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Readers Say Ed Says

March 6, 2013

Risk Management Study

Dear Mr. Ed Seykota,

Please see attached a contribution for 'Acknowledging Limits: Equity and Margin'. I have attached both Word and Open Office formats, and hope you will view content OK (any difficulty please let me know).

I have taken longer than expected to follow this up, significantly underestimating the time required to shape up the short hand from my thesis and achieve a reasonable presentation. My background is pure mathematics and I apologize if this influence makes for a user-unfriendly read (happy to provide further clarity in any regard).

Going forward I would love to be involved in the TSP and contribute further, my thesis is compatible with the project just need to work on presentation for each chapter.

You have inspired this work, hope you enjoy it (not least the 'Core Equity' definition ;-)

Thank you for sharing your study.

You might consider presenting it in a way that makes it more accessible to people who lack your fluency with equations and derivations.

I wonder if you know how many mathematicians it takes to change a light bulb. Answer at bottom.

Euler's Formula

Astoundingly Beautiful
and few know what it means.

Answer: It takes -e^(ipi) mathematicians, which, of course, equals 1 using Euler's formula.
March 8, 2013

Singapore Swings

Ed, You might enjoy this article from WSJ on Singapore.


But what really checks all the right boxes for many of the world's ultra-rich is Singapore's obsession with order, predictability and control, all of which give comfort to individuals whose fortunes have recently gone down the drain in many parts of the world. It doesn't hurt that Singapore has some of the lowest taxes in the world, including none on capital gains and most foreign dividends. But it also has relatively secretive private banking laws and zero harassment from paparazzi or protesters, whose activities are narrowly proscribed by Singaporean authorities, further creating an aura of order and stability.

Ronen Palan, a professor of international political economy and an expert on offshore wealth and tax havens at City University in London, believes that while Switzerland is "clearly suffering" from the pressure put on its private-wealth sector from the European Union and the U.S., Singapore is a "very secretive location" where many—Asians in particular—believe their wealth will be spared scrutiny from Western regulators.
Thank you for sharing the article.

Pro-business cultures and prosperity seem to go together.

Tuesday, March 12, 2013

Decreasing Demand for Diamonds

Ed, I am into diamond jewelry business and have a retail showroom in [Country], as our economy is going through recession i am also facing problems and less footfall. I feel that demand for diamond jewelry is decreasing, and at times i think to switch my business so i need your suggestion what should i do.

Thanks & Regards
You might consider taking your feelings about <decreasing demand> to Tribe.
Tuesday, March 12, 2013

Who Pays?

Ed,I share a well written article:
Thank you for the link.

I wonder how you feel about the conclusions of the article.
Tuesday, March 12, 2013

Issues With System


Hope all is well with you in Texas.

If you are ever in UK could you come and have a look at us, 15 minutes drive north of Cambridge? Or maybe we could meet you in London?

We have put together a system which we are trading, it all looks good but we would very much like to improve or add to it. This is causing us the issues - not sure how to make it better.

Hopefully you may be able to help.

The best French restaurant (Cambridge) out side of France has a reservation in your name,just let me know when!
Thank you for your note and invitation.

You might consider further defining your "issues" in terms of your feelings and forms about them - and taking your feelings about <not sure> to Tribe.


sometimes has a life of its own.

Tuesday, March 12, 2013

The One

Ed, Finally, about 20 years after reading about your trading philosophy, I get it.

A real "Eureka moment" in my "trading."

I feel like Neo from the Matrix movie as he finally realizes he's "the one" and now everything I view the world in a different light. Thank you
Thank you for sharing your process.

The World Around You Changes

when you change.

Tuesday, March 12, 2013

Market Phases Graph


This about sums it up.

Source: Dr. Jean-Paul Rodrigue, Hofstra University
It seems to sum it down as well.
Thursday, March 14, 2013

Sacramento Tribe Rocks Process

Dear Ed,

The Sacramento Trading Tribe meeting starts with a pleasant conversation as the five members catch up with each others developments over the past month.

People seem energized. We have a terrific drumming session. Check-ins start with some storytelling and analysis about situations, avoiding real feelings. When it is this member's turn I say that I intend to do a "feelings only" check-in to help me detect an issue for the hot seat, and encourage the others to the same.

I feel heat in my drumming arm, a ringing in my right ear, and wonder aloud if that ringing is Fred trying to communicate distress. We move on to the next member. The remaining check-ins do indeed focus more on feelings and less on how and why the tribe member felt about some situation. This leads to one member getting into a hand-slapping form that we encourage, with voices and drumming, until he exhausts the form. We ask what he is thinking about. He is thinking about an argument with his wife, an "explosion" he says, with little provocation, that he says he regrets.

We ask if he would like to explore the feeling more and try to identify some critical event in the past that might me a model for his explosive reaction. He agrees. Another member has thoughtfully formatted and printed copies for all of the Rocks Process from FAQ. We are new to this process as a Tribe, but endeavor to follow the steps. We probe for what our hot seat member is thinking at the moment of his explosion.

We ask has he felt this way in the past. He recalls feeling this way as a teenager when his father told him he should not pursue his dream career as a recording engineer, instead focusing on business with an eye to supporting his mother should his father, who recently suffered a heart attack, should die. Father is a ex-minister and good at laying on guilt, says the member.

We ask more about that and learn that as a child he experiences asthma attacks during which, his father explains, his mother cares for him. Now, the father says, it is time for son to pay back that gift of care from his mother. We start probing about the asthma attack experiences and discover a scenario we can re-enact, in accordance with the Rocks Process.

One member, and woman, plays the mother. I play the father. We tell our son he cannot go out to play because of the dusty conditions outside that could trigger an asthma attack. He throws a tantrum, writhing on the floor, that leads to difficulty breathing. Mother and father argue about the best course of action while the son suffers. There is no resolution.

The scenario ends with the son gradually recovering while seated on a chair. We offer him a medicinal rock to represent his reaction to his parents attempt to control him. He accepts it. We ask whether he would like to give up the rock in order to find other ways to deal with his frustration. He agrees.

Other members suggest ways to deal with the issue: share your feelings (how you feel about being denied outside play time); negotiate (ask for limited play time or some other compromise); reason (tell parents you accept the risk).

He takes a resource rock in his hand and we press each alternative response into the resource rock in his hand. Then we recreate the scenario. This time, he negotiates successfully for some limited play time, arguing that his asthma attacks have lately been less severe and less frequent. The parents find it satisfying to have a more mature conversation with their young son.

On checkout he reports feeling "clean." Other members note that his countenance is radiant. He looks boyish and happy. He tells the group that "there is clearly some magic going on here." We all feel good and happy for him, and pleased that we are able to conduct a successful rocks process.

After a final checkout the meeting adjourns.
Thank you for sharing your process.

You might consider taking your feelings about <guilt> and <self-worth> to Tribe

Parents Who Use Guilt
to control their children

may wind up with children
who resort to self-punishment
by blocking air flow.

Thursday, March 14, 2013

Inner Voice


I drive 85 miles to my Tribe meeting. I have an hour to spare so visit the local Fry's Electronics, a warehouse computer and everything else store.

My usual routine is to scan the computer and electronics hardware and instrumentation sections, ignoring appliances, DVDs, toys, junk food and tons of miscellaneous shelved goods.

For some unconscious reason I am drawn to a section in software that contains a few Dummies books. My eyes drift down to a knee-level shelf and spot the words "The Inner Voice of Trading" on the spine.

I read a lot of trading books, especially on trend following and psychology and am keenly interested in anything written by the Chief. I pull the book from the shelf and, to my astonishment, the Foreword is written by Ed Seykota.

This is Fry's Electronics. What on earth is a trading book doing on their shelves? How do I come to find it in only 10 minutes wandering around this enormous warehouse? My intention is to learn about trading from the masters. Now I have a new result: a copy of Michael Martin's "The Inner Voice of Trading" with Foreword by Ed Seykota right here on my desk. Fred truly works in mysterious ways.  
Thank you for sharing your process.

Friday, March 15, 2013



I am happy to see the website link in your e-mail and hadn't checked it in quite a while; it is very entertaining.

Still that one typo that bothers the s... out of me, unless it's some insider TT joke: on FAQ Index page at top, upcoming events is spelled "upcomming." Please clue me in if I am missing something!
Thank you for the catch.

Trixie Makes the Catch

and lands on her feet
as usual.
Mar 15, 2013


Hi Ed,

I was missing the unbelievable learning opportunity the tribe offers and lo and behold
I see you have a workshop coming up!!!  Really looking forward to this and doing some
work together.

I had to quit trading for 6 months due to a lack of self confidence causes by an inability
to sit on my hands. After that difficult time and intense introspection I turned the corner
and my equity curve looks quite different!!!  I also lost much of my arrogance through this

Thanks for putting on the workshop!!!

March 15, 2013

Welcome Back

Hi Chief Ed,

I feel excited to see FAQ come back running again. It is the lighthouse for our tribe during last couple years. I am glad to see the new book, new workshop and probably an all new Chief coming back from vacation!


Thank you for the warm (and smiley) welcome.

I feel happy back here in the right column.

for Austin Science Fair Judge

1. Like Science
2. Judgmental

Yours truly examining an exhibit to determine which kinds of wood sound best in a xylophone.

March 15, 2013

Fighting Like Real Parents

Hi Ed,

I am a member of a newly formed tribe for over a year now in Sacramento, CA .

The first rocks process for our meeting on 3-13-13 is powerful and amazing. We start with a drumming session that is energizing and unifying and proceed with a check-in that is longer than usual.

During check in one member says he is feeling heat in his head as he places his hands on his head, tightness across his shoulders as he rubs his hands across his shoulders, and he puts his hands to his throat like a choke hold. He tells us he explodes in anger at his wife recently and tells her to leave.

I react with drawing in my breath between clenched teeth and letting out a moan feeling his remorsefulness and his wife's pain. We continue with another members check-in. We proceed to who is willing for our first rocks process as this is the focus for this TT meeting. It is the hands to the throat member who is willing for a hot seat after some consideration.

He tells us the background leading up to the argument – feelings of not being able to do what he wants, feeling pressures and feeling ignored. We encourage him to express and intensify the forms and we drum in unison with a hand clapping form he is expressing.

He tells us it feels like the hearts are no longer beating together (wife & his) and his hands begin to not meet evenly and the fingers are splayed and do not meet. And then he begins to slow down the forms and relax. I ask if there is another time he has felt the same feelings. He replies his parents pressure (guilt) him to give up his dream of being a recording engineer and instead make him get a business degree so he can take care of his mother.

I ask if there is another time he remembers feeling the same feelings … after a few minutes he begins remembering as a child around 5 years of age not being able to play outside when he wants and he feels his mother is smothering him.

He is remembering his asthma attacks and choking. We ask if he would like to role play an asthma attack. We test for willingness for the rocks process. I play the smothering mother. Another member is willing to play the father. While the boy is told he can't go outside to play the parents begin to argue.

He begins to have difficulty breathing.

They alternately ignore him gasping on the floor or the mother is overly consoling him on the floor and yelling at the father to call the ambulance. His breathing becomes more distressful and his face is very red. The words just flow from my mouth. They are not my words. We are yelling loud. The boy crawls to a chair and it takes a few minutes for his breathing to become regular. The role playing ends.

The father role model asks the boy to pick a rock from the bin of rocks he collected from the Truckee River and brought to the meeting tonight. It is in his right hand. We go around the room offering new resources to the boy to use when he wants to go outside to play. Each resource is anchored into the rock and his hand is squeezed around the rock. The old resource is anchored last if he really feels he needs to use it. The boys face is beaming! His eyes are twinkling. He looks like a little boy receiving gifts at his birthday.

In check out I share that he looks so much younger and he had this sweet little boy smile as he got each resource anchored in the rock, 20 years of stress has left his face. I also share that my grandson is living with me again and this rocks process is making me aware to take care to not smother him and let him take is own risks.

As we are leaving our meeting place "the boy" shares that "It is uncanny. You were fighting like my parents."

Thank you for sharing your account of the process.

In TTP role playing, the subject often reports how amazingly well the role players execute their roles - including facial expressions, tones of voice, even choice of words and phrasing.

You might wonder from where they get such accurate information. I like to think we "radiate" our intentions and others "collect" them and help us act them out.

This explains how come we keep cycling through the same 'ol dramas with new people.

You might consider, in your rocks processing, to first assist the subject to notice the "medicinal rock," he currently uses, such as "shutting down," "pouting," "getting angry," etc.

He might also like to identify the primary rock donor or person from whom he originally receives the medicinal rock - so he can go through a formal process of "forgiving the rock" back to the primary rock donor - perhaps explaining to the donor how the rock no longer serves him.

After the subject forgives the medicinal rock, he may feel surprisingly peaceful and a little empty and may then more readily accept the new rock with new resources such as "staying present," "maintaining rapport," etc.

Sometimes You Can Get

breathtaking results

by balancing the rocks.