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April
13-19, 2003
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Questions
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Answers
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Sat, 19 Apr 2003
Pressure Drop
Prediction
Dear Ed,
I was wondering if you would be so kind and please help me. I was searching
the web and ran across an article that you had written and it seems to be
closely related to the problem I am trying to figure out. As seen in this
diagram attached, I am trying to predict the pressure drop between two
orifices ... |
Your
problem is like trying to blow up a balloon with a hole in it - or trying to
take living expenses out of your trading account. In both cases, the
less you withdraw, the better you float. See Physics
FAQ page on www.radialmomentum.com
.
Pressure
Gauge
Clip: http://auto.howstuffworks.com |
|
Sat, 19 Apr 2003
Jinx
Hi Ed,
Whenever I am doing well with my trading, I tend to avoid letting people
know I am doing well because I jinx my own performance. So nowadays, I just
hush because after I do well, I get a drawdown. Is this because of
complacency & feeling good about yourself (feeling of importance concept
- by Dale Carnegie)? Or is it a psychological thing, as if I want to self
destruct … as if I don’t want to win whenever I am ahead (like Mr.
Livermore’s multiple bankruptcies … but I DO want to win.
I notice this in other aspects of my life. Relationships etc. I tend to
sabotage things to make situations bad when things are going good you know.
How can I help myself? I recognized this and slowly changing on the personal
side of my life (relationships). My relationship with my mother has never
been better now. Before, I fuss at the smallest little things.
I know this has something to do with my trading and way of life ...
connected to my psychology of sabotaging things. I want to remedy this. Any
thoughts? |
The
Trading Tribe takes the view that you are successful in creating a result
that elevates your feelings up to the point you notice them.
By
locating and finding the positive intention for your feelings directly, you
might not need to create dramas in your trading.
Intentional
Sabotage
One
way to sabotage machinery is to throw a pair of wooden shoes (sabots) into
the gears. |
|
Sat, 19 Apr 2003
Crash
Discipline
Dear Ed,
Dieters who try to lose weight as fast as possible (through fasting,
for example) usually gain the weight back pretty quickly -- otherwise known
as "yo-yo" dieting. By contrast, those who slowly change their
eating habits tend to keep the weight off with more consistency.
Likewise, do you think traders with discipline problems are better off
working slowly through their issues, rather than suddenly assuming
stringent rules without question? In other words, is "crash
discipline" no better than "crash dieting"? |
Sometimes
people eat, drink or indulge in other activities to excess, in order to make
their feelings go away.
When
they learn to accept, allow, even celebrate their feelings the need for
distractions and soporifics goes away instead.
The
Trading Tribe works toward location and expression of underlying feelings.
This tends to dissolve them. Sometimes trying to solve a problem, only adds
mass.
Miles Darden (Not
Shown)
DARDEN, Miles,
giant, born in North Carolina in 1798; died in Henderson County, Tennessee,
23 January 1857. He was seven feet six inches in height, and at his death
weighed more than one thousand pounds. Until 1853 he was active, energetic,
and able to labor, but from that time was obliged to remain at home, or be
moved about in a wagon.
Text: www.famousamericans.net
Clip: www.weirdlinks.com |
|
Fri, 18 Apr 2003
Do the Markets
Change?
Chief Ed:
Is it true that today's markets are different from 20 or 30 years ago
and, as a result, techniques from those days won't work anymore?
|
These
days people are showing a lot of concern that markets are different and
trend following methods no longer work.
I
recall, in the old days, people showing a lot of concern that markets are
different and trend following methods no longer work.
January,
1900 Pronouncement:
The
Markets Seem Different Now
http://elfwood.lysator.liu.se/
loth/b/y/byytorr/time.jpg.html
|
|
Fri, 18 Apr 2003
Crowd
Chief Ed:
When do you go with the crowd?
|
Go
with the crowd while it wins.
Sometimes
the crowd goes for P/E ratios, earnings, momentum, concept space and
sometimes the wind trade.
Trend
following accommodates a wide variety of crowd behavior.
Tulipmania
1630-1637
When the middle
classes began to realize how much money the upper classes spent on tulip
bulbs they sensed a fool-proof get rich quick opportunity.
All one had to do
to become rich was to plant and wait. The buying and selling of a product as
invisible as un-sprouted flowers came to be called the "wind
trade."
People were
desperate to cash in on the bulb-trading frenzy! Small businesses were sold
and family jewels were traded.
Local governments
tried unsuccessfully to outlaw this commerce. But like any profit boom,
trade was legislated by economics, not government.
The bottom fell
out of the market during 1637, when a gathering of bulb merchants could not
get the usual prices for their bulbs. Word quickly spread, and the market
crashed.
Clip:
http://www.picturesof.net/_gallery/_Plants/
_PAGES/pink_tulip_photos_00204101724.html
|
|
Fri, 18 Apr 2003
Cycle of Feelings
Mr. Seykota:
I have experienced a severe drawdown in equity, and I am sensing a
tremendous amount of fear. Fear of the uncertainty of the future, fear
of whether or not I can contain the drawdown and exhibit discipline in the
face of such uncertainty. I haven't experienced such a drawdown in many,
many years.
Previously, you mentioned everyone gets what they receive, or their actions
are played out by their true intentions. Mr. Seykota, this drawdown was
not my intentions, nor was it what I wanted. The feeling I receive when
I write that is one of conviction, I can say and write it and know there are
no other feelings or thoughts that may be influencing me.
I am a proven, veteran trader, but the fear of recouping such significant
money is right in my gut. It is the time, of a slow methodical and
steady process which was so evident in my trading until my bold moves which
caused this drawdown and the subsequent out of control, not
"stopping" trading that resulted thereafter.
I am currently
examining my feelings and thoughts to try to understand what may have caused
the drastic change from conservative to extremely aggressive.
In hindsight, I should have stopped. But I could care less about the past, I
am trying to locate the feelings inside me now that will drive my actions
now.
This feeling of fear is extraordinary. It seems to be fear of the
uncertainty of my plan to recoup the losses, the fear of my skills, the fear
in staying with the plan, and the fear that it might not be enough.
My plan is simple, it is straightforward, and I can and will implement it.
But the feelings that are being generated are so strong.
Have you every been through such an experience, and could you share with us
how you managed your day to day feelings of fear, frustration and that lack
of confidence until somehow events changed to get you back on track. |
The
Trading Tribe holds that we are responsible for our results, and that
results indicate intentions.
Sometimes,
in response to increases or decreases in equity, traders change their
methods. One way to begin to
stabilize a method, is to examine the feelings about changing it.
The
Trading Tribe holds that we set up dramas in order to experience
feelings, and that when we are willing to experience feelings directly, we
do not have to set up dramatic excuses to do so.
Jesse
Livermore, a handsome and powerful man cherishes his secrecy and his private
life. He moves in silence and mystery and is like catnip to women.
Jesse
Livermore, the legendary "Boy Plunger" and "Great Bear of
Wall Street" in his office in 1929 just after the "Crash"
when he goes short the market and makes over 100 million dollars. His powers
are at their highest. His life slides downhill from here ten years later he
kills himself.
Jesse
Livermore "The Boy Plunger" of Wall Street and his wife of twenty
months set sail to Europe on the S.S. Rex after his 1934 bankruptcy.
Before boarding Livermore says, "I hope to relieve my mind of some of
my troubles."
Livermore
is subject to deep black depressions all his adult life, during success or
failure. This photo of November 26, 1940, shows Livermore two days before
"The Great Bear" of Wall Street takes his own life.
Jesse
Livermore and his wife Harriet on November 27, 1940, at the Stork Club,
Livermore’s favorite night club. Looking distant, pale and wan, he
commits suicide the next day.
Clips: http://www.jesselivermore.com/pics |
|
Date: Sat, 12 Apr
2003
As simple as possible, but no simpler.
Dear Mr. Seykota:
I enjoy reading The Trading Tribe website and the comments.
I wish to summarize "trading" from my point of view and see if I
can, by making things simple, help along other traders that are behind me in
their learning path. I would like very much if an experienced and successful
trader as you would comment on the different points. Here we go:
1-I view "trading" as a game of chance in which the objective is
to make money. Basically a sequence of bets, some profitable, some not, that
will produce in the "long term" an ending equity much bigger than
the starting equity. The difference with other games of chance is that one
needs to decide when to start the bet and when to end it, transforming one's
market participation into a series of discretized events out of what
is a continuous non-linear process (the markets).
2-As Markets are the result of many inputs (buyer's and seller's decisions),
the process of price generation is non-linear, chaotic, and therefore
the distribution of price variations is leptokurtotic (i.e. more
fat-tailed than a normal distribution). This indicates that one way to
profit from the market is by trend-following strategies, in what will
result in a sequence of many small losses and a few very large gains. This
allows from the creation of a myriad of trading strategies in different time
frames.
3-Once a positive expectation strategy, with enough opportunity is created
or found, then one would use "money management" techniques to
increase/decrease one's bet size. For this purpose, the study of Kelly's
Criterion, Vince's Optimal f, and other models is very useful in order to
settle upon a bet sizing strategy that allows the achievement of one's
objectives with a tolerable level of drawdown in equity, and leaving enough
room for possible catastrophic events, etc.
4-Once the above points are settled upon, the execution of the plan
becomes a psychological issue: One either follows it or not. One would
also need to verify that the "system" performs as planned and/or
within a statistically expected range.
I thank you in advance for the comments that you could make to the above.
Best Regards.
|
You
theory sounds about right.
In
theory there is no difference between theory and practice, in practice,
there is.
In
Theory, a Bumblebee can't Fly
Clip: http://wiscinfo.doit.wisc.edu
|
|
Fri, 18 Apr 2003
Reconciling
Psychology and Religion
The opening lines
of the Dhammapada by
Gotama Buddha, some 2500 years ago:
Mind is the forerunner of all conditions.
Mind is their chief, and they are mind-made.
If, with an impure mind, one speaks or acts, Then suffering
follows one. Even as the cart wheel follows the hoof of the ox.
If, with a pure mind, one speaks or acts,
Then happiness follows one like a never-departing shadow.
Traditional spiritual teachings tend to emphasize purification as a
basic requirement of spiritual practice.
They regard any
activity that reinforces individuality, and such feelings as hate going
against the principle of selflessness.
Traditional
psychologists, on the other hand, may regard spiritual discipline as an
avoidance of personal responsibility and relationship and an escape from
the demands of living in the world.
Since, I started
following this forum, I've come to reconcile these differences.
Healthy personal
growth depends on a process of individuation, becoming one's own authority,
and exercising freedom of choice, releasing negative emotions, honoring such
feelings as fear, greed, hope, and guilt, which are valuable for both
personal and spiritual work.
I've found, both
psychotherapy and spiritual practice can contribute to liberation from
limiting self-concepts, freeing one from fear and delusion, from the past,
and the future. By facilitating awareness of limiting beliefs,
I've found
psychotherapy can accelerate and assist the process of attaining contentment
for the trader as well as spiritual development. |
Spiritualists
contemplate good and evil, psychologists, sickness and health.
Both
agree that beliefs determine quality of life. Both know joy and pain. Both
teach that when you commit to sharing your gifts with others, you find
yourself.
The
basic principles of trading work for spiritualists and psychologists, on
stocks, bonds, futures and marbles.
Rare
Popeye with Ox Blood
looking
for two cat eyes and a pee-wee
http://users.townsqr.com/rsilva/ |
|
Thu, 17 Apr 2003
All that Jazz
Ed,
I am a green pea just learning. I read the post about trading and Jazz and
wanted to express what I was thinking and maybe get your feed back.
1A) Jazz is a fluid highly improvised form of art,
1B) The Markets are fluid and there is an art to trading
2A) Good players don't over play
2B) Good traders don't over trade
3A) Rule of thumb in Jazz "when in doubt lay out"
3B) Rule of thumb in Trading "when in doubt lay out"
4A) Good players understand to power of silence
4B) Good players understand to power of not trading
5A) Good players are extremely intelligent. there are no dumb good players
5B) good traders have above average intelligence
6A) good players are incredible fast thinkers able to think harmonically and
melodically while time progresses.
6B) good traders need to think and react with lightening speed when they
have to.
7A) Good players all always exploring new ways to play over old tunes. New
fingerings, voicings etc
7B) Good Traders are always in the exploring mode
8A) good player often hate to here themselves play but do it anyway because
self examination where as painful is also profitable
8B) good traders are always exploring themselves and human nature to better
gauge the psychology of the markets
Just some thoughts off the top of my head. Is my education as a musician a
good fit for developing as a trader?
Thanks and Best Regards |
Your
personal trading metaphor shows up in your language, thoughts and feelings.
It guides your actions and accounts for your results. Your metaphor might be
a warrior, pilot, dancer, chef or even a musician.
Dizzy
Gillespie's style as a musician just happens to include a lot of
risk-taking.
John
Birks (Dizzy) Gillespie
John
earns the nickname "Dizzy" for his comical stage antics. Cab
Calloway finds Dizzy's style too risky and calls it "Chinese
music."
http://www.geocities.com/
BourbonStreet/8446/ |
|
Date: Thu, 17 Apr
2003
Beginner Trader
Dear Mr. Seykota,
I am still a beginner part-time stock trader trying hard to go full-time.
Thank you for setting up FAQ for helping us out. Here are my questions:
1) How should one deal with long losing streak? Although I cut my
losses quickly, they seems to cloud my decision more and more
subconsciously.
2) I am learning to develop trading system. After some initial playing
around, I build a simple sentiment oscillator based on the idea of each
day's candlestick range be treated as a casting vote. I am hoping for
something less lagging than the moving average. Is it true in general
that sentiment indicators are less lagging or is it my mind playing trick on
me? But worst, I don't think it is very tradable because there are much
noise. Is there anyway to fix this by filtering with other type of
indicators?
3) What are the more important areas of learning I should focus on?
Other people's work I should be aware of?
Thank you very much.
|
Drawdowns:
Make sure you inform your clients (including yourself) about how you manage
risk, so you don't incur unexpected drawdowns.
Keep
your risk in line with what you can handle.
Some
traders prefer a low risk approach with gentle drawdowns and gentle returns.
Their drawdowns do not rock the boat, so they can stick to their systems in
a very consistent, business like manner.
Some
traders prefer a high risk approach. They occasionally get spectacular
returns and spectacular drawdowns. They may have to implement circuit
breakers or vacations to maintain their spirits.
I
recommend you find your own unique approach that fits your own personality.
Lagging:
If you want something less lagging, you might look at what feelings come up
when you have to sit still and wait. The best part of a move often occurs
late in the cycle, so getting in early is not necessarily the best move.
Other
Important Areas: everything.
The
4:15 Always Leaves on Time
Being
impatient means you have to wait.
Impatient
Trader, wanting to get in on the move early, shows up at 1:45. Two hours
later, at 3:45, the maintenance crew tells him he has to get off so they can
clean the cars.
Clip: www.winetrain.com |
|
Thu, 17 Apr 2003
The Red Baron
Dear Mr. Seykota:
Manfred Von Richtofen ,The Red Baron, flew his Albatrosses and Fokker DR-1's
for close to three years in the First World War. While the average life
expectancy for a pilot on the western front was less than one month, he shot
down eighty British and French planes and became a "veteran"
while still in his mid-20's.
He formulated
rules of engagement to maximize enemy casualties and to minimize his
men's casualties.
Only until he
was virtually assured of hitting the target did he pull the trigger.
When he shot his own guns, the plane fell; and as it fell, Von Richtofen
said he saw a forlorn look of utter surprise on the BE 2 observer's face.
That, he noted, is how the "trick" is done to shoot down an enemy
intent on killing you in this dirty game.
It is sobering and
instructive to note that Von Richtofen himself was shot down and killed. But
you must realize that he was "betting" his life every day. He had
no alternative. |
The
Red Baron demonstrates focus, commitment and other winning qualities and
attitudes. He is aware of his own feelings and seems to enjoy pulling the
trigger at the right time.
The
Red Baron, in his Own Words,
the
First One ...
Apparently he was
no beginner, for he knew exactly that his last hour had arrived at the
moment when I got at the back of him. At that time I had not yet the
conviction "He must fall!" which I have now on such occasions, but
on the contrary, I was curious to see whether he would fall. There is a
great difference between the two feelings. When one has shot down one's
first, second or third opponent, then one begins to find out how the trick
is done.
-- From The Red
Fighter Pilot by Manfred Von Richthofen
Clip: www.richthofen.com/index.htm |
|
Thu, 17 Apr 2003
Feeling Rehabilitation
Hi,
Clarity of you responses is amazing , hits right on the spot. Thanks.
What you wrote makes sense and feels good. Feelings are the buried part of
our psyche.
I feel hope (is
hope a feeling?) What is the fastest or efficient way to start feeling
more? Or do we feel anyway and it is just a matter of awareness of what
we feel? Can someone do it on their own or assistance is necessary? Do you
follow all your feelings or just experience them and let them pass? I mean,
when you are angry , do you react to whatever caused it or you do something
else? |
Rehabilitating
the ability to connect feelings and logic is an important part of the work
of the Trading Tribe.
Other
important work is to model and adopt healthy winning attitudes that fit your
underlying patterns.
Tim
Montgomery Sets a World Record
in
the 100 Meters, 9.78 Seconds
PARIS (AP) 9/14/2002 ... "I knew something special was in me,"
Montgomery said. "I can say I'm the fastest man to ever run the 100
meters."
"At 30 meters, I felt like no one was beside me, so I said, 'I'm going
to dig in a bit harder.' And I just dug down, and kept running, and kept
running, and kept running, to put as much distance on Dwain Chambers as
possible. And the world record came."
Clip: www.usatoday.com/sports/
olympics/summer/track/
2002-09-14-montgomery_x.htm |
|
Thu, 17 Apr 2003
Feel the
feelings
Chief Ed said: "Feel the fear of missing out. When that disappears,
continue on and feel the deeper pain. When that disappears, Dark Horse can
run with the markets."
Brother Dark Horse said: "When the pain of missing out the move
becomes greater than the fear of losing, you become profitable."
I see convergence. Would you like some tea?
|
If
you enter a trade when pain surpasses fear, you have a moving pain-o-phobia
crossover system.
When
traders experience their pains and fears and let them go, they can trade the
markets painlessly and fearlessly.
Pain-o-Phobia
Crossover System |
|
Thu, 17 Apr 2003
Report from
Meeting
Hi Ed,
I recently attended my first meeting. It is my pleasure to work with
our Chief and the rest of our group. I am committed to being "one of
the Indians". Our group had made excellent progress in helping our
fellow trader who occupied the hot seat. The others in the group, I believe,
had also "got something" from this meeting. I know I did!
When our coordinator decided to start closing the meeting, he suggested the
group members offer some final thoughts. I had stated that I really liked
the idea ... the structure of the group ... that I believe it has huge
potential and that we can all help each other and learn from each other - -
along the journey of trading and of Life!
Thank you for engineering this! |
Yes
!
|
|
Thu, 17 Apr 2003
Report on
Meeting
Hi Ed,
I am truly gaining an appreciation for the Trading Tribe process. Our last
meeting went very well. As we are all learning the process, we experimented
with breaking into two groups to ensure that everyone would have the
opportunity to participate and learn. While it was an effective teaching
tool to help everyone understand the process, I think it is best if we
all work in one group in the future.
Here are some
first-hand reports:
-----
I can still feel the relief and see the look on this trader's face when
the fear was mirrored perfectly. Neat.
-----
It is
absolutely amazing but I still feel the physical changes which occurred
directly after [xxx] mirrored my fear.
-----
Hot Seat opened by saying, "When I receive a
signal I feel anger and overwhelming, paralyzing fear."
With some work, I
was able to get what I thought was a pretty good reflection of the trader's
fear. However, I was having a challenge feeling the anger. While the trader
spent more time explaining the fear to the group, I was interested in
reflecting the anger.
The fear was not
yet mirrored correctly. Another member in the group who was clearly feeling
empathy with the trader was trying to communicate the feeling of fear and
not quite getting it right.
However, a few
minutes later, this same member in about two sentences clearly described the
fear that he was feeling and the trader in the hot seat physically
changed and said YES!
|
Yes
!
|
|
Thu, 17 Apr 2003
Analogy of
Weight Loss Program
Mr. Seykota,
Do you feel that even if you were giving away a good trading system, people
might not profit because their internal system may be incompatible?
One analogy I can think of is the desire to lose weight. Most people
understand that exercise and diet are probably the solution. But even if the
master tells us exactly how he did it (e.g. run 5 miles a day, and eat 3
apples a day), we will not be successful if we don't have the belief,
determination and persistence to follow through. On the other hand, if we
work on and eventually succeed in those internal virtues, the right exercise
and diet for us will evolve.
Is this somewhat along the line of the Jade Master and FAQ approach?
Appreciate your comments. Thanks. |
That's
pretty much the thick and the thin of it.
Jack Sprat
Could eat no
fat,
His wife
could eat no lean;
And so,
betwixt them both,
They licked
the platter clean
This
poem celebrates Charles I of England and his wife, Henrietta Maria.
Parliament refused to finance Charles’ war with Spain and left him “lean,”
so he turned the tables and dissolved Parliament. He and his wife imposed a
war tax and forced the common people to house their troops.
http://www.bygosh.com/
MotherGoose/JackSprat.htm |
|
Thu, 17 Apr 2003
It was done to me.
Hi Ed,
In regards to my question April 14 on the importance of the dictionary
please allow me an explanation. I once went to the Jademaster to learn about
jade and he handed me a broom. I picked it up and began to sweep. Deep down
and quite forgotten there was a lot of emotional conflict that needed to be
swept away before I could even begin to deal with the realities of trading. I
needed the broom.
I was taught
that a humble man suffers no pain". In regards to trading, what do you
think of humility as a necessary trait and how would you explain emotional
pain as a teacher of humility. Thanks for the broom.
PS. I notice my suggestion of the dictionary now appears on your favorite
list of books. |
"I
was taught" is passive. It hides the identity of the guy who taught you
and it minimizes your own role and responsibility in the matter.
Pain
seems to reveal the lesson once you develop a willingness to feel it.
Broom
- Many Ways to Use It
Clip: www.longshadowstrading.com/
Brooms/BroomsLimited.html |
|
Thu, 17 Apr 2003
Redundant
Questions
Mr. Seykota,
I continue to read the FAQ and enjoy your perspective. I notice that you are
continually asked for advice that if given would imply that you are a
supernatural being.
My question: Do you tire of being asked questions from people who want
you to give them the "secret"? I may or may not imply
that you are a supernatural being. You have to receive the message and
perceive it for yourself.
My observation is that we all hold the "secret". It is in
application that makes us different. |
Be
careful about implications, like the one about people only writing in to get
secrets. FAQ contributors generally provide thought provoking
questions and information. See the Ground Rules.
I
consider myself a student. FAQ contributors help to educate me and
each other by the Socratic method of asking questions.
Socrates
Wonder,
Hypothesis and Elenchus
appear
several times per day
from
contributors.
Clip: www.bronzeart.com/sn289.html |
|
Thu, 17 Apr 2003
Objectivity
Hi Ed:
One of the greatest obstacles I had to confront was the realization (the
market made it real) that success in trading requires complete objectivity. I
am an object and the market is a different object. The market has no
emotions, feelings, sympathy or kindness. It's just a data stream.
Therefore, to enable any type of meaningful interaction required one of us
to change;
I figured it was
easier for me to change. Now I just process the data stream and react
according to imbedded algorhythms.
I don't feel good
or bad, happy or sad; but then again the market and I really interact and
communicate. Here's a picture of me leaving my trading office. My wife is
always telling me I'm cold and impersonal, but she's not a trend trader like
me!
Robo
Trader |
You
have an interesting trading metaphor. I wonder what kind of relationship you
have with the person who oils your hinges or the ones who sit on your lap
before bed time.
Tin
Man
The
Tin man wants a heart
and
doesn't know how he manages
to
feel that longing.
Clip: www.costumezone.com |
|
Thu, 17 Apr 2003
Approaching
Programming II
So the question become: what's an old programming language ? no C++ because
of C, no C because of Assembly, no ... everything you desire ! There always
be something before: timelines are a wonderful stuff ! |
A
mature programming language is one with lots of followers, books on how to
learn it, examples of useful code and access to technical support.
In
selecting software, as in selecting markets to trade, wait for a trend to
form - also, don't wait too long.
Abacus
The Latin word for pebble, calculus, is the origin of the modern term
calculate.
In its earliest form, the abacus is a board with parallel grooves.
The operator slides pebbles back and forth in the grooves. In a later
development, beads slide on wires or thin strips of bamboo, reducing
"crashes."
Clip: http://www.ee.ryerson.ca:8080/
~elf/abacus/intro.html |
|
Thu, 17 Apr 2003
Personality and
Trading Style
Dr. Ed -
If my personality is suited for day trading, do I have a better chance of:
overcoming the bid/ask spread, and commissions or
changing my personality to be more suitable for intermediate and long term
trend following. |
If
you are a content and prosperous day trader, ride your winner.
If
not, you might start by noticing the payoffs that keep you in your position.
If
you want to try something new, go to the floor and study successful scalpers
- or get some data and software and develop a system.
IPE
Floor
Clip: http://www.ipe.uk.com/about/floor.asp |
|
Thu, 17 Apr 2003
Quit Work and
Day-Trade
Enclosed are the following people who successfully day trade. Maybe be you
could forward this to the gentleman who asked that question
|
FAQ
does not endorse products or traders. See Ground Rules.
FAQ
is open to hear directly from an off-floor day trader, successful for years,
who wants to talk about the issues he confronts. |
|
Thu, 17 Apr 2003
Group in
England
Dear Ed
Are there any interests to start a group in England? |
See
Directory.
|
|
Thu, 17 Apr 2003
Day Trading -
Is It Really so Terrible
Dear Sir,
It is not an exaggeration to say that your interview in market wizards
changed my world view if not my world.
I have been a
moderately successful trader for 10 years for institutions (in every sense
of the word) and 5 years on my own account. My life so far has been a
journey of incomplete self discovery using the processes of the markets and
chronic substance abuse.
Just when I
thought I had the cunning plan to solve all ills, I return to the jade
master and see his day trader chair empty.
My fund is 75%
weighted to term positions - but I'd hoped that 'day' trading was a valid
outlet of creative tension/frustration/action.
The bad stuff has
to be directed somewhere - as we know from common bodily function. As an
ex-local on the sadly redundant LIFFE floor I'm partially certain that with
an edge (having stops), day trading can provide a revenue stream and keep a
chap from messing with the higher expectancy term trades.
I hate to use the
word 'fractal' but now I've done so - with appropriate execution and
slippage costs - can't the same principles apply - a day trade duckling can
always mature into a term positioned swan?
your site is fantastic and thank you for it.
Regards. |
As
trading frequency increases, the profit to cost ratio deteriorates.
Note: some brokerage houses offer "free" commissions and make it
up in the spread. Still, almost everything works sometimes.
On-floor
scalping requires skill, experience and self discipline. Scalpers provide
liquidity against market imbalances.
Providing
Liquidity - And Receiving It
Sometimes
scalping can be like trying to take a drink from a fire hose.
Clip:http://hacks.mit.edu/Hacks/by_year/
1991/fire_hydrant/ |
|
Wed, 16 Apr 2003
How to Start a
Group
Hi Ed,
I read FAQ pages, and I think it's a great idea if I come to an Incline
Village meeting first before I even think about a San Jose, CA group. What
do you think of the idea, and if it is a good idea, how can I join your
meetings there? Also, when is the appropriate time to start a group here,
and how do we select a coordinator?
Thanks, |
To
join a group, or to start one, see the Directory.
|
|
Wed, 16 Apr 2003
Pain Avoid
Dance
Brother dark horse says: "If something is going in your direction, pain
avoidance comes in the fear of missing out on what's in front of your
face."
Chief Ed says: "Go with the flow and experience your feelings, just the
way you are. You might come to know their positive intentions."
Dark Horse is contrarian, chief Ed is trend follower.
Pax!
|
If
you are using fear of missing out to avoid deeper pain, you risk setting up
a lot of trading dramas.
Alternative:
Feel the fear of missing out. When that disappears, continue on and feel the
deeper pain. When that disappears, Dark Horse can run with the markets.
Dark
Horse
Galloping
in an up-trend.
http://www.usgifts.to/products/479.6.html |
|
Wed, 16 Apr 2003
Experiment and
a Question
Hello,
Thank you for the quick response to my question on your physics
page.
I did not know, that the lift is generated mainly near the entry orifice. If
so, then everything looks fine.
By the way your web site rocks, FAQ are entertaining and educational.
Sometimes I laugh pretty hard. I understand you spend your time and
expertise in the most meaningful way, offering people more than they are
asking for, even if sometimes it is not exactly what they are asking for.
Thanks for doing that.
I have a dilemma , maybe you can help clarifying it for me: sometimes I
am asked for something that I know will not help anyone in the long run, but
will bring relief. What is the best course of action?
Give them what
they want knowing it is only temporary and will bring more suffering later,
but let them experience the possible pain?
Or stick to my
experiences and offer only what I believe is worthy?
The answer seems
pretty obvious that it is better to stand by your values, but different
people are ready for different stuff in different stages of their lives ... If
you do not help them at the beginning they may never ask for help again
... Do we have to go step by step and experience "all of it"
through our lifetimes or can we jump in our growth? |
When
they ask for medicine, show interest in their feelings. When they ask for
poison, show interest in their feelings.
When
they experience their feeling, they forget about medicines and poisons.
You
might look at your agreements. Dependency on clients' problems might
interfere with solving them.
Strong
Medicine
Day
trading can provide activity and excitement, distract the mind and cover up
deeper issues. When traders deal with deeper issues, the urge to engage in
relentless and frenetic activity subsides.
Clip:
www.avma.com |
|
Wed, 16 Apr 2003
Goals
Dear Ed,
Thanks to your FAQ pages, I am starting to really understand the keys to
success with trading (although, like you, I am still a rank beginner ;)
Given the emphasis on living/trading in the present/now, how do you set
goals, which are by nature future-focused?
Most (all?) highly successful people set and achieve aggressive personal or
professional goals. Although Tiger Woods "lives in the now" when
swinging his golf club, he is widely known to have set a goal of beating
all of Jack Nicklaus' records as a boy, and has structured his life
around achieving that goal.
Note that I am not talking about a plan, which may or may not have a goal
attached to it (most trading plans are simply planned responses to market
action) Even several "Market Wizards" described their failures
when they set specific dollar or rate of return goals.
Thanks for listening. |
A
goal defines a direction. Goals and plans exist in the present.
If
your goal is to build character, you can stay on task every day.
If
your goal is to obtain an object, playing may dissipate character, and
winning may erase your purpose.
Tiger's
goal is deeper than wanting to improve on Jack. That sounds more like Jack's
goal.
The
Golden Bear
In
the land of Sharks and Tigers
Ckip: www.nicklaus.com |
|
Thu, 17 Apr 2003
Approaching Programming
Hi Ed, this is [xxx] from Italy. I read your FAQ Ground Rules and Policies
and I think it's not a mistake to mention something that it's free and
public. I'm not a professional programmer, so, looking for as easy tool, I
find a powerful and elegant language that I suppose could be a
solution for people who need to learn programming and don't desire to
spend an entire life in the task. It's [XXX] and it can be downloaded
for free. Just my 2 cents. ciao
|
Professional
programmers rarely use new programming languages ... unless they like
spending their lives talking with powerful and elegant technical support
people.
Tech
Support Guy - Mr. Popular
Your
new best friend ... is also everybody else's new best friend ... plan to be
on hold for hours at a time. |
|
Wed, 16 Apr 2003
Quit Work and
Day-Trade
Ed,
I have a full time job but I really love trading. I am thinking to quit my
job and become a day trader. What do you think? Please advise. Thanks.
Best Regards, |
Before
you give up your day gig, you might want to talk to some other people who
support themselves by day-trading.
Short-term
trends have small moves, so the rewards are small. Costs, such as
commissions, spreads and slippage on stops, do not decrease in proportion.
Scalping,
trading against large orders, to provide liquidity, requires skill and
experience and close proximity to the action, such as a seat on the floor.
Successful
Day-Trader
Scalpers
have seats on the floor.
Clip: www.beekenparsons.com |
|
Wed, 16 Apr 2003
Pre-Nuptial
Hunch
Dr. Ed -
Something that may be of use to your readers.
Whenever I have a position going my way and then it REALLY goes in my
favor, I am overcome with a warm feeling of love. I literally say,
" I love the financial markets!!!". Invariably the position
starts going against me in a big way RIGHT AFTER. After many of these
experiences, I have been able to overcome my feelings of betraying this
position and manage to sell when I have this emotion.
Keep up the great work,
|
When
you can celebrate the feeling of being a sold-out bull in a big bull market,
you can handle the risk selling out on the way up.
Fractal
Heart
New
implantable organ for traders, part silicon and part carbon, combines
feeling and logic in optimal proportion. Gets you in at the bottom, out at
the top, with no worries.
http://computerart.org/a0028-2.html |
|
Wed, 16 Apr 2003
Investing
Hi Ed,
You have a great site, very stimulating. I'm
curious to your thoughts on "investing." Do you
"recognize" this word and/or does the action even exist? Also,
do you trade futures commodities exclusively? If so, is it because it
"fits" your personality & system? Thanks for putting in
so much effort with the site. Regards,
|
A
Trader exchanges things, usually by buying and selling.
A
Speculator (from Latin: speculare, to observe) meditates and ponders
over possible outcomes.
An
Investor (from vest, to clothe) endows an operation with money, time
or other capital.
A
Gambler bets on the outcome of a game.
A
Broker acts as agent for a trader and charges a fee.
A
Dealer buys and sells for his own account.
A
Fundamentalist looks at a situation and makes predictions about the
future.
A
Trend Follower figures prices to keep going in the same direction, by
momentum.
A
Chartist looks at price patterns, expecting them to repeat. A
Contrarian
bets against the crowd.
A
Day Trader makes short term trades.
A
Scalper trades on the floor, to provide liquidity.
A
Position Trader stays in for the major move.
Scrooge
McDuck
Sits
on Gold, Metals, Cash
Teh Planet's richest waterfowl amasses one of the world's largest
collections of gold coins and paper currency, keeps in giant money bin atop
hill in native Duckburg.
He
enjoys swimming in money. He moves to American West from native Scotland,
amassing a fortune from gold and copper mines. No longer invests - keeps
everything in cash. Never gives to charity; never marries. Lives in mansion
with three great-nephews, Huey, Dewey and Louie.
Clip:
http://www.forbes.com/2002/09/13/
400fictional_5.html |
|
Wed, 16 Apr 2003
Economists in
Action
Ed,
After recently discovering the links on your great website, I came across an
amusing one today I thought you might appreciate.
www.foulds2000.freeserve.co.uk/
economists.htm
I also read your interview in Market Wizards again last night, and agree
that people will get what they truly want from their chosen pursuit,
regardless of their level of self awareness. As a new trader, this idea is
continually helpful for grounding myself in reality.
Thanks for the inspiration. |
I
notice they seem to get a bit nervous when the price gets to 11 and below.
Adam
Smith (1723 - 1790)
Economist
and Philosopher
Virtue
is more to be feared than vice,
because its excesses are not subject to
the regulation of conscience.
Clip: The Warren
J. Samuels Portrait Collection at Duke University www.econ.duke.edu/Economists/ |
|
Wed, 16 Apr 2003
John's
Smith
Ed,
I wonder what it would feel like to have written some of the most open,
honest, & recognizable lyrics ever - and still be anonymous?
www.farmdogs.com/bernie.html
|
I
suppose you could ask him how it feels. My
guess is he has it set up the way he likes it. He is part of one of
the best teams ever.
Some
people like designing systems, some like marketing and some like
trading. Right livelihood is about finding your niche.
Bernie
Taupin
"I
write the Songs"1 for Elton John
Bernie
Taupin is one of the most prolific lyricists of the 20th century.
Taupin's 27 year collaboration with Elton John rivals Lennon and McCartney.
Taupin's perceptive lyrics appear on over 100 million records including the
latest Rocket/Island release "Made in England" and the albums
"The One", "Elton John", "Goodbye Yellow Brick
Road" and "Captain Fantastic and the Brown Dirt Cowboy". His
hits include "Your Song", "Goodbye Yellow Brick Road",
"Daniel", "Candle In The Wind" and "The One".
-----
1. by
Barry Manilow / Bruce Johnson |
|
Tue, 15 Apr 2003
To Know the
Trend
Chief Ed:
How do you acknowledge there is a trend?
I don't know what a trend is. I do not follow her. Instead, she takes me
where she wants to. I just respond to her. Yet, I do not know her. |
The
part of her you do not know is the feeling of your own longing to be with
her.
You
find out about that part when you sing it to her.
It's a little
bit funny, this feeling inside.
I'm not one
of those who can easily hide.
I don't have
much money, but boy if I did
I'd buy a big
house where we both could live.
If I was a
sculptor, but then again no,
or a man who
makes potions for a traveling show ...
Well I know
it's not much, but it's the best I can do.
My gift is my
song and this one's for you ...
Your
Song by Elton John
lyrics:
Bernie Taupin
Click here for a
good place to go long ...
http://www.geocities.com/faroefantasy/ |
|
Date: Tue, 15 Apr
An Antidote for
Monkey Mind?
Dear Ed,
I really like your site and your visuals. As my fifteen year old might say,
it feels "pretty chilled". Like many of your visitors, I find
it challenging to sustain being in the moment, although I certainly had no
difficulty when I was a little child.
Sometimes, if I am
called upon to make hard decisions such as what to trade and when, I get
an attack of what many yogis call "monkey mind". My mind swings
from past to future all the while gibbering away about "what ifs"
and "shoulds."
Occasionally I can
remedy this pathetic mental state by taking a few slow deep breaths and on
each inhale saying to myself "Be", and then, on the exhale, saying
to myself "Still". "Monkey mind", like SARS, seems to be
highly contagious, and I was just wondering if you, like the CDC, had any insights
on an antidote or even what this condition might look like.
Warm Regards,
|
If
you worm your way far enough into the apple, you come right out the other
side.
So
when you find yourself in Monkey Mind, grab a banana and gibber to the max.
Also, while it lasts, take advantage of the opportunity to experience the
feelings of (1) being in monkey mind and (2) not wanting to be in monkey
mind.
When
you experience these feelings directly, the drama dissolves. Sharing helps
too. You might find yourself another little monkey to mind.
Monkeying
Around
Sometimes
Doting Beats Antidoting.
Photo: (c) Tudor
Hulubei tudor@hulubei.net |
|
Tue, 15 Apr 2003
Hope and Fear - In the Future
Ed,
In your response you mentioned, not thinking about the future or the past. I
looked up the definitions of two common words/emotions associated investing
and trading. Interesting that they both deal with the concept of not
staying in the now.
hope noun - something good that you want to happen in the future, or
a confident feeling about what will happen in the future:
fear noun - an unpleasant emotion or thought that you have when you
are frightened or worried by something dangerous, painful or bad that is
happening or might happen:
|
Some
traders seem to like hope better than to fear even though hope can keep you
in a losing position and fear can get you out of danger.
The
Trading Tribe looks for the positive intentions for feelings.
Fear
Anticipates Danger
Clip: members.aol |
|
Tue, 15 Apr 2003
Aha
Moment
"MS Bookshelf 2000 defines "Why" as the intention underlying
an action or situation; The Trading Tribe holds that intention equals
results; so the word why is meaningless. Attempts to use it are inherently
ambiguous. Note: "Why" is central to fundamental analysis."
Aha moment: I found the above very powerful. Studying myself, I can see
I've been asking 'why'. That has always been the root of all my troubles.
How ironic I've been asking 'why' to facilitate efficiency, yet I've been
adding mass. A restless mind is a dangerous mind. 'Doing nothing,' and
sitting tight, I find is the toughest thing to do. Maybe ... I'll pick up
golf.
----------------
An unrelated question:
Eastern and Western religious and/or philosophical thoughts have different
conceptions of fear, greed, and hope, etc. In your experience, in the
trading arena, does ones spiritual "beliefs" effect the
experience and magnitude of these primal emotions?
For example, most Eastern religions and philosophies see all changes in
nature as manifestations of the dynamic interplay between the polar
opposites: yin and yang, and thus they believe any pair of opposites
constitutes a polar relationship where each of the two poles is dynamically
linked to the other.
A person with such
mind set might easily be more accepting of losses and higher heat levels.
For the Western mind, this idea of the implicit unity of all opposites is
extremely difficult to accept.
It would seem
paradoxical, to Westerners, that contrary aspects of reality are actually
aspects of the same thing. Such a mind set might be more resistant to
losses, and trends. It seems, such a mind set would also experience the
above emotions on a deeper level as well. |
Trends
are markets having aha moments.
What
you believe is true for you.
In
futures trading, the short and long position define each other.
Van
Gogh: Starry Starry Night
Discerning
art aficionados may be able to detect the subtle Eastern Influences in Van
Gogh's work.
Clip: www.vangoghgallery.com/
visitors/007.htm
Moves to: www.vggallery.com |
|
Tue, 15 Apr 2003
Trading and
Jazz
I trade to make a living, but also am a jazz musician and have been for
15 years. Playing jazz is a lot like trading trends, in that the future
is unknown, unless you are pretending and just repeating yourself and
mapping out your solo. Wanting to be right in trading accuracy is the
same as wanting to sound good in music. It wrecks everything. Making you
play things you don't want to.
#1 How do you dissolve the need to play well and just play? A great
player suggested to try and play as bad as possible, but that doesn't seem
to work for me. I ask it more for music, but trading parallels as well. I've
only had a taste of the truly free playing state in my years of playing, and
it is truly an incredible feeling, but very fleeting.
#2 When you are trading trends, you are following the wave. When you are
playing music, what are you following? Your feeling? Alas, in trading we
are lucky, we have account statements to tell us when we are losing, but
in music there is no gauge to tell us if we are playing from our heads.
|
#
1 Get the needy feeling, give it to your group and make some jam.
#
2 Follow the feelings in the room.
#
2-b The gauge of being out of the groove ... is that you are looking
for a gauge, instead of grooving.
#
E7-th Stay on the EDG#E.
Miles
Davis (1926-1991)
Miles Davis' music
and style incorporates modes rather than standard chord changes. Miles'
experiments with modal playing reaches its apotheosis in 1959 with his
recording of Kind of Blue. During his career, Miles acts as inspirational
overseer to many great improvisers and nurtures them and their ideas.
Clip:
http://croz.fm/img/miles_davis.jpg |
|
Tue, 15 Apr 2003
Useless
see Economics
Gentlemen
Thank you for your answer.Sorry ,but answer of Mr.Seykota useless for me
,as not adressed group of persons with specific objective's risk profil
,social and educational background ,to which belong autor of this e-mail . |
Sounds
pretty much like you are getting the hang of fundamental analysis.
Another
Economist Gets his Stripes
Clip: www.murphyrobes.com |
|
Tue, 15 Apr 2003
Zero Divided by Zero
Hi Ed,
What is (are) zero
divided by zero in trading?
Thanks. |
Using
SVO-p, that becomes ...
Zero
divides Zero
So
your zero becomes two zeroes.
Doubling
your equity is another way to add zeroes to your account
-----
Mitosis:http://www.accessexcellence.org/
AB/GG/mitosis.html |
|
Mon, Apr 14
Chief and Chef
Greetings Mr. Seykota ~
I am a big (as in attitude, not girth) fan of your Trading Tribe site and
story in Market Wizards book. I understand you do consulting for certain
requests? I am a trader who would like to increase his success (very easy to
do at this point; nowhere to go but up) and would like to hire you for the
following consult:
1. to assist me in constructing a trading system similar to the one that
brought you much success - that would give signals upon daily input of
prices. This system would leave out all emotional decision-making, and would
target high returns on the reinvestment of funds.
2. I'd pay extra if it could bake me some brownies.
In all seriousness, though, would you be willing to help me develop such a
system? I have the Turtle Trader system already but haven't used it yet, in
the outside chance I could tweak it with your advice or even reconstruct one
better suited to my psychology and dreams of being a successful trader.
If you are interested, can you give an estimate of time required? I am
willing to drive to your location. I can't guess the future, nor do I handle
discretionary trading well. But I do like chocolate brownies.
|
When
you commit to do the part you know about, the rest comes.
The
Ultimate Brownie
8 (1 oz.)
squares of unsweetened chocolate
1 cup butter
5 eggs
3 cups sugar
1 Tablespoon vanilla
1-1/2 cups flour
2-1/2 cups chopped pecans, toasted
Preheat oven to
375 degrees F. Melt chocolate and butter in a saucepan
over low heat; set aside. In a mixer, beat eggs, sugar and vanilla at high
speed for 10 minutes. Blend in chocolate and flour until just mixed. Stir in
the nuts. Pour into a greased 9 X 13 inch pan. Bake for 35-40 minutes.
(Don't over bake.) Cool and frost if desired, but that is not necessary.
Recipe:
http://baking.about.com/library/
weekly/aa022900.htm |
|
Mon, 14 Apr 2003
Life Lessons
Dear Mr. Seykota,
I don’t know who you are but from the content of your site, you know an
awful lot about life. But more importantly you know yourself ... a state
I aim to reach during my lifetime. The market teaches one about life and one’s
self; money is just icing on the cake.
It seems to me the most successful persons in life are the ones who get what
they want. And the happiest person wants what they get. You seem to
represent both.
I appreciate the purpose of your teachings. |
Kids
are the best teachers. They are particularly good at teaching adults how to
balance what's really important.
Teeter-totter,
bread and water
Wash
your face in dirty water
Water doesn't
really rhyme with water. The alternative, bread and butter, doesn't rhyme
either. Kids know that none of that really matters.
Clip: www.geocities.com/hit2net/
playground/39591.html
|
|
Mon, 14 Apr 2003
Subscriptions
Hello,
I saw the link here from Turtle Trader's daily mail - is there a way to
subscribe to this, or is it web-based only?
|
Currently
by web delivery only.
Little
Miss Muffett
Experiences
Delivery by the Web
Miss Patience Muffett receives her famous bite, perhaps as part of a
research project. Her father, Dr. Muffett writes about using insects and
spiders as food and medicine in 16-th century England.
Clip:
http://www.rochedalss.qld.edu.au/
spider/spider9.htm |
|
Mon, 14 Apr 2003
Miami
Dear Mr. Seykota,
After reading your FAQ’s I got a feeling that your philosophy is similar
to the philosophy I am trying to foster.
Self-discovery. I know this is the key to success and happiness in any
undertaking. I would like to request if you can give permission for me to
start a group in Miami FL. I really like these open minded discussions of
psychology, philosophy, and other studies that attempts to advance a person
mentally, physically, socially, emotionally, and spiritually. Harmony in all
aspects of life is what brings happiness and success. Like I said before,
success is getting what you want and happiness is wanting what you get.
|
Miami
!
Welcome!
You
are in the Directory.
Miami,
FL
Map: www.yahoo.com
|
|
Mon, 14 Apr 2003
Fear
see Change
and No Change
The central question of my being is WHY do I fear? FEAR asks me a
question I do not answer at ease. HE asks me: "I can give you what your
heart longs for. Do you ACCEPT it?" Pax!
|
Fear
anticipates danger. Look for strings.
Clip: www.home.eznet.net/
~stevemd/stringar.html |
|
Mon, 14 Apr 2003
San Jose Group
Hi Ed,
Are there still only two people interested in starting a San Jose, CA group?
Count me in as the third! I want to have a group started in our area,
because Lake Tahoe is too far to travel to bi-weekly on Thursday nights.
As much as I'd like to generate interest in our area, I wonder if the desire
to make a commitment to meetings is more powerful if people discovered and
requested to join a group, rather than us promoting and getting more people
to join?
Come to think of it, I just answered the question myself just now ..
Let me know what else I can do. |
The
Incline Trading Tribe comprises members from Los Angeles, San Francisco,
Atlanta, Houghton, MI ...
San
Jose could use a coordinator. |
|
Mon, 14 Apr 2003
First Meeting
of the Manhattan Group
Hi Ed,
I am pleased to report that the Manhattan group has had tremendous
interest. I would like to announce that our first meeting will take
place on Thursday May-8th!
I was wondering if you could kindly update your web site and include the
date of our first meeting like you have for the Toronto group. |
Manhattan
May
8, 2003 |
|
Mon, 14 Apr 2003
Remove the
Feelings
I was wondering what you thought of these websites. They deal with emotions.
You said stuff about the limbic system, this man claims emotions are just
memories that can easily be removed. Here are the sites: [XXX] Thanks. |
FAQ
does not endorse or review products. See Ground Rules.
Be
sure you fully understand the positive intentions of your body parts before
you decide to remove them.
No
More Aches and Pains |
|
on, 14 Apr 2003
Golf and Trading
Ed,
I was wondering if you caught Tiger Woods and his interview after his
miraculous play on Saturday afternoon? When asked if he knew what number he
needed to score in order to win the tournament the next day, he laughed
and responded that he had no idea. But most interestingly he said that
in days when he hits incredibly low scores its usually not days in which he
goes out trying to hit a 64 but instead days in which "he gets out
of his own way." As soon as he said this I thought of trading as
well as your site and some of your comments.
I have found that my moments of success in trading, golfing or when I played
pro basketball appeared when I have no feelings, neither excitement nor
fear. If anything this void in emotions would create a calm inside. I
have found that getting out of my own way usually takes the form of having
no concerns about this shot (trade) or the next (shot) or the previous shot
(trade), almost to the point of indifferent ... but in a positive way. I
guess recognizing this is half the battle.
However, creating
that internal environment consistently, that's a whole different story ...
any advice??
Thanks again for your site or shall I say book. |
Being
in the Zone is natural, at least according to Tiger.
Staying
out of the Zone seems to require effort, although there are some ways that
seem to work:
 |
hide
your feelings |
|
ignore
other's feelings |
|
blame
others |
|
think
about past and future |
|
avoid
the now |
|
ask
Why |
Just
Stay Out of this Tiger's Zone
Clip: www.colchester-zoo.co.uk |
|
Mon, 14 Apr 2003
Where to Look
see True
Beliefs
Hi Ed,
My beliefs are true when I see another standard that agrees with me. The
issue comes when I compare my standard with those standards and they show me
wrong. Where should I look?
|
Look
in the mirror.
Agreement
Reflector
Item:
www.drugstore.com |
|
Mon, 14 Apr 2003
Dictionary
Hi Ed,
Several years ago at a seminar in Toronto, I asked you what was the most
important influential book you had ever read. Your response was "the
dictionary" and you went on to explain. My question is why it
has not made your favourite list of books?
Would you please explain in the Q&A as to the importance of why the
dictionary is so important to read and understand.
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The
dictionary contains the contract we have with each other about what words
mean; it holds our collective consciousness, including unresolved issues and
confusion.
For
an example of trying to use non-standard English, see the FAQ directly
below.
For
another, consider the "why" in your question. It's ambiguous:
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you
want it on the list |
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you
want to point out my omission |
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you
want to show your perspicacity |
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something
else entirely |
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The
Trading Tribe avoids "why."
Verbal
Contract Reference Library
MS
Bookshelf 2000 defines "Why" as the intention underlying an action
or situation; The Trading Tribe holds that intention equals results; so the
word why is meaningless. Attempts to use it are inherently ambiguous. Note:
"Why" is central to fundamental analysis. |
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Mon, 14 Apr 2003
Economics
Diversification
vs. conzetration for intraday trader
Gentlemen
In he's coin simulation Mr. Seykota stated result for simulation of
portofolio with 5 different positions. 5 positions vs. 3 positions can give
lower drawdown, if quality of all trades are equal. But clear, that with 5
positions trader need make more trades as with 3. Some must be loosed -
Conzetration and folloving quality of trade or intensity of trades in closed
time interval. For intraday trader that can be important. If for each of
five position control full market depth for atleast 3 ECN (INCA,ISLD,ARCA)than
for five positions 15 windows must be controlled .
Clear that best quality can be received with one position ,but only in case
ideal conditions without Risk of unexpected slippage, trading stop (short
selling in high volatile market -30-40%)
Exist publication to this case? What are advantage and dissadvantage for
intraday trader for 1,2,3,4,5 positions ? Or for non fixed number of
postions from 1 until 5 dependent from market conditions ?
Exist statistic simulation ?
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You
might consider a career in economics. With a little more effort you could be
writing things like this:
Identification
with averaged data and implications for hedonic regression studies by
J.A.F. Machado (Faculdade de Economia, Universidade Nova de Lisboa) and
J.M.C. Santos Silva (ISEG, Universidade de Lisboa)
Abstract:
In the estimation of models with averaged data, weighted least squares
is often used and recommended as a way of improving the efficiency of the
estimator. However, if the size of the different groups is not
conditionally independent of the regressand, consistent estimation may not
be possible at all. It is argued that in the case of some leading examples
of averaged data regression, consistent estimation is possible using the
usual weighted estimator. Contact: jmcss@iseg.utl.pt
Or,
with a lot more effort you might be able to distil it down to something like
this:
In
retrospect it becomes clear
that
hindsight is definitely overrated!
--
Alfred E. Nurman
Alfred
E. Neuman, Economist Analyzer (c) Mad Magazine |
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Mon, 14 Apr 2003
Pyramiding
Dear Ed Seykota,
In one of your
answers you said that "Pyramiding may prohibit capital
formation". Can you please elaborate this idea. Regards. |
Too
much pyramiding can result in large drawdowns.
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Mon, 14 Apr 2003
09:42:16 EDT
Suggested
Reading
Dear Ed,
For readers of FAQ who wish to pursue mindfulness in all aspects of their
life, may I be so bold as to suggest [XXX]. For, whatever the nature of the
discussion, trading or parenting, the message is quite the same, wouldn't
you say? Nothing special.
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FAQ
does not endorse products or publish contributor endorsements. See Ground
Rules. You may submit questions from your own experience.
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Mon, 14 Apr 2003
Washington, DC
Dear Ed,
I would like to begin a group in the Washington, DC area.
Living in a town primarily populated by lawyers, lobbyists and politicians I
receive more correct opinions than I find at any news kiosk! Despite this
noise, Washington is a wonderful city in which to live and think.
Thank you.
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DC
!
Welcome!
You
are in the Directory.
Washington
DC
Map: www.yahoo.com
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Mon, 14 Apr 2003
Pyramiding Trends
Hey Ed,
When one pyramids as the trend continues, since one is trying to increase
one's position with a smaller bet each time, (literally like a pyramid),
there comes to a point where one is buying or shorting just one contract. then,
the trend continues to rage on, if so, I wonder if it would be in
keeping with the principles of trend following to keep on adding single
contracts, or just keep on adding small bets anyway.
This seems to make sense, since, the longer a trend lasts, the
probability of the trend continuing on diminishes more (or is this view
is too fundamentalist?), thus, pyramiding makes sense since one is making a
smaller bet each time. So, when one reaches the stage where one is adding a
single contract, it probably would make sense for one to watch one's equity
level, as long as the positions added form increasingly smaller proportions
as compared to total equity.
Please tell me your opinion on this, if it's not a good idea to continue to
pyramid with single contracts, then what do you think is better?
Cheers
Paul
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So
if I have this right, on one hand you say the trend just rages on and on,
and on the other hand, you say it's probably over.
Sounds
like you like to worry about the future, even outguess it.
To
tune up your future guessing skills, you can use a deck of cards; flip them
over, one at a time and keep track of your score. You can even get playing
cards with your favorite heroes on them.
Future
Fuel Futures Trader
"I have a
hunch, Scotty, Di-Lithium is about to turn around. Tell Spock to Buy 500 May
Di-Lithium Crystals at the market. I think we can squeeze the Klingons."
"How do you
know that, Captain?"
"The Ferengi
tell me the Klinons are way short, in over their heads, and selling more
just to keep it from going up more."
"But Captain,
the Ferengi are from Deep Space 9 ... that's a later TV series ... we aren't
even supposed to know about the Ferengi."
"That's why
I'm the Captain, Scotty."
Clip: http://members.aol.com/ataraxiarl/
blgupc/startrek/deck.htm
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Sun, 13 Apr 2003
Change
and No Change
Chief Ed:
Things are changing,
but nothing changes.
Still, there are changes.
Le roi est mort, vive le roi!
-- Michael Cretu, Enigma
The urge for novelty distorts my perception. I see what does not exist.
Pax!
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The
popularity of fundamental analysis ensures the profitability of trend
following.
The
feeling of wanting things novel might be a novel thing for you to feel.
Enigma's
Michael Cretu
Poetic
Fundamentalist
The
central question of our being is not to be or not to be, but WHY? |
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Sun, 13 Apr 2003
Speaking of
Speaking
Hey Ed!
Today would be a great day to talk ... however my voice has chosen not to
work due to laryngitis (sore throat last week) ...
feeling fine just waiting for the vocal chords to kick back in ... |
You
might check if other parts of your body also choose not to work.
My
Voice Has Chosen Not to Work
Clip: www.school.discovery.com/clipart |
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Sun, 13 Apr 2003
Thinking
Results
Dear Ed,
It's been a while since I don't send you my ideas. I was developing some
thoughts about my system and how to improve it. I heard something that
described my experience, something that I felt but couldn't put in words and
therefore I couldn't state it to myself and solve the problems that were
affecting my state of mind. I really would like to share these words with
traders that had a similar experience (start winning but at some point begin
to lose and feel impotent to identify the causes):
"The curious anomaly of trading is that, if you start with a winning
trade, you will automatically experience the kind of carefree mind-set that
is a by-product of a winning attitude, without having developed the attitude
itself."
I was winning but there was no mind-set to support that winning. When I
began to lose, my self-confidence plunged. That just can't work. Now, I'm
working and re-thinking my way of understanding my system, so I set a
favorable mental environment to plant the seeds of a "winning attitude
tree".
The result is that
I will harvest consistency from a healthy mental development as a person and
as a trader. Thank you for your support. Best regards,
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When
your results effect your attitude and your attitude effects your results,
you have positive feedback.
Positive
feedback is unstable.
Within
the confines of a cylinder, unstable combustion can produce very
useful work.
Ignition
Clip: http://www.eng.warwick.ac.uk/
~espbc/courses/engine/Otto.jpg |
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Sun, 13 Apr 2003
Not Good
Hi Ed,
I trade for over 6 years on only one futures market (regulations in an
Eastern European country, changing fortunately). I know my theory but am
emotionally green and young (well, maybe I'm "patient", but that's
it).
Cannot control
my fear of not earning cash...angry for loosing previously, help! Angry
again for not forgiving myself for breaking my own rules, help! I'm
greedy when it comes to winning, chicken when loosing. People skills suck, I
just keep constantly thinking about how to improve, man I haven't [xxx]
for 2 months!
Feel depressed,
worthless and so on. If a wake up too early in the morning I just keep
thinking and thinking, cannot sleep. Tried meditation but it made me think
even more due to the awareness phenomenon.
Sometimes I feel I
live in my own world of illusion (the sort of illusion which isn't shared
with anybody else's' illusion) Just tell me I'm normal and I'll be fine, I
guess. I'm new to this site, maybe there is a thread I could join? Best
regards,
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Fighting
feelings, controlling fears, and otherwise interfering with the process
doesn't work.
Go
with the flow and experience your feelings, just the way you are. You might
come to know their positive intentions.
Anger
Consider
the Positive Intention
Clip: members.aol
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Sun, 13 Apr 2003
Remote Groups
Hello Ed,
Regarding Remote groups, I am glad you put a disclaimer that
Participation in a group does not imply that Ed Seykota certifies or even
knows a trader.
As a contact person for one of the groups, in my conversations with
potential group members, it was becoming very apparent that they were
expecting Ed Seykota clones. However when I looked at myself in the mirror,
much to my dismay despite being a group coordinator I failed to metamorphose
into Ed Seykota.
I feel setting up groups is an excellent idea, every city should have
one. As you state meetings provide opportunities to resolve personal issues
around trading. Along with the deep transformational work undertaken
in tribe meetings of raising the subconscious agendas to the conscious
level, and to facilitate a healthy interrelationship between feelings and
thoughts; I believe just the check-in process, and monitoring of feelings
and emotions between meetings could be very useful.
In the past I joined other groups, one of them was a Buddhist self inquiry
group. I found that just by meeting on a regular basis gave me a
yardstick to measure the progress (or lack of progress) of my journey. I
would use the meetings as bookends if you will, during the week I would
observe myself and then discuss the events in a group setting with other
likeminded people.
"When we try to investigate our mind through introspection, we find it
tends to be dominated by discursive thoughts or by feelings and
sensations" -- His Holiness The Dalai Lama.
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FAQ
encourages personal growth as well as vocational competence.
Bookends
Up
here, a pair of pears appears
Clip: www.myvictoriantreasures.com
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Sun, 13 Apr 2003
Fear of Knowing
Dear Ed,
I am a failed trader who is finally beginning to realize why he doesn't want
to succeed.
After years of studying the markets, I believe I have finally developed a
system with a proven edge. I know exactly how much I will risk on each
trade, and it is but a fraction of the average gain per trade. I know that
on average, I will receive a signal to trade only three or four times per
week (being raised on day trading, 10-20 trades/day was my norm), yet each
trade has a high possibility of yielding a relatively large return in a
short period of time. I know if I trade only the signals I receive from this
system, I will be able to continuously compound my account beyond my
greatest expectations. I know that to succeed in trading, I must trade only
when I have an edge, and to refrain from trading at all other times.
Yet, even having been convinced of the viability of my system for the last 6
months, I've yet to stick to my ground rules for more than a few weeks. I
go through endless cycles of successful implementation of my plan (often
yielding results far better than I'd planned), followed invariably by quick
decimation of my previous gains, and more. The triggers for initiating my
self-destructive phase are garden variety (inability to stay mentally
focused following drawdowns, blowing stops, revenge trading, etc), and they
quickly lead to "mini-blowouts" that cause me to cease trading,
whereupon after a few days of refocusing my will and spirit to "do
better this time", I begin again with newfound determination -- only to
fall into another cycle of success/sabotage.
This has been the
pattern of my trading efforts for so long that I've come to accept my
addiction for failure, yet I've never really understood why it was that I
could not follow a few simple rules, even if I knew that great gains could
be the end result of my discipline.
After stumbling upon your FAQ following a particularly destructive bout of
trading and getting a bit of inspiration from the somewhat oblique Q&A
format, I started to really investigate my own psychological makeup, trying
to dig into what it was that prevented me from executing what was needed for
success. Why was it so hard for me, even when all the rules were laid out
before me like a simple checklist? If the "prize" was right there
in front of my face, why could I not simply reach out and take it?
Suddenly an image-thought entered my mind -- that of a man who suspected
he might be sick with a fatal illness, who was too afraid to visit his
doctor.
Even though the
likelihood of him being diagnosed with the disease were slim, he preferred
to live a half-life under a condition of uncertainty, rather than take that
chance of knowing inevitable doom.
The analog to my history with trading struck me in an instant: the reason I
was could not execute my plan was that I was afraid of realizing whether or
not my system was truly a success, and constantly strove to avoid that
confrontation. As long as I veered from my game plan, I could always point
to the fact that it was my failure to stick with the system which caused the
inevitable losses, and not the system itself.
So long as this
continued, I always had that last chance for redemption, a reason to hope,
and therefore consigned myself to an endless cycle of gains and losses, just
so I wouldn't have to face the possibility that after all my years of study,
effort, and pain -- my "edge" might not really be there at all.
I sacrificed my
own emotional and financial well-being just to maintain that illusion of
hopeful possibility, to preserve the "sanctity" (immortality?) of
the system, saving it from both randomness and certitude, thereby keeping
the mystery (of death?) alive.
I believe I'm finally sick of running away from knowing -- I'm ready to find
out what it is I have . . .
My sincerest thanks.
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Experiencing
your feelings with others seems to accelerate the process.
While
it might seem a bit awkward at first, with a little practice it might become
quite natural and organic.
Sharing
a Flower
Art: www.zivicstudio.com
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