Nov 29, 2013

Love Test

Dear Ed,

I want to share this interesting link quoting a study where "Fred" shows up very clearly in the data:

http://www.bbc.co.uk/news/science-environment-25129117

Warmly,

Nov 29, 2013

Pyramiding

Ed,

Thank you for everything !!!!! I get a big Aha, a great insight after your email on pyramiding.

I was convinced that if I trade 1% of my core equity in one position, my trading account cannot broke and my gain would be exponential. That means I trade by pyramiding ON TOP OF my normal risk. The result I get is as you say, excess volatility.

After backtesting the pyramiding strategy, I'm now convinced how my trading system structure gets that result.

Yes PYRAMIDING UP TO my risk, is definitely wise and wealthy.

Thank you Great teacher.

Nov 28, 2013

Pro-Active

Ed,

In TTP, what does "respond to situations pro-actively" mean??

Nov 28, 2013

He Wants to Humiliate the Coach

Hi Ed,

I have been coaching Rec Soccer for eight years now and am generally well liked by kids and parents for my approach which is to rotate all kids through all positions and constantly encourage them to work hard and take shots. I balance this with also trying to win games. My daughter is on the team but the balance of the roster is selected randomly.

So this year the two coaches I picked as assistants became very annoying to me as the season progressed. One would indirectly question Ref calls by speaking loudly that he thought the call was off, or bad, or whatever. I tried to get him to stop by appealing to logic, that there was risk in this approach (yellow/red cards or accumulated bias against the team) with no chance for reward as the refs are never going to change a call. This didn't work but what finally did was me telling him about all the fines that had been issued for this type of thing, and how the fines are published by the league.

The other 'guy' began a steady campaign of comments and complaints on virtually every topic of how the team was managed - even when he did not have all the info. I won't bore you with the minutiae, but the spectrum was broad and even included things I had put to vote by the entire team. The methods of complaining included under the breath comments while walking away, phone calls, and texts. The primary complaint was of unfairness.

As the season wears on it becomes increasingly apparent that the complaints all center around his kid who is a good kid. Lies about injuries and illness to avoid certain positions (injuries and illnesses that magically disappear once the kid is where he wants her) and the constant proclamation of unfairness.

I literally wanted and want to slap this guy around and tell him to f--k off, that I think he is a huge pussy and pathetic example of a coach and of a man, but that's a bad example and not my style anyway.

I took it to the Tribe and did some work but this guy is still 'in my dome' ( season is over) and my feelings of wanting to tell him that I think he is a huge fake and a pansy- one of these 'its all about the kids' when its really about his kid guys - persist.

I also want to do it publicly and humiliate him in front of people. You know, show how he is wrong and I am right. I'm having trouble letting this go and also am a little ashamed of some of my feelings, particularly wanting to humiliate him and 'set him straight'. I never would but its how I feel.

Also, I was looking through FAQ and saw a picture you posted of a guy surfing with a kid which you captioned 'kids learn by example' and I immediately began to cry.

Thanks,

Nov 28, 2013

Existentially Speaking

Hi Ed,

I come to know about this song
http://www.youtube.com/watch?v=1zGPBqHKCgk (Preview)
and was wondering that if you have any other perspective about our existence.

Regards,

Nov 27, 2013

Theory

Dear Mr. Ed:

Do you believe that:

1.-having a desire,
2.-with un unconditional belief that you can attain it
3.-mainting your attitude in a calm presente (not over stimulation or unconsciousness) state, and,
4.-working hard for its completion

Will make you achieve anything you desire?

Nov 27, 2013

Confusion

Ed,

On your answer for the first example "pyramiding up to your risk", the trading position is cut with a loss of 2 500$ for the first tranche. Then what do I do with the second tranche of 1 500$ on your example?? And finally what do I do with the third tranche of 1 000$??

In a winning position, say the gain is now at 10 000$ that means 2R from your example of 1/2% of the initial account, how to pyramid this same position??

I still feel confusion on the pyramiding strategy.

Nov 27, 2013

Wants a Different Book : see previous

Dear Mr. Ed:

Besides getting to know yourself everyday, and spending some time analyzing your behavior patterns.

What are your favorite trading books?

Appreciate every response.

Kind Regards

Nov 27, 2013

Pyramids: Up-To, On-Top-Of and To-The-Max

Ed,

A pyramid -as the Egyptian pyramids- has a large bottom and a small top; from the bottom to the top, the width becomes less large and from the top to the bottom the width becomes larger.

How to pyramid the size of a winning position in Trading?? Do good traders start from the bottom of the pyramid or do they start from the top?

Thank you.

Nov 26, 2013

Fragile Web

Ed,

Complex human societies, including our own, are fragile. They are held together by an invisible web of mutual trust and social cooperation. This web can fray easily, resulting in a wave of political instability, internal conflict and, sometimes, outright social collapse.

http://bloom.bg/1atfmTC

Nov 26, 2013

Wants a Book on Trading

Dear Mr. Ed:

Beforehand I want to thank you for taking the time for answering my message of november 22 2013.

I´ve been reading all the faqs starting in 2011, nevertheless, everything is too advanced for me. Can you recommend a list of books, sites, or any other instrument I can study diligently so I can learn the art of trading. Ill work till fail to catch up.

Thank you,

Sincerely,

Nov 26, 2013

Once Per Day

Hi Ed,

I am now trading a 20 futures universe.

4 x Agricultural futures
4 x Non-Agricultural futures
4 x Currencies
4 x Equity Indices
4 x Government Bonds

The system uses a Donchian 20 day breakout with a 2 x 15 day ATR trailing stop with a 4 x 15 day ATR take profit.

The system requires looking at once a day!

This means I am free to;
Concentrate on my day job
Walk the dog
Garden
Be with my wife
Read
Do stuff

i.e. have a life away from the trading screen

Some might think that's boring but really it's just getting on with life. I can't control the markets nor do I understand what they do or why they do it. What I do know is it is now the holiday season.

So with that in mind I wish you a Happy Thanksgiving and well over the Festive Season.

Best wishes

Nov 26, 2013

25% Risk

Dear Ed,

I'm a student of Michael Covel and was introduced to your work as well. He is currently here in Vietnam (I've been living here for 2.5 years, I'm Swiss) and we became friends, nice guy.

I just read your article below:

http://www.seykota.com/Tribe/risk/index.htm

In Figure 3, you mentioned that the optimal bet size is " 25% ". This would allow for 3 losing trades in a row to nearly wipe out my account.

== > I'm cracking my head about the 25%, seems very high to, or am I misinterpreting something here?

I'm personally using 1% of current equity, as I can endure the worst draw downs that my systems generated in the past, I tested on different time frames, markets and portfolios. Also when reading Michael Covel's, Richard Weissman's or others work, then I understand that they risk between 1% to 4%, depending on the heat they can take.

I would appreciate your reply.

Many thanks Ed.

Kind regards,

Nov 25, 2013

Going for a Ride - Finding Relaxation and Focus

Ed,

Thank you for [going on] the [bicycle] ride. Your cow [squeeze] horn worked impressively [as a babe magnet]! Though you may want to expand the sample size to know if it is a 'sure thing'.

I thought I intended to inquire about 'everyone gets what they want'; though assuredly one of the many to do so. Somehow the 'everyone gets what they want' just resolved itself inside of me while riding. Another knot untied!

Thank you for sharing yourself and for inviting me to the last Tribe meeting. I will file a Tribe Report in a separate e-mail.

Returning home, my loving and caring wife remarked, " … you have been to Austin twice, both times you return home relaxed and focused."

I want to wish you a Happy Thanksgiving. You are a good man.

Nov 25, 2013

Radial Momentum

Ed

I recently visited an old friend and collaborator (MIT '67 aeronautical engineering). We were discussing lift and he recoiled at the term "radial momentum". The attached e-mail exchange ensued, which I thought you might enjoy.

I've also been meaning to give you a ring to discuss the markets and perhaps solicit some business advice. When would be a good time to call?

-----

Date: Wed, Oct 30, 2013
Subject: Re: Alarm bells
To: [Friend from Me]

A more general version of Seykota's radial momentum for a collection of N particles can be formulated as MR = Σmivi, where mi and vi and the mass and velocity for the ith particle. The initial configuration can also be generalized to contain the particles in a spherical "balloon" of radius R ≥ 0. In Seykota's case m = Σmi , all vi = v and R = 0 (under the simplifying assumption that the particles are point masses).

For an ideal gas composed of N identical point masses, all mi = m/N and therefore MR = (m/N)Σvi . If the gas is initially contained within a balloon of radius R > 0, when we pop the balloon we would expect the particles to initially have various radial velocities, with the possibilities ranging from all pointed outward (positive) to all pointed inward (negative). If the balloon were 1 meter in diameter and the particles were moving at about ½ kilometer/second (typical for gas molecules), virtually all of the particles would be moving outward from the center of mass after a few thousandths of a second. So there is little practical difference between Seykota's formulation and my more general version, the purpose of which was to cover all the bases.

The above is not only unsurprising but mathematically trivial. However, it seems to have been largely overlooked. For instance, if you Google "radial momentum" it takes you back to Seykota or to "angular momentum" and Wikipedia: Angular momentum makes no mention of radial momentum or anything similar. While Seykota's experiments are suggestive of practical applications, radial momentum provides a direct theoretical connection between dynamics and the second law.

-----

Date: Oct 26, 2013
To: [Me From Friend]

OK. I give you "radial momentum". J

If Seykota is describing a collection of particles with an origin at the center of mass of the collection, the aggregate radial momentum could never be negative. If you just imagine the motion of the center of mass (the coordinate origin), what direction would it be moving to have a negative radial velocity? Given that choice of coordinate system origin and a "spherical" set of coordinates, negative aggregate radial velocity (and therefore aggregate radial momentum) is just undefined. The radial measure is defined as the distance from the origin to the "point". R >= 0 by definition.

If there is anything "surprising" here? I don't see it.

-----

The Hamiltonian for a particle can be written using Cartesian coordinates as H = H(x, y, z, px, py, pz, t), where the p's are momenta. Transformed to spherical coordinates, this becomes H = H(θ, φ, r, pθ, pφ, pr, t), where pθ and pφ are angular momenta and pr is the "radial" momentum (what else would you call it?) Seykota's derivation in http://www.seykota.com/rm/RM_approach/index.htm is along the same lines except that he is describing the aggregate radial momentum MR of a collection of particles with the origin at the center of mass.

Notice that that the Cartesian and angular momenta can all be zeroed out (placed at rest) by choosing an appropriate frame of reference. However, this cannot be done for Seykota's MR if the number of particles is 2 or more. Seykota claims that the radial momentum is conserved, just as for the other momenta. However, this is true only for MR ≥ 0 (under his assumption that all the particles have the same radial velocity), since for MR < 0 the radial momentum will reverse sign as the particles pass through the center of mass. This asymmetry is the dynamic basis of the second law and the arrow of time.

Smoluchowski's model is limited to diffusion (which is presumably where it would be found in a textbook), while the Boltzmann/Gibbs model is more general-purpose (being mechanism-free). This may be why the Smoluchowski model has been largely forgotten in spite of its clear advantages in describing diffusion.

Thanks again for the discussion – it's always stimulating.

Deep Reflections On Nuts and Babies

Ed,

What deep thinkers men are.

I mowed the lawn today, and after doing so, I sat down and had a cold beer. The day was really quite beautiful, and the drink facilitated some deep thinking. My wife walked by and asked me what I was doing, and I said, "Nothing." The reason I said "nothing" instead of saying "just thinking" is because she would have said, "About what."

At that point I would have to explain that men are deep thinkers about various topics, which would lead to other questions. Finally, I thought about an age old question: Is giving birth more painful than getting kicked in the nuts? Women always maintain that giving birth is way more painful than a guy getting kicked in the nuts.

Well, after another beer, and some heavy deductive thinking, I have come up with the answer to that question. Getting kicked in the nuts is more painful than having a baby; and here is the reason for my conclusion. A year or so after giving birth, a woman will often say, "It might be nice to have another child." On the other hand, you never hear a guy say, "You know, I think I would like another kick in the nuts." I rest my case.

Time for another beer.

Deep Reflections

Attribution

Nov 23, 2013

Wants a Picture and Bolding

Dear Ed,

I wonder if you might be willing to include this image with my Nov. 10 post titled TTP and Cancer.

Text

Attribution

I accept that you do not feel that any portion of my submission merits bolding, and I want to express my feeling that the second-to-last paragraph does merit bolding due to the direct expression of feelings in the now which seems often to be one of your criteria for bolding.

I continue to struggle with the concept of intention and where to draw the line between asking for what I want and control-centric communication.

Any insights into this issue that you are willing to share would be appreciated.

I do hope you understand that whether you make any changes to the actual post or not is inconsequential to me.

Regards,

Nov 22, 2013

Workshop Follow-up - Relationships Up / Gold Down

Ed,

I sit down to write many times over the past couple of weeks and I don't follow through.

I want to share but I feel a lump in my chest. I notice I feel this lump when I have to give someone disappointing news or I have let them down or not stuck to an agreement.

Right now I feel at calm but I feel sad and disappointed.

After the workshop I get back to [City] and I find I am promoted at work while at the workshop. I am on a project and my employment is via a short term 3 month contract. The promotion involves managing people and task and dealing with the big picture and the unknown. I am pleased to get the promotion although the new role feels unfamiliar and awkward at first, but I start to fall into it. I work 10 hours a day and I struggle with my commitments even reading Ed's book which is a pleasure.

I use the intimacy model in my relationships and the role things seem to go well for me. I am comfortable with the role now and I like it.

I really feel insecure and the need to support my wife and 3 children financially. I work on a government salary which is mediocre at best, as a family we have just enough to break even. I feel I am not at home enough for them and when I am I am exhausted. I am on a rolling 3 month contract and we fast approach the end of the project.

I make contact with someone interested in forming a Tribe here in [City] and we agree to meet up. I am terrified of having to run a tribe meeting as leader. I always tend to hide anonymous in the group and try to fly under the radar wherever possible and the though of leading a tribe, a process I still feel unfamiliar with terrifies me. I am afraid of letting people down.

I get a sudden urge to buy gold, I can't afford this, but I reason with myself that it is the 39th day and I better have some bullion as an insurance contract and it looks nice too and I can feel rich if I hold it. I notice disappointment as the price drops just after I buy and I look at the chart and notice it is in a long term downtrend. I know this before I buy but I buy anyway. I buy one ounce of gold.

I think about this logically and if the 39th day disaster unfolds and I own one measly ounce this is not going to be much help to me much. I also notice that spending this money on the ounce of gold means I can't pay off my credit card. I also notice it is one month before Christmas and I have no spare money to buy Christmas presents and I might just have enough to take the family on a camping trip for a holiday for one week. I notice my 3 children want X-boxes and I-pods to keep up with their friends. I feel like I like a failure and I am going to disappoint them.

At work I deliver great results for the business, as my customer, but somehow disappoint my project manager. She demotes me. I am no longer Finance Lead and I am no longer allowed direct contact with the system vendors. There are relationship issues between my project and the business. I am caught in the middle. The money is about to run out and there are lots of outstanding issues still left to resolve.

I have one success I am very proud to share. I no longer yell at my kids.

Also I receive them more. I have a dilemma I share.

I try to talk with my daughter who is whining and causing trouble, she doesn't want to listen to me.
She yells at me in a way which I find extremely rude. She yells "Get out, Go Away!" I want to receive her and go away but I don't want to condone and accept the behavior of yelling at me.

I feel I don't know what to do.

I use the sharing feeling heart rock you all gave me and I say "I want to receive you and go. I notice you don't want me to talk with you but I don't like being yelled at or spoken to like that either, so I don't know what to do now?"

Somehow the situation is defused and things work out.

There is still plenty of drama in the house but I am proud to say I no longer yell at the kids or my wife. This is gone.

We are working on our agreements with each other.

My biggest lesson from the workshop is the importance of clear agreements and integrity.

I manage in this time to make some progress on my goal to develop my trading system.
I use Mechanica my ex [Location] tribe member kindly dedicates some time to help me solve some programming problems and overcome some snags I have in Mechanica.

I am smart enough to know I cannot manage anyone else's money until I can manage my own so developing the trading system and manage money is what I want to do but I feel I can't do it until I get my own house in order.

I am extremely grateful to you all and I recognize some of you in your FAQ reports just from what you describe and write. I thank you for sharing and some of it hits home for me also.

Thank you all for your support and I send you my best wishes,

Warm regards

Nov 22, 2013

Wants a Mentor

Dear Mr. Ed:

I don´t want to make a long mail to interrupt you from your activities. My short story is, im a 24 year old, born and live in [Country], hard worker all my life, I study law and got the excellence award to the best score in the generation. I've been working two jobs, sleeping 3 hours, so i can support my mom and me.

A few years I was interested in learning the stock market but got robbed of my money by false or scam artists. I work as hard as you can imagine, i don't want a private consult because of the lack of knowledge i currently have, but, i always wanted a mentor that can guide me to success, besides God. If got a little help with you i promise i will not disappoint you with laziness or lack of effort. Everything and anything you tell me to study or do, ill do it with maximum passion.

Please help me, lots of respect

Sincerely,

Nov 22, 2013

More On Cancer Prevention

Ed,

You might like to see this grabbing video:

http://adsoftheworld.com/media/tv/mcac_rhian_touches_herself

Tribe Meeting Report - Learning to Ask

Ed,

I go to the meeting with a feeling of tremendous energy. I was able to overcome some challenges with my trading that day and I feel very motivated.

When we are addressing problems facing the group, I bring up an issue I am having related to helping people. I feel some anger towards people who have not taken me up on my offer to help. The group begins the process of exploring the problem and very clearly we hone in on my issue. I have a problem assessing others' willingness to be helped. We then explore further and uncover that this is related to issues I have in asking for things. Several feelings and memories come up. I was raised in a very self-reliant household where we were taught to go out and get things we want. If there is a problem then look at yourself first. Do not rely on others. This has given me the "rock" of not asking for things I want. I see the problem clearly, that I need to work on assessing willingness and asking for things I want.

Later in the meeting we talk about parenting and that how private property rules can increase kids' self esteem by showing them that they are worthy of having control over their property and their bodies. This lesson really sinks in with me and I spend the next few days really understanding how I can increase my kids' self esteem.

I then connect this back to my original problem of not being comfortable asking for things. I realize that I need to work on my self esteem. I hesitate asking for things because I have some self esteem issues about "deserving" anything. If I do not value myself then I underestimate the help I give others. Me not valuing this assistance creates drama because I want the admiration for those I help to medicate my self esteem.

I realize the feedback loop I have created for myself. I need to start asking for things and make sure that I see the benefit for both parties once I state what I want. If we do not want the same thing then that is OK, we should not enter an agreement. This has been very eye opening for me. I commit to working on my self esteem, although I think I need support from the group to undo 40 years of habit.

As is common, I had a chance to put myself to the test. Someone I know asked for my help. Feelings rushed in wanting me to instantly "give" help. I fought this as I thought about willingness. Figuratively, I asked this person to demonstrate willingness. I had a lot of anxiety between the time I asked for this and when it actually did come through. My wife was great in listening to my feelings and supporting me. I waited and the demonstration of willingness was made. The connection felt great and I gained some self esteem. TTP feels like it is working for me on several levels. The growth feels exponential because of my ability to make complex connections btw my behaviors. I have tremendous appreciation for the Tribe and my family.

Nov 21, 2013

Tribe Meeting Report - Learning to Accept and to Decline

Ed,

A Tribe Member indicates that he has difficulty taking his relationships with women to the next level so the relationships end and he feels unfulfilled. He goes through forms and when he freezes his feelings at their peak he remembers a time when his grandmother hugs him. She squeezes and practically suffocates him. He goes along with the situation and allows it to happen. The Tribe does a role-play exactly as it originally occurs. Next, we give the Tribe Member the resource of sharing feelings so he can stand his ground with his grandmother. A Tribe Member presents this to the person in the Hot Seat in the form of a Heart Rock. We role-play the situation again. This time the Hot Seat expresses his feelings when his grandmother begins to hug him. She won't stop hugging him in this aggressive manner and it becomes clear that she is into what she is doing to him. We add a new resource to the Heart Rock by threatening to bite the grandmother. This action gets her attention and breaks the abusive pattern. She steps back. The two of them can now share feelings. He relates his feelings of anger, sadness and disgust when she hugs him like that. He is able to assert his rights to his feelings and his body as well.

I can relate to this drama because my mother was always smothering me by grabbing my face and forcing me to kiss her on the mouth. When I recall this situation I can still feel the same feelings of anger, sadness and disgust. This affects my relationships with women because I don't trust their intentions. I usually pick women who fulfill this drama. However, I do notice I am more careful now with whom I date. A friend tries to fix me up with someone. There is a stipulation that I must guarantee that I will pay for lunch before she agrees to meet with me. She doesn't trust men because her husband leaves her with five kids and no support. He disappears. I never have a problem picking up the tab for lunch but I see it as a "red flag" to agree in advance. I decline the invitation. I feel that two people with their guards up may not be a fun date anyway.

I speak at the Tribe meeting about needing more time in my daily schedule to work on my animation project. However, after a discussion with the Tribe, I can see that I am put things in the way of reaching my goal to become an animator. I am concentrating on my drawings rather than finding someone in the animation industry that I can apprentice with or tell me how I can attain my goal.

The main blessing that I receive from this Tribe session is a big AHA for me. I realize that I have difficulty asking others for help and using the DIM method instead of relating to others. During a break at the Tribe meeting a Tribe Member states he will contact an animator he knows to get in touch with me. We exchange e-mails after the Tribe meeting and he gives me information about an animation studio around where he lives. He offers to let me stay at his home when I visit the studio. I feel so fortunate to have a great friend and Tribe member. I also contact an old college roommate and friend who puts me in touch with an animation studio in Dallas, Texas that has just released a new animated feature film. I am following these leads. The power of the Trading Tribe really energizes me.

Nov 21, 2013

Tribe Meeting Report - All Members Interconnect

Ed,

In this series of the Austin tribe meetings I notice my relationship with my wife and children improve dramatically. There is less drama and more empathy. I find myself saying "yes" a lot more as well as having more clarity in family agreements.

I learn that the Hotseat (HS) controls, or rather has, the highest leverage in TTP. We are all connected in the process, each fulfilling a specific role. At the last Austin Tribe meeting I am the PM for a Hotseat. I see this coming from the onset of the meeting or rather I have a feeling of what is happening. I start taking notes so that I can manage the process. I'm feeling a bit out of sorts and struggle to write, and I feel my head spinning a bit. I learn to recognize this as an indication that something big is coming. I sense that something big is coming. The feeling is familiar. I notice the Hotseat is delaying taking the Hotseat by testing others for heat—checking for willingness for others to take a Hotseat. I immediately recognize this as the Hotseat has something big and is already setting the stage for his Hotseat process. He is clearing the room and switching everyone into the ON position for his process. I'm selected as the PM and act as the PM for the process, and I do it in such a way (the Hotseat and tribe members direct this) that I interact directly with the Hotseat, while other tribe members assist me and guide me in the process. I notice one tribe member is sort of separate from the process and brings some confusion to the process. He is playing his role of confusion perfectly. I write a note to myself to ensure that we come back to him at the end of the process as he likely provides the test to see if the process works. We do. He does.

Here's the loop (kind of): early in the meeting I discuss my son (I don't know why I'm doing it) with the Hotseat and the tribe; and the Hotseat (he's not yet on the Hotseat) brings up "personal property rights." This is a topic we share on numerous occasions. Here's the loop part: We're already doing TTP, we are all already in the process and we have not "started" the Hotseat process. We're doing TTP without being in the formalize structure of TTP of Hotseat, PM, and role players. We're doing TTP simply by sharing feelings. The process doesn't start when we officially start the process. The process is already going on with our agreement to send and receive feelings once we arrive at the meeting. The process now transcends any formal beginnings and endings, and, yet, having formal starting and stopping points seem to help.

The Hotseat wants intimacy with one woman. The Hotseat feels this intimacy with his children and wants to have the same feelings with a woman. The Hotseat works through his process and the Austin Tribe gives him a heart rock with the added resource of "protecting his personal property (his body)." It's a heart rock with the resources of establishing rapport, sending and receiving feelings, as well as a "pointy end" for use when the other resources fail to work.

Another Austin Tribe series is fast coming to a close. I have intimacy with my fellow tribe members and feel joy. The field of relentless validation and acceptance sans any form of judgment is what the Austin Tribe provides. The Austin Tribe gives me a model for my essential tribe. My family now feels more and has less drama. My children benefit from the hard work I do in Tribe.

Each day I feel a bit more and give up control a bit more. I welcome feelings of "head spinning" as well as all the other feelings that come up.

Best,