Ed's FAQ May 01-31, 2021

Contributors Say	Ed Says
May 29, 2021 Dither Filter Dear Mr. Seykota, On April 20 2016 you reply to a FAQ contributor: Many moving average systems also feature some sort of dither filter – to prevent strings of whipsaws around the crossovers. Could you share some insights into what such filter might look like? Kind regards,	Thank you for raising this issue. You might consider a system that signals buy and sell when the price crosses over its own 200 day moving average. You might find the price does not always pass through definitively; indeed, it may continue crossing above and below the line for quite a while, resulting in a substantial string of quick whip saws. To prevent this dithering effect you might use a shorter average, say 10 days. Then, your system signals buy and sell when the 10-day moving average crosses the 200-day moving average.
May 25, 2021 Wants to Chat With Ed Hello Mr. Seykota, Hope you are doing well. Sorry to disturb you, I can imagine that you are very busy and that you probably receive a lot of emails from young traders. I currently live in London and I started to fall in love with the market a few months ago. I contacted you because you were the one that inspired me the most in terms of how you see life and trading in the book Market Wizard by Jack D. Schwager. One thing is for sure, I have never been so passionate about anything in my entire life and I want to become really good at it! I am reading every book I can about all the different theories. Would it be okay with you to spend few minutes with you on the phone or virtually to get some of your feedback and advice? Here are some of the questions that I had in mind: Which books do you recommend to start with? Which trading strategy/theory would you recommend me to start with. How can I continuously improve my trading skills? Is there any type of career that you recommend? Or should I jump straight into it? Overall, what I want to get from the markets is to understand them or at least have a feeling of them and understand why I am entering or exiting a position. This world fascinates me and having the opportunity to talk would be extremely valuable to me. In the meantime, I hope that you and your family are safe and I wish you all the best! Best regards,	Thank you for reaching out to me. Yes, we might can chat by phone. Coincidentally, I have a plan to produce a series of podcasts, following the format of FAQ. The Chat-With-Ed process as I currently envision it: 1. You and I chat for a while by phone about your issues; I record the call. You remain anonymous. 2. I edit the recording and send it to you for further edits. 3. When we both like the result, I post it on line for the general Ed-ification of the trading community. I retain all rights to the recording. If you have interest in participating as an anonymous caller with right to edit the recording, let me know so we can set up a session.
May 25, 2021 Wants to Program in Python Hi Ed, I am from Hong Kong. I am 25 years old and a big fan of your work. I've recently ordered both your books and have also started learning Python. I am wondering if you could recommend some books or resources to get skillful at Python for trading. Any advice would be greatly appreciated! I am still trying to figure out what aspects of Python are great for trading, such as backtesting, probability calculation, and automated trading. Just wondering how exactly I could get started and I thought you would be the person to goto. I hope you are doing well. Thank you for your time, I really appreciate it. Sincerely,	Thank you for raising this issue. You might consider running some simple back test algorithms on a spread sheet - to get a feel for how back testing engines work. Once you get the overall idea, you can create a back testing engine in almost any language.
May 24, 2021 TSP Ed, I notice on the Trading Systems Project website a call for volunteers to help develop additional topics (listed below). I wonder what sort of help you are looking for. I email you today to express my desire to develop additional topics and contribute my findings to the Trading Tribe community. How might I be of assistance? Please let me know if you need any additional information. Thank you. Respectfully submitted,	Thank you for showing an interest in extending TSP. I invite you and others to extend the materials. If you so desire, you may send me your extension. I can help you edit it. Eventually it can appear on line as part of the collection.
May 23, 2021 Perfect Signal Hi Ed, It has been fascinating to see your work and the wisdom you have. I have read 3 books from Michael Covell on trend following and still looking for other materials or trainings on trend following. I also created a computer model that generates automated signal for Stock and Crypto models. (10x100 MA strategy) Thought the systems produces signal perfect but still, I am not sure how to put a stop as when Crypto crashes it crashes to 50-60 before I exit from the trade. Any advice on how I can find an optimal stop loss for all my crypto trades ? Also, is there any workshop you are planning to conduct in near future ? Thanks for your help. Thanks,	Thank you for raising this issue. You can optimize a trading system by back testing combinations of parameters to find a set that balances profitability with drawdowns - and that produces a theoretical track record that your like. Thus, the optimal solution depends on your own preferences for risk and reward. Also, trading signals only have meaning in the context of a great many trades, some of which win and some of which lose. Trading signals have little value in predicting or managing any one particular trade. The probability of success on any one trade equals either 0% or 100%, depending on how it turns out. I wonder what you mean by "find an optimal stop loss for all my crypto trades ." You might consider taking your feelings about following a definite system to Tribe as an entry point.
May 23, 2021 Crude Trader Ed, I used to trade Crude futures. Based on Volume and Previous high low close trading everyday. Apart from that I want to know suggestions from experts like you regarding any other tool that needs to focus. Thank you	Thank you for raising this issue. Some resources you might consider employing for trading every day: 1. A supply of a strong sedative. 2. A therapist. 3. Income from another source to support your day-trading habit.
May 19, 2021 Line of Least Resistance Dear Ed, I was reading the book "Reminiscences of a Stock Operator" and came across the phrase "the speculative line of least resistance at the moment of trading." Could you please explain how you determine that? If you could use a price chart it would be easier for us to understand.	Thank you for raising this issue. I do not know exactly what Edwin LeFevre (the author) means by that phrase.
May 15, 2021 Null Symbol I was looking at the stock ranking charts and noticed some stock symbols had a "null" value. Does this indicate anything? Thanks!	Thank you for raising this issue. Null Symbol means no such symbol in the current data base - thus unable to locate the name of the stock.
May 14, 2021 Patience Hi Ed. I have 1 question. Perhaps I ‘’ know ’’ long term trend ( instrument gold ) tends to down. I have not patience, and a wish ,to wait swings up during ~ 1 month. Is it consistent with trend following to trade these swings?	Thank you for raising this issue. You might consider taking you feelings about <waiting for a system trade> to Tribe as an entry point.
May 14, 2021 AI and Feelings Hello Mr. Seykota, First, thank you for your generosity with your time and intelligence. Second, forgive me if you have already answered this previously. I'm new to trading, and working my way through a lot of the books on the subject. Most of these books were written before the current state of AI or Machine Learning. So, generally, the consensus has been that trading will continue to exist in more or less the same form as always, because human beings will continue to react with the same Greed vs Fear emotions as always. My question is what effect do you think the involvement of AI-driven trading will be on markets, and trends? Since these "traders" feel neither greed or fear, how do you think they are going to trade? And what effect will that have on the marketplace as more and more capital is being directed by these systems?	Thank you for raising this issue. AI does not eliminate feelings. It merely moves them from the trader to the guy making the decision to invest in the AI system. The allocation of funds to trend-following commodity trading systems tends to reflect recent profitability, regardless of the method or persons calling the trades.
May 10, 2021 Reach Out How are you Ed? One of the Toronto Tribe traders when it was launched here. Just wanted to say hello and I hope you're doing well.	Thank yo for reaching out to me.
May 4, 2021 Wants a Foreword Dear Ed, I trust things find you well. I appreciate your updates and insights on the Website and FAQ. You hold a mentor role for me, but you fulfill this role for many with your considerable outreach. Thus, I will provide a reminder of when our paths crossed. We had a conversation in the early 90s at your office in Palo Alto. You were gracious with your time, and I left with gratitude. In April 2009, I enjoyed attending your workshop in Reno with Charles Faulkner. Charles became a private coach to myself and my trading group in Chicago. I want to check your willingness for a support request. I have a book in the alpha/beta stage, and I’m wondering if you’re willing to add any of the following? A) Feedback or a review of the book. B) Allow me to quote from your poem “Borderline - A Fractal Poem,” and make mention of your book “Govoply in the 39th Day.” C) If you recognize value, would you write a foreword? The book confirms your conclusion of an “Increase in frequency and severity of price bubbles,” from the “Looking Ahead” page in “Govoply in the 39th Day,” and provides a model for this behavior. Your impact travels beyond the limited tangible interactions between us. It would be an honor to have your thoughts on my recent work. Thanks for your time and consideration. Best,	Thank you for reaching out to me. I wonder if you can send me a copy of your draft.
May 3, 2021 Sticking on Risk Dear Ed, I am still feeling Stuck about my overall strategy and risk management. I went on doing a lot of reading again about Risk management on trend following. (1) (2) My goal is to move from Hunch-centric betting and come up with an optimized betting system. To improve on hunch-centric betting, we might come up with a betting SYSTEM. A system is a logical method that defines a series of bets. The advantages of a betting system, over a hunch method are (1) we don't need an operator, (2) the betting becomes regular, predictable and consistent and, very importantly, (3) we can perform a historical simulation, on a computer, to OPTIMIZE the betting system. I am not sure the Reading is helping me to get to the AHA moment. I am not sure my previous testing on Spreadsheet is workable. Thank you for reading. Best Regards	Thank you for sharing your process. You might consider taking your feelings about <doing the programming> to Tribe as an entry point.
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