The Trading Tribe

Ed Seykota's FAQ
Home | Send Mail to FAQ | Resources | Ground Rules | FAQ Index

Epidemic Lab

Contributors Say Ed Says
Jan 31, 2021

Do-It-Myself (DIM) Process

Dear Ed,

Thank you so much for your previous reply.

TTP has had a huge positive impact on my life, and now that I feel like I would need it more than ever, I am unfortunately not in the position to access one (probably the same situation of most of the people out there).

I have tried a few times to practice TTP on my own, with various degrees of success, but it always feels like something is missing (relentless validation), and according to what you have written in the Trading Tribe book (if I recall it correctly), this is something that you have found unreplaceable according to your own experience.

I guess I just want to share my feelings of "wishing there was a way to self-TTP".

All the best, take care Ed.
Thank you for sharing your process and your wishes.

Jan 22, 2021

By the Books


Thank you so much for your two wonderful books. I just finished reading them.

I'm now going to create my own trend-following trading systems, but have never done so before. Do you have any advice on what software to use that will create buy/sell recommendations based on a predefined system? How to backtest on prior data? Or any further books I should read?

I wonder if spontaneous dancing is an expression of forms...

I'll leave with a quote:

"The “negative” subjective and objective events that you meet are meant to make you examine the contents of your own conscious mind. In their way the hateful or revengeful thoughts are natural therapeutic devices, for if you follow them, accepting them with their own validity as feelings, they will automatically lead you beyond themselves; they will change into other feelings, carrying you from hatred into what may seem to be the quicksands of fear -- which is always behind hatred.

By going along with feelings you unify your emotional, mental and bodily state. When you try to fight or deny them, you divorce yourself from the reality of your being. Dealing with thoughts and feelings as just directed at least roots you firmly in the integrity of your present experience, and allows its innate motion and natural creativity to thrust toward a therapeutic solution."

-The Nature of Personal Reality, by Jane Roberts

Thank you for acknowledging the work.

You might consider building your own back test software on a spreadsheet.

You can find a template and instructions on this site at TSP - the Trading System Project.

I hold that every action expresses as a form.

Per your Roberts material: I hold events as neither positive or negative.  I wonder whom Roberts claims makes the meaning - that means to make you examine the contents.

I find that attempts at Do-It-Myself (DIM) attempts to pursue the path from pain to perception tend to wander off the path.

The Trading Tribe intends to use group process to maintain focus and accelerate the explorations.

Jan 21, 2021

Wants to Attend Austin Tribe Series


Ed Says: "I plan to host another Austin Tribe series when I get more clarity about the ever-evolving rules about travel and meetings."

I'm interested to join if you go ahead.


Thank you for expressing an interest in attending a Austin Tribe Series.

I plan to announce the next one on this site and also via the TT Reach-Out system.
Jan 21, 2021

Ranking Method

Dear Ed,

I have made a few different attempts to do the trend exercise.

The first round I used a list of all the NASDAQ stocks. Loop through the list, take each symbol, pull the 10/21/2004 - 10/21/2005 historical data from yahoo finance stock api.

Do some if statements, if the number of rows are > 256 and stock price > 5 after the close on 10/21/2004 then proceed. Calculate the lag, calculate the ROC and the yearly % ROC. Print the result in a log file. The process for this one works but the stock api works very seldomly.

Second round. I buy a kibot data subscription, I download the 10/21/2004 - 10/21/2005 historical data for BRLC, BCRX, BLSC, BTUI, RNWK, SNDK, TWTR, BFT, PRLS, SUPX, KNOT, BWNG, BRN, LEXR, ANSI, BABY.

I'm only able to find data for the subset BCRX.txt, BTUI.txt, RNWK.txt, SNDK.txt, PRLS.txt, SUPX.txt, KNOT.txt, BRN.txt, BABY.txt.

I loop through these and do the same calculations and get the below result. The values are slightly off due to python pandas library way of handling floats.
Thank you for sharing your process.
Jan 21, 2021


Hi Ed,

What do you call an alligator that works at the CFTC?

Thank you for sending me your joke.
Jan 19, 2021

Wants Advice

Hey Mr. Seykota,

I am [Name] a freshman studying finance at Bentley University. I have a really strong interest in the market and have been trading for about a year now. What would be your advice to an 18 year old looking to further advance my interest and skills inside this career. Thank You...
Thank you for reaching out to me.

You might consider telling yourself exactly what you want.  

You might also consider telling yourself the truth, in the likely event that your wishes wind up coming true.
Jan 19, 2021

Wants to Learn

Hello Mr. Seykota,

I have read so much about you and just came across TT.  You are a absolute legend.  The traders you worked with were also very successful.  Do you teach your method?  If so, I would love to learn and would be indebted.

Thank you for reaching out to me.

I don't know how to teach you anything.

I can, perhaps, enjoy the journey with you while you teach yourself.

You might consider starting out by reading through FAQ.
Jan 19, 2021

Working Perfect With Zero Loss

Hello Sir,

My name is [Name], 40 yrs old from India , and i have an accurate trading strategy for US100 indices, would u like to believe in it and give it a try, i have tested it for more then a year now, working perfect with zero loss, i don't expect any money unless you use my signals and make money out of it , awaiting your reply

Thank you for sharing your results with me.

I wonder if you could send me a copy of your brokerage statements for the last year, showing all your trades.

If your system seems, as you say, accurate, I might like to have a closer look.

If not, I might can introduce you to Ken Paxton, Texas Attorney General, who might have an interest in your system.
Jan 18, 2021

Continuous Compounding

Hi Ed. I have 1 question. You write in Trends article (TSP) ==

After 5 days (the time constant) the Lag is about 16.72 or about 2/3 of the way to the new price. 

If we were to compound continuously, rather than once per day, the price would be, after 5 days, one "e" of the way from $10 to $20, where e, Euler's constant = 2.71828.

How to compound continuously ema function, rather than once per day?
Thank you for raising this issue.

For more frequent compounding, separate the interval (5 days) into smaller increments.

For example, you might like to divide the 5-day interval into 50 increments, dt, each 1/10 day long.

Then, for (k = 0 k < 5; k = k + dt)
L(t) = L(t-1) + dt / T (P - L(t-1) )

You can make dt as small as you like, as your Lag gets arbitrarily close to continuous.
Jan 16, 2021

Crossing Over


Could you please show how to pre-compute the price at which two exponential lags cross? 

Kind regards,
Thank you for raising this issue.

Lag L: L(t) = L(t-1) + 1/TL (P - L(t-1))
Lag M: M(t) = M(t-1) + 1/TM (P - M(t-1))

For crossover: set L(t) = L(m) and solve for P.

Jan 15, 2021

Crude Trader


This is [Name] from Pondicherry, India. Trading in Crude. Want to learn trading technicals

Thank you for letting me know.
Jan 15, 2021

Wants a Trading Partner

Dear Mr. Seykota,

Good evening!

I am a 23-year-old full-time algorithmic equities trader in San Juan. I was speaking with a few friends about traders in the area and one of them mentioned your name.

I am writing because I want to thank you for your contributions over the years and for inspiring me as a trader. Your chapter in Market Wizards has always been one of my favorites.

A little more than a year ago, I moved to PR for Act 22. Before this, I was studying flute and harp performance at Juilliard and creative writing at Columbia. I trade my own account and my strategy is technical and data-driven, based on scans I built from scratch with approximately 85%-win rates. I’m also working on developing an automated system and managing my investment portfolio to expand my overall knowledge of the markets.

Anyway, I wanted to reach out to say hello and introduce myself. It has been difficult to meet other Act 22 traders during the pandemic, so I don’t know very many people.

I am not sure whether you are actively trading equities, but if you know of any equities traders on the island who might be interested in discussing ideas, I would greatly appreciate any information. I have been trading alone for quite some time and have been looking for a trading partner or an occasional mentor so that my progress does not become stagnant.

I hope you have a nice weekend and thank you very much again for your inspiration!

Thank you for reaching out to me.

As I recall, San Juan has an active trader community that sponsors social events. You might consider reaching out to them.

Per your 85% win rate, you might consider checking your back test returns for sensitivity to transaction costs.

Jan 15, 2021

Feeling Fear

Dear Ed,

I have some feelings about your FAQ. I have had a few chances to meet you so I feel like I can write a bit more personally to you and I want to use these chances to get mentored by you through email but I know you post my emails to the FAQ and this raises some feelings in me when you do it.

I feel scared when you post my emails to FAQ because I'm scared the secrets of trading that I'm chasing gets given away (I know there aren't any trading secrets). I want to trade and make money trading so I'm fine feeling these feelings when you post my emails but in order to "amp" them up and get them to the surface I'm telling you I feel these feelings. I really want to make money trading.

I found a company that lets me earn trading capital, through proving that you can consistently be profitable, their words not mine.

They have a few rules, for the package that I selected I'm not allowed to lose more than $1000 in one day and I'm not allowed to lose more than $2000 in total. They provide a simulation account with $50k, If I let the account go below 48,000 then I lose the chance of getting funded and have to re-enroll in the program.

There are more rules but in the name of brevity, essentially what the rules push for is to only trade in the morning from market open until 3:10pm so "day trading." I recall from a Tribe meeting you telling another member that day trading is shameful but I don't know if you mean that it isn't possible or that you were just using that to help the Tribe member feel shame and amplify shame. So to find out for myself if day trading is possible or not I'm giving it a go.

This morning I trade at the open for 2 hours and lost $412. It feels really scary to see this happen, it feels like the floor under my seat drops away and everything I have read about trading is a lie.

I feel super duper scared in this moment seeing the system that I worked out not working... I have my stops in place, I have a bracketed order set to take profit twice as big as the stop loss.

The theory checks right... but then it doesn't work aghhhh I feel like screaming (I actually did a little scream while typing). I spend a lot of time reading your FAQ's, reading multiple trading books but it's just not enough.

I don't know the model for a profitable trader, yikes this is scary will I ever learn this model. Where can I go to learn this model. I'm a full time trader now. So I guess when I say I'm searching for the secret sauce (I know there isn't one) I'm searching for the right model, and by model I mean behavioural model.

Neither of my parents are profitable traders so they can't teach me the model, I don't have an uncle or family member that is a profitable trader so they don't have the model, neither of my friends are profitable traders so they don't have the model, so where am I supposed to learn the model? The closest thing I have to learning the model is from you through FAQ. I hope it's enough!

All the best
win Thank you for sharing your process and feelings.

You might consider the positive intention of fear motivates risk control.

Perhaps you might fear enough fear to (1) stop doing what does not work and (2) conduct some back testing and optimization on your method so you wind up with something that has some chance of working.
Jan 14, 2021

Wants to Make 80K

Dear Ed,

I feel so frustrated. I'm a trader now, I used to want "to be" a trader but why wait I'm a trader now! The frustration; now as a trader I'm practicing using a program that lets you replay previous trading days and practice trading futures contracts. I'm mainly trading the ES forward contract.

A cool feature is that you can increase the replay speed up to 400times of the normal speed so one second happens every 1/400th of a second. So it allows me to sort of backtest a manual discretionary strategy.

My strategy
- Chart: 20second candles
- Wait for a horizontal structure to form
- Place a buy order with a stop loss of 7 points and a take profit of 15. The platform also has a feature where if the trade moves x points into profit it will move the stop to break-even. Mine is set to 4 points
- As the trade grows more profit I move the stop loss on the DOM(Depth of Market) to where I see a support/ pull back level in the bids or asks limit orders.

I feel frustrated because it doesn't work all the time, I wish it worked a lot more than it doesn't. It will work a few times and I will get profits and feel like I'm a trader that knows a profitable strategy but then it starts to not work and I feel like a trader that doesn't know a profitable strategy.

As a trader that really wants my income and living to come from trading futures and speculating in various markets and the profits thereof, I get really sad when it doesn't happen. I feel really sad that I'm a trader that is still young and new and hasn't gone through lots of markets and feel confident in the losing times that the profitable times come time and time again.

I need to keep my head up and keep pushing forward with a sense of positivity. Worrying about money just doesn't work (Hard not to do, though I try). Lucky for me I'm still young with only a girlfriend and no kids so I have time. I'm glad I get to start early. I'm also scared that trading is a facade and not true and that it isn't really possible to make a living trading. I want to make $80,000 a year from trading futures, sure a little more is fine. The problem is I have studied systems and there is nothing linear about system returns so saying I want $80,000 a year from markets is well probably not possible but I guess there is nothing wrong with saying I want $80,000 a year from trading profits, hopefully that will set my subconscious on a path to figure out how to do it.

My parents aren't very good with emotions, they don't understand them so I haven't had very good models for healthy behaviour and views on emotions that leads to high self belief, self worth and self love. Ingredients I see the wealthy people I have encountered through time have. I'm trying to learn it by myself and by seeing a life coach / nlp practitioner.

I feel sad that the odds seem stacked against me, I didn't get good grades in high school, I didn't get an engineering degree like you. I'm scared that it's a sign that I have too many emotional issues and that I'm just not built for this industry. I didn't have the grit in high school to push through the fear of failing a test to even study for it. I'm not trying to hate on myself, I'm just willing to face the facts and progress from where I'm at.

All the best
thank you for sharing your process.

You might consider back testing your system over a couple decades of data.

You might come to learn that short term systems such as use 20-second candlesticks incur large transaction costs from commissions, skid and recognition delay.

You might also consider the addictive nature of short-term dopamine-centric trading; it can provide an escape from dealing with deeper issues and interfere with attaining your financial goals.
Jan 13, 2021

Trying to Register


I have attempted to sign up (register). 

Did so and Nothing happened.

Nor since my numerous returns can I log in.

Is there something else I should do?

Also, are there any Tribes that meet via Skype or other on line method?  I'm not concerned about CV19 but I do not see any Tribes around me (Nebraska) None in SD  ND CO KS Iowa . . .

I have read the Trading Tribe Book and can see it would be far better to attend a live meeting
but how and who?
Thank you for sharing your process.

Registration gives you the possibility of communicating with other traders on the list.

It can also get you an invitation to attend one of my Workshops.

I have Workshops and Tribe Meetings on hold pending resumption of traditional protocols for  travel and meetings.
Jan 12, 2021

Wants a Mentor

Mr. Seykota,

My Dad always told me to aim for the top in business.  I believe you are a leader in your profession, and I would like to benefit from your experience.

I am an 18-year-old aspiring broker currently studying in a private college in Canada. For the past year I’ve been amassing as much knowledge as possible in stock fundamentals and analysis.

I believe that it would greatly enhance my chances of success if I had a mentor to better understand the profession. I will be spending a month in New York this June and I would be very grateful if I were able to spend some time with you.

I would be available whenever it would be most convenient for you. I understand that your time is very valuable and if you’re unable to grant my wish, I fully understand. I’m available to discuss this more at your convenience. You can reach me at anytime, either by phone or email. I look forward to speaking with you and hopefully learning more about stocks with you in person. 

Thank you for sharing your process and for raising this issue.

You might consider that I offer mentoring through this site - for free.

Jan 12, 2021


Hello Mr. Seykota,

If the stock market is up, that would logically imply the economy is doing great.

So if the economy is doing great, then why doesn’t the Federal Reserve raise interest rates back up to 5%?

Thank You,
Thank you for raising this issue.

You might like to consider the possibility that neither the markets nor the Fed behave according to the same logical system you use.

Jan 10, 2021

Where to Start

Dear Ed,

What an honour it is to know you are on the receiving end of this email. I am 18 and I live in London. 7 months ago, soon after my birthday, in the trough of the recession, I became fascinated with value investing. I spent my time reading The Intelligent Investor and Security Analysis. I have since reaped the rewards of Graham's prudence and currently hold an ISA that has performed well.

Recently though, after being lucky enough to chat to the co-founder of [Firm], I was recommended the book Market Wizards. I am sure you are familiar with this book, for you are certainly a centrepiece.

After reading your interview I was struck by your wisdom and insight into the market. 30 years later, I imagine you are somewhat like Jesus himself. Well, it is this same wisdom I seek today. There is no doubt that the stories contained in that book offer me great elation: however, today's markets are far more unfamiliar than they were when Mr Schwager published his book. Although, as you mentioned, "The markets are the same as they were five to ten years ago because they keep changing - just like they did then". I am sure it is this philosophy that allows for great success in a world of accelerating change.

Benjamin Graham offered the notion that investing can, and should, offer safety of principle. Although in a more globalised world, where value opportunities have depleted, basic human nature will always permit such a method.

This is an ideology I shall carry forward throughout my investing activities. Speculation, on the other hand, as I have learned, is more about managing risk: working with the odds, and accepting that nothing you know is for certain.

I find this endlessly exciting, and something I definitely want to start focussing my efforts on. The thought of doubling your money in a day as quickly as you can halve it has been the source of many of my thoughts as we enter a third lockdown here in Britain. The problem I have had, however, is that I don't know where to start.

The internet is packed with "trading gurus" and exploitative online courses. For every person who says scalping is the way forward, there is another person saying that the money is in swing trading: the chain goes on and on. That's before you even consider the different asset classes.

So I come to you, Mr Seykota, as a beacon of reason and perception. Where do I begin? I am not looking for detailed strategies or trade secrets, I am looking for a place to start, a place to learn. I have been considering scalping small cap stocks where the institutions and their algorithmic counterparts are less popular.

Perhaps I should focus my efforts on S&P futures, or stock options, or commodities trading (where many of the legendary stories from Market Wizards are set). Although I want nothing more than to hear your advice, I understand that you may have got to this part of the email thinking that I am an inconvenience and a waste of time, this is something I can very much understand: It is a privilege just to know my message has come across. 

I hope to read TTP soon, another book to add to my growing list of trading literature.

All the Best,
Thank you for sharing your process and for raising the issue about where to start.

You seem to have a grasp on the basic literature.  From there you might consider conducting some back testing to get a sense for the kinds of systems that have a chance of working and for the ones that don't.

You might also consider confronting "gurus bearing systems" with a request for back test results along with supporting brokerage house statements.  

You might also consider examining your fascination with doubling and halving your equity;  Over trading may excite dopamine channels that may interfere with risk control.

Jan 8, 2021

Portfolio Management

Dear Ed,

I hope you are fine and I wish you the best for 2021. I just finish the new Market Wizards book from Jack Schwager and I’m happy to see that you are mentioned several times.

The discussion about system parameters with  Marsten Parker remeinds me of my own struggle with overfitted trading systems. The systems he uses or used historically tend to lose their edge or tend to stop working after several years and that triggers a fear in me. 

I remember using an intra day stock index trading System with 30 indicators and about 50 parameters, hardly earning the transaction costs. I recall William Eckardt on this topic, saying that 3 parameters are maximum for a trading System.

That impresses me, giving a clear advice for this problem. After tons of back testing i would say, he is right, if you separate long and short systems, but who knows. Finally I manage to align with your philosophy that medium and long term trends are simply the only reliable phenomena one can use for trading, if you are a private investor and don’t have access to real suprisamentals (like Chris Camillo, also featured in the new MW book). So it is time for me to read your faq regularly again, that helps me to deal with these fears…

Over the last 3 years I have serious trouble in my private life, falling in love with another woman and finally getting divorced from my 15-some years relationship wife. Throwing away the shared time, the memories of our lives with our child and the common values is still hard for me, but the alternatives, ie keeping on with an undecover love affair and compromising ethics or deciding against my deepest emotional desire to live with this new woman, are also no good.

So the rational decision derived from my emotional state comes along with a highly depressive and aggressive ex-wife and recurring moments of guilty conscience in my head.

I hope i can find a way that enables a happy life for all people involved. Sometimes I wonder if I stress the past too much and have difficulties to live in the present moment, sometimes I wonder if any empathy with my ex-wife is a good thing or not.

Today I cannot imagine a worse thing for a man, than having to decide between two women who won’t let you go. To put it positive, I have to solve complicated new problems in the age of 47 after 15 years of silence. At least my trading activities are not negatively affected with 63% up in 2019 and 33 in 2020. Maybe the emotional distraction from the market ups and downs don’t really matter for long term trend following.

With Love
Thank you for sharing your process.
Jan 4, 2021


Hi Ed,

I have read your FAQ for many years, I find myself returning to the pages periodically. I never write because I want to write in an impressive way, I realise that the need to be impressive is one of many tools I use to reduce the amount of work I have to do - 'if I can't do it really well then I won't do it at all, the corollary of this is of course that if I don't do it at all then I am not really failing' .

Your pithy remarks seem to help me with my growing understanding of my situation. In particular, 'everybody gets what they want from the markets'. I have never seriously traded in the markets, even as I write I realise that I have done very little 'seriously'. I have the feeling that this is another tool I use to reduce the impact of failure.

I resolve to write now, in order to express my gratitude towards your continued efforts to share your hard won knowledge.

I am humbled by how long ago I read many of your utterances and yet how few of them I have applied.

With gratitude and humility
Thank you for sharing your process.
Jan 1, 2021

Reflections on 2020


First of all thank you for all your generosity and support.

It has been an incredible journey to explore landscapes of my own mind.

I am more aware and able to instantly detect when my mind experiences unpleasant emotion. I have formed a habit of asking “what it is telling me?”. I do not have an answer all the time, but the process insulates me from getting involved in further drama.

It is not that deep emotions that were running my life have disappeared, but I can certainly claim that their effects and impact on my day-to-day life have significantly reduced. I wonder if the progress is going to continue or some trigger will happen that would make me go back to old ways.

Something tells me that I have made significant shifts with my ways and have great things to report in the coming time.

Have a wonderful 2021!
Thank you for sharing your process.
To Top of Page