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Ed
Seykota's FAQ
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October 29, 2021
Volume and Price
Good morning Ed,
Hope this message finds you well. Can you please help me with the questions?
What is the relationship between volume and price In trading stocks?
When a stock volume % chg shows low percentage such as 0% to 5% in the day, does it mean the stock has a good absorption rate?
Thank you in advance for your help!
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Thank you for raising this issue.
I do not know of any trading systems that implement volume as a adjunct to trend identification.
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October
29, 2021
8 Predictions
Dear Friend,
congratulations for experimenting, finding and committing to a healthy
diet (diaita, "way of life").
It occurs to me that people in your FAQ are reporting an increasing
number of Govopoly-type of accidents as originally suggested by you in
the ever-green book.
I am picking up my jaw from the floor as I re-watch the short video
below, produced in 2016 and titled 8 predictions for the world in 2030,
where the World Economic Forum says they "asked experts from our Global
Councils for their take on the world in 2030" (cit).
The first seven seconds are priceless and I feel they represent the
artistic footprint of the Govopoly climax.
I notice the opener is set on "You 'll own nothing" rather than "We",
validating the dramatic split in the Assets ownership.
Please find below an explanation (I feel puzzled) by one of the Council
members as she seeks to clarify the opening statement:
“I don't own anything. I don't own a car. I don't own a house. I don't
own any appliances or any clothes,” writes Danish MP Ida Auken.
Shopping is a distant memory in the city of 2030, whose inhabitants
have cracked clean energy and borrow what they need on demand.
It sounds Utopian, until she mentions that her every move is tracked
and outside the city live swathes of discontents, the ultimate
depiction of a society split in two.
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Thank
you for sharing your perceptions.

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Lobsters and Citizens
You can boil them alive if you do it slowly,
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| Image
Credit |
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October
27, 2021
Wants an Open
Channel
Ed,
I have a very interesting and unique background I'd love to share,
culminating in a question I hope you will be so kind as to answer.
I built a most unusual career in the special events business over the
last two decades. I started off as a sound tech and toured
with some bands and produced music for years before shifting to
corporate events.
I enjoyed a very colorful and successful career as an Audio Technician,
Video Technician, and eventually as a project manager, managing the
overall AV setup for large corporate conventions, conferences and
meetings.
I've worked with several past Presidents, the Pope, a number of touring
musicians, CEO's of a full variety of some of the largest corporations
in the country.
My overwhelming ambition to push further led me to business school and
in 2015 I completed my MBA at The University of Maryland.
I went from the technical side of the industry to the business side and
for the next 5 years, managed accounts and worked on the business
development side of the Meetings and Events industry.
At the beginning of 2020 my industry was crushed by the country's
response to the Covid outbreak and my company laid off 90% of its
workforce, myself included.
Obviously an industry built around large gatherings was annihilated and
what was once a $10 Billion dollar part of the travel and tourism space
was reduced to hanging on by a thread.
The vulnerability of my industry became clear and the illusion of "job
security" unraveled.
Volatility is a very real and present part of life and I am eternally
grateful to the universe for exposing this fact before I was an old
man, numbed by the comfort of a corporate pittanance and the illusion
of job security. With this new found realization, I obviously
needed to pivot.
I needed a new path which provided autonomy and
self-employment. I would say that I needed a new path which
gave me "control over my own life" but as a Buddhist I don't believe we
actually control much.
Perhaps we can control our emotional response to our experiences, but
like the universe so appropriately revealed over the last year and
half, security, control, and the like are all illusions. With
a lifetime interest in finance, I discovered a fantastic passion for
trading and began studying the markets.
Specifically, I started watching the commodities, and index futures
markets. Like you, I was fascinated by the puzzle and have a
love for data so I built some excel data models and started studying
different systems.
With very limited capital and the need to generate some stream of
income, I first stumbled upon a scalping system. Of course I
initially blew my 401k through scalping because of the obvious--my R:R
was stacked against me. I had to take on losses that matched
and often exceeded potential returns. While I had a breakout
signal that resulted in 70%+ win probabilities, I found heavy losing
streaks very hard to recover from since I was risking so much on each
trade.
Armed with persistence, I dug deeper. Thanks to Michael Covel
and the story of the Turtle Traders, I discovered the logic of Trend
Following. I read all about you, read a few more of Michael Covel's
books, started reading Van Tharp, Jerry Parker and Larry
Hite.
I get the basic premise, which is simple and straightforward, and have
totally bought into the underlying philosophy of Trend
Trading. As the CFM study reveals, there are 200 years of
supporting data on the long term effectiveness of TT.
I have committed myself to modeling and developing a Trend Following
system and feel like I am getting closer every day....I am optimistic
and determined and know with high level certainty that I will be able
to develop a system which provides me with a level of financial freedom
I could never obtain working for another man's company!
I have some challenges that I am working through and I am hopeful that
you and I can develop an open channel of communication so I can bounce
some thoughts off of you (more on that in a second).
But I want to start off with a big picture question: I am
driven to be great!! I don't want to just be an adequate
trader. There are many adequate traders out there and there
are plenty of short-term bubbles to ride.
But I want to be great at this, which is why I am reaching out to you,
Sir! You are one of the GREATS! And my question is,
how did you accomplish that?
What piece of advice would you give a man who wants to achieve
greatness and longevity in trading? What separates you from
so many other traders?
It can't be "work hard" right? I mean the world is full of
hard workers. I was in the military when I was younger and no
one worked hard than a motivated Marine! Grunts would spend
an entire day and an unfathomable amount of energy pushing a rock
uphill before a smart engineer would figure out how to use a machine to
get that rock uphill in half the time with a fraction of the
effort!!
I have heard you speak, and I know you are highly intelligent--but I
have met some incredibly intelligent poor people! Like
Napoleon Hill talks about in "Think and Grow Rich", it seems knowledge,
when not applied nor focused in a specialized way, can be quite
useless. Ed, what do I need to know to be GREAT at
this?
Lastly, I wanted to circle back to my mention of an open channel of
communication. One thing that has worked for me in the past
has been connecting with and associating with successful
people.
I want to build an open channel of communication with you,
sir! And I don't believe anything worthwhile is
free! I have a very broad base of knowledge and skills and
would be happy to exchange these for your time and expertise.
Want to plan an event? I can help with that. Need
some AV support for a conference or bluegrass concert? I can
help with that. Planning on recording a new song (Love the
Whipsaw song, by the way)? I can likely help with
that. I would be thrilled to exchange my knowledge for some
of yours...So please consider chatting with me! Your
mentorship will be appreciated and utilized, the value of which I can
only hope I will be able to repay with return value!!!
Thanks so much for your consideration Ed! This is truly a
win-win for me, because at the very least I am grateful to be able to
include myself among the "Tribes" of traders you have brought together
with your knowledge and leadership. In the meantime, have a
great week and I will most certainly look forward to connecting with
you soon.
Most Sincerely,
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Thank
you for reaching out to me and for offering to share your knowledge and
experience with audio production.
Per your question about the origins of success, you might also consider
the importance of luck.
Per you request for an open channel, you have it here on FAQ. You might
consider proceeding by formulating some questions that focus on your
concerns.
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October
26, 2021
A Lot of Views
Dear Ed,
What an honor to have received a reply from you. Thank you.
Ps. I listen to your Whipsaw Song almost daily, and
just shared it with my British trading coach in context of my style, in
case it start popping up in circles and getting a lot of views... I
hope that’s ok.
Yours Always,
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Thank
you for sharing your process - and for your concern about views popping
up.
The Whipsaw Song (April 8, 2008) currently has about 1/3 of a million
views on YouTube, about 4,000 more on Vimeo and some on other channels
as well. Not bad for a wanna-be banjo picker and a pick-up
band.
By the way, I notice the guy doing the singing on the video has a lot
more hair than I do.
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October
26, 2021
Day Trading
Crypto Currencies
Good Morning Mr Ed,
let me introduce myself, i am an indipendent trader from south Italy.
i started being profitable after reading books on trend following and
your advice on trading psychology has been so so important for me,
practically a life changer.
since when i started systematically and mechanically applying trend
following principles, i am 300% up in only one year of trading
cryptocurrencies futures.
The system is very simple, Donchian 20-20 always in the market with ATR
position sizing, everything automated, so that no human intervention,
and total exposure is of 12.5% in 25 futures, so 0.5% risk per trade.
Win rate of around 30% and winners around 3 times bigger than losers on
average.
i want to share some feelings that came up these last days.
<Wanting to change system often>
i feel an itch to change system and parameters from time to time... and
my last drawdown of 50% from 600% up to 300% up is related to missing
some big opportunities
<Doubts about time frame>
I read everywhere that trend following is DAILY... but from back
testing and live testing, i found out that 4H yields much much bigger
results, at the expense of some bigger volatility in equity.... i want
to try Daily.... but my tests always tell me that 4H is better.... more
trends with lower ATRs, bigger positions for better profit....
<Doubts about portfolio>
my back tests were made always with single asset portfolio... the
results are ridicolously GREAT with every single asset tested.... with
live trading with multi asset portfolio - 25 futures x 0.5% risk, my
account grows, but these very last days i have a fear that the profits
from some assets could be neutralized by the losses of others....
main feeling is <uncertainty>... an issue with which i
live since some childhood family related problems.... i only think that
i need to STICK TO THE SYSTEM at least for one more full year, since
first year was so profitable.
Wanted only to thank you and to know you,
Have a nice day
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Thank
you for sharing your process.
You might consider taking your feelings about <50
drawdown> to Tribe as an entry point.

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You run
short-term trading
on dopamine.
You run long-term trading
on seratonin.
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October
25, 2021
Has to Succeed
Hi Ed,
Wishing you and your family well, I am an aspiring trader with a few
years in the market and have followed your career with great interest.
I find myself still trading sideways with my small hedge.
I would like to learn from you since you have such a great perspective
and would compensate you in any manner that could be of use to you,
time, money, free work.
I am humble enough to offer any effort in exchange for a bit of your
time.
I know I could be of use to you. I have to succeed for my friends and
family and would be eternally grateful.
How can I be of service?
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Thank
you for sharing your process.
You might consider taking your feelings about <having to succeed
for others> to Tribe as an entry point.
I wonder if you can imagine yourself in an art museum, gazing upon a
painting by Rembrandt - and then also imagining how his
family and friends feel about his success.
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October
23, 2021
Stopping
Losses with a .223
Dear Ed,
I farm sheep in Australia and am In my mid thirties.
My ewes lamb in mid winter. I become quite emotional at this time
because foxes can come in the night and kill / injure or miss mother
new born lambs.
I feel a strong responsibility to care for the flock and to protect my
livelihood. When I see a fox in the paddock with the sheep at night my
emotions become very strong.
I have a very accurate Finish rifle in .223 with a German scope and
high powered torch that I can attach to the barrel. When I see a fox
with the torch I turn the torch off.
Then I walk to a point to which I think I can take a shot within about
200m. I then usually lay down to use my bi pod and turn the torch on
again.
If I can identify the fox clearly and I have a safe shot I close the
bolt and I set the trigger by pushing it forward from behind (a
factory add on)- then I take the shot which is a humane kill 95% of the
time.
For some reason when I set the trigger my mind clears. My main
observation is that I have quite a distinct process or system for
controlling foxes with my rifle.
I do not have such a process for my participation in financial markets
which is why I recently have reached my uncle point again. My
participation in markets involves strong emotions and the potential to
lose my livelihood plus many variables I can not control.
Much like the sheep paddocks at night. This uncle point coincides with
discovering you and your work.
I went through all my trades and came to the conclusion that I would
have made quite a lot of money if I stopped my losses at a
predetermined point and stuck to some form of a plan based on a system.
Instead I have lost quite a lot of money which is hard to accept but
true so I must accept it. I must now develop my own system.
I would like to be a part of your Tribe by reading FAQ and writing in
once in a while. I also wanted to thank you for the free material you
have provided- I believe to be good at something and then share your
gift is the mark of a man.
Below is a Wedge Tailed eagle eating a fox shot with the above method.
My correspondence is not meant to offend you and I hope that it has
not. All the best.

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Eagle Eats Fox
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Thank
you for sharing your process.
You might consider taking your feelings about <cutting
losses> and <protecting your flock> to Tribe as
entry points.
I wonder if you can envision yourself setting up your scope and torch,
easing the trigger forward, taking the shot and thereby preventing the
foxy trend from carrying off part of your tender flock of Aussie
Dollars.
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October
22, 2021
Unconditional
Acceptance
Ed,
The Trading Tribe practice brings salvation to thought forms through
the light of human consciousness. By serving the forms with
unconditional acceptance and compassion you are serving God.
Best regards,
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Thank
you for sharing your insights.
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October
22, 2021
Health Regime
Good evening Ed,
To thank your selfless and unorthodox contribution to humanity, I'd
like to share my own health regime by using the wisdom from the East
and the West:
1. Eat less and eat no or little meat
2. Life is too short to count calories
3. Cultivate strong will to reject news as well as sugary, salty and
greasy food
4. Eat organic but some of the food doesn't need to be organic
5. Sleep well
6. Enjoy outdoor and sunshine and remember to breathe
7. Excise Gently
9. Love yourself first
10. If you are stuck, come to this site to untie your knots;-)
Thank you!
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Thank
you for acknowledging me and the work - and for sharing your Health
Regime.
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October
21, 2021
Example of
Back Test Testing
Good morning Ed,
Can you please provide an example of back testing?
Thank you!
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Thank
you for asking about back testing.
See: Back Test
You can find this and additional information at the Resources link,
above
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Oct
21, 2021
The Blame Game
See previous: September 6: Book Report
Dear Ed,
It is interesting that you included "All wars are bankers war" from
youtube in your most recent conversation.
Though
the content is dramatic and horrifying, I am surprised by how few
viewers were numbered on this vast platform since its publication in
2016.
The video also reminds me about your remark in "Govopoly" of "no
conspiracy" theory.
Since
your book "Govopoly" drastically reduces my time on news and other
propagandas, I learn to focus on the most important things in order to
have a right livelihood. I can't thank you enough.😍
Here
is my question: based on your teaching of a system model for dynamic
behavior, a situation is mostly too complex or too interrelated for
simple answers.
Everything influences everything else. If there is no one cause for any
event, why does the video only convey one message?
That is to blame bankers for all the evil acts of war and instability
of the world.
You teach us to be intelligent beings and not to place causality over
responsibility.
Don't
you think the video "all wars are bankers war" is too banal and
obvious? If all filthy rich bankers on wall street are evil,
does
that mean all poor people are innocent and angelic?
If so, the revolution is inevitable and it is justified, isn't it?
Please advise. Thank you for your time!!!
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Thank
you for raising the blame issue and for caring to think deeply about it.
I include the banker's-war video on my site to present
additional information about many of the events that appear in
Govopoly.
I do not include the video to vilify (or deify) specific
groups - such as the banking sector.
System dynamics aims to identify and verify structural
relationships and how they explain associating behaviors.
Govopoly
presents a structural model and a step-wise simulation of the
evolution of our economy that explains many of our current directions;
it does not place blame on any one element or sector.
In my
experience, people do not generally think in terms of system dynamics;
they think in terms of cause-and-effect and assigning blame.
For example, you might notice a recent increase in crime and violence
in some of our inner cities.
Govopoly
suggests this associates with the disappearance of the Free-Competition
Sector. Free Competition provides opportunities for individuals to
employ their energy and talents in productive ways. Absent these
opportunities, individuals may turn to alternative forms of livelihood.
Our
modern media frequently employs the cause-effect-blame model. In this
case, it blames the rise in inner-city crime and violence on
guns.
This kind of thinking supports of anti-gun
legislation even
though such legislation may act to further suppress the
Free-Competition Sector.
For another example, Jack, an
alcoholic, lives with his wife, Jill an enabler. They form a system in
which Jack drinks and irritates Jill. Jill responds
by complaining; her complaining irritates Jack who responds by
drinking.
Both parties blame each other; neither party
appreciates the underlying dynamics or their role in it; they
do
not have a model that supports their working together to restructure
the way the pressures interact within the system.
For yet
another example of the prevalence of cause-effect-blame thinking, as
you point out, the banker's war video places blame on the
banking
system.
At this point, in our cause-effect-blame society, you might even notice
a temptation to blame causal thinking !
An
approach more consistent with system thinking merely observes and
models the dynamics, without judgment, and then aligns an investment
portfolio accordingly.
In our current case, you might notice the continuing assimilation of
the Free-Competition Sector by the Govopoly System.
This
indicates a continuing decrease in the overall standard of living,
including a decrease in manufacturing jobs, an increase in
dependency on government, continuing inflation and volatile
moral-hazard markets.
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Oct
20, 2021
Sticking to
the System
Hello Mr. Seykota,
To clarify further, you asked me what I would rather do (than pull my
stops).
I would rather leave my stops in and not cancel them.
So I was wondering what you think my problem is if I keep taking my
stops out - or not put them in - when I would rather put them in after
I enter and trade, and leave them alone and not move or cancel them.
Thank You!
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Thank
you for clarifying your problem.
You might consider taking your feelings about <keeping your
agreements> to Tribe as an entry point.
Meanwhile, you might notice the feelings that come up for you during
the next
event in which you break an agreement, either with others or with
yourself.
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Oct
16, 2021
Vital Skills
Dear Mr Seykota,
I hope you have been keeping well and staying safe.
Your plant based diet seems to be having a positive impact on your
physical health and not taxing on your mental health. That is great
news.
I myself find a plant-based life style simple and effective. I’m
avoiding processed plant 🌱 based nutrition now and eating more fresh
food.
Anyways, I have a question regarding skills and knowledge. To test a
trading strategy, what skills in relation to mathematics, statistics
and programming do you know to be vital?
These fields of study are very extensive, I am narrowing it down as
much as possible. Your help would be greatly appreciated.
Kind regards
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Thank
you for raising this issue.
I do not know of any particular mathematical skills vital for back
testing.
You might consider your willingness to do whatever it
takes to test your strategy.
That willingness can attract the resources you need to accomplish your
mission.
You might consider taking your feelings about <doing whatever it
takes> to Tribe as an entry point.
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Oct
15, 2021
Reunion
Dear Chief,
yesterday I talk to my wife. The communication is technically (terrible
connection) and emotionally difficult. After about 20 minutes of
listening to accusations and relating to events in the past I loss my
temper and yell at her (maybe you still know my yelling from Reno: I
can be very loud). I tell her that I find the way she describes my
behaviour utterly unfair and that her imputations are cheap and plainly
untrue. We both calm down.
I ask her if she is willing to listen how I feel about the situation.
She agrees. I tell her that I got physically ill, I tell her about my
frustration and my feelings of despair, that as they leave it
felt as losing a part of my body, that I thought about killing myself
because I could not stand the misery and that the feeling of
responsibility to my older children halted me from making something
irreparable.
She says that I am exaggerating and creating drama.
I tell her that I understand her view, and see no sense in talking
further. We hang up.
I remember telling a lady friend, in a similar situation, to keep on
repeating the same content until she feels that her boyfriend accepts
it, or until her boyfriend tells her that he is not willing to listen
anymore.
I call her again and ask her if she is open to listen about how I feel.
She agrees.
I repeat the same: I tell her about my frustration and sadness and pain
of not seeing her and the children. I tell her that as the officers
reject me at the border I feel as someone would rip out my heart. I
tell her that after some weeks I do not tolerate seeing her picture or
pictures of the children, because of the pain. I remember her that
during the whole time I offered my support, financial and practical,
called her several times a day, and did not ask her to come back,
because I figure out how hard and difficult it is for her, with a dying
mother and two little children in a dictatorship during Corona
restrictions. I repeat that I do not criticize her decision, and that I
can understand her and that her decision is right, and that I suffer
under the circumstances. I wonder if she prefers me to keep my feelings
for me and telling her that everything is fine.
She compares the situation with the war, where you expect compliance
from the soldiers and not that they talk about their feelings. She
mentions that she is so distressed that she cannot listen or be open
to anyone´s feelings. In her view, I failed as a partner. She
feels that I did not yield enough emotional support. I find that I
could not do any better.
Today we talk shortly. I tell her that I want to be with her, but not
at any price: if the relationship stays this way, I prefer not to be
with her. She answers that she does not want to separate but to work on
the relationship. She returns in three days. We do not look forward for
it, we are both worried about the further development.
I tell her "when you are here I will f--- you until one cannot tell the
difference between you and a meatball". She laughs.
We love us, it is a horrible situation. Maybe we can use it to grow
(her guilt issues, my abandon issues). Maybe the pain is stronger than
the love.
Thanks for listening and reading.
Yours,
|
Thank
you for sharing your process.
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Oct
14, 2021
Registration
Good morning,
I am writing because I would absolutely love to join a Tribe but can
not find a way to do so without registering on the eseykota.com
website.
I am happy to register, and have done so several times now.
When I register I get a "Thank you for registering" message.
When I go to log on, however and type in my login information, I am
never able to actually log on. The login screen just
continues to refresh and provide a new, blank login screen. I
would appreciate any assistance you can offer on this matter.
Thank You,
|
Thank
you for setting me know about your situation.
I wonder if you can send me a series of screen shots illustrating your
process and results.
|
Oct
12, 2021
Forrester
Information
Greetings Ed,
I trust this email finds you well.
Here is a PDF I think you can enjoy, the long version of the life-story
of Jay Forrester.
I'm not sure where I found it, but I did set it aside some years ago.
Here it is
and I hope you enjoy it. It contains some rare pictures
dating back to 1940, details about his early life etc.
Regards,
|
Thank
you for sending me the PDF.
|
Oct
12, 2021
Where to Start
Hi Ed,
I really appreciate your teachings and have been working in the trading
world for a short time.
Where do you advise me to start?
Do you think a trend following strategy is applicable to bitcoin?
With Donchian channels the back tests seem to give excellent results.
|
Thank
you for raising these issues.
You might consider starting from where you currently find yourself.
Actually, you don't have much choice about this.
Yes, you may apply trend following to Bitcoin or, for that
matter, to any security.
You might also consider that trend-following systems provide a
framework for getting into the major trends and cutting losses; trend
following signals do not predict the outcome of any particular trades;
trend following works, on average, over a great many trades.
You might consider taking your feelings about <wanting to feel
secure> to Tribe as an entry point.
|
Oct
11, 2021
Finds
the Feeling of Rejection Surprising
Dear Ed,
I report about my process. She is returning on Sunday, after 9 weeks.
To my surprise I observe rejection from my side.
I am not looking forward to her return, I rather experience the idea of
driving 15 miles to the airport to pick up her and the children as
annoying.
I feel that her decision to stay with her ill mother without consulting
with me, as noble and selfless as it is, stole me two months of my
life. Right now, I would prefer to be alone. I don't know how I am
going to react when I see her and the children again. Maybe it is a
self defense mechanism. Deep inside I feel terribly sad. I want to take
my feelings about "how could you do this to me" to the hotseat.
Yours
|
Thank
you for sharing your process.
|
Oct 7,
2021
Capital and
Risk
Mr Ed SEYKOTA,
I trust this finds you well, and I appreciate your time taken to read
my email.
Firstly, I apologize for asking this very same question that you've
probably been asked innumerable times.
The question is about the minimum starting capital required for trend
following trading.
It's been published, in particular, by Michael COVELL that you once
responded to that question by stating something akin to, “I’d ask a
trader who thinks he needs a certain amount before he can trade exactly
what amount he would need to stop trading.”
I had asked this question of Michael COVELL, but he referred me to your
quote and further stated that my stock broker /stockbroking
platform - in the context of minimum trading capital requirements - was
not going to be the limiting factor in my ability to trend-follow
trading, but he did not go on to qualify his statement.
Yes, I fully appreciate that my psychological / behavioral /
mathematical ability will also be fundamental to my ability to become a
profitable trend following trader, but if I can't even satisfy the
minimum starting capital issue, then my trend following days are dead
before they've even started.
I'd like to quote Larry HITE and say that I'm a little slow, could you
please explain.
I live in Australia and use an Australian stockbroking platform, and
have used a number of different brokers over the years to buy
shares/ETFs.
To my knowledge (and I'm yet to find anything or be told anything to
the contrary) when trading / investing / buying stocks through
Australian stock brokers / broking platforms, the minimum buy amount is
AUD$500.00 (not including brokerage). I'm sure I'm not telling you
anything new.
As a trend following trader, if I risk 1% of my trading capital on one
trade to buy X number of ABC shares, and that buy trade MUST be a
minimum of AUD$500.00, then surely my minimum starting capital - to
even have a crack at trend following trading - MUST be a minimum of
AUD$50,000.00 (not including the cost of brokerage in and out)?
Of course, if I wanted to risk more of my trading capital per trade,
e.g. 2%, 5%, 10%, 100%, then my minimum starting capital could be less,
e.g. $25,000, $10,000, $5,000, right down to $500.00 for a 100% all in
'investment'. However, that would not be prudent risk management. It'd
be bold, but not prudent, and I'm too old (53 yrs) and indebted to be
bold.
So, if there is no minimum starting capital required to trade the trend
following way - not to mention the necessary funds to add units to a
well formed trend and/or diversify into non-correlated markets - then
could you please explain to me the mathematics of how I can fund my
trend following endeavours with a starting capital of less than
AUD$50,000.00?
Thank you for any assistance you can provide.
Regards,
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Thank
you for raising this issue.
Say, per your example, you have $50,000 starting capital.
Say, for example, you plan to risk 1% ($500) on a trade. Note: I do not
recommend for or against your risking any particular amount.
Say you plan to enter XYZ stock at a price of $50/share and cut your
loss at $45/share.
Thus, you plan to risk $5/share. So to risk $500 you would have to buy
100 shares - and allocate $5,000 capital to the trade.
With this plan, you might have on five trades at once, risking a total
of about $2,500 and tying up a total of about $25,000 of your equity.
Note the difference between the capital you have to allocate to the
trade (a function of the price) and the risk you take (a function of
where you place your stop relative to your entry price).
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Oct 3,
2021
Speaking Up
Ed,
Okay I will be the one to say it. This guy is one of the richest people
of the planet and no one watching these videos (on the Mandelbrot set)
seem to know who he is.
This is crazy, I've been subbed for 6 months now so I doubt it is even
used anymore.
Anyway if Ed does see this I would first like to say your a madman and
second thanks for setting a path for trading.
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Thank
you for showing an interest in the Mandelbrot work.
For more: Elephant Valley and Poem.
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