|Sun, 4 May 2003
I have resistance in using a trend follow system.
I have resistance in using a trend follow system. It is because I want to
gain profits constantly (at least every month).
It seems that many traders despise a trend follow system and are tackling
development of trading systems (many are day trades) in order to ask for
If I want to gain profits constantly (at least every month), should I
tackle a mental problem ? Or should I tackle development of another
trading system ?
you tackle fishing, you might not catch the limit every time. If you tackle
football, you might not score on every play. You might examine your feelings
of wanting to tackle trading and make a profit every month.
Clip 1: www.hroller.com/
Clip 2: www.art.com/asp/
|Sat, 3 May 2003
Manhattan Tribe Reports
We are planning on using certain prerequisites for our tribe. If you think
it appropriate could you please publish this to let out members know to call
encourages personal growth groups and Intentional Communities and provides a
bulletin board and directory to assist like-minded people to connect, at
their own risk.
The name, Trading Tribe, and
the TT logo are both in registration to Ed Seykota, and currently refer only
to the meetings Ed personally conducts in Incline Village, Nevada.
In response to vigorous demand for
this work, The Trading Tribe is currently preparing a training program and
materials, leading to certification of mastery and right to use the Trading
Tribe name and logo.
|Sat, 3 May 2003
Go with the trend
William J. Mallers, Sr. (former chairman of CBOT):
"Nobody should be puzzled as to whether a market is a bull market or a
bear market after it gets underway. The trend is evident to those who have
an open mind and reasonable clear sight, for it is never wise for a
speculator to fit facts to theories."
1. Trade with the trend.
2. Ride winners and cut losers.
3. Manage risk.
4. Keep mind and spirit clear.
"Your subconscious may pick trades for their drama value ... to elevate
feelings to the point you have to feel them."
"When you first start using a trend following system, you might find
yourself fighting it where your objectives differ."
This is where I feel that keeping mind and spirit clear and a healthy
entitlement work together to give us an "open mind and reasonable clear
Sat, 3 May 2003
Not Even Zero
in a Glass
on the River Bottom
Wrong web site. These guys are more into getting in touch with their
feelings, kinda like the "sensitivity training " of the '60's.
There's so many aha's happening here it sounds like somebody with the
hiccups, 'course if Gurjieff is correct then 99% of these guys are
"Organic Machines" just parroting words they think will ingratiate
them with Ed Seykota.
Zero? I've panned many a creek and stream looking for gold and "flow
velocity" is at no place, zero! It isn't even zero in a glass of water!
The guy in the cowboy hat coined a phrase, "Nobody knows what you think
they know", it seems like it's true even here.
Hey! that was just one "a" short of an aha!
Just havin' fun!
velocity at the sides of a pipe, the bottom of a river, the bottom of a gold
pan and the bottom of a sluice box are all zero. See below.
you might like to examine your feelings of wanting to post logical
(Fundamental) arguments against the. markets.
with the flow of your feelings is a good way to cover your "a" and
complete your aha.
Profile Across a Pipe
Fluid velocity in
a pipe is not constant over the cross section. The velocity is zero at the
wall, increasing to a maximum at the center then decreasing symmetrically to
the other wall. We call this variation the velocity profile or distribution.
Here the mean velocity is um.
miners learn to process gold ore by feeding water through a sluice box with
riffles on the bottom. They use shovels to add raw ore and also to agitate
the mixture into the water flow.
Rocker Box, a similar device, rocks back and forth to agitate the sediment
off the bottom.
requires rotating and tilting the pan to agitate the mixture. The pan does
not work very well if the prospector just fills it and leaves it on the
bottom of the river.
Clip 1: www.efm.leeds.ac.uk/CIVE/
Clip 2: www.digistar.mb.ca/
Sat, 3 May 2003
I Read and am still reading Market Wizard. The book gives details of
numerous traders, all employing different techniques but successful. At the
end of book the author summarizes the basic characteristics of those people,
like all wanted to be successful traders, each trader found a methodology
for himself etc etc ...
But I think one main thing which is common in them including the author is
that they were all associated with Market place (future, stock etc).
Like you worked as an analyst / broker where you were able to meet Richard
Donchian and ask him about the number of days in his moving average, Michael
Marcus met you while working as analyst and learned money management, Bruce
Kovner was taught by Michael Marcus when he was hired by him, Larry Hite
learned money management from you, so on and so forth. None of the
profiled started without being associated with this industry.
This shows that if you work in this industry the learning curve is much
A person who is not associated with this industry and knows nobody in this
industry is I think at a great disadvantage.
What would you suggest for him / her assuming there are no jobs nowadays?
might direct your search engine toward help wanted. You might
check your feelings about no jobs.
High Paying Trading Job
Cuddling in a hammock can pay pretty well for trend
followers who prefer fiddling with their partners to fiddling with their
Fri, 2 May 2003
I am a beginner in
futures. What market you would recommend to trade, electronic or
outcry? Are they different (for the same commodity)?
you master the basic literature and spend some time with successful traders,
you might consider confining your trading to the super market.
by the Pound
offer ... 8 bid ... done.
Fri, 2 May 2003
Common Sense is
About the snail cling-ons posting…that is quite profound, Mr. Seykota…very
profound! I have learned a lot about life in FAQ’s … no lie!
The funniest and most profound FAQ I read in Market Wizard is Mr. Schwager’s
Q: “What is the most important advice you can give the “average”
A: “That he should find a superior trader to do his trading for him. And
then go find something he really loves to do.”
might check on which side you see yourself.
Or, Both and More
Thu, 1 May 2003
on the River Bottom
Once there lived a village of creatures along the bottom of a great crystal
river. The current of the river swept silently over them all - young and
old, rich and poor, good and evil, the current going its own way, knowing
only its own crystal self.
Each creature in
its own manner clung tightly to the twigs and rocks of the river bottom, for
clinging was their way of life, and resisting the current what each had
learned from birth.
But one creature
said at last, "I am tired of clinging. Though I cannot see it with my
eyes, I trust that the current knows where it is going. I shall let go, and
let it take me where it will. Clinging, I shall die of boredom."
creatures laughed and said, "Fool! Let go, and that current you worship
will throw you tumbled and smashed across the rocks, and you will die
quicker than boredom!" But the one heeded them not, and taking a breath
did let go, and at once was tumbled and smashed by the current across the
Yet in time, as
the creature refused to cling again, the current lifted him free from the
bottom, and he was bruised and hurt no more. And the creatures downstream,
to whom he was a stranger, cried, "See a miracle! A creature like
ourselves, yet he flies! See the Messiah, come to save us all!"
And the one
carried in the current said, "I am no more Messiah than you. The river
delights to lift us free, if only we dare let go. Our true work is this
voyage, this adventure." But they cried all the more,
"Savior!" all the while clinging to the rocks, and when they
looked again he was gone, and they were left alone making legends of a
flow velocity at the bottom of a stream is zero; the water does not dislodge
small animals or sand. The flow velocity is maximum in the middle of the
stream, near the top.
If a cling-on lives on the bottom of
the river, he has to jump up from the bottom quite a bit, in order to find
Check before saving people; a lot of
them are really quite content where they are; if you like to participate in
change, wait for some to jump off the bottom and get themselves into the
flow, then join them. Same for markets.
Some snails actually like sticking to
rocks and, well, being snails
Thu, 1 May 2003
Applicability - What is Best
Do you subscribe to the theory that "a market is a market" and
that trend following works for all markets such as futures, equities,
Also, is it best to diversify into several markets as opposed to
trading "equities only" as I do?
following may or may not work for you. Diversification may or may not be
best for you.
might explore the feeling of wanting someone else to tell you what you want.
& Harcourt Fenton Mudd
Trek Hen Peck
Thu, 01 May 2003
Fighting the Flow
Thanks for your TT/FAQ work. May it yields you results beyond your
Today, I acknowledged my rage with Going With the Flow. My rage comes
from living life believing I can only feel good when I worked hard. Yet, I
also have gone through life wishing someone would save me by giving me
fool-proof system, including you. And if someone did, I would still fail.
Years ago, I stopped trading because emotions started affecting my profits.
I made a pact never to trade again until I could control my emotions. And
now through your FAQ, I understand it's about allowing all my emotions to
flow. I never thought I would explore developing a trend trading system.
And today, I put aside my predicting research and start going with the flow.
Thanks so much. And best to you on all your endeavors.
Thu, 1 May 2003
From the Trading Tribe pages:
"I suggest you forego trying to find a best, or even
"reasonable" system until you come to terms with how you like to
I suppose the same holds true for trade picking, i.e., the best trade to
put on is the trade we like to put on, in the sense that we allow our
feelings to flow naturally. Just like there is a trading system or
strategy that suits best one's character, the system or strategy themselves
will suggest what constitutes an opportunity or not. Doing otherwise would
be like giving way to conflicting feelings.
Please let me know what you think.
subconscious may pick trades for their drama value ... to elevate feelings
to the point you have to feel them.
Fundamental analysis is reason rich,
and can easily justify any trade your subconscious picks.
When you first start using a trend
following system, you might find yourself fighting it where your objectives
As you resolve your issues, your
system and your feelings pick the same trades.
couple nice picks.
Thu, 01 May 2003
Not sure if these qualify as AHA moments, just a few insights which occurred
to me these past few days:
- Self-destructive trading that occurs after a period of success requires a "self"
to destroy -- lose the "self" (an ego, a target, a future
expectation of where you should be, etc) and the tension dissipates.
- A trader who distrusts the market is not unlike a man who distrusts his
wife -- a relationship built on suspicion and insecurity can only lead
to ill will, misdirected anger, and preconceived negativity.
Only an open,
benevolent relationship can nurture and sustain a positive result.
- Constantly feasting upon future expectations will only yield past regrets
as waste products.
might report what feelings you resolve to get these insights.
Lane and Richard Gere
proof that adultery is inevitably destructive, in Adrian Lyne’s Unfaithful.
|Thu, 1 May 2003
The Capital of Trading
What are the advantages of trading one's own capital over trading client
capital as it pertains to psychology?
Seems to me it is easier to trade with exact discipline when I ask no one
for an opinion and do not feel pressure to perform.
What % of Tribal members trade their own capital (for a living) versus
client capital? A guess would be fine.
Great site Ed, Thanks for sharing your wisdom with us. It is your interview
in Market Wizards that led me to Trend Following.
claim you ask no one for an opinion ... and then you ask me for an opinion
based on a guess.
My guess is that you have some
unresolved issues about boundaries, such as whose money to trade and whose
opinions to follow.
worries about boundaries.
1 May 2003
Dear Mr. Seykota
With every passing day, your FAQ's become more and more enlightening - it
probably also has something to do with my own mind being liberated ...
I get the impression from some contributors that your answers don't address
their questions. Prima facie, this seems to be, but it is increasingly clear
to me that your comments reveal so much more than meets the eye. One that
set me musing was the response to the contributor who quit his IT job for a
riskier consulting career. You said that that seemed like cutting a winner
and taking on larger risks. That comment hit me between the eyes as I have
always wondered whether it would be wise to switch careers - I never
thought of that decision-making process in terms of trend-following. It is
truly amazing how your answers can pack so much wisdom in often just a few
I have been thinking about how to incorporate my feelings into my trading
system, as you pointed out in one FAQ. In fact, my system will take into
account my family commitments, personal characteristics, available time and
my limited knowledge of trading.
instance, I do not have that much time in the evenings to trade, so my
system is designed to allow me to make major decisions over the weekend,
without missing trend signals. I also know that once in a while, I will have
a lapse of discipline and fail to track the market for a day, or I may fall
ill and cannot trade, etc. I have tried to make my system suit me as much as
possible, while providing positive expectancy (though I am probably overly
optimistic on the expectancy part). I know that my system designed as such
will probably not give me fantastic returns, but I like it and I really
enjoyed the process of designing it.
you said in an FAQ, there is no best car but there may be a best car for a
person. My system is not the best there is but it is something that I call
I am poor at math, so that is a large handicap when trading. But you
also once pointed out that math is no substitute for clarity. I have
therefore tried to be honest with myself in my system design and trading and
force myself to think through everything. It is really tough, I assure you,
for a Math dummy, to internalize math concepts (even those as simple as
arithmetic), But strangely, it is a very enjoyable process.
I would like to seek your insights on two issues I have been pondering a
1) Money management is one of the most critical elements in trading.
But unlike entry indicators, there does not seem to be much evolution, not
to mention revolution in this area.
algorithm is to adjust position size based on daily market volatility. I
have searched all the available public literature and there is nothing much
on improvements to position size models. Do you have any suggestions on how
I can improve basic position-sizing models? I get the sneaking suspicion
that the final answer may be that the simple things work best - like how
moving averages still work well despite many new entry indicators.
BUT as oft-cited, "make thing as simple as possible, but not any
simpler (or simplistic". Even something as simple as a moving average
can be improved by making it adaptive and dynamic, like how a simple MA can
become an exponential MA.
2) The other question is on whether I should modify my system from time
to time. I have finished with my system but I have new ideas every day,
as well as new input from books I read, or FAQ insights. With each passing
day, I find the mistakes in my system (which is being used to trade - it's
not a paper system), and change my system. But I also know that I should
stick to a system and not keep changing.
paradox is that I am disciplined enough to stick to my system day in, day
out, but yet I modify it periodically. May I have your advice on how to
deal with this dilemma?
Thanks and so sorry for making this posting so long.
Trend Trading basic principles1:
with the trend
winners - cut losers
Trend Traders follow these basis principles and modify some of the details
from time to time, such as what instruments to track, how much risk to take
and how to place stops.
your system reflects the way you like to do things. If you find yourself
fighting your system, or struggling to follow it, you might check your
feelings about authority.
as Authority Figure
some traders, rules guide; for others, they stand in the way.
See risk management approaches at www.turtletrader.com.