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Feb 12, 2020

Baffling Inconsistencies

Hello Ed.

Hope you are keeping well? are a few questions I am a little baffled about.

1) I read on the great Internet that you took $5,000 to over $12,000,000 in twelve years. That is one heck of a gain every single year. Is it the whole story?

2) You talk about having to take a more concentrated portfolio to get bigger gains. But the  say your maximum risk should never exceed 2.5%. How can the two co exist? Is not it one or the other?

3) you say never risk more than 2.5% on any one trade. But then tell people that put up money with you to risk 50%. How can they lose 50% if the maximum risk is 2.5%. That would be 20 successive maximum losses. I could see you possibly hitting 20% drawdowns..but 50%.

Have a splendid 2020

Thank you for pointing out some discrepancies between what various other people report me as saying.

I generally refrain from telling people what they "should" do. I wonder if you can tell me your source for the 2.5% should theory.

To help you reconcile your baffle, you might consider the case below.

Say you enter five independent trades, each of which has a half percent entry risk.  

Than, say these trades all sweep on to success so your portfolio triples.  

Then, say your portfolio has a 50% retracement so you wind up with a net 50% gain.

You might consider taking your feelings about <believing everything you read> and <digging into the math> to Tribe as entry points.
Feb 11, 2020

Looking for a Mentor

Hi Ed,

First off, I hope this message reaches you well. I recently read your interview in Jack Schwager's Market Wizards and learned of your reputation in the markets. I also had the pleasure of stumbling across your "Whipsaw Song" on YouTube which was an absolute treat. Not to mention more valuable than 99% of trading advice I've ever received!

I am reaching out because I have been trading for over 5 years and still haven't hit my stride. Many of the reasons can be identified in your Whipsaw Song but one aspect of trading still eludes me: my niche in the markets.

In other words, up until this point I have sporadically taken trades based on hunches, tips, fundamentals, technical indicators, you name it.

I have had a few winners (which I closed too early) and have had some painful losers (which I held onto too long), but I have managed to keep my account alive. My problem is, I have never had a trading mentor to show me the ropes and I haven't been able to find a unique (& successful) approach on my own.

What advice would you have for someone who has been trading for 5 years but has not much to show for it, other than still being here?

I live in Denver, Colorado.

Do you have any trading colleagues here who you could point me to for mentorship? Do you offer mentorship yourself?

Thank you for reading. Kind wishes,

Thank you for reaching out to me.

You seem to already know the rules of trading and you seem to have awareness of when you follow them or not.

You might consider taking your feelings about <embracing discipline> to Tribe as an entry point.

Feb 8, 2020

S/R System Confirmation

Hi Ed,

I've replicated your support resistance system results in excel too.

Kind regards,
Thank you for completing the exercise and for letting me know.
Feb 5, 2020

What You Measure, Improves

Greetings, Ed

A few years ago in Tribe I complain about not being able to develop trading systems to my satisfaction.

A few weeks ago, I get an "AHA" to log my daily system development hours in a spreadsheet.

I calculate a simple daily average hours spent in system development with sum (all hours all days) in the numerator and n (all calendar days since start of log = ( today()-firstDate) ) in the denominator.

The puny daily average number of hours opens my eyes to how little time I have been spending on system development.

I consciously decide to raise my daily number of hours spent in system development and I begin to get results that I like.

All the best...
Thank you for sharing your process.
Feb 3, 2020

Syncing with Nature

I have spent many many many hours at the sea shore contemplating the movements of markets and even some oft-quoted statement attributed to you about said subject. 

While I cannot be certain what you meant, it is no matter to me at this point. 

There is a type of wisdom in nature's patterns which we can observe. 

Thank you for pointing that out. 

I changed my strategy and stopped fighting the tide, and find myself in sync with the rhythm of supply and demand more often. 

My results changed too, 180 degrees in the other direction, from a loser to a winner.  

Thank You,
Thank you for sharing your process and your insights.
Feb 3, 2020

How to Determine Regime Shift

Hi Ed, thanks for the answer to previous FAQ questions; as your answers help enlighten the trading journey.

My next question is: if you were to create a trading algo, and it had to know when the market regime shifts from sideways to trending (and back), which inputs/indicators/methods would you use to determine that?

Thank you for your lifetime of wisdom.
Thank you for raising this issue.

Shift detector algorithms depend on assessment of trend.  The definition of trend depends upon your preference for trend length.  

The unique instantaneous moment-of-now trend (trend length = 0) exists, in theory for some good-behavior functions such as ramp and sine.

Other than that, for real world detectors, you pretty much have to start with your own trend-length preferences.
Feb 1, 2020

TTP Notes

Greetings, Ed.

I hope this email finds you well. I review my TTP notes and I like what I’m reading. I hope that sharing them with the Tribe will help some out—

I ask clearly for what I want. 
I’d like to know how you feel about…  
Tell me how you feel about …    

Tell me more about how you feel.   

I wonder what you would like to do?     

I acknowledge and thank every time someone shares feelings & wishes with me.   

I get information gently, without asking questions.   

I don’t ask “Why?” questions—they teach people to make excuses.   

I stop stopping.   

I quickly set priorities & go instead of stopping with analysis paralysis.   

I stop talking to my feet.   

I get clear agreements & I check for willingness.   

I establish rapport & intimacy.   

I don’t ask questions—I say I’d like to know how you feel about…    

I share my feelings.   

When I stop worrying and stop stopping, then I move forward and make progress toward my goals.   

In Tribe we set goals and work towards them.

If we get stopped then we use the Rocks Process to overcome them.   

I bring willingness.   

Rapport or War.   

I feel all my feelings and learn their positive intentions.   

I know what I want and I ask clearly for it.  

Problems are a difference between what we have and what we want to have — Tribe helps remove the difference and then what we have equals what we want.   

I go faster by going slower.  

Intentions = Results so I look at my Results to understand my Intentions.

All the best…

Thank you for sharing your notes.
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