Sat, 17 May 2003
Fred and Angels
"If you can already locate a feeling, such as demons pulling you, or
pressure in the stomach, then the name of the feeling is optional.
The process is to fully experience the feeling, per location, size, shape,
texture, motion, color, sound, flavor, etc."
Oops! I was forgetting about the process. No labeling! I was not fair of
me calling them "demons". They usually know better than me
when the trend is vulnerable, or losing momentum.
"A coach or group can help you stay on task. When you come to accept
the feeling, you get the aha and the insight."
I have been enjoying fully the flow in my relationships. The Process
seems to be particular important to me in this respect. No more struggles
with Fred, my friend.
is not fair; if it were, you would look like me. You might examine the
feeling of wanting things to be fair.
relationships can provide a lot of support for communication between Fred
like old Trees, intertwine and support each other at deep levels.
Sat, 17 May 2003
Not understanding your take on pyramiding. Are you saying start at a
smaller position, say 1/5 of a full position, then pyramid up to the full
Example: If I trade each position of Equity divided by 10. Should I take
that position smaller THEN pyramid up to the equity/10?
does not tell people what they "should" do.
others to tell you what to do, might be a way to avoid the feeling of
responsibility for making decisions.
can perform simulations on historical data to determine a risk placement
strategy that fits you.
heavy and painful to hold.
if you add fewer at each ascending level.
Sat, 17 May 2003
NLP and TTP
I read the recent FAQ 'NLP and TTP' posted Friday May-16th with great
interest. I have been a long time student of NLP and have tried on my own
and also in a professional setting many of their techniques.
Based on my many years of work, I whole heartily agree with you that
unless one confronts and fully experience the feelings there is very little
progress and difference that NLP makes.
After doing some of these NLP techniques things would go well for a while,
but I found that Fred would always find a new way to create the drama. Freds
powers should not be underestimated, the temporary fixes which NLP and some
of the other interventions offer, are usually readily bypassed by Fred.
I believe NLP, Visualizations techniques etc do offer tremendous benefit
but should be utilized after TTP or similar work that lets you fully
experience the feelings and thus dismantles the drama creating engine.
the mid-70's, John Grinder and Richard Bandler formulate NLP (Neuro-Linguistic
Programming) by modeling the work of Fritz Perls, Virginia Satir and
effectiveness as a quick fix seems to vary among practitioners.
Move the car
forward about 3 feet so the flat part rolls around to the top.
|Sat, 17 May 2003
Fred Trying to Communicate with CM
Dr. Ed -
Just wanted to give you and your viewers an example of Fred trying to
communicate with CM.
Recently I emailed you about my feelings of regret for missing out on two
successful Internet IPOs at companies I worked for AND going to business
school and missing the Internet bubble.
My criteria for picking stocks is very strict and the recent equity rally
has given me feelings of uneasiness of missing out as no stocks met my
criteria. This uneasiness is nothing new as I have felt it a few times
during the bear market rallies over the last 3 years.
Just the other night I had a dream that I was standing on the beach watching
the waves break and EVERYBODY was surfing the waves which to me appeared
short and choppy.
At first I thought this dream had to do with the fact that I moved from NYC
to Miami Beach in January of 2003. Then it became obvious what was
Keep up the great work.
all about sticking to your plan and experiencing feelings as they arise. If
you are unwilling to feel your feelings, the temptation is to avoid them by
jumping off your system.
Wise Dropping in Late
Hawaii, Nov 24, 1996
Surfers both have to deal with feelings of missing out on the small ones,
until the big one comes along. They also have to deal with feelings of
staying with the big one.
Sat, 17 May 2003
I'm going to feel "feeling" feelings as they appear, and see
I've never spoken to someone who doesn't answer questions as well as you do!
But ... when thinking about the answers received, the perspective of the
original question changes ...
I would make a comment about how your risk article is great for getting the
"Big Picture", but doesn't help me much with a
"dynamic" system where the expectancy (win loss probability and
win loss amounts) keeps changing ... like when I'm starting out and
haven't got many trades ... but I know what you'd say "You might check
your feelings about finding out for yourself" ... so I wont say
point of risk management it to contain risk, by position sizing and stop
placement, before you enter a trade. Once
you enter a trade, risk control is already a done deal
concerns about subsequent dynamics might relate more to wanting to predict
the market, and get out at the top.
worry about such things; trend traders just follow the trend, sometimes
making profits, sometimes taking losses in line with their risk budgets.
Floor, Penthouse - Everyone Off
getting out at the top.
Sat, 17 May 2003
To: Mr. Ed Seykota
"I am calculate for the worstest case ..."
Majority of sucessfull traders in industry can have win ratio from 0.3 until
0.5 (if exist important exception, please inform me )
Calculation of chanse to catch losing streak
with 10 consecutive loss case of 0.3 win ratio case of 0.5 win ratio
1/(1-0.3)^10 = 1/35.4 1/(1-0.5)^10 = 1/1024
But it is only in case, if each trade is independent event.
Question - How long can be losing streak by high professional trader, if
he make 10000 round trip ? What say realy statistic, not simulation ?
I suspect that losing streak with 16-32 consecutive loss is reality, but i
knew not precise information from industry. In case of bet 3% (with
transaction cost) of total capital on each trade, trader need catch 22
consecutive loss to lose 50% of total capital.
Autor interessed for identification of long losing streak from start and
money management algortm .
round trips in 10 years is about 10 trades per trading day. Chances of a
losing streak that long are much less than 1 in a googol.
losing streak of even one trade, without proper risk control can be a
by Too Much Risk
In his attempt to
control the whole coastline of Europe, Napoleon attacks both Spain and
Portugal, without sufficient capital to withstand national resistance in
both countries. He again undercapitalizes when British forces enter Portugal
under Wellesley in 1808. “If I thought it would need 80,000 men to master
the Peninsula I would not under take it ... 30,000 will suffice.”
Sat, 17 May 2003
Times Predictive Method
development of my predictive mathematical method I started [recording
I recorded Monday
trading times on Sunday, Tuesday trading times were posted on Monday,
Wednesday trading times were posted on Tuesday and so on till Friday.
done on Dow Industrial Index with use of 21MA and 5-13-8MACD as an
additional filters to determine direction of trade. Results were 10
profitable trading times calls, 3 additional correct calls but did not get
confirmed by MA or MACD. There were no incorrect calls. All trading times
occurred no more than 10 min from predicted times posted on previous day
some of them were 1-2 min apart.
I would be happy if you would look at my posts and told me your opinion.
Feel free to pass this info to anyone who you consider ready for something
like this. Best regards,
notice your system gives only trading times, such as 9:55, 13:25 and 14:50
est. Brokerage houses do not accept time of day as an order.
might consider extending your system to generate actual orders, and then
having a professional third party evaluate your system.
Receiving a Trading Time Order
Fri, 16 May 2003
Dear Sir Ed,
I am a 21 year old student in Karachi Pakistan doing his bachelors in
business administration. Majoring in Finance (SZABIST). I aspire and
truly want to become the best trader I can be.
I want to salute and thank you for coming up with such innovative idea of
people meeting to help themselves , nitty gritties of the craft of trading.
I am delighted and most grateful that you are sharing with novices like me
your wisdom, experience and time. Trading attracted me form childhood the
working of the stocks market intrigued me. Since last two year I am studying
the markets and about trading as much as I can.
Sir I learned about you indirectly from yes Mkt Wizards, actually I read
about in Martin. J. Ping books Investment physiology Explained.
I wish to start a TT community here in Pakistan which is rapidly becoming
a high performing emerging market, but trading as a career and trader suffer
here from the general attitude that its akin to gambling.
I want to
contribute towards removing the idea that KSE or Karachi Stock Exchange is
not a Casino and we trader not gamblers. Here its difficult to start with
anything relating to learning the craft of trading. thanks to internet we
can now learn from the best.
are now on-line
Fri, 16 May 2003
NLP and TTP
Thank you for encouraging us to work with our emotions and check out Turtle
traders. I still am in amazement over my emotional AHA from doing The NLP
Hexagon Goal setting exercise located near the end of
That simple, yet
challenging exercise given me awareness of the emotions I most want in my
life but I have resisted until now. Freedom!
Also, thank you for your Stock & Commodies' Determining Optimal Risk
Article link. I love the ability to downloading the article yesterday
immediately. Now, I am off to study your new Risk Management page. I
appreciate all your efforts with TT & FAQ.
Best to you, Sincerely,
NLP Hexagon Process, the NLP Swish and others aim to move you away from bad
feelings and behaviors and toward good ones.
The Trading Tribe holds that the
feelings you judge and try to avoid run your life, and that
experiencing them sets you free.
The Trading Tribe Process (TTP) seems
to resonate with and support other disciplines and processes.
Fri, 16 May 2003
I can't believe you went to the "coin toss" analogy in your risk
management essay. Why not just hand out sleeping pills and blankets? Let
me know if I'm snoring too much.
to feel boredom typically associates with not being able to stick with
your trades are as quick as your wit ... you might do well to stick it to
others less and to stick with your trades more.
your trading ...
for your communication skills.
the new raspberry flavor.
stays on all day.
Fri, 16 May 2003
Trader Models 4
Wow. Mind boggling. I don't know what to say to that. But Im sure I will ...
oops, just did ... here goes ...
I just discovered its easier to sit and feel the feeling rather than
chase it round trying to find out "where from?" and
"why?" and "what can I do to make it go away?". Its
actually quite hard to do, cos it seems such a pointless exercise ... just
"feeling" something? What a waste of time... I always thought I
had to "do" something when I "felt" something (that for
some reason I don't like feeling) to make it go away...
And I also just realized I feel a whole range of stuff that's so
"sneaky" I don't even know I'm feeling it ... in a way, I'm
deducing this, cos if the result shows the intention, and the result isn't
what I want, then I must have just played out a drama to
"distract" myself ... I need to pay more attention ... This is
quite a sobering thought ... it means a fair proportion of my life is a
drama ... maybe if I just "follow the feeling" it'll take me to
You wrote: The Trading Tribe Process is to re-formulate your concern about
wanting to succeed as a physical feeling, and then to work toward fully
OK, I think I got this. Instead of trying to solve it, I'm trying to feel it
in all its "glory", right? Not particularly pleasant ... and doing
it made me feel same as before ... kind of weird ... no "aha's" or
"flashbacks" to childhood traumas I'd locked away in the depths of
my mind, near to where I keep the memories of when my parents used to keep
me in the coal cellar in winter and feed me stale bread and water on
Sundays... but at least I realized its just a feeling and I don't actually
have to do anything about it, just feel it ... hope I remember that next
time I'm in my trading software ... or a restaurant! hehehe That's this
weeks task ... bask in my "unpleasant" feelings... so if you
haven't received another email after a week, please call the neighbors and
tell them they can break down the door! :-)
You wrote: looking for the positive intention of the feeling
Hmmm ... I always thought I knew what the positive intention of, say,
"being successful" was. I mean, its obvious isn't it? You have to
be ... everyone else is, and that's what were here for, right? But thinking
about it ... I just realized I don't have the slightest idea ... weird ...
back to the drawing board ... duh!
You wrote: exemplifying enjoying the feeling for each other
Not clear on your terminology here ... does this mean "feeling good as
I describe it to someone else"? If I was at my first Tribe meeting and
hearing "exemplifying enjoying", I'd be nodding intelligently and
doing my best to look as if I understood... However, if it does mean
"feeling good as I describe it to someone else", then I think I
need to find someone to talk to ... cos my computer's no good ... all it
ever says to me is "Goodbye" and "You have a message"
... and some of those feelings are soooo sneaky they have me running round
in circles... pressing <buy>, <sell> and (especially) <Scan
Again!? You just did that> buttons left right and centre ...
You wrote: going with the feeling wherever it goes
Now this one has really got me ... go where the feeling goes? Its not going
anywhere ... its just "there" ... you mean stay concentrated on it
until I have an "aha" or a flashback to that time I lost my best
friends last 2.7 billion dollars on a little known company called Enron cos
another friend told me it was "solid" and that he'd read a really
good write up about it on the internet?
Joking aside, this is really helping. I mean, I'm not rich yet or anything,
and I even put on a trade today that went directly down (system said
"buy", head said "market looking wobbly, better wait",
but I've got my stop in), however ... the sun seems to be clearing some of
the fog ...
|Fri, 16 May 2003
Win / Loss Sequence
Thank you for your new section on risk management. You write:
Note that the results from both these systems are approximately identical.
Over time, however, the fixed-fraction system grows exponentially and
surpasses the fixed-bet system that grows linearly. Also note that the
results depend on the numbers of heads and tails and do not at all depend on
the order of heads and tails. The reader may prove this result by
When the fixed fraction is a higher percentage, doesn't the order matter?
order does not matter, even for large bets, as long as the bet fraction is
constant. To convince yourself, simulate on a spreadsheet.
result also follows from the law of multiplicative commutation:
= aba = baa
equation also shows what a Physically Fit Lady, Fred Flintstone and Sheep
have in common.
Fri, 16 May 2003
Fred, CM and
The FAQ reminds of my most enjoyable university classes. The professor
opened up the floor and the class talked. Thanks for taking the initiative
to establish this forum.
I am aware of an "aha" experience that occurred last night.
It was not even directly related to a trading position but I know that it
impacts my trading style.
There was a disagreement with a coworker and I started with my typical
processing of the event. This involves a continuing replaying of the event
in the my head, playing out different scenarios and conclusions. As the
processing continues, I evaluate (I intentionally visualize myself in 3rd
person as Fred and CM replay the event) my emotions and recognize my anger
is not directed at my coworker. In fact, the anger has nothing to do with my
coworker. My real anger is directed at myself. I am angry at myself for not
communicating what I need to communicate (low confrontation personality). I
stepped back in my personal timeline even further and realize that my lack
of communication and voicing opposing ideas is a life long trend.
I resolved this particular drama by sitting with my coworker and I
I basked in my feelings as I explained my perspective. What a wonderful
after the Aha.
Fri, 16 May 2003
Thank you for providing such a creative site for others to share with and
learn from each other.
As for myself, I'm within driving distance of your Incline Village Trading
Tribe. If possible, I would very much like to attend a meeting, perhaps this
me something about yourself, your trading, your understanding of the Trading
Tribe Process and your phone number.
Thu, 15 May 2003
Feeling of Trending
"When you first start using a trend following system, you might find
yourself fighting it where your objectives differ.
As you resolve your issues, your system and your feelings pick the same
I acknowledge this pattern while riding a trend. While riding a trend I
usually have to make an effort to sit tight and keep mind and spirit clear,
for it feels like a lot of demons try to pull me out of it. Sometimes I also
feel a lot of pressure in the stomach.
Do you think this is the germ of causality inside me, or a lack of
entitlement, or both?
Tribe Members help each other experience feelings. If you can already
locate a feeling, such as demons pulling you, or pressure in the stomach,
then the name of the feeling is optional.
process is to fully experience the feeling, per location, size, shape,
texture, motion, color, sound, flavor, etc.
coach or group can help you stay on task. When you come to accept the
feeling, you get the aha and the insight.
not such a bad feeling after all,
just the solution to my problem.
Thu, 15 May 2003
After reading your response on May 10, 2003 entitled Re-Buy I think that you
may have helped me with something again.
I have taken big risks in the last 10 years. I have made very good
percentages but with high volatility.
I experimented with something lately. I took $10,000 from my $110,000
account about 15 months ago and opened another stock account.
With the $10,000 account I bought stocks that began up trends off of bases
without researching the stocks much. I bought 4 to 5 issues at a time and
did not concentrate in any one position.
In my $100,000 account I kept my old method that has given me very good
returns in the past and I repeated the past method. I researched sales
earnings and waited for breakouts and concentrated big percentages of my
money in the best all around issues.
The smaller account is now almost at $40,000 a 300% increase. The bigger
account is at $133,000 a 33% increase and has been a wild rollercoaster. I
was down $43,000 or 43% in the bigger account at one point this year. I
couldn't even talk to anyone until I got back to even! I felt like a
beginner again. I did not cut my loss on one issue that I had taken a large
position in. I have not done something so stupid in years. I guess stocks
don't just go up anymore like they did late 90's.
I was and am surprised at how much percentage increases can be made by
increasing my diversification. For some reason I am able to cut losses
better and relax more.
I still cannot believe the smaller portfolio percentage gain somehow! I
think my emotions just get to wild when I buy too much of one issue. I
was O.K. in the past with $2000 - $35,000 but with more money it is just
hard to deal with the portfolio rising and falling a large percentage
everyday. It is like I can make or loose a new car everyday and I drive a
used car with over 100,000 miles on it now!
I am currently diversifying my portfolio.
Here is what I currently own. [omitted] Most of the stocks have been bought
within 4 weeks. Anything in my purchases look too screwy to you? If you
cannot answer because of FAQ rules, I understand. Thanks for the past help.
I hope this e-mails correctly and fast.
Well, I hope I did not overstep one of the rules in FAQ somehow. Your help
is very valuable to me. Thanks.
might continue to study risk management, particularly bet sizing.
Value versus Bet Fraction
curve expresses two fundamental principles of risk management: (1) The
Timid Trader Rule: if you don't bet very much, you don't make very much,
and (2) The Bold Trader Rule: If you bet too much, you go broke.
more, see: Risk Management
Risk Management Links:
Thu, 15 May 2003
Trader Models 3
Hey! Where d'you get my photo? hehehehe I've lost some hair since that was
I appreciate the time you take reading and replying.
You say... Drama is not a result of the feeling ... it is a result of not
wanting to experience the feeling, of trying to do something to avoid the
feeling, to make it go away.
Yeah, but it doesn't actually go away ... the more I try to make it go
away, the stronger it gets ... However, lets say the drama actually
achieves what I'm trying to do ... which it does sometimes ... then the
feeling DOES go away ... and I feel good/better ... if I don't do the drama
... I don't get any result at all ... I'm a "non participant" with
hot cheeks! Then again, perhaps I could try something else - something
different and less dramatic? Maybe the beginnings of an "aha" here
... need to put CM to bed and let Fred work on it overnight ...
You also say (in another answer to someone else)... The feelings we accept
and enjoy rarely interfere with trading.
Here you mean like "happiness"? ... a friend calls, I feel good
for the moment and when the moments over so's the feeling? ... or my dog
dies and I'm "sad" for a while ... but its just a
"feeling" I feel until I don't ... no drama to play out, nothing
to prove or avoid, just a feeling I feel while it is? I can understand the
"accept" part, but when I do a re-run in my head how do I
"enjoy and celebrate" something that's (or I am perceiving at the
time as) unpleasant? Right now I'm "baffled", and I'm writing
this to try and make the confusion go away! :-) Maybe I should just sit
here and enjoy the furrowed brow, sweaty palms, chewed lip and fond memories
of all the times I've been baffled before... until I'm "aha'd" and
not confused anymore ...
More from you ... In your recipe for success, don't forget commitment - and
a deep belief in the inevitability of your success.
Now THIS is a gem. How do I develop THAT belief? I think I remember
you writing to someone that the future doesn't exist ... if so, how can I
be sure of my success? I hear you say "You cant be sure" or
"Declare your goals and ambitions, and then go out and make things
happen," but how do I develop the belief so that I can actually
believe going out will make things happen? Or does the belief come later,
after the success starts?
doubts would make everything fall into place ... I mean, I'm smarter than
average, if <someone> can do it I can learn too, and although writing
this I feel like a complete [xxx] whose knitting is coming undone I know I'm
less "dramatic" than most people... but I cant seem to
"believe" this belief for some reason ... even though CM (or
is it Fred? I cant tell who is who...) tells me I've got everything I need,
and can do everything required, for it to be true... I KNOW that if that
belief was there then the "intention" would be there ... and
the results would follow ... cool! How? Accept and enjoy the doubts?
Finally (phew!) you wrote ... Strict discipline induces insurrection. I'm
struggling with indiscipline (or is it doubt?) ... I've just noticed that my
desire to feel "free" induces the drama of indiscipline ... I was
under the impression that discipline was top of the *required* list ... and
I figured it was either strict or it wasn't really discipline ... like being
a virgin ... one is or one isn't ... no "fuzzy" area ... What
exactly do you mean? Break the rules occasionally? Be flexible?
Thanks again ...
on working with the model. You may find it a lot easier with a friend
or within a group.
you dislike, grow stronger; the feelings you like disappear, leaving you
turning point in the Trading Tribe Process (TTP) occurs when you become
willing to feel an historically unpleasant feeling.
example, some traders dislike feelings that associate with whipsaws, missing
moves and draw downs.
methods Trading Tribe uses to get to the turning point include:
for the positive intention of the feeling
enjoying the feeling for each other
with the feeling wherever it goes
example, you seem to have a concern about how to develop a winning attitude.
You are trying to make the concern (feeling) go away by "solving the
problem." Your wanting it to go away, makes it stronger.
Trading Tribe Process is to re-formulate your concern about wanting to
succeed as a physical feeling, and then to work toward fully experiencing
the feeling disappears, it leaves insight and wisdom ... in this case,
natural knowing about how to succeed.
you look at Sram and Yuri, you may have feelings about them, and judgments
about these feelings.
|Thu, 15 May 2003
Please assist me in obtaining a thorough mastery in trading concepts. Could
you recommend a few books? Thank you.
Books, Links and Risk Management above
Thu, 15 May 2003
Thanks for a great site. I enjoy reading all the posts. With reference to a
post on the site on Feb 6th 2003 (Poker), the contributor mentioned a
publication of yours entitled Determining Optimal Risk. Please let me know
where I can locate it.
article appears in Technical Analysis of Stocks and Commodities Magazine,
Thu, 15 May 2003
More on the
Process & Tribes
Endeavoring to stay out of trance has proved fruitless, so I am leaning the
other way and finding good pickings. Re-readiing Erickson is opening up
something - what - I'm still wondering.
Continuing my comments -
Let's start with Erickson. He held throughout his lifelong research into conscious
and unconscious processes that they were separate and autonomous and
much more often than not, that the work of the unconscious was better
squares with the Trading Tribe Process is that it doesn't. What it does
match up with is psychoanalysis - the unconscious becomes conscious with
cathartic resolution and integration. It's clear that this does work for
certain kinds of distress - and Erickson's emphatic position makes me wonder
when it doesn't.
I have given this some thought in the past - mostly about how the coming to
conscious awareness of metaphors of identity and other symbolic processes
can have a positive effect on revising self concept. Self awareness
functions as a dissociation process that places the pattern in question in a
"not me" category. Here it can be changed to imagery that the
individual will want to associate into. How self awareness might function
in the Trading Tribe Process is still unclear to me.
I don't think that Under Fred is necessary for your model. If
everyone's Fred is basically biological, then Freds recognize Freds and
that's all that's needed. What is suggested by the Fred / Conscious Mind
split is that when people get together they can do so as Conscious Minds,
as Freds and what is most likely, a mix of both.
This reminds me
of Kurt Vonnegut's group types: Karass or Freds and Granfalloons or
Conscious Minds. Vonnegut contended that almost all of the official
groups we can join are Granfalloons - full of their own importance, but not
really accomplishing much of anything.
Whereas the other members of our Karass might be unknown to us - except that
they keep turning up and really influencing our lives. I think you envision
the Trading Tribes being Karass, and it seems to me that as established
organizations, they will attract both sides of the mind.
My other comment, (also critical - why stop now?) is that catharsis can
be misleading as an indicator of change. Emotional responses are quite
convincing for certain parts of the brain that something important has
happened. This is manifest in psychotherapy as "finding THE original
historical cause" for any current difficulty. The problem with
this, as Bateson and later Weick point out, this takes no account of double-bind
difficulties which, of course, are the ones that "tie people up in
This has stopped
therapist from finding something resembling a memory, and metaphor is
another way to change. Still, the binds keep rolling along until they are
dealt with as communication devices they are.
cathartic release of emotion may accompany the Trading Tribe Process.
In addition, sudden peacefulness, new insight, wisdom, change in facial
expression, posture and trading skill may follow.
Erickson seems to have remarkable
resonance with the subconscious. Perhaps
he acts as a surrogate CM, for the client's Fred.
Under Fred = the collective
unconsciousness; the collective consciousness resides in books, libraries
and lately, Internet.
Vonnegut: Cat's Cradle
about San Lorenzo Island, scene of
Granfallons and Karass.
Thu, 15 May 2003
Ha ha ... thanks for the insight.
Wed, 14 May 2003
Validation and Commitment 3
and Commitment 2
Just thought I'd send in an update on the issues I discussed last week. In
short, WOW! What a week it has been!
Having spent all that time examining my thoughts and feelings, I got
straight to the heart of my "I can't win at what I really want"
issue. And I dispelled it right away. When you realize that YOU choose your
own beliefs and that some of them are chosen on entirely mistaken and faulty
premises, it's easy to let them go. But more importantly to the process
was your notion of "positive intention".
Once I sorted through the how and why of my faulty belief, all of my trading
behaviors became very clear to me. I realized that what I thought was
"destructive" and "conflicting" behavior made PERFECT
sense in light of my beliefs. I realized that all of my behaviors were
founded in POSITIVE INTENTIONS that were based on faulty premises and
In other words,
I wasn't acting against myself and my goals at all. I was acting fully in
support of myself, based on the beliefs that I accepted.
A quick and dirty example to illustrate the point: If you believe that you
can't win at trading, and the result of "not winning" is financial
losses, then are you not acting with positive intentions by periodically
walking away from trading? Of course. If you can't win, then it's in your
best interest to stay away! YOU GET WHAT YOU WANT FROM THE MARKET. If you
can't win, you won't win. So protect yourself by staying away.
Indeed, trading is so much more than trading. It's a metaphor for life.
And in clearing that issue within myself, I found myself at a level of
peace I haven't felt in I don't know how long. In realizing that I am
acting in my best interest, that all my feelings and "parts of
self" have positive intentions, I realized that I AM ON MY OWN SIDE.
I feel "congruent" now. As though all my internal parts are
aligned toward a common goal. Conflicts have been resolved. How wonderful it
is to "welcome yourself home", to stop fighting yourself, to stop
criticizing yourself for "screwing yourself up"!
"They" say that when you're committed, everything you need
shows up. I feel it's no coincidence that within 48 hours of having become
fully committed to my trading, the major issue that I've been contending
with for almost two decades was cleared up.
But the benefits don't stop there. I finally got what trend-following is
really about, and man oh man, is it ever SIMPLE: You have a system. You
follow the rules. That's it.
The ONLY thing "hard" about trading is ALL THE OTHER JUNK WE BRING
TO IT. The fears, the concerns, the expectations of how trading
"should" be, the putting our past experiences into our future.
NONE of it has anything to do with trading, but we think it does. We try to
predict and forecast because we need to be right, we need to know, we need
to feel secure about our trades. But none of that has anything to do with
trading. There is only the system, the rules and the following of the rules.
It's a numbers game. Once you have a system that works the only issue is
implementing that system to give the numbers an opportunity to work out in
I found myself trying to choose between two trades the other night. Both had
already triggered entry signals the day before (I was still in the process
of self-examination and was not trading at the time.) I found myself looking
at volume, looking at price action, trying to "figure out" which
stock would perform better. Until I realized that I was attempting the
impossible. One might work, both might work, neither might work. Who
cares? Either one is as good a bet as the other. The signal has been tripped
and the only issue now is money management. Positioning myself for
exponential gains or linear losses. Trying to figure out which stock to
choose has nothing to do with it. I might as well spend all day at the
cab station trying to figure out which cab is going to get me to my
destination without getting hit by a bus. I CAN'T FIGURE THAT OUT. EVER. WHY
WASTE MY TIME AND EFFORT TRYING?
I realize now that the ONLY thing I need to "work" on is
myself. Remaining vigilant not to fall into the old traps of prediction,
fears, etc. Honor feelings, deal with whatever arises, but when it comes to
trading, all there is to do is to follow the rules. Whatever happens
happens and none of it matters so long as I'm following the rules. Losses
are part of the gig, discomfort is part of the gig, getting stopped out just
before the gap and limit up opening is part of the gig. Don't like it? Don't
And this has translated into my entire life, not just trading. Going with
the flow. There is only NOW. Anything might and could happen after
NOW, but NOW is all I can respond to. What is ACTUALLY OCCURING is the only
"data" worth considering. (Assuming that you have a plan that
accounts for various contingencies, of course.)
It's been rather fun watching myself watch the intra-day quotes. Up and
down, excited one minute, scared the next, optimistic then pessimistic. Why
bother? Either my stop has been hit or it hasn't. Nothing else is relevant.
Why waste my energy? Time to turn off the quotes, put in the orders and
go play outside...
Best to you...
Saul Steinberg (1914
taxis and many ways to view them
Wed, 14 May 2003
Thanks for your reply yesterday ... Im still thinking about it ... So even
"probability" and statistics is still trying to figure out the
market? Just "go with the flow" of whats actually happening? Makes
perfect sense ... until the invisible comentator asks "yeah, but what
if..." :-) But he'll change his tune soon!
I just checked out your answer again, to see if I could glean more from it,
and I noticed the bit you wrote about "change" has gone. This
was the part I *most* didnt understand, but *most* felt as if there was
something important there ... but your answer's changed ... ???
I just had an experience that included a "drama" Id like to share,
and which made me try and use the process. It wasnt a trading experience,
but Im [xxxx] sure it or something like it will/has affect/ed my results.
(Aside: If my results are negative, does that mean my intention is to
lose money? Im truly awed by the "life" implications of that
quotation. Its scary...) I live in Brazil, and the nearest club looks like
5000 miles away ... so how do I do the process with myself... is it
The drama... I was paying in a restaurant and ended up in an argument over
prices. I complained, didnt receive satisfaction, and kept complaining, and
the queue behind me kept getting bigger..... The worse I felt (rage,
embarassment, frustration - all feelings I feel during trading), the more I
complained... to no avail... until I just gave up, paid, left the
restaurant and walked home - fuming away inside, and totally aware what Id
just done was pointless, and that it would have been less unpleasant just to
pay the difference and walk away, but also aware that doing this would have
meant walking away feeling something ELSE not entirely pleasant ...
Anyway, on Monday, as I read your site, Id been confused the the idea of
what the term "drama" actually meant, but as I sat down in front
of the monitor I suddenly thought "Hey, Im feeling bad ... and if that
wasnt a drama I dont know what could be! Concentrate on the feeling! ...
What am I feeling? ... Where? What does it mean?" But it was like
trying to see where an atom is by shining a light on it ... My Process was
somethihng like: "OK, Im feeling like ****, Im angry, my gut feels like
hot, Im not breathing properly, Im clenching my teeth, saying "grrr!"
to myself.... but so what?" I guess Im missing something ... what?
Also ... you mention "knots" of tied up feelings Im unable to feel
... but I KNOW when Im angry, frustrated, embarassed, scared, happy,
surprised... because I FEEL these emotions at the time ... and its
precicely cos Im feeling them that I do all the non-useful
"dramas" ... if I DIDNT feel them, I wouldnt need to play out the
Is the objective of the Process not to feel the feelings, or to feel them
and be able to NOT play out the dramas? As you've probably guessed, Im a
little lost here ... but Ive ordered the Toxic Parents book ... so maybe
when Ive read it I can blame it all on them and everything will be great!
:-D Just kidding!
The Trading Tribe Process intends to
reframe feelings you don't like, as feelings you are willing to feel.
The group keeps you on task and
exemplifies enjoying the feeling.
Drama is not a result of the feeling
... it is a result of not wanting to experience the feeling, of trying to do
something to avoid the feeling, to make it go away.
Your attempt to make frustration and
embarrassment go away, is the Drama. Other Freds assemble to assist you: the
Maitre d', the people in the queue, etc.
By just being there with the total
experience, enjoying the sensations of warmth and heat in your cheeks, the
perspiration on your hands, and so forth, you get an aha, a set of
realizations about all the times you recall being in similar
You may recall situations involving
risking money in the markets and trying to avoid feeling frustration and
embarrassment, and making an expensive move.
This time, however, you allow the
feelings, notice a shift, and see things differently. You resolve your
situation, effectively and quickly.
You also notice you no longer have a
need set up similar dramas.
can experience it and go for the aha, or act it out in the markets.
|Wed, 14 May 2003
Tribe in London
I have been visiting your site for a number of weeks now having found it
through the www.TurtleTrader.com .
I have been studying and researching systematic trading methods for the last
10 years. I have been running a market neutral equity hedge fund for the
last four years and have recently embarked on the
development of a systematic trend following commodity futures fund.
I have a number of questions.
There is currently no tribe based in London or the UK. How would you suggest
I explore what is involved in setting one up here and what steps can I take
to further prepare myself to help to establish a new tribe.
Your site refers to both a program of study you are preparing and
(elsewhere) private consultations. When do you anticipate the study
program becoming available and what form does it look like taking. Is
the private one-on-one work something you do yourself or were you suggesting
Congratulations and thanks for the site and the work you are encouraging
who participate actively seem to catch on best. To start a Tribe or
Intentional Community in London see Tribe Directory.
people who want to learn more about the work, in person, I am developing a
and places are open.
South Pass, Wyoming
|Tue, 13 May 2003
Oh, What Ever Shall I Do
If you look at [xxx] it had a hook down 7 days
ago ... if I wanted to buy more when the stock takes out that high of the
hook down, where do I place my stop ... ?? ... do I place it at
the low of that hook down or do I place it at the low of the day that
it takes out the high of the hook down ... ?? ... when I asked [yyy]
about this, he wasn't quite clear ... he kind of said that it depends on
what the stock is doing now ... ?? ... does that mean I should look
for some support in the past couple of days to place my stop? ... could you
does not provide instrument specific advice or trading system parameter
advice. See Ground Rules.
seem to want someone to tell you what you "should" do ... even a
friend who admits he is not clear.
notice the stock you mention is still below its 2000 highs, while plenty of
other stocks are making new all-time highs.
passengers get plenty
thrills and excitement ...
never get back to the high point.
|Tue, 13 May 2003
"You might reframe the negative feeling as just a feeling, that Fred
wants to communicate to CM, neither positive nor negative."
That's it, Ed! We finally got to the point (AHA). I have just started to
reframe those "negative" feelings as just feelings and also
started to celebrate them for my joy and great relief. Thanks for your
"I gather that you validate truth, perhaps even your own being, by the
agreement of others .. trying to get the market to agree with you, can be
I feel that's partly true. About needing approval, I was aware of it a long
time ago. It's rooted on rigid early upbringing. Nevertheless I think the
positive aspect of such need is related to lending an attentive ear to
advice from the long lived, as expressed in the maxim:
"If you wish to know the road, inquire of those who have traveled
Sometimes, though, I feel it's an impediment to personal growth and
independence, and also an excuse not to take responsibility for my own
actions and their outcomes.
the road in your own way, even if the experience is to need to follow
someone else's way.
of Choices Along the Way
|Tue, 13 May 2003
Dear Mr. Seykota,
I find your approach very similar to the meditation process.
When I meditate, instead of trying to stop my mind from
thinking, I simply acknowledge and become aware of my thoughts and
observe them with detachment and let them flow pass.
meditation observes thoughts with detachment and lets them pass.
Trading Tribe observes feelings with intention to experience them.
Trading Tribe keeps you on the hot seat, to help you focus your feeling
until it resolves into an aha.
A young Dolgan
girl avoids the feeling of cold ... inside her reindeer-hide clothing,
despite sub-zero temperatures.
|Tue, 13 May 2003
When you say check your feelings about something what do you mean? Be aware
of it? Aren't most people aware of what they are doing or thinking
that not really make a difference? If I am depressed, I am aware I am
depressed no? I am still depressed. So what then?
out feelings is the work of the Trading Tribe.
is a generic label. A tribe can help you stay on task while you parse your
feeling into physical components such as pressure, temperature, size,
texture, sound, etc.
of the details of a feeling to others seems to resolve it into an aha.
Doughboy Meets The Three Stooges
in many ways
can have different meanings.
|Tue, 13 May 2003
Mirroring and Pacing
Could you please elaborate on the mirroring and pacing technique used in TT
How does mirroring differ from pacing, is one physical and other verbal?
This is what I have been able to find, am I going in the right direction?
Mirroring is the ability to enter someone else's world, to make them feel
that you understand them, that you have a strong common bond.
Mirroring allows the subject to feel as the has found someone 'just like me,
" and also gives the mirrorer the ability to experience the same
physiology as the subject.
Matching physiology enables the mirrorer to "walk" in the other
man's "shoes." If a man can understand, say, the muscular tension
of another, has he not drawn closer to understanding his thoughts?
Any observable behavior can be mirrored, for example:
Vocal qualities (pace, rhythm, tonality)
Anything else that you can observe…
To mirror another person, merely select the behavior or quality you wish to
mirror, then do that behavior. If you choose to mirror head tilt, when the
person moves their head, wait a few moments, then move yours to the same
angle. The effect should be as though the other person is looking in a
You: "If I were to ask you, what's the most important thing in a
relationship, how would you describe it to me?"
Her: "I want a man who makes me feel comfortable with myself" (you
remember "feel" and " comfortable")
You don't mimic a person word-for-word, but you match the *meaning*
that's offered. ie, if someone goes "I love pancakes!", you don't
go "I love pancakes!", but you can do something like "Mmmmmmmmmmhh...yeah...."
- in the same tonality and volume. Mirroring and pacing work "in
concert," so you have to use both.
follows from intention.
you wish to compare notes in person, you might like to visit The Trading
Tribe here in Nevada ... or have one of us visit your group.
see pancakes differently. One might like the flavor, another the height of
is 27, on the high ...
our analyst is looking for 40.
it breaks from there
says it'll be all over the floor.
|Tue, 13 May 2003
Like the water from a cup that has been sitting by the bedroom window all
SVO-p; staying in the present clarifies the current state of the water. See
Trading Tribe Process.
Tue, 13 May 2003
you're forum very much. Ones' again, thank you for being a guiding light..
I'm currently feeling the new feelings I'm feeling. I look forward to
sharing my experience with you.
forward is looking forward. Sharing is sharing.
Forward and Backward
is where all the action is.
Tue, 13 May 2003
Dear Mr Seykota,
After 10 years of trading and studying the markets I had developed a
systematic process for trading medium term trends in US equities and wanted
to implement it.
I have been lucky enough to have brought together a great team and top class
structure around the product that we are launching (see attached document).
However, due to a great deal of scepticism in London about trading a
system in equities, we are having a hard time closing a deal with a lead
sponsor. We are looking for $20-$30 million at launch, due to the economics
of the business.
If you know of any institution that would be interested in sponsoring us
at launch, we are looking to do a deal and would greatly appreciate an
On a personal note, thank you for sharing your experience with people like
me. Because of the generosity of people like you, I've been able to
understand the markets. I'm amazed how unconventional the thinking still is,
when it seems so natural to me, but it has been a wonderful journey - one
which I'm going to be forever on! Thanks.
notice you blame skepticism and economics for your funding
fund managers use reasons and excuses later on, to explain performance.
Trading Tribe holds that results indicate intention.
for your attachment, I suggest you invest your team with spell
understand NASA has a pretty good launch facility.
with the Basics
Tue, 13 May 2003
Dear Mr. Seykota,
Let me rephrase my question: does probability exist?
Tue, 13 May 2003
Trend Following Methods
I find trend following truly liberating because it doesn't require you to
figure out the future. As a trader, I simply "wait" for the trend
to shift and meet my criteria of a trend shift and then I
"follow". No prediction is required.
I have been trading futures full time for five years. I spent the first 3
1/2 years trying to "figure out" the markets. I tried most
technical indicators and none of them worked very well consistently. I
managed to breakeven in my trading in the third year and turned a profit in
the fourth year because I was trading with elementary trend following
principles "despite" my TA prediction bent. Simply I was cutting
losses short, risking 100% of my open profits before my exit rules are hit,
letting profits ride, and sizing my position prudently to stay in the game.
I had an epiphany one day and that changed my trading from the TA
prediction approach to trend following. Over time I managed to gradually
lose all my indicators and I now use a moving average to define trend and
My trading journey continues and I've tried trading different time frames
and markets to find the ones that suit me personally. I continue to evolve
and fine tune my trading rules on an ongoing basis (they are getting
Risk and Drawdown
I define risks in futures trading simply as when the trader doesn't know
what he or she is doing. This means the trader has no clearly define trading
rules for entry, exits, and position sizing. If the trader knows what he or
she is doing, then the risks that remain are the trader's own well being,
i.e. his personal life which affects his emotions and therefore trading.
It has taken me a long time to "accept" and be able to handle
whipsaws and drawdowns. It's still not easy but I am getting better at
continuing to take my trades after whipsaws. I finally understand what Mark
Douglas is talking about when he teaches traders to think like a casino
"operator." This means so long as the game I am playing (i.e. my
trading methodology) have positive expectancy and I size my bets
appropriately, I will come out ahead if I take all the trades of my method.
This is just like the casino taking every bets of its customers
"indiscriminately" and while they may lose on individual bets but
over many bets they make money because the games operated by the casinos
have positive expectancies.
So I view drawdown as an unavoidable and necessary part of trading. In
fact one of my written reminders is "Drawdowns and losses are
unavoidable. They are necessary to make net overall profits."
I hope the above have enabled you to get to know my feelings about trading
better. I am genuinely interested in finding out whether it is possible
for you to manage some of my family's money at mutually beneficial terms.
Please advise how we can take explore and take this information exchange
you want someone to manage your money, I recommend you visit in person.
Compare notions about trading styles, risk and drawdowns.
sure your styles match.
Mon, 12 May 2003
"If your CM does not listen to Fred, you might keep
"practicing" the same old dramas for a lifetime.
For example, you might check your own feelings of wanting to debate,
meanwhile missing opportunities."
After reading about the Process, I acknowledge its patterns in my relationships
with girls over the past years.
It has been a long
time since I always find myself involved in power struggles with the
girls I have been choosing as potential partners, with great distress to
both parties. Such power struggles, on my part, I feel are based upon
deep unresolved negative feelings and beliefs about women, which express
themselves in the form of deep insecurity and an unwillingness to be
emotionally open, always trying to take full control of the situation.
Unfortunately, I have seen and lived this pattern over and over as it would
appear that I always end up caught in such dramas, ruining my hopes to
achieve the healthy relationship I always dreamed about. So, after reading
about The Process, I started thinking to myself: "What is Fred
trying to tell you while you are trying to block him?"
Yet, I have not find a precise answer up to now.
seem to think some of your feelings are negative.
might reframe the negative feeling as just a feeling, that Fred wants to
communicate to CM, neither positive nor negative.
Fred succeeds in informing CM, motivations to entrain external dramas, like
power struggles disappear.
Trading Tribe Process.
and Woman Fighting ...
on the Same Team
Mon, 12 May 2003
Who Gets the
"The stock is up already, is it overextended?"
If we had a crystal ball and we saw a stock that went from $20 to $100, we
would see a trend (barring a takeover etc).
If one owns it at $20 and another at $30, who is in a better position?
We could say the owner at $30 is better off because it was even more evident
that the trend was there and he owned it for a shorter time period.
Now, say the stock is at $40. Both are in the same position? We can say the
owner at $30 has less risk, only 10 points to breakeven while the other has
20 points of risk to breakeven.
seems like the price someone else gets matters to you.
Mon, 12 May 2003
I have been in the hedge fund industry for seven years. Recently I decided
to leave the fund I was working for and manage my own capital in a way which
is more consistent with my personality in an environment where I can grow
personally and be open with my thoughts and emotions.
I think I am on
the right path - there is a lot of un-learning I still have to do - but
the hardest thing for me to do right now is to put on my first trade.
might be able to locate the basis for your hesitations with the Trading
the First Step
Mon, 12 May 2003
To keep the current and future members of our North West tribe up to date I
had created a message board on MSFT groups. It is called the ORWA trading
Is this O.K.? I
now see that the Trading Tribe is now a reg. trademark. So shall I have the
name changed? How do you want that handled? Best Regards,
phrase "Trading Tribe" is in registration to Ed Seykota. You may
use "ORWA Tribe." Send the URL to your board, so it can post
in FAQ Tribe Directory. Be sure to include a link to FAQ on your site.
Mon, 12 May 2003
I've recently found your site via www.turtletrader.com
and am intrigued by the "maybe you want to explore your feelings
about..." replies. At first I thought they were pretty weird, but
thinking about them has brought about a couple of "ahas".
I've been "struggling" for a couple of years now with trading and
realized my lack of success is down to something I'm doing/not doing or
thinking/not thinking. Is there a "model" of beliefs an
investor needs to be successful? Is everyone completely different, or
are there "patterns" common to the best traders? If so, what are
the common elements?
Also, three things that really put me in a tailspin ... maybe you'd like to
One was a proverb I read about a coin tossing competition, where the winner
was worshipped like Wall St analysts once were, ran courses and wrote books
to explain his amazing coin tossing methods. Applying this to the markets
(and I don't even know if its applicable, but some people say the markets
are at least "almost" random) how can one know that winners
are winners because of their methods and not just because
"someone" has to win ... After all, everyone can't lose ... If
1000 people are trading against each other, wont SOME eventually come out
winners ... even if none uses ANY kind of system?
The second is the following ... in testing systems I've noticed that none
of them are really *good*, the best only give around 50% good/bad trades.
The profits seem to come or go depending on when you get out, not when you
get in ... 50% doesn't seem to be any better than "chance", and if
good trend following systems give even less than 50% positive trades, what's
the point of using ANY kind of entry method? Why not just random? I mean
if most breakouts are false anyway, what's the point of using breakouts at
all? If I buy (or sell) NOW, the price will either go up (and pass the next
breakout point), or it wont, in which case Id have to sell ... so how does
"waiting" for entry conditions reduce the *risk* if >50% of the
times you wait you end up with a loss anyway?
Finally ... and this might sound even dumber than the last points ... but
how come its easier to write systems that LOSE truckloads of money, but not
ones that MAKE bucket loads of money? Even programming a simple Turtle type
trend following system (entering and exiting on breakouts, using 2N initial
stop etc) only produces mildly positive results over five years (when tested
over whole markets such as SP, FTSE), so how does one get *confidence* in
a system if you cant get one that makes more than bank interest?
I can already
imagine your reply to that one! hehehe If the markets were
"random", wouldn't systems produce results around a normal
distribution? I'm aware my system logic and system programs may not be
brilliant, but they're good enough to write simple systems based on sound
logic, and I'm also NOT using additional positions are a position goes in my
favour, but can you make money from a negative/zero expectancy system just
through money management?
Also some of these
systems give excellent results on PARTICULAR stocks ... but they aren't
"robust" to use across lots of stocks ... Even so I get results
skewed way to the (negative) left using all kinds of different systems
weaned from dozens of books ... 90% of these systems lose lots of money, but
the <10% that make money only breakeven or turn slight profits ... so if
I start trading based on "weak" results, Ill be operating on hope
that the system in real life will give better results that the system tested
on historical data ... doesn't seem right somehow...
Any thoughts? How
can I look at this in a more "useful" manner? I haven't written a
system that makes money (and I'm talking about > interest results... not
200% a year), but as others have, I'm obviously not doing/thinking something
On another level, could I ask you a personal question? Why do you trade?
Why is <your answer> important to you?
PS - Nice idea to create a "community" where you share the
benefits of your wisdom and experience. Thanks.
questions are consistent with core beliefs in Fundamental analysis,
causality, predictability of the future, reasons, and understanding change.
Trading Tribe approach to change is to follow the trend.
theory, physicists can predict the period from the length and gravity.
practice, when the pendulum is a pair of fuzzy dice, hanging from the rear
view mirror of a pickup truck, on a country road, accuracy suffers.
generally make no attempt to explain how the atoms in the pendulum, the
truck, and the physicist, all happened to assemble at the same time and
Followers simply notice the direction of the dice and go with it, until the
Mon, 12 May 2003
An true believer of trend-following, I have
experimented with almost all technical analysis tools, and continue to
return to the tried and proven Simple Moving Average crossover.
I have a group of about ten highly liquid, high
volume, stocks, that all trend very nicely and respond very well (over the
previous two years) to a 5/20, 7/35, 5/25 SMA crossover.
Ed, what are your thoughts on trading this one group of stocks all year
long? This would be similar to futures contracts, where traders
"specialize" in Crude Oil or S&P 500 contracts.
My feeling is that getting intimately familiar with the trend behavior of
only these high-volume, high-liquidity stocks will put money in my pocket
both long and short.
like people, come and go. You might consider trading specific patterns
and situations rather than specific stocks.
Snead (1912 -
Sam Snead wins
both Masters and PGA 3 times and British Open once; runner-up in U.S. Open 4
times; PGA Player of Year in 1949; oldest player (52 years, 10 months) to
win PGA event with Greater Greensboro Open title in 1965; all-time PGA Tour
career victory leader with 81.
Mon, 12 May 2003
Someone put up a thread regarding starting a tribe in Melbourne, Australia.
My question is can I join? And How?
the Tribe Directory Page
Mon, 12 May 2003
Can you please advise if you include the unrealized profits of your open
trades into the calculation of portfolio heat or only the trades’ initial
about figuring things out for your self might be driving you.
to Riding Solo
Mon, 12 May
Freud, and Fraud
Friends with Feelings
Just a riff off Ed's observation that, 'Sometimes Fred arranges drama to get
CM's attention. When dramas occur during the day and can no longer be
ignored, we call them problems. When they occur at night, we call them
dreams. A student of Fred, Freud, emphasized that we need to analyze
problems and dreams. To Fred, of course, this constitutes fraud.
I experienced an illuminating example of Fred, Freud, and fraud one night
last week. The previous day, I had felt uncharacteristically
dissatisfied with trading. I was trying to catch short-term trends,
following markets obsessively and moving in and out to little effect. My
distinct feeling at the end of the trading day was that I had completely
wasted a day out of my life which I promptly attempted to assuage (squelch)
by getting ahead in some of my other work.
That night, I dreamt that I was with my children at Pier 41 in San Francisco
waiting for a ferry to Sausalito. We were watching the seals at the pier,
and I noticed one in particular. It was a harp seal that I had seen in an
advertisement for a wildlife organization that was soliciting money to help
endangered species. The seal was large-eyed, with soft dry fur. It looked
directly at me. In the dream, I desperately longed to climb down the rocks
and play with the harp seal. I realized, however, that the ferry was shortly
departing and, with regrets, I left the seals behind to catch our ride.
My first inclination was to play Freud and analyze the dream. Seals
were my favorite animal when I was a child. They seemed happy and carefree.
I could watch them play for hours: climbing onto the ice, sliding down into
the water, climbing back up, sliding down. My analysis suggested to me that
I was perhaps working too hard, struggling to meet obligations, thereby
endangering the childlike enjoyment of life.
As soon as I arrived at my Freudian formulation, I recognized it was
fraudulent. It would lead me to do what I had always done in such
circumstances: I would step away from trading for awhile, enjoy life, return
to trading for a period of success, and then flush with victory expand my
trading efforts to briefer time frames. The analysis was not a way of
dealing with Fred's communication; it was an essential part of keeping the
With a bit of trepidation and self consciousness, I decided to put my dream
through The Process. My guide along the way was an excellent book by Alvin
Mahrer called Dreamwork in Psychotherapy and Self-Change. Mahrer's approach
makes three assumptions:
The dreaming person may be described as having entered into a new and
qualitatively different personality state. In contrast, virtually all
other approaches see the dreaming person as essentially the same personality
but with reduced defenses.
Deeper personality processes may be grasped by entering into the dream
state. This means that you will probably be unable to grasp or be privy
to these particular deeper personality processes by standing outside the
dream and talking about it or trying to figure out what the dream means.
Deep-seated and profound personality change occurs to the extent that you
can be or experience the deeper personality processes contained in the
dream. This means that you will probably be unable to undergo this kind of
deep-seated and profound personality change by standing outside the dream
and trying to do something therapeutic.
The goal of The Process, it seemed to me, was to be the dream, not stand
outside it. And since my desire in the dream was to play with the seal,
I decided the best way to be the dream was to be a seal.
So that's what I did. I spent the next trading session barking away,
clapping my flippers, balancing things on my nose, and otherwise
behaving in ways unbefitting a serious psychologist and trader.
The interesting part came when I started following the market action
carefully while in my seal mode. I held the image of climbing up the ice
floes, sliding down to the water, and climbing up again. Spontaneously, I
started to view the charts as my playground. Climb up, slide down, scamper
back up: the short-term movements that had been so threatening to me when I
was trying to ride small trends now were part of (literally) playing the
The aha experience occurred when I realized that the previously intimidating
countertrend movements were essential to the seal game: you couldn't play on
the floes if you didn't climb up and slide down. The downward movements in a
rising trend were part of the opportunity to continue play! I realized that
I should work on incrementally adding to positions to get back on the slide
rather than attempt to predict dips before they occurred. Better
strategies for position sizing, not shorter-term trend trading, was what I
Interestingly, before enacting the dream, I hadn't given position sizing a
moment of thought while contemplating my trading ennui. It was a nice
illustration of Mahrer's use of dreams to enter a new state and see oneself
afresh. Whether I use this experience to catalyze a breakthrough in asset
allocation or not remains to be seen, but I can report that, since the
experience, I have not lost the sense of playing the market.
I would be interested to hear of others experiences encountering Fred in
dreams, creative arts, games, and other spontaneous, non-Freudulent
activities. Thanks for the opportunity to be part of the Tribe.
The Trading Tribe Process seems to facilitate and accelerate various other
the President has a Seal
Sun, 11 May
I just wanted to check in and see how your doing. Last week's tribe meeting
was clearly a transformation for all of us. I want to thank you. You were an
inspiration of emotional openness and the joy I felt from your AHA and
concluding expression was simply a profound experience for me.
Sun, 11 May 2003
What is Truth?
"Do not believe because you saw the written
word of an ancient sage;
Do not believe on the authority of masters or
But accept as truth and conform your life to
what agrees with your experience and after
a profound study satisfies your reason and
leads to your good."
-- Siddhartha Gautama - (Buddha)
I agree with the ancient sage that truth is a very vague concept. More often
that not we welcome as being true that which conforms to our own inner
concept of truth.
With that in mind, I feel that truth is a result of a collective
agreement about a particular issue. Even though always subject to
review, the older the better. For instance, "Go with the Trend" is
true for speculators because there is a collective agreement among long
lived speculators that the method resonates with their experiences and
That said, Ed Seykota, I feel that we benefit the most from statements
which find convergence among traders and which have gone through the test of
In this sense, I find particular interesting how old timers describe their
feelings while being "in the zone". That's a tangible aspect to
which the less experienced can compare their current level of development
and concentrate efforts towards better attitudes.
In this regard, there are some shared statements among old timers
which I find particular interesting:
The predominant trend is evident and easy to feel or see; Rather than the
trader calling the best trades, the best trades call the trader (it would
appear that traders evolve toward an inner state of absolute silence and
responsiveness); In the zone, feelings flow naturally, i.e., there are no
conflicting feelings, and ... The best way to learn is through practice in
real situations. Please let me know what you think about it.
gather that you validate truth, perhaps even your own being, by the
agreement of others.
feeling of needing approval. might be driving you. This may have roots
in early upbringing.
this out, say by trying to get the market to agree with you, can be
can get a stamp like this one for a few dollars. Trying to use the markets
to give the stamp can lead to the stomp.