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May 21 - 31, 2007


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(Quotes from Ed in Red)


Tue, 29 May 2007


Rock Process

Dear Mr. Seykota:

I am not sure of the part how to replace the Bad Rock with a Good Rock. Do you take recess and decide with tribe what the Good Rock is going to be?

Can I attend your tribe to experience this process so I can duplicate here?

In the Rocks Process, we replace the Medicinal Rock with an Action Rock. 


You have workshop experience and are currently practicing TTP.  You are welcome to visit the Incline Village Tribe.




Learning the Rocks Process

is like learning the banjo.


You can get the hang of it

by hanging out with people

who are already doing it.


Clip: http://www.banjoband.com/

Mon, 28 May 2007


SVO-p in Aviation

see SVO-p

Hi Chief Ed,

This is from the instructional text, PRIVATE PILOT MANUEVERS, by Jeppesen Sandersen Inc:

"... the FAA strongly recommends the use of the 3-step process when exchanging flight controls..."

"You have the flight controls."

"I have the flight controls."

"You have the flight controls."

The FAA in fact recommends the SVO-p syntax for essential communication between pilots -- and also between pilots and the tower.


Sun, 27 May 2007


System Development

Dear Ed,

In your experience do you find that various volume measurements, such as Accumulation / Distribuiton, OBV, MFI, or some other custom indicator incorporating volume, effectively assist in filtering out purchases that under perform or highlight purchases that outperform.


By this I do not mean predict a future performance that does not yet exist, rather through the use of back testing suggest setups / situations which increase the probability of profitability.

My own back tests seem to be providing inconsistent answers to the question for both entry and exit. Can you shed some of your considerable wisdom and experience on the question? I am willing to accept the help! :)

Thanks for any help you can provide.

Price trend seems to be the best indicator of price trend; other indicators seem largely incidental.

Sun, 27 May 2007


Trading Advice


I'm a [non-us] engineer that came here in 1996. I started to work as a Process Control Engineer in a Paper Plant here in [State].

A year ago I took a position as Customer Project Manager in a Power Utility company in the Distribution side of the business.

I don't like he job I'm doing now, and being 45 yrs old there is no much room for me in the job market. Beside, with all the outsourcing this kind of jobs are very unstable.

I'm selling an apartment that we bought about 3 yrs ago and maybe be able to make $30k.

Can you help me to improve my trading skills, so in a near future I could make my current salary of $50k/yr and live only out of trading?

These days, one futures contract might move several thousand dollars per day. 


You might consider waiting until you have a few hundred thousand dollars before you begin trading.


Meanwhile, you might consider taking your feelings about your job to your Tribe as entry points.



Disgust About Your Work


might indicate



a change of profession


- or -


using disgust to medicate

deeper issues.



Clip: http://www.georgehernandez.com/h/


Fri, 25 May 2007


Rock Process Feedback

Raises $30,000,000

Hi Ed,

I am trying to fulfill a commitment I make whilst visiting with you in Lake Tahoe; my commitment is to ... post my Rock Process to other Tribe members.

Well now feels like a good time to catch up, I am delighted to let you know that I have the $20mln plus another $10mln after my presentation, things got a bit long winded in terms of legal documents etc but I launch the commodity fund on 3 April. I notice my need to explain myself has dispersed, and can now appreciate the power of silence in a meeting. I find meeting and socializing with larger groups more enjoyable.

Thank you for receiving me and for taking an onward interest.

Thank you for sharing your process.




Intentions = Results



Clip: http://www.wpclipart.com/money/index.html

Fri, 25 May 2007


Going to the Source

Hi Ed

Thank you for supplying the FAQ forum as it provides the opportunity to ask you first hand about some of the comments that you may or may not have made in the public domain, such as this one from [Name] which implies that:

Trend-following was easier in the 60’s and 70’s because of the “huge computerized trends.”

Trend-following has changed today because the “huge edge he once had is no longer possible.”

Trend-following is a secret because “Ed's not going to tell anyone what he is doing.”

And my personal favorite ; “Because if he has some small edge that will disappear as soon as he tells a lot of others”

If you would care to respond to [Name]'s version of events regarding the life and times of Ed Seykota it would be appreciated.

Many thanks Ed for the TSP on Trends, I Coded your YPROC into Wealth-Lab as an indicator and gained a far better insight into Trends than I previously had. You helped me understand that a trend has Motion and Velocity, not just Motion and my account balance is now reflecting that fact.


Re: Seykota's Method?

Posted by: [Name]

Date: October 23, 2003 10:32PM

Everyone who has the status of an Ed Seykota at one point had a huge edge over everyone else. Ed's edge was that he was a computerized trend follower who understood position sizing during a time in the 60s and 70s where there were huge computerized trends and NO ONE else had those real edges. He also had a lot of psychological insight.

You cannot imagine how huge those edges are. Today, I suspect that is main edge is that he is very smart, has a lot of money, and can use that money to find small edges. Everyone else wants to know what he does, but fail to realize that he the huge edge he once had is no longer possible.

And Ed's not going to tell anyone what he is doing, because if he has some small edge that will disappear as soon as he tells a lot of others. Nevertheless, most people cannot follow what he'd suggest anyway.

Remember what he said in market wizards, "Cut losses; ride winners (that creates positive expectancy); keep bets small (that keeps you in the game); follow the rules without question; know when to break the rules (the last one for example would apply when there are major market conditions that change and your system stops working).

I hope that helps because that is his real secret.

The back cover of [Names]'s latest book carries a bogus endorsement from me.


I wonder how much of the stuff inside is real.

Fri, 25 May 2007



Hi Ed,

Can you tell me what might be the positive intention of hate?

Maybe to avoid things you don’t like?


Hatred is an emotion of intense revulsion, distaste, enmity, or antipathy for a person, thing, or phenomenon.  The Positive intention is to avoid, restrict, remove, or destroy the object.




Anti-Hate Sign


represents the feelings of those

who hate




Clip: http://www.sfsu.edu/~ohr/noindex/


Fri, 25 May 2007


Quant Site

Hi Chief!

What do you think about [Name]'s website?

It says they aim to "find predictability where it exists". Do you think they are on to something, or are they doomed to fail because there are assuming that markets can be predicted?

Their site states their goal: to combine the best in financial knowledge with the best in mathematics and computer science to create a self-sustaining Quant system.


I see nothing on the site about supporting traders in sticking to their systems.

Wed, 23 May 2007


Music and Women Return

Hi Ed,

A report providing anecdotal evidence of the effectiveness of TTP and the Rocks Process.

For as long as I can remember, I fear rejection and humiliation and am hesitant to ask women out. I accept long periods of solitude as the cost of my freedom from the risk of humiliation.

Also, over the course of the last few years, I experience less and less aesthetic pleasure. One by one, I cease playing guitar, listening to music, and reading literature.

These knots show up in my snapshot process, where at each meeting I am blocked on relationships and fun.

At a recent meeting, I take the hot seat, and experience fear, which is trembling verging on tears. A member of our tribe who has recently returned from the Reno workshop, and is now versed in the Rocks Process asks me if remember feeling this before.


I recall feeling this when my parents fought. I remember my mother blaming my tearful state on my father and shielding me from him (somewhat dramatically) and my father saying that I was ok. I remember siding with my mother on this, feeling helpless, and believing that all I could do was curl up and hide.

We move into the Rocks process, and I trade a helplessness rock for a rock giving me, among other things, the power to voice my thoughts and feelings, to try to change my circumstances, and to exit whenever circumstances are truly dangerous and I do not have the power to defuse the danger.

I am amazed how my fellow tribe members are able to recreate the scene from my childhood. On scant information, they play my parents with uncanny accuracy. I still don't know how they were able to do this.

In the weeks following the meeting, I find myself walking, impromptu, into jazz bars and country bars, listening to beautiful music. I begin to play the guitar again. I also begin to read novels and poetry again, with an even keener sense of pleasure and insight than before. I now ask women out without a single care of whether or not I will be rejected. Indeed, very recently I asked a woman out when I estimated that my chances of getting a yes were pretty low. And, when I got the expected "no," I felt no sense of humiliation. I do all of these things effortlessly, and simply because I want to do them.

I cannot thank you, and my tribe members, enough!!


Thank you for sharing your process.





Women and Song


are some things to Wine about.



Clip: http://www.adflags.com/catalog/


Wed, 23 May 2007


Calmer Now

See Volunteering

It has just occurred to me that I never shared to anyone my curious tendency to head roll in bed before falling asleep. I would roll myself to sleep with load music in the background - this was an obvious ritual for me for well over 25 years - actually, I have decided to stop 1.5 years ago. Babies usually get over this after their 5th year, some never get over it. This is called Rhythmic Movement Disorder - my reluctance to explain this to anyone might be one of my obstacles to get intimate and really close to anyone. I felt like a freak - some studies relate this to autism, mental retardation or maternal neglect. I recall being at a doctor once at age 9, who concluded that I'll "just get over it". I knew it wouldn't be that easy.

From my own experience, I attribute this to plain boredom, loneliness accompanied with too much pent up energy (probably emotional) and a way to comfort myself while lying in bed. I would hypnotize myself and most of my rushing thoughts would just flow with the rhythm of the music, I would also play some sort of "movie" in my head. After a while, I would get tired, turn off the stereo and just fall asleep, with a warm, tingly pulse over my whole body.

I thought this was just plain crazy and lasted way to long, so I decided to stop. I am calmer now and sleep much better. I was able to stop when I mapped out all the characteristics of me doing this - the biggest conclusion is that I was doing it for self-comfort, so I just accepted the fact and started comforting myself with optimistic thoughts instead. I also found a few comfortable sleeping positions during the healing process and it all worked.

I'm glad it's over but nevertheless, it's quite a chunk of my true self and want to find some ways to get the news across to these special people in my life.

Thank you for sharing your process.

Wed, 23 May 2007

Excitement and Boredom

Yesterday I buy [stock] at 43.50 betting on a breakout. Today I walk into a small gap opening. Great!  The stock quickly trades up into the 44.40s and then goes into bore mode. I have an urge to sell. I think it's because I'm bored. It's not exactly an exciting stock. I wonder if I might be better served finding my excitement away from the market. Ahhh ... As I write this the activity picks up as the stock retraces some. To add or to sell or to do nothing at all ... That's the question. I elect to do nothing. I find that I make the most money when I am bored.

You might consider the difference between being bored and being willing to experience boredom.

Wed, 23 May 2007


Drum Circle

see: previous

(Intra-Tribe Communication)

After watching the video, it looks like there is much in common with good old fashioned TTP. I imagine by the end of the Tribe meeting, everyone is feeling buzzy and numb.

Like the rest of us, I am investing much of my focus on the reprogramming processes that goes by many names (Rocks / Re-parenting / Looping / Hand me downs / Patterning / Regression etc). Going back and deciphering the old code in an area of our life and then improving upon it with revised code is a common theme.

In my mind I am envisioning a number of interacting loops that have been relating to each other in a particular way for a long time. When you go back and reprogram a loop, it alters the whole system of interacting loops. This can create disorientation that many of us are familiar with after the Rocks process. The system and CM want to move the reprogrammed loop back to where it was because that is what it is used to. Thus, to ensure that we create lasting change, I suspect that working on multiple loops and employing reinforcement processes (group and individual) is important. Ways to do that are finding me. If you have any thoughts, please let me know as I am in the process of organizing a guide and workbook to collect thoughts and experience in this area which I plan to share with you soon.

In the meantime, I'm going to sign up for some belly dancing lessons!

Imagining, envisioning and suspecting are not quite the same as experiencing.


Talking about and analyzing the Rocks Process is not the same as experiencing it.

Tue, 22 May 2007

Wants Cow Pie

Austin, where the heck did you go? You where here just a minute ago, maybe you got filed with the TSP, chart server, and my personal favorite the professor /grad asst / student model of the “Associates Program”. Maybe you could post a picture of a big hot air balloon, or a wind bag, or a big pile of cow poop, or something.

You might consider taking your feelings of frustration to your Tribe as an entry point.




Cow Pie


Clip: http://www.cuttergallery.com/Slater%20


Date: Tue, 22 May 2007


A Tribe, Drums, Fire, and Alchemy



In TTP, we combine group process with the accountability for producing results.

Tue, 22 May 2007


My First Tribe Experience

Mr. Seykota,

I am a new member of the [City] Tribe. I attended my first Tribe meeting last Friday evening. I am sending you a written account of my first Tribe experience.

Thank you for creating and operating the TT website,
and for the TTP.


I recall feeling quite anxious as I drive to my first Tribe meeting. My tendency is to deal with issues via the “do-it-yourself” approach. So, attending a Tribe meeting stirs up my feelings and pushes me out of my comfort zone.

Some of my nervousness and anxiety dissolves as I arrive at the meeting and talk with other Tribe members. They are warm, open and friendly as we introduce ourselves. I recall thinking it is nice that we all choose to spend our evening working together with the intention of improving ourselves and each other. There are many other things we can do on a Friday night, but we are in the Tribe ready to work.

Our Tribe leader asks if anyone has an issue they want to bring to the “hot seat”. No one volunteers. For a moment the meeting seems to slow down, however our leader adapts to the situation and purposes that we split the main group into pairs and conduct “hardball” sessions. We pair off into groups of two members, switch gears, and the meeting takes a new turn.

I choose to address the issue that kept me from attending a Tribe meeting, though I have been an avid reader of the FAQ for the past four years. The issue is my fear of reaching out and building relationships with other traders.


My hardball partner says, “Show me what is standing between you and building bonds with other traders.” I get a picture in my mind of having to go to different companies and sell myself to their management team. I immediately feel tension in my arms and shoulders and I hear a judging internal voice say, “I don’t want to do that.”

I mention to my hardball partner that I hear this internal message. My partner responds by asking, “What is it you don’t want?” He encourages me to increase and intensify the feelings I am trying to avoid. Initially, I think what I don’t want is to have to sell myself. I think it seems insincere. I continue allowing the tension to build. My eyes are closed and the word “REJECTION” flashes in my mind. I focus on this word and gradually it starts to dissolve, giving way to something else. The tension fades and I feel more relaxed.

I open my eyes and look at what is around me. I am in the moment with other traders and we are all trying to support each other.

I realize that participating in this process is the first step in dealing with the fears and judgments that have prevented me from reaching out and building relationships with other traders. As the hardball process concludes, I sense that a transformation is beginning. I wonder how these changes will unfold and play out in my life.

Thank you or sharing your process.

Tue, 22 May 2007


Curve Fitting

My problem is curve fitting.

I optimize a simple moving average using 1 minute bars in the Russel 2000 Index. I optimize over the past 3 months, 3 weeks, 3 years, whatever. The best results are produced. I find that they have NO bearing on future performance. So I test using out of sample data. I find no pairs of data repeat themselves. Thus, no pattern, no system.

Is trying to find a consistent pattern using technical indicators not feasible.

What do you think?

If you like 1-minute bars, You might try 1-second bars and 1-millisecond bars.


Warning: Don't try 1-day bars and moving averages over 90 days unless you want to ride some meaningful trends.


One day has 86,400 seconds, so trading once-per-day has a frequency of about 1.2 X 10-6 Hz.




Really High  Frequency Trading


Microwave trading at 108 Hz.

is about 1014 times as frequent

as day trading.


Gamma ray trading at 1018 Hz.

is about 1024 times as frequent

as day trading.



Clip: http://www.britannica.com/ebi/art/


Tue, 22 May 2007


The Morning After


See May 20, 2007: Silver Keyboard

Dear Ed,

"systems" seems to be true.

After first TTP experience a guy recommends me a dating web-site. I look for him there and find two nice guys I want to contact. I apply to appear at the dating website.

I think about work-life-balance: working during the day and relaxing in the evening. I do it. I plan to write an inspired text for my page in the dating-web next morning when the air is still fresh, the birds are singing.

My mother calls me late in the night. She sold a big chunk of fine stock in her portfolio despite a developing uptrend, gives me a list of funds to examine and wants me to fill the portfolio with new stock and funds. Positive thing: she respects now that I am active in the area of trading and investing. Negative thing: My mood is gone. Why does she call in the night despite I asked her to call next day. I feel pent-up.

I know that all of this is happening in my head, it's my buttons that somebody else presses. But how does she smell that I am sort of leaving?

In the morning I look at the two guys. They still look great. They are a little bit younger as I am like the guy was who recommended the page to me. Would be nice they answer.

Definitely, I do note some links between "back-tested" snapshot by tribe as described at May 20 and the incidents after snapshot and -not finished- TTP.

I am very glad that there is a method to break up crusty structures.

Thank you for sharing your process.


Mon, 21 May 2007


Performance Question

Dear Mr. Seykota,

I came across an article about you in Trader Magazine last December, became aware of "trend following" and have been researching / learning as much as possible ever since. I think it is a much smarter strategy than what I have been implementing over the past few years. Due to the lack of material on the subject I purchase [Name]'s course after reading his book. He and I have been conversing whenever I have questions.

With all that said I have seen that your track record truly trumps all others. I emailed Michael earlier today and he responded:



Dear [Name],

Thank you for your thoughts. Roughly on the same topic ... Ed Seykota's performance has been on a whole different level than the rest of the Trend Followers we have discussed, (250,000% with withdrawals included). Even if his means of diversification and risk were at the perfect levels I don't think it would explain the HUGE discrepancy in his performance. As I am sure you have read, Ed noted "special pattern recognition" as part of implementing a position. I can see that being an effective way of "cherry picking" signals. From your speaking with him, do you have any other input into the enormous performance difference between Ed and other Trend Followers?




Beyond all that has been written ... I have nothing further to add on Ed!

Have you asked him this question?


So, I figured I would ask you. I sincerely look forward to any thoughts you have.

Thank you.

Riding Bulls (and bull markets) is pretty easy, in theory and in retrospect. In actual practice, and in the now, bulls and bull markets might bring up feelings you are unwilling to experience.




Some Bull Riders


would rather work on their systems

than on themselves.


If you want to take the whole ride

you have to work on both.



clip: http://forum.connpost.com/photoblog/


Mon, 21 May 2007


Track Record


Can you take a brief look at my last 2 months track record. These are the exact trades I have done in my account over the last 2 months, which I realize is a very brief unit of time. My only question is this: Do you see any holes in my basic position sizing and money management (cutting losses, riding winners)? I have developed my “system” over the last 15 years, and traded real funds for the last 2.5. If you look at “sheet 2” of my excel spread sheet you will see some stats I put together. I have had a tremendous run in the last 2 months, (based on $50.00 a RT) which is not the rate I pay, as I pay much less. I am up 43.1%, with my biggest (closed) losing trade being $1,425.00 and my biggest (closed) winning trade is $11,590.00. After today these numbers are different as my open positions; crude and beans tacked on almost 5k more in open profit today, and Beans may now be my biggest winner.

I have a track record of a little over 2 years. Last year after fees I was up $32k and change starting with 50k. In my first year I was up $23k starting with 50k. In the last 2 months I have exceeded this. I am very cognizant of draw-downs etc. lol. I started a new track record because I changed my entry methodology, which I realize makes up less than 10% of a ‘system” but psychologically I was not comfortable with my original method. Since the “change” things have gone parabolic which is very peculiar.

If you have any insight or advice I would be most grateful.



You might consider including a graph of your daily equity and daily total margin requirement.  You might also compute your MAR or another bliss function.

Mon, 21 May 2007


SVO-p Endorsement

(S-ubject, V-erb, O-bject - present tense)


A man who works for me, tells me that Dean Koontz writes some of his chapters in SVO-p. He is a best selling fiction writer.


Mon, 21 May 2007


Volunteering Job and Check-In

Hi Ed,

Per your suggestion, I started the volunteering job this month in a cancer support association. I go once a week and talk to sick people to help them through their pain and current experiences. I have been twice in a hospital (actually a hospice) in which people with prevailing physical pain stay there or visit on a regular basis.

I notice that I have a hard time convincing some people that I can manage the task and that I have sufficient knowledge for doing the right thing with the patients. The patients however seem to enjoy my company and say many good things about me doing all this. I feel appreciated by them. I also notice I'm more open to people in general, I catch myself smiling more and having more regular conversations going on.

I look forward to seeing the people in hospice, I feel that this way of connecting to people might have been a missing piece for all my life - it's also interesting to find that I am very comfortable doing this. I fantasize I could have done just the same as a kid if only my family took me seriously enough to believe I could help them this way. What a pity, now I get sad easily.

As soon as I returned from USA, I got some interesting insights about myself. This also refers to my sister - I sent her some materials on emotional intensity and the theory behind gifted children by Dabrowski, Piechowski and Silverman. I don't consider myself gifted (and most gifted people would say the same about themselves) However, I read this stuff and I look back and I see a lot of analogies.


Most importantly and regardless of being gifted or not, if emotional intensity is an apparent companion of some sort of advanced development, then it should have been nourished by our parents and schools, not slammed down and punished as in our case. My mother related to this and said, "This is an eye opener, if only we had known".

I could have been an achiever, if I only worked harder instead of being indulged in my narcissistic habits of not doing much and "getting everything" - now I am paying the price by going through the whole cycle again and relearning to work more to get more tangible results. That's putting the blame on me - but the truth is I tried many times, I just wouldn't budge for some reason. Now I figure that if I could find some satisfaction according to my "inner priorities", my body would just let me do things I want to do. I hope I'm getting there. Maybe with time, I'll start to tick the right way.

The narcissistic traits in me are also becoming very clear to me, the way I treated people, my "outer" attitudes etc. Although it hurt me more that anybody else, I just do all that. I also didn't realize there is any other alternative to my behavior (and there wasn't for that matter - the feelings where sometimes just overwhelming) and that the other person could possibly have a different mental state, reality or feel any different my occasional very intense moments. I assumed that I know exactly what the other person knew, felt etc. ...and that the other person knew what I felt! This is not a good way to go through relationships although I am open minded enough to assume that other people have lots of compassion within them.

I feel this email is loaded with regret and rightly so, I do regret a lot of things. Now I think of my girl I love for so long. If only I didn't have so many emotional blockages and that default behavior of mine, well, enough said. I have my down days. Right now, for example, I feel quite lonely.

Thank you for sharing your process.


You might consider sharing your feelings of loneliness with your girlfriend.




Serving Others


tends to cure narcissism.



clip: http://www.digital-ethos.com/