time in response to demand.

Friday, October 17, 2008

 

Getting Different Results
 

Ed.

 

I'm a 20 year old from [Country]. The moment I read Trend Following by Covel, an aha experience took place. It was only a few months ago that I came across FAQ and found myself reading the whole database in a week! Another aha. I never looked at it from the perspective that our solutions may lie within ourselves. I find you an inspiration and thank you for putting up the best resource (hands down) for all traders.


Lately I have back-tested variants of the 85/325 crossover system on a standard S&P contract and Crude Oil. The results are eye-popping (and the drawdowns are large too). Never thought that that going along the trend would have such power. Anyhow, I wanted to ask you some questions regarding the 15/150 TSP system. My back-testing software is [Commercial product]. Here is what I would like to confirm:


1. Is the ATR of 20 days? In that case, my ATR20 values are very different from the metrics log. My software is giving me ATR20 as 1.55, 1.48 and 1.6 for the first three days. I back-tested it anyway and the ending equity ends up 4.204 Million. The difference of $900000 in ending equity is because of these varying calculations.


Thank You for your time.


Goodbye.
 

You can audit your software by running the numbers on Excel.

Saturday, October 18, 2008

 

Picking Bottoms

 

Dear Ed

I feel glad to see FAQ updates again.

To pass the time and avoid the talking heads on Bloomberg trying to explain each wiggle I have started reading more and more.

I recently read a book called ‘The Black Swan’ by Nassim Taleb. I wonder if you have read it and if you had if you had an opinion on the Math he uses to explain why he feels the bell curve is a redundant basis for building systems and managing risk.

I am not advanced in Math but like to think I am a realist and skeptic. I enter every long trade (I only go long) with a preparation to lose 100% of my investment and to a degree 100% of my account (not because I am reckless but because maybe the broker will go bust, maybe the stock will blow up, maybe the stops won’t work). There are risks in trading beyond a bad down day that I feel some people overlook.

I am interested in his writings as they seem to resonate with me, I like to think anything is possible; why couldn’t the Dow end 2008 at 6,000 or 14,000? People on TV and in the press seem to think it’s ‘impossible’, I believe anything is possible, I always have done.

I wonder if I am being too theoretical to trade in a real way or if my tendency to believe that the ‘extreme’ is more likely than markets price it to be will keep me going in the longer term.

If you haven’t read his book I think you’d enjoy it if only because he shares your scorn for self styled ‘experts’ and frequently talks of ‘picking up nickels in front of a steam rollers’ a phrase that in my mind I associate with you.

I wonder if your trading has worked over the years as your criteria for entry acts as a detector for potential ‘black swans’ (my understanding is that your method involves lots of small winners and losers and the occasional big winner).

Warm regards, good to have you back.


-----


P.S. In my own trading I’m trying to pick the bottom, borrowing money, averaging losers and cancelling stops. It seems what I know I need to do and what I actually do are two different things. I guess I’m getting what I want. But I can’t understand why I’d want to feel this depressed.

You might consider taking your feelings about <why you want to feel depression> to Tribe.

 

 

 

 

In Picking Bottoms

 

you might consider

evaluating the risks carefully

 

before going into the red.

Friday, October 17, 2008

 

Elliot Spitzer's Political Assassination
 

Ed,

 

This is an eye Opener

If you don't think the current financial crisis was deliberately planned by our political leaders in collusion with the big banks ... watch this from March 20, 2008.


http://www.youtube.com/watch?v=GMo7T9t0Gzk 

You might consider avoiding getting yourself between a mama bear and her cub - or between a drug dealer and his buyer.

 

 

Friday, October 17, 2008


Hitler in Short Squeeze - Comedy Video

 

Ed,

 

You might find this video of interest.

 

www.youtube.com/watchv=

WfvIstgOugc&feature=related

Thank you for the clip.

Friday, October 17, 2008

 

Taking a Reading

 

Hi Ed,


I am happy to see you update the FAQ.

You make me smile as I read your response to me. I am currently re-reading books I read sometime ago for the first time and Reminiscences of a Stock Operator is next on the list!

 

Currently reading Against the Gods by Peter Bernstein again.

 

I ask myself quite regularly if Hank and Ben are against the gods or wannabe gods. I have no answer.

Thanks again and have a great weekend!

Regards,

The press seems to be viewing Helicopter Ben with good nature, sympathy and a sense of humor. 

 

(The nickname, Helicopter Ben, follows from a metaphorical comment by Milton Friedman.)

 

So far, as credit continues to implode and as prices continue to trend lower, I see little concern in the press about the long-run implications of monetary inflation on prices, on the bond market, on the dollar and on paper currency in general.

 

If the economy were on the Hot Seat in a Tribe meeting, we would cheer it on and encourage it to take its form to term - knowing that the trends in process are inherently Holotropic (tending toward healing).

 

Attempts to medicate the economy with money regulations and incentives are not likely to move it toward health; indeed, such attempts impede healing and are likely to exacerbate the current imbalances.

 

 

 

Ben, The Action Figure

 

 

 

Ben, The Savior

 

 

 

Ben, The Man of the Dollar

 

 

 

Ben, Dealing With Difficulty

 

 

 

Not Particularly Funny

 

 

Clips:

http://www.businessweek.com/the_thread/

hotproperty/bernanke-helicopter.jpg

 

http://www.urbandigs.com/g-helicopter-big.jpg

 

http://bigpicture.typepad.com/comments/

images/2007/12/16/bernanke_recession.png

 

http://www.freakingnews.com/pictures/35500/

Ben-Bernanke-Money--35914.jpg

 

http://deadcatsbouncing.blogspot.com/

2008/04/fed-goes-bust-dollar-goes-up.html

Thursday, October 16, 2008 7:26 PM

 

Robust System


Ed,

 

For those looking for examples of robustness, I suggest the Water Bear that can survive in the cold vacuum of outer space.


How's that for robust!

I believe they may be slow moving trend followers.

But can they survive a "bear" market . . .  ?

 

 

 

Tardigrade

 

Source: www.boingboing.net/2008/09/08/

water-bears-survive.html

Thank you for the article.

 

Tardigrade does a nice job of risk control.

 

I wonder how his Sharpe Ratio, Sortino Ratio and Omega look.

Thursday, October 16, 2008

 

Distance and Closeness

see previous

 

Ed,

 

Ed Says:  I wonder if you prefer the wanting to the closeness.

I wonder if you prefer distance to closeness.

I like both.

Thursday, October 16, 2008


Cover Indicator

 

Ed,


I find the cover of the Der Spiegel (the largest German weekly magazine) from Oct. 13 very e-motion-less.

(Translation: Emergency! Stop! Who stops the free fall of the free market?)

Maybe not yet the bottom.

 

 

 

Thank you for sending the cover.

 

You might notice several recent attempts by readers to pick bottoms. 

 

Picking sides seems easier.

 

 

 

In the Markets - and Elsewhere

 

the tops and bottoms

 

are generally more obscure

 

than the sides.

 

 

Clip: http://www.alexis4u.com/images/

Panties_and_bra/Butt_panty_SQ3003.jpg

Wednesday, October 15, 2008

 

Wants Closeness

 

Ed Says: The essence of the shift is to move from wanting a <level of closeness> to appreciating the <level of closeness> that currently exists.


Whatever the case is, <wanting closeness> feels good.

I wonder if you prefer the wanting to the closeness.

October 15, 2008

 

Riding Waves

 

Ed,

 

I notice this video of your son windsurfing.


http://www.youtube.com/watch?v=pmzgfQHyb3A

Riding waves seems to run in the family.

Wednesday, October 15, 2008

 

Wants to Join IV-TT

 

Mr. Seykota,

My name is [] and I'm writing you from [] after a fun day of trading.

Recently I read "Trend Following" by Micheal Covel

The following quotes caught my attention:

"Working with Ed Seykota was one of the most incredible experiences of my life" -- David Druz

"Apprenticing with Ed is like getting a drink of water at a fire hydrant" -- Thomas Vician Jr.

My passion, commitment and dedication to learning how to become a successful trader is second to none. If been trying for several years. Many many very expensive learning lessons. I probably could have saved some money by getting a degree at Wharton or Harvard but that's not what I wanted to do. I've learned many things from those losses and I never gave up, instead I applied them to a simple trading system that is now starting to work quite well.

I'm still craving to learn whatever I can to excell at my trading career which is why I'm writing you today. I work by myself in somewhat of a vacuum up here in []. I don't know any Tribe Leaders so I'm writing to you to apply for admission to The Incline Village Trading Tribe as a visitor.

A agree, accept and commit to the requirements for on-going participation.

Sincerely,

You might consider reading The Trading Tribe and sending me your CV.

Wednesday, October 15, 2008

 

Questions about Fred

 

Ed,

 

I have three questions:

 

1) Has the bear scared you into hiding? :) It has been a while since you posted the FAQ. I hope all is well and that you are experiencing many feelings.

 

2) Is it possible for Fred to feel two different feelings at the same time? For instance in the last three days as the market has bottomed (maybe) and rebounded heavily, I have experienced the feeling of both exciting greed, thinking this could be a huge buying opportunity, and fear that this is just one more trap set for those who would dare feel any greed. How does TTP handle experiencing two divergent feelings at the same time?

 

3) I think I recall in one your posts, though I can't seem to find it that you mentioned something to the effect of knowing when to break the rules. If in fact you said that, and I am not just making it up, how then do you work with Fred to know that you are not simply creating drama by following Fred? Is such knowledge even obtainable?

 

Thanks for your moment of now in answering my questions.

In the TTP model, Fred is a feelings pump with intention to make us experience our emotions - so we can come to re-program our fast response patterns.

 

In the TTP Polarity and Half-a-Yoga Processes, we encourage the Sender to experience multiple forms and to synthesize them into one master form.  The partial components of the final form seem to complete each other in this process, leaving the Sender at the Zero Point.

 

For example, you might infuse one hand with the feelings of wanting to buy and the other hand with he feelings of wanting to sell or stay out.  By gradually bringing your hands together, you might gain insights about the sound of one hand clapping.

 

 

 

The Polarity Process

 

may also work

with three hands

 

if you happen to have them handy.

 

Wednesday, October 15, 2008

 

Helping  Brother

see previous


That is quite insightful I must say, and in some ways you are correct; however I am in an entirely different business, with a completely different skill set and profit motive.

 

What you may have sensed is more my tendency to take responsibility for other people's lives than a specific role in his trading.

 

I also imagine its more about ego than altruism - to be honest. I am 25 years old, my brother is 30 so that can create sticky situations.

I do know that my brother is looking to enhance his trading methods, and you have been a source of inspiration for him for a long time.

You might consider taking your feelings about <wanting to run your brother's life> to Tribe.