Austin Workshop Follow-Up: System Designing

Dear Chief & good friends of my support group, I write with my progress of the Austin Workshop commitments.

1) Asking for help. I have an AHA moment as I sit down to write this. The commitment that lies beneath this, waiting to bubble up is taking responsibility; taking responsibility for my situation, goals, progress, results and for nurturing intimacy-centric relationships. I feel empowered by this realization and therefore re-state my first commitment as taking responsibility.

2) Building a clear, rules-based trading system.

To translate my system ideas into computer code for TradeStation, I decide to contract an experienced programmer to get a system completed and then learn programming myself, over time. A member of my support group generously puts me in contact with a guy who codes for him.

I gain the insight that my rules are not adequately comprehensive as I list them to email to the system writer. My background is discretionary trading and determining hard & fast rules feels foreign. Moreover, thinking deeply about what I do is novel; I see that gut feel and emotion play a large part in how I respond to market action. Emails are fired back & forth between the developer & I as I clarify the system & iron out bugs. This process takes about two months.

I feel disappointment when I back test the system for the first time and the performance report prints a loss for the Y-T-D period to June. Further investigation reveals market conditions were unfavorable for the system during the test period. My real-life trading and observations during this time dovetail with the results too.

I learn more about the nature of the system as I back test it over varying conditions.  Tweaking system parameters to better suit the conditions of the window make it profitable. I feel myself becoming less emotionally attached to the system's outright profitability and more interested in price action and system characteristics the more I delve. I am reminded of my childhood when I used to spend many happy hours in the shed or garage de-constructing and building mechanical and electronic devices.

Next step I run the system fully-automated in simulation mode. This feels a little uncomfortable even though the trades are not real; the system trades during my night time & I worry it may do something crazy while I'm asleep. I find it interesting that I worry even though I have no money at risk and think about how to control the possibility of the system punching out crazy orders. I progress in sim-mode for two weeks when a bug emerges. The system does not adjust the trailing stop the way I want.

Time passes while I think about modifying the system code and the market has two great moves which the system takes in sim-mode. I feel mixed emotions; glad the the system picked them, frustrated that I have not taken them in the real-world. I recall a self-observation that I have a tendency to rush into something prior to doing adequate recon. I now appreciate this comes back to bite me and often pushes away the very thing I seek. I try to pace myself and enjoy the journey.

Collecting my thoughts and writing this email has been difficult. Now that it's done I feel happy that I got 'round tuit.

My thanks to my Tribe.

Regards

July 12, 2011

Destructive Drugs

Ed,

I am currently writing an article about psychiatric drugs and the destruction of youth. I just started it and my writing skills are fair at best.

Would you be willing to proof read and verify my logic?

July 13, 2011

Gambling

Hi Ed,

I am a Derivative Analyst at a Stock Brokerage firm. I have two questions on my mind which I have asked many people but could not get satisfactory answers. I read your interview in Market Wizard and I was really very impressed by your trading style and performance. I thought you will be the best person to clear my doubts which have been on my mind since two years.. here it goes...

Is rule based trading (not investment which has a holding period of more than 1 year) is same as Gambling..??? Warren Buffet says " derivatives are financial weapons of mass destruction". Your view on this...?????

Thanks & Regards,

July 15, 2011

Guru Purnima

Hi,

Today is Guru Purnima.

I am thinking of you - Thank you for everything!

July 18, 2011

Workshop in Europe

Dear Mr. Seykota,

I read you might consider a Workshop in Europe. I live in north Italy, but I would travel as necessary to join the workshop. England or Switzerland would be a good compromise.

By the way, just to let you know, I'm Vice-Major of a small Mediterranean village.  I can provide at choice 2 conference rooms with a sea-view.

The town is called Riomaggiore and is part of the Cinque Terre in the Ligurian Riviera.

The first conference room is the castle of the town: The Lounge of the Castle (holds up to 75 people or more). The view from the top of the castle is of the Village of Riomaggiore.

The second lounge is 1-mile from the village and includes a Botanic Garden called Torre Guardiola: The Lounge of Torre Guardiola holds 50 people. 

The five villages of Cinque Terre make up a nice area, quite touristic but still quite a little wild. A bit busy in July and August, perfect and peaceful in September with the chill starting in October. The villages include a variety of accommodations: apartments, room rentals and a few hotels.  The nearest airport is Pisa Airport in Tuscany, 1 1/2-hour from the Cinque Terre and 1-hour From Florence. Pisa is very well connected to all European Airports, and very well connected with connections from the USA via London, Paris, etc.

If this interests you, I'll be honored to provide assistance to the logistic organization if needed.

Cordially,

July 19, 2011

Leaving Drugs and Alcohol Behind

Dear Ed,

Please share this update with Charles. I am writing from home and his e-mail address is at my office.

First, thank you for all you do.

I receive my TTP Trading Rules card and $2 bill. This makes me smile. I see my investment double…many times.

I return to Joplin, MO for the third time to volunteer. This time I am joined by my 15-year-old son and a local church youth group. About 15 of us go to work rehabilitating an old house. Spending a few days volunteering is a priceless experience. We ride to a site of a house destroyed by tornado and recover much lumber, load it on our trailer, clean it up and recycle it for use in the home we rehabilitate.

We work 8-9 hour days removing old paneling, tearing out old windows and frames; and replace with new, hand-fresh sheetrock, siding, paint, clean up—and I learn I can do these things. My son learns he can fix things and be valuable. This has to be the Intimacy Model Ed speaks about. We are learning together, we pray and eat together. We work and after a long day in the heat, we cool down at a local river for a swim.

At the river there is a bluff and people are jumping from it into the river. The river is shallow except in this area where they jump it is deep enough to jump in. But after climbing up with others I find I cannot jump from the ledge, perhaps 20 feet up. My legs turn to jelly. How is this possible, I think? I can leg press 135 pounds 100 times but my legs cannot (will not) hold me up at the ledge above this river. I sweat profusely at this ledge, trying to muster courage to jump. As time passes, the sun is going down, and my fear does not lesson. If anything, it seems to get worse. The youth pastor coaxes me to a lower ledge I have not seen and finally I jump in. After the jump, I feel humiliated, confused. My sensations last for the rest of the evening. I have long had a fear of heights. On this trip I am once again confronted with this fear.

I attend a 50th anniversary party last night. A lady who was once my teacher in 7th grade, some 40 years ago, stops by and tells me she has heard I have made a 180 degree turnaround in my life, and that I have become an outstanding citizen. I realize at once how far I have come as a person and I try to enjoy this feeling. Recounting this story makes my head drop forward from fatigue. I clasp my hands, close my eyes and exhale out of my nose. I thank God I can travel this river we call life without medicating with alcohol or drugs. Today I take more time to think. I sense the years gone by, but realize with gratitude what I have is now, and what is to come is not even real, only now is real.

My trading tribe is a paper tribe, a concept, but as people around me see me differently, I learn things will happen when they are ready. I feel no desire to try to force matters.

I fly to Joplin with a doctor in his small plane. Of course, again I am uneasy sitting in this plane at elevation 5000 feet. I distract myself and suppress what feels like a mild form of panic. I enjoy the view. LOL. The doc is someone I’d like to have for a client. He is in fact a former client. My past mistakes make me wonder what to do now. I am different now. I decide to simply do the next right thing. If I am to regain this man as a client, if it is meant to be, it will have to happen organically. And if it does not happen, I am quite content with that too. My fellow tribesman often grapples with start up funds, and the trials of trying to attract clients. I say go to your existing clients and treat them very well. Give to them exquisite service, and this will eventually come back in the form of referral growth.

II take a tote bag of books with me to Joplin. One of them is Lila by Frank Persig. When first try to read this book last year it is quite difficult. On this trip it is entirely accessible and I can barely put it down. The Metaphysics of Quality make me think of TTP. The theory purports to unify the world of objects and the world of value. What speaks to me if Persig’s statement that “reality is value.” I think this is what Ed is trying to teach us about excellence and personal achievement.

Studying philosophy is part of my right livelihood. It feels indulgent because I am not digging a ditch around my pool or pouring concrete, or cleaning out the garage, or opening a new account. The trick seems to be to do all of this. After decades of careening through life, life balance feels elusive yet, right now, in this moment of now, I am in balance. If I medicate my feelings with reading is that harmful? I think it can be if it takes me away from being a full person, a father and husband, brother.

One of the traders in the workshop I attend in Reno asks whether I can run my business and still develop a trading system almost from scratch. Once in denial about this difficulty, I see it as a puzzle now. In Joplin I meet a C++ programmer. Meeting him feels like a breakthrough. He can program my system if I write it out in natural language. Just thinking about this makes my mind swim. I am literally exhausted. Now, that is weird. If I say I am exhausted, that is what I feel. If I shift my focus to a phone call that comes in I am suddenly not tired anymore.

Excellence is positive. Reality is value. Lila is “Zen times ten” according to my friend who reads it for inspiration and founded a multi-billion hedge fund and an automobile company. TTP is the trading tribe process, commitment to others, going with the trend, right livelihood, support network.

When I was unable to jump from that bluff into the water, I was sending out that fear. My friends were my Field of Acknowledgement and supporting me with encouragement. My judge was inside me telling me to be afraid, convincing me that I could never make this leap. Though I lost out to this judge, I learned of his presence. I too feel like a wounded healer. I come from a family that is delineated emotional wreckage. But my immediate family is different. My wife, by the way, is beginning to notice positive changes in me. She has begun to comment on them. Our son and daughter see me growing. I believe they are pleased. They agree with Charles that I need to air out my brain with daily exercise. I love that advice, Charles! I try to do this and I am successful a lot of the time.

Lila, The Trading Tribe, Deep Simplicity, Pascal’s Pensee’s, Jung, Freud, Bateson…these works make me appreciate why Ed suggested getting a good dictionary! 

Unlike Ed, I am not an engineer by training, and my math, while good, is not as developed as that of an engineer. I am teaching myself psychology and philosophy. I took only an introductory course in logic in college, no psychology at all. I explore NLP. I act on it. I feel compelled to explore fundamental building blocks. I am given to distraction. This drives me crazy sometimes. I celebrate my feelings of craziness! Wow. Can I do this? I am not smart enough to know why I can’t! 

If Ed turns common sense on its head in The Trading Tribe, and thank God he does, I am really enjoying eddies and currents, vortices in this river! Though barely trained in science, I love learning it, thinking about it, and kayaking across it in the river. For so very long I was trapped in the frequent medication of alcohol. To emerge from this behavior into something else as a completely changed person, I think this is physically impossible, but psychically completely possible! My fear of leaping into the water from a bluff, knowing others were doing it safely, exposed a k-not, a judge within me, a vulnerability. Is this the same judge keeping me from a single trade in a commodity? I am pretty sure it is the same guy.

I close sending you all my best intention, and assurance that I grow as I accept myself, love others, know I am not perfect, love myself (now there’s something for next update). I am not really a trader yet, and I am okay with that—finally.

All the best.

July 19, 2011

Letting Go

Dear Ed,

Searching for one of my old emails I found the following:

Letting Go
As the leaves have begun to fall now in their swirling colours, allow the season to inspire you; how easily and naturally in the cycle of living, letting go is natural.

What are you willing to let go of? Of thinking you know? Of being right? Or of being unsure, un-trusting in what you do know? Of over apologizing, of never apologizing? Of labels you have been given? Of your conclusions about others?

What in your communication with yourself would serve you to let go of? What could you let go of in your communication with others?

We have faith that spring will come again with new growth. You may not know what new growth will emerge from your own letting go. Have faith that letting go will allow for the new in your own natural rhythm. After the letting go, peace and stillness of winter preludes spring.

Thank you, Ed, for your work and teachings.

July 20, 2011

Portland Workshop

When will you have a workshop in or around the Portland Oregon area?