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Ed
Seykota's FAQ
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FAQ
March 21-31, 2016 <-- back | down | forward --> |
| Contributors Say | Ed Says | ||||||
| Mar 31, 2016 Disregard Wanting Relationship Help Hi Ed, Please disregard my previous emails. |
Thank you for sharing your process. | ||||||
| Mar
31, 2016 Risk, Reward and Confidence Hi, I have some problems with risk - reward. I use trend following method (in medium term: weeks- months) based on breakouts something like "Turtles" did with little changes for example: different pyramiding: risk for every trade is 1% - 0,5% -0,25% (of account) with trailing stop based on ATR to block total risk at last pyramid. Open and close trades on breakouts. That gave me total risk in one market about 1,35%. I trade on 5-7 different commodities and stocks. I pick markets by its strength (long and short). In past i was building pyramid like this 2%-2%-2%-2% with total rist on one market =5%. When I use it on 7 markets my portfolio risk is 5% * 7 = 35%. With standard trend following accuracy 30-35% it is suicidal. My target is CAGR > 20%. To make sure that my method is ok I made some portfolio back testing for stocks in [software] but it is not clear because of data (gaps, etc.). I bought some data for continuous contracts and it look ok. But I have medium trust in my testing program - I mean I don't have enough confidence to bet money on it. Richard Dennis gave his "Turtles" essential confidence to pull trigger on every sign of his method and they made a lot of money with pyramiding 2%-2%-2%-2%. I'm concerned about different behavior of markets now and 20-30 years ago. Maybe you can give me some tips to make my trading less stressful and more profitable? ;-) I have no problem with drawdowns to about 40-60%. It happened to me several times. I only need some confidence to use this method or tips to fix it. Maybe it is necessary to change it or make it more adaptive to current reality? I've read many books about trading especially about trend following and feel it. I know the rules of FAQ but maybe you can guide me in my process? I'm from [Country] and my English is average but we can write emails. Thank you for being worldwide trading helpdesk ;-) Greetings, |
Thank
you for raising this issue. Confidence has to do with trust in yourself and in your system and in the markets to continue behaving similarly. Stress has to do with how you process your perception of your situation. These both have something to do with your system and quite a lot to do with your internal psychology. You might consider taking your feelings about <confidence> and <stress> to Tribe as entry points to your psychological process. You note a target CAGR (Compounding Annual Growth Rate) of 20%. You might consider how you might feel (stress and confidence) with a target CAGR of 2% or 200%. You might also consider abandoning the idea of a target CAGR - and design your system around your risk tolerance - and then see what kind of theoretical returns you get.
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30, 2016 Wants Relationship Help Ed, I would like help with communication and specifically the feedback loop that happens in my intimate relationship. Today, we have a conversation with and the connection feels good. I feel warm gearted and open. At one point, I remember a voice in my head and I get scared, at the same time I feel that the conversation turns from being open and honest sharing of thoughts and feelings to closed and control centric. I can pinpoint the exact point in the conversation that this happens. I would like help with keeping communication open in a positive feedback loop. And stay intimacy centric. I would like your support for finding and living my right livelihood, marrying my GF, and finding a Tribe in which we can belong together. And I would like a Heart Rock. I cant seem to navigate my relationship from the inside and I would like your help to mediate. Thinking about my life in general, I have boughts of crying at random moments by myself. I feel my throat swell up. I have tears down my face. I dont know if I will ever get through this. I dont know whats on the other side of this feeling. I scrunch ky eyebrows together and my lips frown while tears drop down the side of my face. I dont know what to do and where to go. I dont know what the right thing to do is. Thanks for reading, |
Thank
you for raising these issues. As I recall, you do not show much willingness to engage TTP or the Rocks Process. You might consider hiring a personal therapist with a specialty in Family Dynamics. If you wish to continue with me here on FAQ, read The Science of Trust by Gottman and send me a book report. |
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28, 2016 Idea on the TT Process - Therapy as Avoidance Hi Ed, I have a thought when we talk about your recent process on yourself at the dinner... That idea suddenly comes to me and I initially feel it’s a joking idea. I feel I want to say it but I hold it off. You were saying members doing one process after another and not showing real personality breakout, and seems to be in a loop. It also happens to myself. I agree with you that the strong willingness to change will eventually bring one out of it, by a seeming lucky factor(in your case, a caring person). I get to understand that you are considering how to codify such seemly random lucky element and make it a consistent process which can repeat the result. I am looking forward to your new invention. Then a thought comes to me and now It bothers me if I don’t share it with you. There’s a similar situation. I see that sometimes the endless running from one process to another process might be serving some other need. Like using TTP / therapy itself to avoid / delay a real issue? It happens too in my Tribe before. Members seem to report and work on irrelevant issues to keep them busy so to avoid working on the real issue they dread. I feel I want to see you to have a wife. You helped so many people including me to get intimate relationship, and you leave yourself behind. I’m feeling a square block sticking in my chest. I actually was imagining how about you just pick [someone], and get married, NOW? you might not need so many processes to get you ready for a marriage. Or you might not need any processes at all? The Tribe might be able to help you on issues, after you are already in marriage? Or your wife might kick us out of you house and that’s the end of Trading Tribe? A happy ending, though. |-) My head starts to spin after I leave your house. I don’t know if this makes any sense to you and it’s just my 2 cents. Thanks, |
Thank
you for sharing your process and observations. I have a notion I would like to test; namely, for the Rocks Process, to implement new rocks for the client in all the roles that show up for anyone in the role play. For example, if the client presents as Victim, then he normally gets a Heart Rock as the Victim - that helps him mitigate this role. The victim, however, typically may have modes as Perpetrator or Savior - from which we might complete a full suite of Rocks Processes.
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| Mar
28, 2016 Help Wanted Dear Ed, Please help me. |
Thank
you for reaching out to me.
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| Mar
28, 2016 Workshop Follow Up Ed, Thank you for your support with my workshop follow up. My thanks to those who provide such useful comments and feedback. I commit to "work hard on my trading systems for three hours a day: See what feelings come up. Report ... to my support team and FAQ." This starts from Ed's comment at the workshop - approximately "Are you actually serious about trading?" I work to complete my testing with good results from the roll-forward testing . Once complete I order data for the 4.5 years I do not previously have data for and rerun my testing. The results are quite poor with a small profit only for the 4 years and an unsatisfactory Sharpe Ratio and other metrics of risk-adjusted return. Looking around I see many - but not all - futures strategies have performed relatively poorly over this time. For example the Trend Following Wizards Reports show for top trend followers: 2011 -7.5% 2012 -6.1% 2013 +1.7% 2014 +24.5% 2015 -2.7% Annualized nominal compound 4.4% Sharpe 0.37 So my experience is not unusual. I then add a semi-fundamental overlay (from a book by Ernie Chan) which increases profits and risk adjusted profits on the original data and makes the recent 4.5 years satisfactorily profitable. Of course this change renders the 'out of sample test" no longer "out of sample". So I feel some doubt that it truly has an expected profit from here. The risk adjusted profitability of the recent 4.5 years disappears when I run the test with less than $1m USD. This exceeds the maximum that I want to put into futures trading. I spend a couple of weeks thinking about the situation before deciding to terminate the project. I don't feel too bad about this. I know people who started trading without doing the homework and had to go back to working 9-5. So I feel glad I did the work before launching into trading but I know it took far too long. But I do feel that I have failed in some senses. I start work on a new system for trading stocks a few weeks ago. Perhaps this offers more possibilities as I have more and more varied kinds of data to work with and the contract size problem does not exist with stocks. I have been trading Index ETFs with a timing model for some years with satisfactory results. Getting back to the original question - am I serious about trading? At one level yes because I put in a lot of work and followed through to completion. In another way no because I have not found a way for me to trade futures sufficiently profitably. In other news: My reformed tribe meets for the first time on Monday. My health remains stable. My productivity improves at a good pace. I lose more weight. Thanks again everyone for their support. I have learned a great deal from the project and I think I have grown a lot too. |
Thank you for sharing your process. | ||||||
| Mar
27, 2016 Easter Wish Hi Ed, have a good Easter with your family ! A hug, |
Thank you for sending me your wishes. | ||||||
| Mar
26, 2016 Something Different Ed, Thank you for spending time with me. It's a wonderful experience with you this weekend. I really love the bluegrass. The moment with you is always priceless. I'm happy to feel that something in you is different. I also feel that I have some significant growth in myself, from the influence of your sparkling wisdom and personality. I like the way you pat my head when you hug me goodbye. I feel it's from a loving elder. I feel I conclude a process and feel tears in my eyes. Have a great rest of the weekend and quick recovery!
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Thank you for visiting me and for sharing your process, observations and photo. | ||||||
| Mar
24, 2016 Performance Good afternoon Sir Just checking in to report ROR for 2016 and 2015 (annualised) 2016 ROR 66.61%, std 6.89% and i-ratio 8.77 Jan 27.09% Feb 10.37% Mar 18.79% (incl. of 24 Mar 2016 PnL) 2015 ROR 60.40%, std 8.55% and i-ratio 6.70 Thank you for your insight Best regards |
Thank you for sharing your numbers. | ||||||
| Mar
22, 2016 Cafe (the movie) Hi Ed, The title is In this Cafe, everyone has a story. I realize, on your FAQ, everyone has a story. And guidance from your side. Thanks, Respect. |
Thank you for sharing your observations. | ||||||
| Mar
22, 2016 Remembering Dear Ed, Just remembered you. No particular reason. Food memories of your guidance of I = R. Hugs from a far away place. |
Thank you for reaching out to me. | ||||||
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