Ed Seykota's

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Questions

(Quotes from Ed in Red)

Sun, 20 May 2007

Silver Keyboard

Thank you for sharing your process.

Silver Keyboard

Encouraging the Sender

to develop feelings about images

into forms.

can help identify

k-nots and rocks.

Clip: http://www.artandallthatjazz.com/Jessica_Felix/

Sun, 20 May 2007

Business Before Trading

Ed,

I hope life is good for you now. I am “swamped” in the water business. It is a good thing, because the swamp is limited to a few species. That is, I am heavy into a few clients and I like these clients. I understand this is not necessarily the best business model, but it is very appropriate for me right now. I like avoiding the politics and ineptitude that is rampant in the larger water “business”.

I wish for more time to work on a trading system / business. Currently, I am finishing up a “back office” system that tracks orders, trades, monitors open positions / risk and delivers status / performance reports. At this point, I believe that taking care of the business of trading is more important than the particular trading strategy. I intend to finish this and then work on a few strategy ideas that I have.

I still want to flush out an idea that I have. It regards chance. I do not have all the vocabulary or formulas to model or quantify this.

Ephemerally, it goes like this: When working with trend following systems, the trader is at the mercy of the trend makers. Trends of all types occur very frequently. But, only some of these trends can be traded. And, only some of these tradable trends will occur in the markets the trader is trading. This is the “opportunity field." It is not continuous, but intermittent.

The continuity and frequency of the opportunity field are reflective of the frequency of a trading system and the volatility characteristics of the underlying markets. If the trading system is a 20-bar moving average of a yearly chart, then the system maybe has the chance to enter and exit once in a lifetime. If the market opportunity materializes in this trader’s lifetime, then the 20-year moving average system looks like a good system.

The trader goes to his grave content knowing in his will his family members are well taken care of. Taken to a different extreme, if a futures market routinely moved large amounts in serially linked V shapes, the frequency of the wave would allow a trading system to be matched up to it and a large number of entries and exits transacted. The opportunity field is frequent and perfectly predictable. My son can do it and think he is a genius.

Looking at commodity trend following firm’s returns, it seems trend following commodities is a multi-year opportunity field. If I start a trading fund and have a bad year, it does not mean the system is bad. It means the market opportunity over this year was bad, or the system is a bad system. Because most people do not have the multi-year commitment to see if their system is good or bad, the role of chance is paramount in the success of many traders, especially the new beginners or young firms. If they go into business and the opportunity field presents itself, they can move forward thinking they are doing a great job and have the holy grail. If they happen to start a few years earlier or later, the same trading systems may look like bunk, and they die a premature death. Same systems, different results. The opportunity field is the real winner and loser not the trader nor the system. Chance is king.

I would like to work this up with real math / statistics, but it hasn’t come to me yet. Perhaps it will.

I do know a couple of things. One is I am very long term in my trading endeavors. I am very independent, self-reliant, competitive, and resourceful. Thinking about trading provides me an intellectual outlet. I find I must exercise this outlet somewhere and trading seems to fit. I have only made discretionary trades in my life, but they are based on feelings and perceptions regarding social tendencies, not financial fundamentals.

Sun, 20 May 2007

Whittling

see previous: May 14: Support

OK.

You might notice how you feel about using a build-em-up term to describe your trading.

Whittling

tends to make things smaller.

Clip: http://soulemama.typepad.com/

soulemama/images/wood1_1.jpg

Sun, 20 May 2007

The Art of War and Trading

Dear Ed,

Master Sun said:

A rushing torrent
Carries boulders
On it’s flood;
Such is the energy
Of it’s momentum.

A swooping falcon
Breaks the back
Of it’s prey;
Such is the precision
Of it’s timing.


The Skilful Trader must use both

Your descriptions about your relationships tends to manifest.  You might notice your feelings about war.

You might consider noticing your feelings about describing trading in alternate ways, say, as a discipline, a dance. a form of expressing your integrity ...

Sat, 19 May 2007

Seeking Advice
 

Dear Mr. Seykota

I work as a programmer for almost 10 years and find interest in the stock market for the last 2 years.
Since my programming skills are pretty good I found it only natural to build computerized trading systems.
After trading the US stock market half a year ago for few months, and losing some money I have decided to take a break and analyze what went wrong.

I'm just now in my second phase in the stock market, but this time I take the whole thing more seriously. Meaning investing a lot of time improving my system, reading lots of books and keeping notes, back testing, running results in Monte Carlo simulation etc.

FAQ does not tell people what they should do - or what they need to do.  See ground rules. 

Meaning is subjective and may well depend upon your feelings and intentions.

The meanings of the words {system; work; different; market; robust; decent} may vary widely.

Preparing for a Row-Bust Decent

Over the Falls

You row and sometimes

you wind up, well, busted.

A Decent Row-Bust 

Toning Exercise

You row and sometimes

you wind up well busted.

Clips:

http://www.s88032431.onlinehome.us/

photos/James%20Cornett%20runs%20triple%20

drop%20Little%20Clear%20Creek%20-%20

ducky%20fisrt%20decent!.jpg

http://www.fitness-health.co.uk/

Sat, 19 May 2007

Commission-Free Day Trading
see previous: May 15: Fast Trend Following

Thanks so much for answering my question, I admire your patience in answering all our FAQ questions! Must be the result of stress free, worry free trading!

I would like to add details about my question because it might have been misunderstood?

See: My Previous Question ...

My Rephrased Question is ...

Do you think trend following can also be applied intra day trading? I'm not paying commissions because I'm using a Direct Access Broker ... I will even receive commission if I provide liquidity (Limit orders). So trading commission will have no effect on my performance. I was just wondering if trending actions are as "ride-able" and reliable intraday as with a longer time frame such as yearly. I'm wondering because intraday movements might be easier to manipulate than a yearly move.

You are likely paying virtual commissions in the forms of:

1. Getting some skid on your stop order fills.

 

2. Getting no fill on your limit orders until the price penetrates a bit beyond your price.

Of course, your broker might be filling your orders absolutely free and relying on his staff and the electric company to pay his salary.

When you figure in your actual transaction costs, high-frequency trading tends to generate more excitement than profit.

Riding Fast and Free

can get you a lot of excitement

and souvenir skid marks.

Clip: http://www.fwditon.com/attachments/

Sat, 19 May 2007

Cochin Tribe

Hi,

Welcome !

Cochin

India

Thu, 17 May 2007

Earl Rules !

Earl Scruggs

Thu, 17 May 2007

Thu, 17 May 2007

The Secret
 

Ed Says: The Secret isn't what you think, it's what you feel. The movie and the book appear somewhat sparse on how to implement the secret. In TTP we use the Rocks Process to reprogram our "radiators" so we radiate an intention that attracts what we want.

Yes. I also noticed that. Somewhere in the middle they touch on the subject. They admit that it's impossible to monitor all of one's thoughts. So they encourage the audience to monitor their feelings and guide themselves through experiences that make them feel good.

I like the straightforward way in how they "tell" the "secret". Yet I agree with you that both the book and the movie are somehow sparse on how to implement the secret. And finding ways to effectively implement it seems to be, on a large part, what ancient traditional religious or even some western secret societies have been doing over the centuries.

I have also found a book by [Author] on the Law of Attraction and his way of how to implement it. He seems to have some NLP background and is using it in his work. In his book he works on the concepts of opposition and clarity with regard to one's goals. He also focuses on the three steps ("ask", "believe" and "receive"), using feelings as a measure of effective, positive attitude or "vibration".

As I can tell you out of my experience, I do not doubt "The Secret", that we do become what we think, feel and believe. And I believe I have already been through this with regard to several intentions. Yet I also feel that there some "tricks" or "secrets" which are beyond my understanding.

For instance, I know the kind of relationship that I want (or at least consciously I think so). I can also imagine it vividly in my mind. I also know it would be good for me and I believe I can have it if I really want to. At the same time, I am under the impression all of this "goal setting" is going on just on a conscious level and somehow, for some unconscious or unknown reason, I don't really get it or want it.

When I am about to succeed I feel some internal (and the corresponding external) strong opposition. I feel as if I unconsciously sabotage all of my efforts and end up into a emotional mess again. I guess I need some inner spiritual or emotional healing I am not able to give myself or, as you like to say, "do it myself".

Some approaches to implementing "the secret" rely on individual goal setting and affirmation to overcome "negative" tendencies.

In TTP, we implement right livelihood by group work to embrace and find the positive intentions of all our tendencies.

Loneliness is a Feeling

Some personal growth methods

view it as "negative"

and try to medicate it with mantras.

In TTP,

we celebrate its positive intention.

Thu, 17 May 2007

Cute Site

Hi, Ed. (Hope YOU are reading this.)

It's been a long time... we did language exchange
(Japanese / English) in the summer of 94 in Los Altos Hills - for which, I am forever grateful.

Thu, 17 May 2007

Associate Progress Report

Dear Ed,

We would like your comments on our progress.

If you have definite rules, you have a set of constant parameters; the things you are call dynamic parameters are your system variables.

If you do not have definite rules, you have no formal system at all.

Note, the five-day ATR is a system variable; it varies with volatility.  The number, five, is the constant parameter.

If you make the constant number, five, a variable, N, then N becomes another system variable and the function that generates N has a constant parameter somewhere.

Volatility, trends, draw-downs and whipsaws are all part of the Trend Trading experience.  You might consider keeping them in your testing since the feelings they excite account for much of the actual  experience of trading.

De-trending the data sounds like math-turbation - a DIM substitute for taking the actual ride.

Some Traders Look Everywhere

for ways to avoid

experiencing their feelings.

Clip: http://www.youthnoise.com/

Thu, 17 May 2007

Working Through Feelings

Hi Ed,

I write to you 15 months after I first discover your TT website. I feel very grateful and respectful of you for the work you have done on TTP. Thanks.

For many years, until that time 15 months ago, I try to ignore my emotions and live using reason. I ignore my feelings, rejecting them as 'wrong' when I feel uncomfortable with them and accepting them, assuming them to have no purpose otherwise.

Then, I increase my trading size at work to a level that I feel overwhelmed by anxiety once I put the position on and then overwhelmed in a different way when my trade loses money. I end up closing out the position quickly for what is a big loss relative to my prior P&L swings. The strategy I had previously been profitable with was no longer viable at the new size.

I hate all the feelings involved and they affect my decision. I feel the same feelings when I lose when trading at other times but with much more intensity now. Prior to taking this position, my positions were small enough to be invisible to most people in the firm. So long as I produce a positive result on average, nobody paid that much attention. I know that I can not possibly succeed in trading whilst I feel that way as I can not stand the feelings. I want to make them stop. I hate it when what I want doesn't work out. The feelings are much more intense now many people can see my work.

I talk to somebody who knows you about my discomfort. They suggest I look up your website and I do. After I read though it and your book, the ideas begin to make sense to me. I become aware that I probably have many 'knotted' feelings.

I look up one of the two local tribes. I choose to write to the smaller tribe since I feel uncomfortable about presenting myself in front of too many people. I think this might be a 'knot'. After a few emails delaying my first attendance, I attend a meeting. I don't want to go in. I feel my heart pounding. I feel my breathing is shallow. I want to walk away, or at least hold on to anything on the way so I don't have to go in.

I force myself to go knowing that I can not continue to progress at work unless I develop some understanding of my emotions. I feel so overwhelmed after the meeting starts that I slip into a hot seat without really volunteering. I go with it but not wholly. I know I am holding back. It still feels liberating.

We spend the whole evening on my hot seat. I loop round feelings of anger, indifference and frustration. I have not openly felt these feelings and the forms that accompany them for over 10 years. I don't feel stable but I do feel open to new possibilities. I come back 2 or 3 more times until the tribe can no longer meet in the same space. Throughout the period, I become aware of many more of my emotions. I only do one more hot seat and spend the whole hot-seat punching one palm with the other fist. I feel a huge release to be allowed to feel so angry. I usually feel uncomfortable being openly angry. I think I find a second 'knot'. The tribe disbands without a space to meet.

I continue to want to explore my feelings and attempt DIM process. I can now feel anger more easily but I make no further progress to explore the initial feelings I came for. I make more effort to feel my emotions as they appear. For the first time since I am a boy, I begin to feel loss or sadness. I want to feel it but it seems blocked most of the time. One day, I think about my brother who died when I was a child. I feel resentment at him going. I end up saying goodbye. I cry for the first time in years. I now feel loss much more easily.

After a while, I apply to the other tribe. I feel so nervous again that I miss my first appointment. I stand outside feeling too uncomfortable to join in. I regularly feel like this. I attend large dinners with work. I make presentations from time to time to senior people. Each time, I feel panic and want to run away rather than stay and face the new people. The following week I force myself to go in because I want to develop. Over the next few meetings, I do a couple of hot-seats. I have a much better awareness of my emotions and so I distinguish them more clearly. I feel very strongly injustice, anger and sadness for myself all inter-mingled at once. I do not reach a 'zero-point' where I feel at peace. Instead I leave 'hot' with those feelings each time but pleased I have made some progress. This tribe also disbands because the leader wants to pursue other commitments.

Again, I continue looking to experience my feelings by myself. I think I find another knot at work. My overwhelming feelings when I take risks trading and lose continue to occur. I hate feeling like things are not going my way, that I am losing, that it's not working. I feel no good, I feel battered, I feel like I am failing and that I am not good enough to do it. I want to stop trading. I can't though. When the feelings pass, I feel determined to fight back again to win. I feel determined to earn a high income. I want to be in control. I hate feeling out of control. I hate that other people might do better than me, that they might have something I can't have, that they might win. I want to win now.

I think that I perpetually engage in what you describe as 'drama'. I want to be free of it. The two tribes in [my area] have disbanded. Apparently, I can not participate without setting up my own. However, I do not believe I currently have the ability to implement this successfully. I intend to attend your next workshop. In the meantime, I want to grow. I know you accept visitors to your tribe and also give private consultations under certain circumstances.

Thank you for sharing your process.

You might consider the positive intention of embarrassment.

Embarrassment

has a positive intention.

Clip: http://www.andrewphelps.com/

Tue, 15 May 2007

Wants a Newsletter

Dear Mr. Seykota,

I would like to know if you have any investment newsletter or service. If yes how we can subscribe and how much is its price.

Tue, 15 May 2007

Bernoulli Abuse

If I understand your web page about Bernoulli abuse correctly you are not not denying That Bernoulli principle work as described in various text but it is not the main thing that makes a wing work.

I am working on a different way to make a propeller using Bernoulli without an angle of attack or a curved surface and I am wondering what you would think of it.

Please go to my web page and think about it.
Also do you know what happens to Bernoulli when the shear velocity is reached?

"All truth passes through three stages. First, it is ridiculed. This is the stage I am in. Second , it is violently opposed. Third, it is accepted as being self evident." -- A. Schopenhauer

The invention is seldom revolutionary; the innovation is revolutionary.

You might consider building a lab prototype of your idea to see how it works.

Tim Berners-Lee

Internet Inventor

Larry Page and Sergei Brin

Internet Innovators

Clips:

http://www.w3c.de/PubPraes/tim2.jpg

http://money.cnn.com/2004/09/23/

Tue, 15 May 2007

You might consider taking your feelings about home work to your Tribe as an entry point.

Sometimes It's Easier

to get someone else

to do your homework.

Tue, 15 May 2007

OK. Read these: Royal Flush; Straight Flush and Four of a Kind. 

Hands Up

Clip: http://www.shoppingsurfer.com/

Tue, 15 May 2007

Fast Trend Following

Dear Mr. Seykota,

Mon, 14 May 2007

Support

Ed,

I just thought I would let you know. I think I needed to experience corporate life one more time to realize how much I don't like it. I love being with my son and being a trader. I also realize how much I do not like office politics.

I just sent a note to my consulting firm that I am contemplating ending my term in June at the company I am working at. I thought this was a dream job, to work at this company but there is really a lot of suffering and stress.

I now feel sorry for these people who think they are living while working big hours the young years of there lives. They miss out on many things including their families.

I had trouble the last 2 years trading but I am going to try again. I know I can do it when I concentrate hard enough and follow my basic rules.

It does not matter anymore which way the market goes I am just going with it. I am writing you because I need your support. Most people around me just think I am lazy not working like everyone else. I do not feel guilty anymore for making big money by trading. I thought you and a couple of tribe members would understand.

Another try at full time trading for me. I just can't seem to give up on this dream.

Keep the joy of loving God in your heart and share this joy with all you meet especially your family. Be holy – let us pray. -- Mother Theresa

You might consider being very specific about the kind of support you want.

You might also consider taking the feelings you dislike about corporate life to your Tribe as an entry point.  If these feelings have anything to do with stress and / or accountability, they are likely to emerge during critical phases of your trading.

The Things You Dislike About Corporations

are things you dislike.

Mother Theresa is famous

for having good relationships

with all people, including corporations

and corporate donors.

Clip: http://www.collegerecruiter.com/employersblog/

Mon, 14 May 2007

Bonn / Mainz Tribe

Welcome!

Bonn / Mainz

Germany

Mon, 14 May 2007

Communicating with the Dead

The field of collective societal intentions entrains willing individuals to manifest these intentions as results.  Results can manifest simultaneously in different locations.

Ellipse

A drop of water falls

into a shallow elliptical pool

at one of the foci.

The other focus "reincarnates" a similar drop.

Clip: http://mia.openworldlearning.org/

mwforum/msg00475/ellipse.gif

Mon, 14 May 2007

TT FAQ Question

Yes, you can use anything as a trading strategy.

The strategy is likely to generate results that validate the programming you carry in your "radiator."

We are currently developing ways to re-program our radiators with the Rocks Process.

You Receive What You Send

Clip: http://www.messianicspecialties.com/

Sun, 13 May 2007

Moving Averages

A couple of questions to a local Tribe Leader.

(1) What is the most efficient means of back-testing a particular dataset to determine the optimal set of moving averages for determining buy / sell decisions? Can you recommend a particular program or chart service?

 

The only means I am aware of is Ed Seykota's proprietary program, which generates a "Bliss Map" of the most robust combinations. Otherwise, one can manually step through each combination, as I did in this published study, also viewable here.

(2) Why does one normally speak of a momentum system generating buy / sell signals instead of long / short signals? If one had a trend following system following the Nasdaq wouldn't it have been better to have gone short in March 2000 rather than merely flat? Why the reluctance to go short?

Back test studies I've done and reviewed, indicate shorting stocks is not very profitable over the long term. May be due to the stock market's overall 10% annual upward drift. Add to this the practical trading quirks such as not being able to short certain stocks and the up tick rule, and one would conclude it's not usually worth it in an overall, long-term system, despite spectacular examples to the contrary.

You might consider taking your feelings about out-guessing other traders to your Tribe as an entry point.

Three Shell Game

provides good practice

for honing up guessing skills.

Clip: http://www.kwmagic.com/images/

Fri, 11 May 2007

Free System

You might consider looking at some of the trader's results as well as his rules.

Trading Rules, Like Other Types of Rules

only work if you follow them.

Clip: http://www.aelliott.com/image_pages/