© Ed Seykota, 2003 - 2009 ... Write for permission to reprint.

Ed Seykota's FAQ

(formerly: Frequently Appearing Questions)

Home  ...  FAQ Index & Ground Rules  ...  Tribe Directory - How to Join

TTP - The Trading Tribe Process  ...  Rocks  ...  Glossary

  TTP Workshop  ...  Resources  ...  Site Search  ...  The Trading Tribe Book

TSP: Trading System Project  ...  Breathwork ...  Levitator

EcoNowMics  ...  Chart Server  ...  Contact Us  ...  The Whipsaw Song ...  Music

 

 

 

April 1- 14, 2010

 

<==  Previous  |  Next  ==>

 

Contributors Say

(Quotes from Ed in Red)

Ed Says

Wednesday, April 7, 2010


On Loss and Rejection

Dear Ed,

I think about a girl that I dated, and that never called me back. As I think about it, I stomp with my right foot against the floor. I am obviously angry about it, about spoiling it, about being stupid during the date. But I also know that I use <anger> to cover <sadness>.

 

I take the hot seat with the issue <anger>. I think about the girl, her perfume, and stomp the floor and clench my fists while I make a roaring sound. I am really mad and dislike the feeling. I re-enter the feeling several times; each time it is more intense, and I still dislike it. I just cannot give up the resistance. But I increase the feeling until I cannot resist it anymore.

 

I start laughing. I repeat the form several times, and it is soft and weak. I really enjoy it. And then, all of a sudden, the deepest sadness overwhelms me. I fall to the floor and cry. I think “I want people to accept me the way I am!” I am in deepest sorrow. I see my mother as she scolds me for doing stupid things, and how I feel that she does not love me. And then, aha. I see how I do stupid things, irritating people that I love to test if they love me too in spite of my stupid acts. I see how this feeling rules my whole life. I realize that I don't need to do stupid things to test if people love me, or to spoil a date.

The next day, several things happen. I carry out several changes in my apartment, which is a mess. I just don't need it. I stop using clogs during work. I don't need to look like a bum. This insight also transports to my trading. My trend following system with a huge discretionary part yields very good returns, but it has a drawdown of 30%. After the huge losses 2008-2009 (related to my emotional situation regarding my marriage), I simply cannot stomach such a drawdown. I leave the market several times at its lowest and miss the recovery.

 

During 2009 I keep losing money. But the very day after the hot seat I realize that, by opening smaller positions and waiting until the account grows enough, I can survive the drawdown emotionally and keep on pulling the trigger! The solution of this dilemma was the whole time right in front of me, and I could not see it! Now, it is just a matter of patience, of accepting my greed, of not dreaming about being wealthy in a non-existing future…

It is strange: intellectually, I had all elements to be a successful trader at my grasp. But emotionally several pieces were lacking. I wonder if the puzzle is solved. I keep on working on myself.

I thank you very much for your help, for your support, and for being there for us.

Thank you for sharing your process and your insights.

Wednesday, April 7, 2010


Moving On


Hello,


I hope everyone is doing well. These last couple weeks are interesting. I am having my biggest month in 6.5 years of sales and then last Tuesday I find out that due to a merger my job is not going to exist in a couple months. While this is a surprise, my goal prior to going to Ed's last workshop is to get out of this industry this year while I am on top. I expect it to be on my own terms and later in the year. While it should be easy for me to find a set up similar to the one I have with another company, my intention and commitment is to start a CPO with [Name]. At the moment, I still have a lot of responsibilities in closing out my existing pipeline and in getting paid out. I am thankful that I have already spent about 450 hours studying and working on my trading skills.

After hearing the news I expect that I will switch gears and hit the ground running. Rather, I end up being tired. I sleep eight hours a night, which is not usual for me. I go for walks and watch some TV. I focus on dealing with my emotions, yet feel by not doing much that there is some medicinal behavior. Either way, I am putting one foot in front of the other and letting the excitement build inside of me.

The Tribe is doing great. I feel the Tribe members are benefiting from the support. The only issue I notice is that in a four hour meeting only three people are taking in hot seat. So, during the next meeting we are splitting into two groups of four or five in order to give more people the opportunity to take the hot seat.

Thank you for sharing your process.

Wednesday, April 7, 2010


Wants a Recommendation


Dear Ed,


I hope you are well. I would like to find an answer to my question. There are a lot of broker companies. Most of them provides trading terminals and leverage 1:100, 1:200 some times more. In this broker you can open an account from small amount size like 500 USD and more. Most of them Forex brokers.

I would like to know that all such kind of brokers are real or not because . I heard that the banks and big investment companies not trade buy them. Where they trade the credit leverage also small .Please explain for me and for other trading tribe members that by which parameters need to look for a broker . How trustable such kind of broker what about I mention above.

Thanks In Advance

FAQ does not recommend or endorse commercial products or services.  See Ground Rules.

Monday, April 5, 2010


A Whys Guy

 

Dear Ed,


A list of recent trades, for which I have a specific question:

1. Bot SPY Mar10 114 Call 1.45 sld 1.86 031110
WIN PER CONTRACT $41 28.27%

2. Bot SPY Mar10 115 Call .87 sld .98 031510
WIN PER CONTRACT $11 12.64%

3. Bot SPY Mar10 115 Call 1.10 sld 1.36 031610
WIN PER CONTRACT $26 23.63%

4. Bot SPY Mar10 115 Put .47 sld .43 031610
LOSS PER CONTRACT $4 8.5%

5. Bot SPY Mar10 SPY Mar10 117 Call .37 sld .31 031810
LOSS PER CONTRACT $6 16.21%

6. Bot Mar10 SPY Mar10 117 Call .26 sld .25 031810
LOSS PER CONTRACT $1 3.8%

7. Bot SPY Mar10 116 Put .26 sld .40 031910
WIN PER CONTRACT $14 53.84%

8. Bot SPY Mar10 116 Put .30 sld .39 031910
WIN PER CONTRACT $9 30%

9. Bot SPY Apr10 121 Call .23 sld .22 032210
LOSS PER CONTRACT $1 4.3%

10. Bot SPY Apr10 106 Put .21 sld .18 032210
LOSS PER CONTRACT $3 14.28%

11. Bot SPY Apr10 122 Call .15 sld .205 032310
WIN PER CONTRACT $5.50 36.67%

12. Bot SPY Apr10 122 Call .25 sld .24 032510
LOSS PER CONTRACT $1 4%

13. Bot SPY Apr10 110 Put .26 sld .32 032510
WIN PER CONTRACT $6 23.07%

14. Bot SPY Apr10 120 Call .31 sld .37 03310
WIN PER CONTRACT $6 19.35%

Trade number 15:

Bot RUT Apr650 Put @ 3.1 currently still holding through today's 040510 close: .95

Why, then, from a psychological standpoint, would I chose not to stop loss this trade?

FAQ does not attempt to answer "why" questions.  See Ground Rules.

Monday, April 5, 2010


Wants to Join a Tribe


Dear Mr. Seykota,

I write concerning my attempts to contact the Trading Tribe based in [Country].

I have sent two emails in the last two weeks to the address given on your website directory, alas I have received no response.

Are you able to clarify/confirm that the email address shown is correct and/or still in use, or whether the Tribe in question has been disbanded?

My reasons for attempting to visit the local Tribe is that am doing a very good job of sabotaging myself in my trading.

I have developed my own trend following system for trading both US and UK stocks - every time I religiously follow the system I make money.

However I have occasions where I deviate from my method (the call of the countertrend?) and I end up ignoring my trading and risk management rules etc, meaning I end up back at square one. It reminds me of the trader you described in your Market Wizards interview - I sincerely hope that at some level I am not getting what I want from the market!

I find your writings and website inspirational and hope to progress both as a trader and a person with the help of the Trading Tribe.

Kind regards

If you do not find a Tribe in your area that is still accepting members, you might consider forming one of your own.

Sunday, April 4, 2010


From Control to Intimacy


Hello all,

Thank you for being on my support team.

It’s warm and cloudy here, a low pressure system has been hanging over us for several days. I notice in a low pressure weather system I’m a little cloudy and low energy.

Some good progress this month. I notice several patterns that I’m exploring.

I get a few AHA!’s, a glimpse, of how much energy I spend trying to <be perfect> and thereby getting to resist feeling imperfect. I’m working to explore and enjoy feelings of imperfection. It feels freeing and removes of lot phony pressure I put on myself.

I notice an interlink between trying to <be perfect> and trying to control or change things that give me feelings of imperfection, primarily the market and my relationship with my wife. Giving up control and what now seems like an illusion that I can change my wife, for example, feels freeing in a similar way of letting feelings of imperfection flow.

I continue to notice my efficiency steadily improve, observed by the amount of trade review and study that I’m able to produce on a daily basis.

I’m pleased with my quarterly results and welcome these feelings. In the past, I wouldn’t because I’d say to myself well, next quarter might be bad so I better “play it safe” and not feel good. Being more comfortable with <messing up> opens up the space to enjoy these feelings.

EoQ reporting: for Q1 ’10 I return 12.6%

Thank you all for your support.

Thank you for sharing your process.

Sunday, April 4, 2010


Checking In

Dear Support Group,

There is quite a bit of extra data in it since I last reported in January because my system has reversed in a number of FX markets as well as rolled most contracts during March.

 

The main variances now are in the risk taken when a contract has rolled from one month to another. I realized just before the March rollovers that my testing software assumes constant bet size throughout the term of a trade unless programmed to re-size on rollovers.

 

I decided to trade on the same basis until I had programmed and tested re-sizing on rollovers and so I used the December bet sizes for the March rollovers. I procrastinated on learning how to program position re-sizing and went through a familiar loop of finding other things to distract me. Once I recognized the loop I started on the programming work and now have the code working. I have been testing for the last couple of days and based on the results so far I will re-size shortly.

 

The results are interesting, I expected drawdowns to be worse but the testing does not really show this and returns are improved especially when testing across a whole portfolio. I have to do some out-of-sample testing next, and then my WTI contract is scheduled to roll on Monday so I will re-size it and see what feelings come up when I do so.

During January and February my account had a severe drawdown and I often felt depressed. When some of my FX positions reversed I felt a feeling of despair as I entered the new trades. I try to find the PI of these feelings and I think the depression is to remind me to work and make things better, to stop feeling pushed down and climb higher. However, unlike previous drawdowns I felt no temptation to tinker with the system or exit early and I understood that the drawdown was a function of my risk which I had chosen to take and for probably the first time felt fully responsible for. One morning when I woke up I noticed myself take a detached view of my behavior and be appalled at how detached I could be about the drawdown. I believe this judgment comes from a family member but it had no effect on my behavior and I just acknowledged it and it went away. At a recent tribe meeting I had an Aha about being judged. I made a couple of execution errors during this period which show up in the file but I now have a couple of checklists and a stop monitoring file so I managed to catch the errors and acted to correct them. Now that the drawdown has recovered I mostly feel worry about the risk I am taking but I am trying to use the worry to drive me to more research and preparation.

Another morning, again just as I woke up, I had a very clear vision of what my system should be but so far have found ways to not code it fully which I think has to do with my pattern of not wanting to fail or appear stupid. I noticed from re-reading my workshop notes that I have fulfilled the commitments that I made then and made other progress so I wonder if the process of making a public commitment helps break my not wanting to fail / procrastination behavioral loop. My commitments now are to finish my re-sizing testing, to implement it if the testing is positive and then to complete the coding of "my system" and test it fully with priority given to short-term interest rate futures. I commit to reporting on this by the end of the month or earlier if that's when I finish. I also commit to continue to follow my current system and track variance against it.

I notice that the amount of workshop updates has slowed a lot since January and I feel sad about this but those that I see still reporting are all making progress which is great. I hope everyone is well.

Thank you for your support,

Thank you for sharing your process.

Saturday, April 3, 2010


Portland In Seattle

Ed,


I hope you are doing well with your move. The Portland Tribe is meeting in Seattle.

 

Things are going well. We have eight consistent members showing up, all traders. I am thankful for your support and helping to put me in contact with some wonderful people.

 

The updated TT info is attached.

Thank you for sharing your process.

Friday, April 2, 2010


Wants to Connect in France


Ed,

from the email of 1st March "Get the Essentials", I guess that the sender may be from [country].

I do appreciate the TT Model. The more my life goes on, the more I find TT Model as useful as the air I inspire in the now.


I have already my own religion who claims "Love, love again, Love here and there...", but frankly I've lived it more as a medication concept of my insufficiency in the now, than real things in action.
 

Reading your FAQ clarifies my intentions and helps me to change it from a Concept to a Verb.

My circle repeats that I am more responsible than I have never been, and I learn the importance of Responsibility from you, from your book and everything you teach us on your site.

 

Of course I need to do more again - the process never stops - as I commit to excellence in every field I am willing to be.

I want as well to have a tribe meeting in France, so would you mind to give my email address to this sender.

 

He seems to will to share TT Model principles then we might support each others in [Country].

Thank you.
 

FAQ does not divulge the identity of contributors.

 

You might consider contacting a Tribe local to your area - or starting one of your own and see who shows up.

Thursday, April 1, 2010

 

Finding the Right Path


Hi Ed,

I came across your name whilst reading a book by Michael Covel. Till then I was neither aware of your name nor the work you have done. I have come to want to learn more about trading for the past few months and each book I peruse disappointments.

 

There is no one single book that explains what trading is and what I should learn. It has become frustrating and I hope in writing to you, you would be able to advise me. I don't know where to begin nor what to learn. I am however very keen to learn. I don't know how the market works but am keen to learn. I don't understand the terminology used i.e. shorting but like everything else I have learnt I have been fortunate to have met someone willing to share their knowledge and experience.

 

To date, I am unable to find someone like yourself to impart their knowledge. The fact I read more about you in Michael Covel's book, the more I came to understand not only what you were referring to about trending but how it could be applied to life.

 

I therefore am seeking your advise and guidance. I would truly appreciate it if you could set me on the right path.
 

The cool thing about the Right Path is that you are already on it.

 

 

Sometimes the Road has Yellow Bricks

 

 

Clip: http://i.telegraph.co.uk/telegraph/multimedia/

archive/01454/yellow-brick-road_1454491c.jpg

 

Thursday, April 1, 2010


Inflation in Action

Ed Says “The price of the book is $125 anywhere”. Anywhere, but not everywhere.

http://www.amazon.com/Trading-Tribe-Ed-

Seykota/dp/0930083199/ref=sr_1_1?

ie=UTF8&s=books&qid=1269797097&sr=8-1

 

If you want to pay even more than that, I can accommodate you.

Thursday, April 1, 2010


Update for Amsterdam Tribe

Dear Ed,

Please replace the existing Amsterdam NL TTID with the one attached.
 

The tribe is progressing very well.

May your move to Austin go smoothly.

Ok.

 

Thursday, April 1, 2010


Saving on Travel Expenses


Dear Ed,

After many years of being single, life has changed for me since I met the woman of my dreams a few months ago. The funny thing is, this also makes me want to become a better person. At our Tribe meeting this week, I also get a related aha.

a feeling ~ an emotion located either side of clarity
an opinion ~ premise that may still have a way to go, and

a judgment ~ opinion that can easily travel too far

It also occurs to me that, if I mind my opinions and cut short my judgments, I can also save on a whole lot of travel expenses.

Thank you for sharing your insights.

Thursday, April 1, 2010


Volatility Insights


Dear Ed,

 

PLEASE SEE THE REVERSE CHRONOLOGICAL ORDER OF E-MAIL CORRESPONDENCE SET OUT BELOW:
 

NEW: MY REPLY TO TRADING TRIBE RESPONSE:

Trading out of fear or confidence?
 

Dear Ed,
 

Thank you for your response to my previous contribution.

I agree with your point concerning the important “roll” of willingness in sticking to a system.

However, a further observation that I was trying to draw out with the example in my previous e-mail was the distinction between willingness to stick to the system at a conscious, rational (CM-type) level and willingness to stick to the system at a more unconscious (Fred-like) level.

I have never really had a problem at the CM level with willingness in sticking to a system as I am a disciplined person and my systems are mechanical and algorithmic in nature.

However, as my example illustrated, I occasionally find “weak” spots when Fred-like feelings bubble up and filter through in the execution of the system that are powerful enough to override it momentarily - which can have significant consequences in terms of actual performance (deviating from hypothetical, expected or simulated performance).

Perhaps some other traders who read FAQs may be similar to me in this respect.

One reason why I wish to share my experience with you and FAQs readers is that it really helped me understand at the CM level, and feel at the Fred-like level, the difference between following a system with discipline whilst trading out of fear and following a system with discipline whilst trading out of confidence.

This illustrated to me that notwithstanding all the substantial work that I have undertaken over the years in designing, testing, and trading my systems and working on my own psychology in order to actually trade them at more optimal level, I have misunderstood the key underlying driver of my trading performance until recently:

CM was being “hyper”/overly disciplined whilst Fred was trading out of fear and an unwillingness to genuinely accept true uncertainty in the world and the feelings (apprehension, doubt, too much conscious attention and focus) that I may associate with it when experiencing it.

The result was underlying conflict, notwithstanding the appearance of predominately disciplined systems trading.

Instead, I now try work from a state of balance whereby CM is disciplined (without being “hyper” or overly so) and Fred is trading out of confidence. The result is congruence which cements my disciplined systems trading.

I achieve this by being willing to experience feelings of trading out of fear, accepting them and celebrating them - they are useful signals that I am starting to drift out of balance and into conflict and that I need to get back towards congruency and commitment.

I am reminded of a passage in a recent book by Michael Covel (“Trend Following”, 2007, FT Press, New Expanded Edition, p94-95):

“Trend follower Jason Russell, President of J. Russell and student of Ed’s [I have no idea if this is actually the case or not - I am simply writing what is reported in the book] knows when volatility kicks in for him:

“Volatility matters when you feel it. All the charts, ratios and advanced math in the world mean nothing when you break down, vomit or cry due to the volatility in your portfolio. I call this the vomitility threshold. Understanding your threshold is important for it is at this point that you lose confidence and throw in the towel. Traders, portfolio managers and mathematicians seem well equipped to describe risk with a battery of formulas and ratios they use to measure volatility. However, even if you can easily handle the math, it can be a challenge to truly conceptualize it. The simple fact is that for the investor, the act of truly working through the thoughts and feelings associated with your death when preparing a will. There is no mathematical formula for vomitility because it is different for each person … For the trader who wants anything other than an interest-paying deposit at the bank, I think I can sum it up as follows: Surrender to the reality that volatility exists or volatility will introduce you to the reality that surrender exists.””

When I interpret “volatility” in the above passage more generally (not just in the context of markets) to mean uncertainty in the world (“external” uncertainty (if such a thing really exists?)) and/or my perceptions of uncertainty in the world (“internal” uncertainty (which certainly exists)), I could not agree more with Mr. Russell:

Uncertainty exists; I will naturally feel fear when experiencing it; nothing (including any imaginative mental construct I create to perceive it) will ever remove it. But in the case of trading, my system is the mental construct that I design to operate profitably from what I perceive to be uncertainty in markets, so I might as well just enjoy all the feelings associated with it (so-called “good” or “bad”).

In short, it appears to me that “vomitility” is good for me – my willingness (or otherwise) to experience feeling it is my real trading system.

Thanks again for taking the time to run the Trading Tribe website and FAQs – I very much appreciate the opportunity to contribute to it and learn from it.

Regards.
 

PREVIOUS: TRADING TRIBE RESPONSE

“Thank you for sharing your process and insights into the important roll of willingness in sticking to a system.”


PREVIOUS: ORIGINAL E-MAIL : 02/22/2010
 

Dear Ed
 

I am writing to share with you, and the readers of FAQ, a recent experience which helped me better understand one of your insights.

I spent several months at the end of last year reading through the Trading Tribe website. Thank you, and all the other contributions to FAQ, for all the valuable resources and insights that are available.

I was particularly struck by the following insight:

Ed says: “The feelings you are unwilling to experience are your trading system.”

Although I could understand this statement at a conscious rational level when reading it at the time, I must admit that I did not really understand until now.

Background

I trade using a group of systems that I designed which have rules that are mechanical/algorithmic in nature, but which I still execute manually at present in order to develop a feel for how to trade with them.

One system recently signaled to go short coffee (Liffe Robusta March 2010). I followed the signal, the market dropped slightly and then consolidated. No signal to exit the position has occurred up to the time of writing this e-mail (02/22/2010) but the March contract will expire shortly and I need to roll-over the position.

In addition, for various administrative and IT reasons relating to my trading account with my broker, I must close out all my positions and delete all orders for a few hours sometime this week.

So, at the end of last week (Friday 02/19/2010) my conscious mind was well aware of two reasons to potentially distract me from following the system rules: “Roll-over” and “Admin”.

Both are normal and are expected from time to time so there should have been nothing particularly unusual about the situation. However, my mind had the chance to explain this situation to myself and provide reasons to justify me paying particular attention as to how I should close out the position and roll it over.

Feelings that I was Unwilling to Experience

At the end of last week, still I had a few days to close-out the position.

But on Friday (02/19/2010) mid-morning (European time), I suddenly got a mild feeling of fear or apprehension as the market continued to drift back down towards the recent lows. My mind started to focus on the unusual “reasons” surrounding the situation and I started to consciously think of scenarios where the market moves back up against me and the need to protect myself – especially as liquidity starts to dry up near roll-over – and I imagined regretting taking the breakeven trade implied by my system defined exit point if the market started to reverse direction. I started to consciously focus on the then current market situation in coffee much more closely. By late afternoon I closed out the position but did not roll over in to the next contract as I had convinced myself that I should: take a small profit on the closed-out leg; wait and clear up my “admin” issue with the broker on Monday; and then wait for a new shorter term continuation signal to develop in the following contract.

The feelings were not really strong, but I recognized that there was definitely a “form” to my behavior and actions in that situation: more conscious attention or focus on the short term market behavior; lots more conscious thoughts, reasons, and a priori justifications running through my mind; eyes starting to “pop” out of my head more; slightly squinting eyes; overall tension in my face and chest; generally, just lots more effort and energy was focused on the situation.

But thinking of Ed’s insight, I realized that I did not want to feel the imagined feeling of “failure” when taking the breakeven trade in the reversal scenario that I had created and focused on in my mind. I imagined “regret” at only “scratching” the position without any profit.

These mild feelings appeared to be a signal to myself to try to make me avoid those potential feelings of failure and regret – they were signals trying to make me avoid feelings that I was not willing to experience.

Of course, by closing-out the position early I appeased the mild feelings (which stopped).

Ironically…

On Monday (02/22/2010) March coffee jumped down even further. So now I had every opportunity to feel “regret” and “failure” – a self fulfilling prophesy - just not in the manner I envisaged in my mind on Friday (I was so focused on the short term reverse scenario and protecting myself from it). (Ed says: “Everybody gets what they want out of the market”.)

Learning

This experience gives me a much better understanding of Ed’s insight: even following a purely mechanical and algorithmic rules based system, being unwilling to experience feelings that I consider to be “bad or negative” can override the formal system rules and result in being the de facto rules of my overall trading behavior or “system”.

Looking at this experience from this perspective, I remember that that it is not the first time that I have experienced this type of trading behavior – this kind of “form” with mild feelings of apprehension, tension, and much more strenuous conscious focus. I remember that it can sometimes be a precursor to “off-plan” or “outside system” trading behavior especially when I am tempted to justify to myself getting out of trades too early.

But this is useful to me. Rather than trying to avoid these mild feelings, I resolve to accept them, accept their positive intention (to help me avoid potential failure and regret) and then use them as a signal to myself to have the confidence to stay “on plan” and execute in accordance my trading system rules. That way I avoid failing to execute my system properly and avoid the regret of getting out of trades too early.

Thank you for giving me the opportunity to share my experience with you and the FAQ readers.

Regards.
 

Thank you for sharing your insights and your chronology.

Thursday, April 1, 2010


Confirms TSP Findings


Ed,

 

I have performed the following tests on the exponential average system you showed us in the TSP.

1) I ran the EA system using the gold futures contract data from the support resistance system and found the optimal parameters. They are 240 and 45 (approximately).

2) I ran the Gold and S&P data at the same time using the optimized values for each security in a portfolio setting (S&P-325/85 and Gold-240/45).

3) Next I took the SPDR EFT and GLD ETF data (I downloaded from Yahoo) and tested the individual securities using the optimized parameters calculated above (325/85 and 240/45) from October 1, 2005 to March 1, 2010.

4) Lastly I took the SPDR ETF and GLD ETF data and tested both securities at the same time using the optimized values for each security in a portfolio setting. The date range is from October 1, 2005 to March 1, 2010.

I have attached the summary output for your review.

So far I have essentially confirmed much of what you showed us in the TSP diversification study.

When you combine the two securities in a portfolio and run the simulation you get a higher bliss than you would for each security individually.

I also found that using the optimized parameters on the “unseen” data from October 1, 2005 to March 1, 2010 provided impressive results both as individual securities and also as a portfolio.

I intend to read up on walk forward analysis this weekend, do some more diversification research and provide more of my findings to you and the readers of FAQ.

I have decided to stop testing my pyramiding system for now since my findings are similar the comments you made in your risk management write up. Ed says “In general, such micro-tinkering with executions is far less important than sticking to the system.”

Thanks and I hope you are well.

Thank you for the confirmations.

Thursday, April 1, 2010


Risk Tolerance


Hi,

In the Market wizards you say something like "anyone who trades whilst risking more than 2.5% of equity on that one trade is a gun slinger"

So are you saying someone who risks less than 2.5% per trade is fine?

I think even 2.5% is high. Worse case scenario 10 losing trades is a 25% drawdown. If you get a gap in prices you can't let the destroy your account?

What risk per trade do you use on your trend trading systems? 1%,1.5%,2.0%?

Thank you

Many professionals might risk up to 1/2 of one percent on a trade - and that is versus a pretty wide stop.

Thursday, April 1, 2010


Play on Weirds

 

Dear Ed,


Yes, I he-rd that Ed is "Farm-ing" a tribe in Texas.

In Texas, stock is something with four legs.

Thursday, April 1, 2010


Austin


Hi Ed !

Best wishes for your new life in Austin !

Thank you.

Thursday, April 1, 2010


Next Workshop

Hi.

 

I’ve learned about Mr. Seykota from a book. I really admire him and hope to learn from him. I’ll lose my job (as a programmer) on March 31 and a new job is not likely to be found soon. How much is the early bird price for the next workshop after April?

 

Thanks

At this point, I have no schedule for another Workshop.

Thursday, April 1, 2010


Missing FAQ's


Hi Ed,


I am the guy who was writing down some your maxims from the FAQ . You have realized it, I don't understand how, so you have removed the first years of the FAQ in response.

I write down some of your answers only because your book is out of print, I am not interested in making a public use of your words .

I am sorry for the annoyance that I gave you and for all the people that for my fault can't reading anymore your thoughts . And I am sorry for me to, obviously that I didn't finish my summary.

As far as I am aware, all FAQ's are still on-line.

Thursday, April 1, 2010


The Draft


Ed,

I'm ready to hatch these system dynamic models that we discuss months earlier.

I plan to call you soon, to discuss these models, and attempt to draft you into a role where you make occasional observations and suggestions that improve the work.

I am experiencing some success drafting others into helpful roles. Some are providing mathematics help from time to time. Others who are SMEs in the subject domain area (s) are providing help with the model validations.

I have about 300 hours in so far, and a very well-developed core of stocks and flows upon which I am layering in the essential causal loops.

Per your suggestions, I have reduced the state variable count in the core of the models to 5. You are right about that- 11 is too many and most are non-essential.

SD model creation is by definition a collaborative effort. One cannot develop valid models in isolation, unless the creator is the only SME on the planet in the subject domain area. In my view SD modeling is in fact an effort to document, and then validate, mental models.

This work is extremely interesting Ed. Watch for my call, and thanks for the rich and stimulating content you provide online.

Here is Forrester's autobiographical sketch, in case you do not have it.


http://www.friends-partners.org/GLOSAS/Peace%

20Gaming/System%20Dynamics/Forrester%27s%

20papers/Forrester-Ranch.html



"The only reason for time is so that everything doesn't happen at once"
— Albert Einstein

Ultimately, the "Draft" relies on force of law.

 

You might consider using another metaphor in order to attract people to your enterprise.

Thursday, April 1, 2010


A Quote


Hi Ed,

What do you think of the following quote,

"We don't have control on the circumstances, but we can control and choose how we respond."
 

I think it scans better if you substitute "control of" for "control on."

Thursday, April 1, 2010


On Control and Intimacy


Ed says,

 

" 'Control' means to direct, determine, or cause. In TTP, we hold control - along with other elements of 'future' and 'causal' thinking - to be illusory."

Once upon a time, I was very confused when you said that past and future are mere illusions. The 1987 crash, 1929 crash - those events happened in the past - the past obviously exists and not an illusion!


How can someone so smart and genius makes such a claim that it doesn't exist?

Many years later, just like the young man in the Jade Master, one day I notice, there is only now. Yes, my butt is in the now. The past and future are indeed an illusion.

Just when I thought I've mastered the JCT trilogy (Judgment, Causality and Time), you now give a new one, Control. I am back to the beginning: how can someone so smart and genius makes such a claim that control is a mere illusion?

(Honestly, I feel good back at the beginning. I feel open and curious, or even excited, to the possibility of seeing things in a new way. It is another learning opportunity.)

I guess your claim that control is an illusion because it implies some kind of causality. Your level of control is only to the extent that you can "cause" something to happen (or to not happen).

But if that is the case, then the implication is that there *IS* some kind of control, isn't it? You may not have full control, absolute control, but in a closed system, I am guessing you can exert *some* kind of control?

 

For example, I am guessing you can use the knife and fork to cut the meat into pieces and then put a piece in your mouth? I am guessing you have some control where and when you pee, and not just at a random time at a random place? I am guessing you have some control of holding your breath for five seconds, if you choose to? I am guessing you have some control on your fingers to hit the cord on your banjo at a particular moment such that it becomes a song? In fact, if you have no control at all, if control is a mere illusion, how can you play the Whipsaw Song, over and over? To take it one step further, one may even argue that mastery in a particular field (e.g. juggling) is about gaining more and more control over the instrument!

Lastly, as the author of the Risk Management article, you even specifically state that "To manage is to direct and control. Risk management is to direct and control the possibility of loss." So risk management is all but an illusion? (I know there are AIG, Amaranth, LTCM, but still...)

I appreciate your feedback, thanks.
 

Thank you for your question.  Sometimes a word can bear several meanings.  For example, a tree can bear fruit, a bear can eat berries and you might not be able to bear someone seeing you bear.

 

You might consider taking <your tendency to imply inconsistencies by comparing similar from different contexts>  to Tribe.

 

In the Causal Model, where you are managing an intimate object such as a banjo, you might say you are "causing" the banjo to make a sound - and that you are "controlling" the banjo.

 

In the System Model, where you are in a feedback relationship with your spouse, in the intimacy-centric model, you recognize the ebb and flow of your inherent interdependencies and you design and implement policies that acknowledge the interdependencies and that support intimacy.

 

In the Causal Model, where you and your control-centric spouse routinely "blame" each other for various results, you might rather go for control and one-upmanship.

 

In TTP we hold that the feedback system is a pretty good model for personal relationships.  In this case, attempts to exercise control are likely to induce strong counter forces.

 

If you'd like to test this, see how long you can exert continuous control over your wife.

 

 

Intimacy-Centric Relating

 

 

 

Control-Centric Relating

 

 

 

Clip: http://images.teamsugar.com/files/upl1/0/

3362/23_2008/stk16823cli.preview.jpg

 

http://thebsreport.files.wordpress.com/2009/10/

husband-wife-fighting22.gif

Thursday, April 1, 2010


Elephants and Models

Ed says,

"You might note that with five variables, you can write an equation to draw an elephant; with fifteen, you can draw a Christie Brinkley."

Can you show us the equations for elephants and Christie Brinkley? Thx.
 

I recall seeing a pretty good line drawing of an elephant from five variables.

 

You can get simple elephants at: http://levenspiel.com/octave/elephant.htm

 

You can get equations for a pretty good elephant at: http://scienceray.com/mathematics/is-it-possible-for-a-mathematical-equation-to-be-cute/

 

If you want the equations for Christie, send her over so I can calibrate my math.

 

 

Just Do the Math

 

 

 

clip: http://www.ruggedelegantliving.com/a/images/

Christie.Brinkley.Supermode.jpg

 

 

Thursday, April 1, 2010
 

Austin Tribe


Hello Ed,

I am seeing on your website today that you are in fact moving to God's country here in Austin, Texas, and am very interested in joining in on the local TT if I'm able to do so.

I am forming a Tribe in Austin.  See the Tribe Directory for details.

Thursday, April 1, 2010


Snow on Rocks


Dear Tribe;
 

A very long and productive week. I put in my stops way below the market and many of them have been triggered. I spent a really productive time visiting my family. I made all sorts of helpful connections, particularly coming to a new understanding as to why, they have been so controlling- and yet so out-of control. All sorts of AHAs occurred (mostly pleasant). They will take some time to digest.


One of the things I have realized that makes the TTP process so powerful is that by hearing the feeling of the older generation, (during the rocks process), it becomes clear that they felt as helpless as I felt in the same circumstances. By stretching the insight over another generations it makes it easier to feel compassion for their circumstances and come into better emotional harmony with them.


My rocks process. (Cancelled by a snowstorm). I felt both scared and eager beforehand, and somewhat relieved that the snow came down so hard. I am still committed to having a rocks process.

I haven't forgotten about my commitments.


I am re-thinking and making good progress. I'm not going to trade before the beginning of March. I'll paper trade and learn how to use my new broker tools. That will take some time.

Thank you for sharing your insights.

 

 

Snow on the rocks

 

 

 

 

 

 

 

 

 

 

Clip: http://www.claudiosantori.it/fotografie/

2007/kaivopuisto/images/rocks_snow.jpg

 

Thursday, April 1, 2010
 

House For Sale


Happy New Year Ed!

Thanks again for all the great resources and encouragement over the years. I noticed you have the home up for sale....are you moving out of the area? How can you give up such a tranquil setting? :)

My Wife and I spent 2 weeks down there in April last year... Next time would love to stop in and say hi...take care Ed.
 

Yes, I am re-locating to Austin.

Thursday, April 1, 2010

Grey Sites


Dear Ed,

The link to the Boulder Trading Tribe is grayed out and no longer hyperlinked. Does this Tribe still exist, or am I missing something. I would like to attend.
 

Grey sites no longer respond.

Back to the future