Ed's FAQ JUL 01-31, 2022

Contributors Say

Ed Says

July 20, 2022

Lake Ratio

Hi Ed,

I would like to apply Lake Ratio to my system.

Do you have an example file in excel that you can send to me?

Thanks,

Thank you for asking about the Lake Ratio.

I have it on my site in 2003, as an illustration of risk metrics - possibly useful to measure trading results.

I do not know of a way to use it as a trading indicator.

Curiously, I notice quite a few articles about it now appear on line.

July 19, 2022

Musical Bears

Dear Ed,

Spotted this in SF today. It reminds me of us as Classical Grass.

Thank you for sending me me the photo and remembrances of us playing music together at Lake Tahoe.

A Couple of Bears

waiting for a sell signal.

July 18, 2022

Inflation Model

Dear Ed,

I hope you are doing well. Please consider watching my video where I do an experiment to illustrate inflation visually.

Please consider sharing your thoughts about this attempt to model inflation.

Thank you

Thank you for sending me your video.

You might consider preparing a graph of money supply vs. gold price - to see how well your linear-causal model captures the relationship.

Linear Models
don't explain the wiggles.

https://youtu.be/0bFoT9XfadM

July 16, 2022

What is the Difference

Hi Edward,

what is the difference between the government of the republic and centralized government?

Thank you for raising this issue.

You might consider clarifying your question by re-writing it without using any variations of the verb, "to be."

July 16, 2022

Chet Atkins

Hello Ed,

My father and I recently purchased your Govopoly book and have been enjoying your work.

I notice you acknowledge my guitar teacher Chet Atkins for inspiration.

I wonder if you have taken time to assimilate his protege Lenny Breau? He was somewhat of a secret. You might consider listening to his record online ‘Guitar Sounds from Lenny breau’ as well as his live album ‘velvet touch’. Chet and Lenny have a duo record together entitled ‘standard brands’.

Thank you for acknowledging my book and for sending me the link to Lenny.

July 15, 2022

Tribe Meeting Report

Ed,

I hope all is well. Writing to share the Jersey City tribe experienced a breakthrough in feeling Joy.

The session had 3 members, one of which this was his first Tribe session.

We emoted hand movements (mimicking each other in the field of acknowledgment), shared the lack of intensity of feelings being ripe, and went with the feeling of calm and lightness.

We each had goals we wanted to work on and the feelings didn't initially develop. Instead of fighting our feelings we went with the ones we experienced in the moment at the session.

One member really went with the lightness which developed a hand shaking, shoulder roll, deep breathing that all members encouraged. He really got into it and shared feelings about his family.

I got on the hot seat and went with the hand shaking. This developed into shoulder rolling, stomach clenching, deep breathing, gagging, foot shaking and seat bouncing. The gagging feeling in my throat changed from a ball above my adams apple to a small round item below my adams apple that felt like the hilt of a sword going down my chest.

The newest member shared feelings of being in a safe place and enjoying the lightness, stating he felt like he was home.

This morning my joy breakthrough came as I enjoyed a scenario of people laughing at me tripping over a shoe in the house, and instead of me getting angry or frustrated, I also laughed -- a good light laugh. It was incredible.

This is the first Tribe session I've been to exploring feelings of lightness, happiness, and joy.

Thanks,

Thank you for sharing your feelings and for documenting your Tribe Meeting.

July 14, 2022

Existential

Ed,

I wish to ask you two existential questions:

1. What is the purpose of mankind?
2. What is the truth?

Thank you for raising your existential questions.

Existentialism has various tenants including that the world has no inherent meaning and each person bears responsibility for his own views, meanings, truths and actions.

Existentially speaking, your questions have no inherent meaning - so I answer them as I see fit, per this reply.

Jul 13, 2022

Why

Ed:

On this auspicious occasion of Guru Purnima , I am thinking about you and wondering why FAQ has not been updated since March ? Maybe you are in PR. I am also wondering if Austin tribe meets regularly or if you are planning to do any workshops in Austin.

Thanks for triggering all the progress over the years. More I learn, only to realize that there is much more ahead of me to learn.

Regards,

Thank you for reaching out on Guru Purinama and for asking why.

Why generally expresses an invitation to leave the world of intimacy and feelings and to enter the world of control and logic.

To you and other whys-guys, I offer the following by Annie Lennox. Link.

Anne asks "why" in a fully-orchestral way, and then laments that her lover does not know how she feels.

You might consider taking your feelings about {needing to ask why} to Tribe as an entry point.

July 11, 2022

Wants to Join a Tribe

Hi Ed Seykota,

Hope all is well with you.

I have read your book and visited your website. The trading Tribe book and www.seykota.com are really a delight to read for me. Thank you so much for sharing your wisdom.

I am interested in attending the Trading Tribe Event. Do you have an online Trading Tribe meeting? How do I get the information about the Trading Tribe meeting?

Carpe Diem,

😃

Thank you for acknowledging me and the website and the work.

I plan to host a Tribe Series early next year.

For more information, watch the FAQ pages.

July 6, 2002

Understanding Feelings

Hi Ed.

I came across this picture and thought you’d might like to see it.

The Colors of Feelings

Safe = Green; Joy = Yellow
Grief = Black; Anger = Red;

Source: Contributor

Thank you for sending me your photo.

I notice the card recommends "understanding" feelings. In TTP, we aim to accept and experience our feelings - and use them to illuminate our methods..

I also notice bright yellow goes with joy while anger gets red and grief gets black.

The coloration scheme seems in line with typical opinions and judgments about these feelings - and seems consistent with people having more willingness to experience joy than grief.

Facility with experiencing grief, about, say a losing trade, can help you move more quickly and fully through it and get on to the next trade without having to carry the baggage, such may contain fear and hesitation.

You might consider taking your feelings about {Grieving over Trades} to Tribe as an entry point.

July 6, 2022

Chop Chop

Dear Mr. Seykota,

Have you ever temporarily turned off an algo using your subjective judgment, expecting a chop?

I have found that you get the nastiest chop and drawdown following a big, sudden drop.

I face a dilemma since I'm 99% sure it is not going to break out any time soon, but if I miss that one trade, I'm absolutely screwed.

Is this another version of "High return, no drawdown" fantasy?

Thanks,

Thank you for raising this issue.

A trading system or, as you call it, an algo, defines a set of rules that guides your trading.

Subjective Judgment and 99% Sure indicate trading by guess and hunch, likely responding to hope, fear, greed and anguish.

Using both in your trading indicates a desire on your part to go for high drama, promote the release of dopamine and, likely, using excitement to mask deeper issues.

You might consider taking your feelings about {Right Livelihood} to Tribe as an entry point.

July 4, 2002

Volatility and Risk

Hi Ed,

first of all I would like to thank you for taking the time and making all this great information out there. Both on handling emotions as well as trading (even though they might be heavily intertwined).

Secondly, I would love to attend a TT meeting in the US. I am based in Sweden but if I can somewhere find out dates I would be able to plan a short trip to the US. I recognize the full value is through repetitive practice but I still believe the experience would be invaluable.

Thirdly, trading question. What are your thoughts on volatility?

I find many fund managers and traders speaking as if volatility = risk and I don’t agree as sell offs can be irrational.

Simply watching volatility also completely disregards that large positive movements in a portfolio or strategy is not negative but should be viewed in a positive light.

I find the Sortino ratio better to describe a portfolio than sharpe ratio, yet the sharpe ratio is more commonly used.

I'm thinking about writing a paper on my thoughts and as I am in the early stages I would love to hear your thoughts and if you have any experience on the topic? What would be interesting to look at? Am I completely wrong and volatility does indeed equal risk?

Once again, thanks for taking the time.

I wish you all the best.

Thank you for raising this issue.

In physics, we have volatility as the proclivity of a substance to vaporize; Isopropyl alcohol has a higher volatility than, say, butter.

Volatility results from individual molecules moving about quickly. You can measure volatility as a vapor pressure, in Pascals or Kg/(m-s^2).

In psychology, volatility refers to the proclivity of a person to anger and / or to act irrationally and violently. Again, a person under pressure may act in a volatile manner.

In trading, volatility refers to the tendency of the price of an instrument to change quickly, perhaps responding to surprising strong market pressures.

Thus, we have volatility as a property of an object with some relationship to rapid change and pressure.

Risk refers to the possibility of danger, harm or loss. You can measure financial risk in dollars. If you have 5 contracts long of Soybeans with a protective stop 20 cents below the market, you may estimate your maximum risk at $5,000 - assuming you can fill your stop without any skid.

You might also estimate a probability of electing your stop, say 50%. That then gives you a probability-normal risk of $2500.

Note that traders who do not use stops, have no way to control, or even estimate risk.

Risk also depends on position size. If you have 50 contracts long with a stop 40 cents below the market, you can estimate your maximum risk at $100,000.

Thus, we have risk as primarily a property of the trader.

Thus, we have volatility and risk as two separate and quite concepts.

Setting risk and volatility equal in an equation provides little useful information about either and generally indicates more more about the mental laziness of the guy formulating such an loony equation.

You might consider taking your feelings about {thinking things through} to Tribe as an entry point.

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