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July 20, 2015

Mercy, Pity and Compassion

Querido Cacique Ed,

in TTP we accept people the way they are and we don't try to fix them. I wonder hence about the role of "mercy", "pity" and "compassion" in a TTP setting when people are suffering for example a disease. I think a lot about it and am not certain where helping ends and fixing stops.

Best regards.

(FYI): mi trading anda bastante bien, espero poder irte a visitar a Puerto Rico este año.

Thank you for raising this issue.

In TTP we determine willingness of both the helper and the helpee before engaging in acts of assistance.

You might consider taking your feelings about <wanting to help others> to Tribe.

(FYI): Bueno, me alegre verte. Déjame saber quando me puedes visitar.


July 19, 2015

Grant on Value


Here's one of the best finance quotes you'll ever see.

Thank you for sending me the quotation.
July 17, 2015

Govopoly in Action


Great editorial by Peter Schiff on perverse incentives, unintended consequences, and the politics of good intentions ...

"By exempting U.S. citizens from taxes on interest paid on Puerto Rican sovereign debt, Washington sought to help the Puerto Rican economy by making it easier and cheaper for the Island's government to borrow from the mainland. As a result, Puerto Rican government bonds became a staple holding of many U.S. municipal bond funds...However, this subsidy did not grow the Puerto Rican economy, but simply the size of the government, which had the perverse effect of stifling private sector growth.

In contrast to the tax-free income earned by Americans who buy Puerto Rican government bonds, those with the bad sense to lend to Puerto Rican businesses were taxed on the interest payments that they received. Businesses could have used the funds for actual capital investment (that could have increased the Island's productivity), but instead the money flowed to the Government which used it to buy votes with generous public sector benefits that did nothing to grow the Island's economy..."

Thank you for sending me the excerpt and the link.

If you don't feel like going to Greece or to Puerto Rico to see the process in action, you can wait for it to show up in your own city.
July 17, 2015

Duckweed as Food


thought I would pass this along . . .

Thank you for sending me the link.

Hmmm ... it might go well with quackers.
July 17, 2015

Hamster Rut

Hi Ed,

I feel trapped. I am tired of working for the man. I am tired of feeling like a hamster running on the wheel. Running, Running, Running and getting nowhere.

I work on contract. The contract end date advancing ever nearer, like the execution date for a man on death row. I worry about the future and how I will support my family.

I take my kids to school, the highlight of my day. I commute to work, I leave home at 8:30am, arrive and start work at 9:30am. I work flat out till around 19:00 and I arrive back home usually somewhere between 20:00 or 21:00 depending exactly when I left work. I usually arrive home feeling pretty tired and burnt out.

I have my in-laws visiting at the moment. It is nice to see them again after 1.5 years. A momentary respite from my internal feeling of aloneness.

My wife is finishing off her diploma in Teaching. She is doing well and I am REALLY looking forwards to the little bit of extra income she might bring in once she qualifies.

I really feel under a lot of pressure to produce and provide. I am trying so damn hard but every month the pay arrives and promptly disappears again on the bills. My paycheque arrives into the bank, and immediately gets spent on bills, and there is pretty much nothing left over.

I am supporting my wife, three children, myself and I am soon to support my own Mother who is leaving South Africa to come and live with us.

This is not how I pictured my life unfolding. I recall being young, full of hope and thinking without doubt my efforts and abilities would be recognised and rewarded and undoubtedly, I would be successful. It took me a long time to learn that life owes me nothing and that life is not fair and I must factor in the randomness of the hand lady luck deals out. I realise I must take full responsibility for my life, intentions equals results, but it seems so difficult and long to recover from past financial mistakes. It is almost a whole decade since the Global Financial Crisis altered my world and I got caught borrowing too much without sufficient cashflow or any consideration that things could go wrong. I see it now as my greed got the better of me.

I feel like my life is a house of cards, one paycheque away from collapsing. I worry about the end of my contract and about finding another source of income. I worry about how I am going to support my family. I feel exhausted.

We are in the lower middle class bracket and all our friends seem to have more financial resources and better paying jobs and we can't keep up with them. I experience strong feelings of failure and resentment. I find more and more I avoid social contact and withdraw from social interactions. I am annoyed that a lot of them seem to have a relaxed attitude and don't seem to work that hard, but end up working less, putting in less effort and for much more money. This really annoys me. I secretly seethe internally. I resent this and feel it is grossly unjust.

How is it that at school, I worked hard and was near the top of my class but now in life I am below average despite clearly putting in more effort. I am angry at wasting my time and sacrificing for money and career when I could have been enjoying life.

Focusing on career and money hasn't paid off for me.

I see trading as my way out, but I am not moving forwards with this either, as:

I can't seem to save any money and, for futures trading, I realise that the minimum viable account size of around $500k, which feels so ridiculously out of reach. Even for an ETF type of trading account I estimate would need around $60k, still very far out of reach given my debts on my mortgage are ($433k) as of our last statement.

Also, I haven't figured out how I can get leverage with an ETF account. I realise I have a lot of work to do here.

I can't seem to move forwards with my system either, I feel so exhausted when I come home at night. I can't focus, I have the attention span of a flea.

I want to see the kids and put them to bed but they don't seem to want to go to bed and while they run around I can't do anything.

I recall when I had hope, because I was young, I felt I still had time, but as I am now past middle aged, I realise that time is running out and I don't see progress or any way out.

There don't seem to be many jobs around. I find getting a job these days a very tough and competitive undertaking.

Sometimes I can't help but think of my family as a bunch of parasites and I am the host being milked dry. This is not how one is supposed to feel. I feel ashamed when I think this.

I struggle to internally reconcile my responsibilities to my family with my own objectives.

I feel really alone. I realise as I write this, you would likely suggest I need to share my feelings with my family.

This brings up something else. I notice when I try to share my feelings about things like this they don't seem to listen much or get defensive.

In the interests that my miserable experience and existence might strike a chord with, and possibly help others, I feel ashamed. My heart feels heavy. I have an empty, hollow feeling in my stomach and most of all I feel like crying, my bottom lip is pushing out and curled down.

I submit my failures to you and FAQ.


I don't send the above email. I sleep on it and let it rest and percolate for a few days.

My negative feelings wash out.

I add this:

Ed, and FAQ, I feel a bit better, a more peaceful after writing this. Thank you for listening.

I wish you well. I still have hope. I know deep down my family loves me. Perhaps I am experiencing the emotional equivalent of a drawdown and I just need to keep my chin up and keep on going.

I love my family more than anything and I am proud to support them to the best of my abilities. They are the sole things I care most about.

Ed, I am, and will always remain, ever so grateful to you, for all you have done for me.

I feel more energised and I feel a need to get working on my system.

I see a couple of suitable, more permanent jobs advertised that I intend to apply for.

I am sure things will improve, they must!, we can't stay in the hard times forever.

Take care and Best wishes

Thank you for sharing your process.

You might consider taking your feelings about <struggling with career> to Tribe

From the Inside

a hamster wheel
may look like a career ladder.

July 16, 2015

Teaching Basic Economics


I enjoyed Govopoly and believe spreading the message is very worthwhile. I'm teaching (volunteer) some local college students some economics basics and would like to have them read the book, but at $150/copy it isn't affordable. Do you have any lower cost/.pdf version I might be able to use? I have total respect for IP laws and no commercial interest!

Also, I just discovered the strong/weak charts on the TT site. Could you share the securities universe you use and the screening filters?

Thanks again for your work!

Thank you,

Thank you for sharing your process.

If the books don't fit into your budget, you might consider teaching your students the principles you find important - out of your own experience.

The stock universe includes commonly trading stocks; I use proprietary screening.

You might consider taking your feelings about <entitlement> to Tribe.

July 15, 2015


Dear Ed,

I just want to say, if you're so successful in your trading, then why aren't you a multi billionaire now?

What is stopping you?

Thank you for raising this issue.

As I indicate in my book, Govopoly in the 39th Day, you and many of your friends and associates may soon attain multi-billionaire status as the central banking system increases the supply of money in an attempt to stave off the dilemma between a credit collapse and having to enforce austerity on the entitlement classes.

You might like to keep an eye on Greece, Puerto Rico and elsewhere.

Per your personal question, I wonder if you can refer me to any location in FAQ or elsewhere in which I discuss my own trading or compare it with the trading of others or offer any kind of trading advice for sale or otherwise.

You might consider taking your feelings about <how to measure your own value> to Tribe.

July 15, 2015

Feels Great Pleasure

Dear Ed,

There are a few FAQ answers and interview answers in which you say that market selection is a gut decision or similar. There are also some others in which I remember you say automating the selection process is possible. Probably you use both but I feel that I can feel great pleasue reading your answer if you can elaborate on this topic.

Best regards,

Thank you for sharing your process.
July 14, 2015

Taking it Slow and Cool

Hi Chief,

In a previous FAQ update I share my feelings about a discrepancy between the trades that are generated in real time and placed in the market by my system and the backtest results of the same system on the same data a week later when I review to compare estimated VS actual slippage and executions.

As a result of the <I don't know> feeling that comes up, I decide to take preliminary steps to create better logging within my system code and discover that the code running on the machine I use to automate ​the trading and the code for the "same" strategy that I have on my laptop for testing differ very slightly. I update the older code on my laptop with the code I am actually using to automate the system and the discrepancy disappears.

​I feel a bit surprised and silly while I contemplate the mistake I've made and remember how rushed I am when I ​set things up and how informal my development and deployment practices are.

Surprised and silly feels light headed and dizzy - like I'm holding my breath. I think I may actually be holding my breath while I have the feeling..​. I recognize this dizzy feeling. I have a few methods I regularly use to feel it. I swim under water for as long as I can. I exert myself on my bike until I'm completely winded. I rush through projects to get a quick result then swoon when surprises pop up later.

I settle into acknowledging and accepting the feeling and it becomes a cool wave of relief that I feel on the front of my body. It begins at my scalp above my forehead and washes down all the way down to my toes as I exhale.

My mind clears leaving me with a single thought.

I think that the positive intension of these feelings is to remind me that I can slow down, take my time, take a deep breath and introduce more rigor into my code deployment and automation practices. Or I can rush, hold my breath and produce the thrill of "oh no what happened" followed by the "silly" feeling of realizing what I did.

It's really cool to have these insights instead of feeling bad about myself.
Thank you for sharing the tools and for teaching tool making to the Tribe.


Thank you for sharing your process.
July 13, 2013



If the price = perception of all the market participant,
If the technical analysis = study of price

then can we call
technical analysis = perception analysis of the market & thereby

technical analyst = market perceptionist ??

After all what we all do is to just enhance our perception about market and trade/invest accordingly. Analysis is just part of this and not entirety of it.

What do you think?


Thank you for raising this issue.

Price = price. Perception = perception.

If you start with false premises, you can prove anything.

You might consider taking your feelings about <math-turbation> to Tribe.

July 13, 2015

System-Instrument Pairs

Dear Ed,

I have completed a mini-research and backtesting which includes saving some individual equity graphs of several systems on several major backadjusted futures. Then I modified the signals according to the individual returns and/or individual drawdown levels. For example, not taking the signal of a system-instrument pair if its individual drawdown is more than 25%. General idea is to trade the profitable system-instrument pairs while discarding the consistently non-profitable ones.

Anyway, the results are terribly bad.

I wonder if you have any comments on the subject. Thank you.

Best regards,

Thank you for raising this issue.

Comment: I do not know how to interpret "system-instrument pair" and do not easily follow your writing.

You might consider practicing explaining your ideas to some colleagues - and getting some feedback - until you clarify your language.
July 13, 2015

Still Seeking Perfection

Dear Ed,

Your answer to the "Seeking Perfection" FAQ dated 6 December 2009 includes "nothing works all the time".

This may imply one of the following.

1- a good system does not mean that it creates good results day by day. There are ups and downs.

2- a good system may (and generally can) not create good results after a while. Which indicates a kind of walk forward testing can be useful.

3- something else.

Thank you for the clarification.

Thank you for sharing your insights.
July 12, 2015

PR Tribe Report - I Don't Know in Trading

Hi Chief,

I would like to share my recent trade automation experiences and associated feelings with you. I feel glad to be moving towards successful automated trading and enjoy documenting the process. I notice that <I don't know> is showing up a lot and giving me many opportunities to do things I like to do, including experiment, figure it out and see what happens.

Last week, I leave my trading computer and trade automation running while I'm on vacation with my wife and kids.

Initially I feel a feeling of <I don't know> and experience it as a combination of fear burning in my chest, excitement and wonder while I consider how unattended trade automation might work (or not) and how I might feel. I feel excitement as my heart is beating and my blood is pumping though my body. I especially feel it it at the sides of my neck and in my forearms while I do a final check on the settings before leaving for vacation.​ It's a palpable rhythmic throbbing. My eyes and attention focus easily.

I set things up on my workstation so that I am able to log in remotely with my iPhone to check that trades are executing properly and that automation is working. The software I use (LogMeIn) is slow over the mobile phone network. It shows my screen in miniature at a low resolution. I am able to zoom in and see the basic stats: Position match, True or False and whether or not I have a position. I can also see the charts with the indicators updating the and system signals indicated on them.

Each day I check in periodically to see if there are any open positions and to ensure all positions have exited by the end of the day. I notice I'm not anxious about the positions or the fluctuations in the account equity throughout the day. I'm curious if the trading software will work properly for a week without manual intervention. The checking only takes a few seconds and I find I'm a lot more interested in relaxing, swimming and riding roller coasters with my kids than looking at the phone.

I feel glad that the system seems to be working as designed and that I'm able to play and relax while the computer does the tedious work. I feel patient with the process and satisfied with the current state of my trading. The feeling is warmth within my chest that merges with the warm sun on my face and chest. It feels good - I'm not hot, just pleasantly warm. I notice that when I put my phone back in my pocket after checking on the systems, it feels solid and warm too. I'm reminded of heart rock. I trust that the system will do what it is supposed to and that I can address issues that come up later on if I need to. There is no urgency. I can be here and enjoy whatever happens instead of being in a state of anticipation waiting for something to happen in the markets.

I'm waiting in line for a ride at an amusement park and decide to check the systems after my friend (a fund manager of a high frequency fund that specializes in equity trading that is also here with his wife and kids) casually tells me that the NYSE is offline/halted and that he has open orders with no status. I'm able to log in and see that everything looks normal on GLOBEX and ICE the quotes are updating. I see that I have two open positions with a nice profit. "OK, cool." phone back in pocket.

Some time goes by and I have a feeling that I want to look again. I feel it as an opportunity/hunger feeling. When I log in, I'm not surprised to see that I have fairly large open profits for the system and feel more of the opportunity / "take the profit" feeling. The feeling feels like the initial rumblings of hunger in my abdomen. Seeing the P&L intensifies the feeling. For some reason < I don't know> pops up and then I realize it's going to be fun to check later to see how the trades work out. The hungry feeling give way to a solid feeling of certainty in my face and jaw , I sense that I'm looking at the maximum favorable excursion for the day. Still, I'm happy to wait and see... maybe it is, maybe isn't. This detachment and enjoyment of the uncertainty is entirely new for me and I'm getting into it more each day.

I take a screenshot of the open profit and don't check again until later in the evening, well after the close. The screenshot turns out to coincide with the peak favorable excursion for the trades after all. I feel pleased that my gut is in tune with my systems without me having to sit at the screens. I wonder if there is a way to distill whatever feeling I have that causes me to check the systems and detect opportunity into a mechanical rule. I note that the screen grab has a timestamp... The realization tickles.

Previously, when I monitor a system as it trades, I feel tense and my mind races. In the past when using systems, I usually feel discomfort when there are open profits, discomfort when there are losses and impatience when there is no open position. I feel the urge to compete with the system to medicate the various feelings. My stomach burns and I feel shaky more or less the whole time. The process is usually stressful and wears me out after a few days. I like this "laissez-faire", let's see approach a lot better.

I notice that day after day I continue to like my mindset and results a lot. I'm able to be in the now with my family and I feel at ease. The easy feeling persists more or less continuously. On one occasion while we are at a restaurant waiting for food, I notice that my kids are drawing with crayons and my wife is sending a photo to someone, everyone seems happily busy. I decide to check the systems. For some reason, I'm unable to log in to my trading computer from my phone. While this happens I feel very aware that I am not worried which feels like a fun surprise - it feels like my core is lifting up with lightness. I notice that I am smirking and feel a tickle in my belly. My wife instinctively looks up and we make eye contact. My eyes are smiling. I gesture at my phone and tell my wife "I can't tell if the system is working, I can't log in to the computer to check... I think it probably is... let's see how it works out." I notice I'm really smiling at her. I tell her I feel surprised that I'm ok with this and continue to smile. She looks confused for a moment then relaxed. I try logging into my brokerage account via their web based client instead. It works. I see that I have open positions and that orders are being placed as I would expect. I feel relaxed seeing that stops are in place. I wonder why I can't log in if the computer and system are still working... < I don't know> pops up and I smile some more.

I pocket the phone and check out the kid's drawings with them.

The vacation is over and I feel a little bit sad on the drive home. I notice that I just let the sad feeling happen instead of fighting it or rationalizing it away. Pretty soon it passes from my throat up to my eyes and then dissipates into a nice view. I notice that everyone is asleep in the car and I enjoy the scenery quietly streaming from ahead as we barrel down the sunny road. Everything in view seems vivid and green. Large rocks are catching the sunlight and glittering. I feel very full and energized as I shuttle my family home.


Today I reconcile all the automated executions of the past week against the simulated orders generated by the system to see if the slippage I get is better or worse than expected. I find I'm still getting less slippage in actual trading than I estimate in backtests on all four markets I'm trading.

As I run the reports on the last of four markets, I notice there is a hiccup... I'm surprised when backtest results on the most liquid of the markets I trade give me an entry that takes place twenty min (one bar) later than in live trading and an exit one hour earlier in live trading than the trade signaled by the backtest.

It's only one of many trades and the P/L difference is minor. I feel glad it's an isolated issue. I also I feel worried and out of control not knowing why I get a different result running the same rules a couple days later on what I think is the same data. I go with the feelings one by on eas they move from place to place in my body and my mind clears.

I feel calm.

I adjust a few settings in the software to see if I can figure out why there is a discrepancy. I try increasing the amount of data used to initialize the systems which use moving averages, I adjust the backtest granularity down to the tick to emulate real world conditions more closely, I alternate between local and exchange timezone and still no match.

I continue to feel a bit confused about how to proceed and how to determine the cause of the discrepancy. I notice myself asking "why did this happen?" and answering < I don't know>. I acknowledge the < I don't know> and begin to wonder if there has been a data correction by my data vendor or the exchange. I wonder if it relates to the timing of the NYSE outage. Maybe I'll if I look around enough I'll find out.

The system software logs all orders and various stats but erases them at the start of each day so I have no way to "go back" to see a record of what happened. I decide to create a logging mechanism in my system code to write the status of the system's components, the OHLC data and any orders, bar-by-bar to a file while the system runs. With better logs, I can see the data the system used and what happened when I review the systems days later. If a data correction changes the calculations post facto, I'll be able to see it and know where the change was made to the data. I like the idea of this approach better than relying on the limited built in logging. I suspect I can learn a lot form the effort and logs.

I also like this trading process a lot better than looking at the screens watching the systems all day, anticipating every tick and feeling alternating waves of impatience, discomfort, elation and anxiety.

I feel strongly incentivized to research and create more systems. I feel it as a surge of energy behind my eyes. I might be salivating. I'm definitely smiling.​

Thank you and the PR Tribe for your encouragement to carry out this experiment and for the great work on <I don't know>

Thank you for sharing your process.
July 12, 2015

Chinese Market

Hi Chief,

I wonder how you think about recent Chinese market and the way Chinese government saves the market? It's funny all the government efforts go in vain until they send the national police chief to Chinese SEC to conduct investigation on the malicious short trading on the index futures. People joke that the police chief picks his team members among the policemen who lost most money in the markets.

I wonder if this is also a manifestation of the 39th days?


Thank you for raising this issue.

I wonder how you can tell the difference between malicious trading and regular trading.

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