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Ed Seykota's FAQ
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Contributors Say Ed Says
Feb 28, 2020

Lowering Weight and Raising Funds

Hi Ed!

How's your weight loss journey going? I don't believe Ive seen a team update for a few weeks on that. Has everything been going well, and you're feeling good? If I recall, you should be getting close to target weight soon in March, correct?

Another thing to ask you about is I am looking to access more capital (100k+) for profitable and risk managed strategies I have developed and been using. I have come a long way since the seeing you at the Workshop, and reached my bumper sticker goal of "knowing everything there is to know about back testing by March 2020" far ahead of time. In looking for more capital, I have been researching prop trading desks.. but it honestly seems like most are scams. What are your thoughts on prop trading firms?

Do you know anyone that would provide capital to tested systems that are risk capped, walk forward tested, Monte Carlo tested, and are trading profitably live? I would normally provide my own capital, but my capital access through loans or credit cards are tied up to my business and I am not sure how to access more capital for trading.

Thanks Ed! look forward to the updates and hope you've been well in life.

Thank you for raising these issues.

I have about 5 pounds to go to realize my December 14, 2019 TTP Workshop Bumper-Sticker goal of losing 33 pounds by August 7, 2020.  I continue to enjoy feeling the support of my Tribe Support Team on this journey.

Per raising money, you might consider creating a website that states your trading rationale and shows your back-test results and your actual live trading performance on your test account.

You might also consider taking your feelings about <raising money> to Tribe as an entry point.
Feb 27, 2020

Re-Inventing Himself as a Trader

Dear Ed,

I think about a talk with you some months ago. I remember mentioning my huge losses and my unsuccessful trading endevors. Your comment still resounds in my head:

"You change yourself to turn into a successful father and husband. To be a successful trader, you have to change yourself again."

We discuss my risk proneness. My default reaction to "fear" is to brave it and not to be timid. While acting in this way, I get a record of many exceptional career achievements, but it does not work in the markets.

I recall you telling me "there are old traders and bold traders, but very few old bold traders."

You remember me swimming offshore in Puerto Rico and almost getting sucked by the current. While we talk about this I have a glance of myself as a child. I am in the second class. Two other children bully me and I pee on (myself). I feel extremely ashamed as I return to the classroom and have to face my teacher in my wet trousers. I guess that this event shapes my reaction to "fear“.

After our talk I re-calculate my risk and position sizing algorithms. I realize that it is possible to bet less than 2% of my equity in each trade and still be extremely profitable. I spend more than six months designing, back-testing and forward-testing a system. I start trading it in December 2019. In these first three months it reproduces my calculations. Trading turns a natural activity, free of excitement, like a bank transaction or... peeing.

I learn to follow my system. When I try to outsmart it, I make less money. When I try to predict the markets, I make less money. After a series of huge winners I get greedy. My trading turns more difficult. It is like you say about superior laws in
link. I learn to experience and enjoy the ever changing moment of now and to accept any outcome as inevitable and the result of my intention.

Thank you for sharing your process.
Feb 27, 2020


Dear Ed,

I hope this email find you well.

I have great interest in going through all topics of TSP listed in your website.

I decide to participate in the TSP.

I notice that last updated date is April 27,2006, 14 years passed.

I might be the one who help to contribute and finish all the pending topics, although I know I'm novice.

Thank you for showing an interest in contributing to TSP.
Feb 23, 2020

Role Model and Idol

Good Afternoon, Dear One, Ed Seykota,

I don't know how often do you answer your emails but i am writing to you today in delight that My Role Model and Idol, the Great Ed Seykota will finally know of my existence even though he wont know who i am.

I am your biggest fan Ed, for my age young and vibrant, i have been reading about you and the great works you have been doing.

One of the most appealing story i read was when Michael Marcus was pointing out how much patient and religiously devoted to trend following, that time you were SHORT SILVER while everyone else seemed to be Bullish talking about how SILVER was so cheap but you stayed short and pointed out you going to stay short until the trend changes according to Michael Marcus.

I read a lot of Stories about you but i always wondered who is this Ed Seykota, will i ever meet him one day?

I must say i am delighted to write this email to you and i have been greatly Inspired with your works and the education you gave to the public.

The was one line i once read in one of the stories written about you where you pointed out that "THE MARKET IS THE BEST TEACHER" i never understood the meaning of this statement until one day something dawned on me that in order to avoid whipsaw results i got to Learn how to trade the market by actually letting the market itself being my teacher.

I can write a book about how great i've been motivated by you Ed, i'd love to keep this email short because i am AFRAID I MIGHT NOT GET ANY RESPONSE, my fear of disappointment wouldn't let me write any further, but above all I've always looked up to you Ed, you been my role model ever since i started to read about you.

I wish you good health, happiness and many more years

Kind Regards

Thank you for sharing your process and for acknowledging me and the work.

You might consider taking your feelings about <role models, idols and gurus> to Tribe as an entry point.
Feb 20, 2020

Still in Baffle Mode


You asked where you said you do not risk more than 2.5% on a trade.

Didn't you state that in Market Wizards?

Old and bold traders ... etc ... never risk more than 2.5% on one trade ...

I once mentioned about max. Risk on one trade of 2.0% and you said you liked that.

I am baffled sometime.

Maybe you could simply tell me what is your maximum risk on one trade instead of going around in circles?

Thank you

Thank you for following up.

I wonder if you can site the exact passage and page number - rather than the abstraction with multiple ellipses.

For another take on the passage, see.

Thank you for telling me you still feel the baffle.

FAQ does not discuss specific trading recommendations or parameters. See Ground Rules, above.

You might consider taking your feelings about <entitlement, anger and disappointment> to Tribe as entry points.
Feb 18, 2020

The Over-Trader Blues

Hi Ed,

Hope you all the best in 2020!

After reread your aggregated FAQ and real trading, I've got a question about: how could you doubled your account while minimizing the risk to a percentage like 2% to 5%?

I'm having a problem like the winners could not cover the losses, and if I cut losses short, it seems it couldn't overcome the daily fluctuation in the market (it's commodity market), is it simply a problem of too small in capital?

I hope I could survive in the market and get success again, but I realize my previous success was a result of my over trading, which I want to avoid it now and use what I have learnt from you, Ed.

Please help me and thank you for your time to read my silly words.

Best regards,
Thank you for raising this issue.

Daytrading, Overtrading and other forms of low-discipline Powertrading generally provide lots of thrills along the way and then, ultimately, an all-consuming wipe-out.

All this excitement can serve as very effective distractive medication to mask personal misalignment with right livelihood.

You might consider taking your feelings about <what you can do to serve others> to Tribe as an entry point.
Feb 17, 2020

Checking In After a Decade or So

Good Morning, Ed,

This morning as memories appear in the eternal now, I recall that the three years of Tribe in your Lake Tahoe living room changed my life.

Before, I was frustrated, unhappy with wife, business, trading, feeling bottled-up feelings and didn't know how to change.  

The Tribe process opened me up to new possibilities in relating, listening, empathy. 

It is a permanent change.  I didn't change wife or business; I changed me during those open supportive sessions.  

I went on to run a Tribe after that and provided that service for others. You also fed all of us after each meeting! 

You are a most generous person with your time and talent.  Thank you for those years.

best regards,
Thank you for sharing your process and for acknowledging me and the work.

Feb 15, 2020

Catalog of Feelings


I read your response to one question from 01/05/20: "In TTP, I hold embarrassment as a feeling associating with a delta between (1) my condition and (2) the condition that others around me expect me to have"

Have you cataloged list anywhere which lists out other feelings and and how TTP views those feelings?

Also, like many thing, your observation is right on mark that Do it myself TTP does not work.

Thank you for raising this issue.

I do not have a catalog af feelings.

During The Trading Tribe Rocks Process, feelings emerge along with associating situations, judgments, Rock Donors and Stressors.

For more on the Rock Process, see TTP Extensions.
Feb 13, 2020

Important Lessons

Hi Ed,

thanks for the answer regarding Trend Detection, that it is 100% dependent on variables I choose. Simple, yet eloquent.

My next question is:

What are your most important lessons you learned about:

a) risk management
b) stop losses

Anything that comes to mind other than they must be requisites in a trading system.


What you think to be important, that most people don't realize the importance of.
Thank you for raising this issue.

In control-centric trading, one person determines importance for another person: "You must keep your initial entry risk below 1/2 percent."

Intimacy-centric trading, each person determines importance for himself and then shares that with others: "I like to keep my initial entry risk below 1/2 percent."

In my experience, control-centric trading leads on to drama while intimacy-centric trading tends to align with right livelihood.

You might take your feelings about <doing what your parents tell you to do> to Tribe as an entry point.
Feb 12, 2020

Workshop Progress Report

Hi Team-

I wanted to update the entire support team that my bumper sticker goal of “Know everything there is to know about back testing by March 30, 2020” has not only been accomplished more than 6 weeks ahead of schedule but has also resulted in the development of several algorithmic trading strategies that have some currently incubating and some trading live that retuning fantastic results.

I learned all I needed to know by asking Ed Seykota questions in FAQ about Bliss Function (thanks for letting me bombard you Ed!) and also technical details from reading Kevin Davey's book called “Building Winning Algorithmic Systems”.

Ed taught me to ask myself the right questions and to know myself to understand what type of system I should build that would suit my personality and lifestyle best.

These are questions I had to dig deep on and answer myself. I came to the conclusion that I wanted a consistently winning system that would trade every 1-4 days that would produce the highest return possible for a total risk of 10% drawdown. I became very keen to loss and risk management from my discretionary trading days and wanted to implement tight controls on risk and preserving risk capital and using that as a starting metric to maximize returns from. Aim sure I will continue to develop other systems that maximize even greater returns (at greater risk) and diversify into.

I had a custom strategy tester developed by a programmer that I can back test settings on any assets chart. The custom strategy development took over 3 months. I then found assets I like to trade that are volatile and per Kevin Daveys advice did multiple walk forward tests to fine tune optimal strategy parameters and avoid curve fitting / over optimization and also perform Monte Carlo simulations to determine various risk models and risk of ruin. I had to discard hundreds of potential strategies that fit my criteria and also passed Walk Forward Analysis and Monte Carlo Simulation.

I have fully tested and vetted algorithmic Strategies that trade Bitcoin and Ethereum that are producing returns of 35% per month average between both with an 11% max drawdown and risk management of losing 4% maximum on any trade. I have ran into the max drawdown already and it lasted 2 weeks.

But because I trusted my system and thorough math and testing analyzes, negative emotions did not come into play. It was also designed to not have downside risk be exceedingly large - capped at 10%. (In actual results, slippage caused it to be 11%)

I am currently enrolled in Amibroker and Tradestation Easy Language courses to learn to program my own strategies from scratch without the need for a developer, and to also develop my own custom asset and data screeners to further automate trading and money management. I am also learning to perform parameter optimzations, Walk Forward Analysis, and Monte Carlo analysis automatically by machine instead of by hand, which can be performed quickest in Amibroker's multi-threading. I also have a custom bot that will be live trading on several broker exchanges in the next 10 days that will trade automatically based on signals and alerts received by my algorithmic trading strategy.

If any one has questions on back testing, algorithmic development, or would even like to work with me on anything in this area let me know.

Thank you for your support and being a part of the trading journey we are all on.

Thank you for sharing your process.
Feb 12, 2020

Baffling Inconsistencies

Hello Ed.

Hope you are keeping well? are a few questions I am a little baffled about.

1) I read on the great Internet that you took $5,000 to over $12,000,000 in twelve years. That is one heck of a gain every single year. Is it the whole story?

2) You talk about having to take a more concentrated portfolio to get bigger gains. But the  say your maximum risk should never exceed 2.5%. How can the two co exist? Is not it one or the other?

3) you say never risk more than 2.5% on any one trade. But then tell people that put up money with you to risk 50%. How can they lose 50% if the maximum risk is 2.5%. That would be 20 successive maximum losses. I could see you possibly hitting 20% drawdowns..but 50%.

Have a splendid 2020

Thank you for pointing out some discrepancies between what various other people report me as saying.

I generally refrain from telling people what they "should" do. I wonder if you can tell me your source for the 2.5% should theory.

To help you reconcile your baffle, you might consider the case below.

Say you enter five independent trades, each of which has a half percent entry risk.  

Than, say these trades all sweep on to success so your portfolio triples.  

Then, say your portfolio has a 50% retracement so you wind up with a net 50% gain.

You might consider taking your feelings about <believing everything you read> and <digging into the math> to Tribe as entry points.
Feb 11, 2020

Looking for a Mentor

Hi Ed,

First off, I hope this message reaches you well. I recently read your interview in Jack Schwager's Market Wizards and learned of your reputation in the markets. I also had the pleasure of stumbling across your "Whipsaw Song" on YouTube which was an absolute treat. Not to mention more valuable than 99% of trading advice I've ever received!

I am reaching out because I have been trading for over 5 years and still haven't hit my stride. Many of the reasons can be identified in your Whipsaw Song but one aspect of trading still eludes me: my niche in the markets.

In other words, up until this point I have sporadically taken trades based on hunches, tips, fundamentals, technical indicators, you name it.

I have had a few winners (which I closed too early) and have had some painful losers (which I held onto too long), but I have managed to keep my account alive. My problem is, I have never had a trading mentor to show me the ropes and I haven't been able to find a unique (& successful) approach on my own.

What advice would you have for someone who has been trading for 5 years but has not much to show for it, other than still being here?

I live in Denver, Colorado.

Do you have any trading colleagues here who you could point me to for mentorship? Do you offer mentorship yourself?

Thank you for reading. Kind wishes,

Thank you for reaching out to me.

You seem to already know the rules of trading and you seem to have awareness of when you follow them or not.

You might consider taking your feelings about <embracing discipline> to Tribe as an entry point.

Feb 8, 2020

S/R System Confirmation

Hi Ed,

I've replicated your support resistance system results in excel too.

Kind regards,
Thank you for completing the exercise and for letting me know.
Feb 5, 2020

What You Measure, Improves

Greetings, Ed

A few years ago in Tribe I complain about not being able to develop trading systems to my satisfaction.

A few weeks ago, I get an "AHA" to log my daily system development hours in a spreadsheet.

I calculate a simple daily average hours spent in system development with sum (all hours all days) in the numerator and n (all calendar days since start of log = ( today()-firstDate) ) in the denominator.

The puny daily average number of hours opens my eyes to how little time I have been spending on system development.

I consciously decide to raise my daily number of hours spent in system development and I begin to get results that I like.

All the best...
Thank you for sharing your process.
Feb 3, 2020

Syncing with Nature

I have spent many many many hours at the sea shore contemplating the movements of markets and even some oft-quoted statement attributed to you about said subject. 

While I cannot be certain what you meant, it is no matter to me at this point. 

There is a type of wisdom in nature's patterns which we can observe. 

Thank you for pointing that out. 

I changed my strategy and stopped fighting the tide, and find myself in sync with the rhythm of supply and demand more often. 

My results changed too, 180 degrees in the other direction, from a loser to a winner.  

Thank You,
Thank you for sharing your process and your insights.
Feb 3, 2020

How to Determine Regime Shift

Hi Ed, thanks for the answer to previous FAQ questions; as your answers help enlighten the trading journey.

My next question is: if you were to create a trading algo, and it had to know when the market regime shifts from sideways to trending (and back), which inputs/indicators/methods would you use to determine that?

Thank you for your lifetime of wisdom.
Thank you for raising this issue.

Shift detector algorithms depend on assessment of trend.  The definition of trend depends upon your preference for trend length.  

The unique instantaneous moment-of-now trend (trend length = 0) exists, in theory for some good-behavior functions such as ramp and sine.

Other than that, for real world detectors, you pretty much have to start with your own trend-length preferences.
Feb 1, 2020

TTP Notes

Greetings, Ed.

I hope this email finds you well. I review my TTP notes and I like what I’m reading. I hope that sharing them with the Tribe will help some out—

I ask clearly for what I want. 
I’d like to know how you feel about…  
Tell me how you feel about …    

Tell me more about how you feel.   

I wonder what you would like to do?     

I acknowledge and thank every time someone shares feelings & wishes with me.   

I get information gently, without asking questions.   

I don’t ask “Why?” questions—they teach people to make excuses.   

I stop stopping.   

I quickly set priorities & go instead of stopping with analysis paralysis.   

I stop talking to my feet.   

I get clear agreements & I check for willingness.   

I establish rapport & intimacy.   

I don’t ask questions—I say I’d like to know how you feel about…    

I share my feelings.   

When I stop worrying and stop stopping, then I move forward and make progress toward my goals.   

In Tribe we set goals and work towards them.

If we get stopped then we use the Rocks Process to overcome them.   

I bring willingness.   

Rapport or War.   

I feel all my feelings and learn their positive intentions.   

I know what I want and I ask clearly for it.  

Problems are a difference between what we have and what we want to have — Tribe helps remove the difference and then what we have equals what we want.   

I go faster by going slower.  

Intentions = Results so I look at my Results to understand my Intentions.

All the best…

Thank you for sharing your notes.
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