January 15
- 31, 2010
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Contributors Say
(Quotes from Ed in Red) |
Ed Says |
Sunday,
January 31, 2010
Experiencing the Anal Stage
I am learning to embrace the positive intention of the anal stage,
especially as it relates to the special gifts I may be able to share
with people and get money for.
Assets:
$521,084.77
Liabilities: $552,143.58
Net:
-$31,058.81
500oz goal: $539,250.00
Job applications: 0
Interviews:
4
Offers:
0
|
Thank you for sharing your process.

A Stage for Anal Sharing
Clip:
http://i.thisislondon.co.uk/i/pix/
2010/01/06a-23-naked-415.jpg |
Saturday,
January 30, 2010
Family is Better Off
Thank you for helping me to experience the feeling of <my family is
better off without me>.
|
You might consider experiencing the
feeling of <family is better off if I get a job.>. |
Saturday,
January 30, 2010
Austin Tribe
Hello Mr. Seykota,
I was a senior equity trader for 15 years at [Firm] in [City].
I am starting
to trade on my own and would like to join a Trading Tribe that is near
where I live. I have read your Trading Tribe book and I am very
interested in what a Tribe could offer.
Are there any
tribes in San Antonio or Austin?
Thank you for your consideration.
|
I am re-locating to Austin and plan
to start a Tribe there. |
Saturday,
January 30, 2010
Kelly
Ed,
I was going through you article "Determining Optimal Risk" , along with
the contents of your TSP material on Risk.
While the Kelly formula can be used for optimizing the bet size , it
requires that we know the win ratio and the winning pay off rate. It is
possible to compute these precisely for certain kind of games (coin
toss, dice and casino games)
When it comes
to trading/investment , it looks to me that these can't be calculated
without large errors. If so, is there anything at tall like "Optimal
Risk" in trading in the classic sense of Kelly formula? |
Trading is not an exact science.
Sometimes you are better off making
an approximation to an unknown than to leave it out altogether.

The Golfer Can't Exactly Measure
the speed of the wind.
Nevertheless, he includes an estimate
in with his calculations.
Clip:
http://www.ci.new-braunfels.tx.us/
images/pages/N1014/Golfers%20teeing
%20off.jpg |
Friday,
January 29, 2010
Futures on
25K
Good Day Ed,
I really appreciate all of the information you make available on your
site. My question is specifically about position sizing & risk
management with a smaller account size.
The forex
market offers very small contract sizing (nano lot sizes representing
$100 of currency) but the smallest contract size in the commodities /
futures arena seems to be limited to mini futures and even then the list
of available commodities is limited to a small select group. In order to
properly diversify and position size is there an alternative instrument
/ contract size available for futures trading if you have an account of
around $25K? |
As the contract size gets smaller,
the transaction costs generally increase.
The costs on trading $250,000 worth
of currency on a futures exchange might be $25 or about 1% of 1%.

The Cost of trading $25 worth of Currency
at an airport
might be $1.50 or about 6%.
Clip:
http://www.thebangkokshoppingguide.com/
images/international_airport_bangkok/
currency_exchange.jpg
|
Friday,
January 29, 2010
Back
Testing
Hello support Group,
This is a progress report, even though I don't have as much progress to
report as I would like. My commitment was to convert my trading
methodology to a testable system. As reported earlier, I have spelled
out my trading rules, and created an investment universe to test them
on. I have created a variation file also. I have made no progress on
writing backtesting code.
There are a couple explanations for this. One is that after creating the
investable universe. I resolved to take every signal from that universe.
This resulted in holding up to 20 positions vs. the 4-6 I typically held
in the past.
It also resulted in making much more money than I would have otherwise!
My account is up 7.4% from 10/30 through today, and has handled the
pullback in the stock market well.
As George Soros wrote, one of the unique aspects of this business is
that when you are doing well you don't have to work as hard, and when
you're doing poorly, you have to work much harder. So now I feel like I
have something in common with George Soros because I haven't been
working as hard on my commitment!
The other factor is that my method requires a lot of mental energy, and
being much busier leaves less capacity for the important/non-urgent
quadrant.
I thought the pull back in the market this month might result in a
trading slowdown, but so far it hasn't.
The most enlightening thing for me is how the variation file highlights
the fact that I have thousands of dollars of variation slippage which
are preventable if I am always execute at the moment a signal occurs. I
make good progress in reducing this number.
If anyone has the code for a Trade-Station program for backtesting
anything, it would be very helpful to me in taking the next step of how
to organize inputs, variables, if-thens etc. for my own program.
Good trading everyone.
|
Thank you for sharing your process. |
Friday,
January 29, 2010
Nelson Tribe
Hi Ed,
Please find attached a TT ID for starting a Tribe in Nelson British
Columbia, Canada.
Thanks
|

WELCOME
Nelson
British Columbia |
Wednesday,
January 27, 2010
Affirmations
Hey Ed,
I'm intending to enhance my trading mindset through affirmations.
As a trader
and mentor, are you willing to recommend some key beliefs to cultivate
(a list perhaps) or do you think The Essentials card serves this
purpose.
Hoping
everything is going well. Reading your site sparks my interest in
engineering - thank you. |
Affirmations can be like new-year
resolutions. You say them and then forget them.
You might consider taking your
affirmations into the Rocks Process to implement them as automatic gut
responses. |
Wednesday,
January 27, 2010
Control
Ed says (2010),
"Risk, by nature, is chancy and probabilistic; you
cannot directly manage risk. You can manage your exposure to risk by
entering buy and sell orders."
Ed says (2003),
"...risk is fundamentally unavoidable and the best
we can do is to manage the risk."
OK, combining your new definition in 2010, 1) would you agree if I
rephrase your 2003 statement as, "Risk is fundamentally unavoidable, and
the best we can do is to INDIRECTLY manage it by controlling our
exposure to it" ?
Furthermore, Ed says (2003),
"To manage is to direct and control. Risk
management is to direct and control the possibility of loss."
I remember in the April Workshop last year, you make a point that we
have no control. For example, I can't even control a basketball.
So my questions are:
2) How much control we have? Do we even have CONTROL in our exposure to
risk?
3) If yes, do you think good traders are the ones putting strong
emphasis in managing, directing, and CONTROLLING the possibility of
loss?
4) If no, is it similar to that we can't control a basketball, that we
also can't really CONTROL even our exposure to risk?
5) Is there a positive intention to the feeling of gaining control? Or
wanting control?
Needless to say, I am considering taking my feelings about control to
the hot seat.
Nonetheless,
I'd still greatly appreciate to hear your insight to the questions
above, thanks. |
"Control" means to direct,
determine, or cause. In TTP, we hold control - along with other
elements of "future" and "causal" thinking - to be illusory. |
Wednesday,
January 27, 2010
Intimacy Cycle
I ask, "What is the Intimacy Cycle? Thanks."
Ed says, "I do not know the reference."
I clarify, "I am referring to the Intimacy Cycle that you mention in the
Workshop page."
http://www.seykota.com/tribe/Workshop/
Workshop_detail.htm
|
This is a new concept for the
upcoming workshop - that has to do with viewing relationships from a
system dynamic viewpoint. |
Wednesday,
January 27, 2010
Wants to Learn More
Greetings Ed,
I am a big fan of yours based on my reading about you online and through
various books. I am interested in learning more about the Trading Tribe
and potentially working with you.
Let me know
how best to proceed. |
You might consider reading through
this website, reading The Trading Tribe, attending a workshop and
/ or attending a Tribe in your area. |
Wednesday,
January 27, 2010
TTP at the University Level - and Beyond
Dear Ed,
1. I start the trial using TTP in a clinical setting. As you maybe
remember, I call it Emotional Dynamic Stimulation Technique
(EDS-Technique). Maybe someone aware of TTP points at me with his finger
and shouts "What you are applying is Ed´s technique". I then can answer
"yes, and I call it EDS-Technique". About 4/5 of the participants at the
study report fully resolving their issue in one hot seat. Many of them
want to enter my Tribe. I am carrying processes and evaluating the
results almost daily. EDS/TTP is absorbing most of my work time, and I
love it.
2. I invite several medicine students to learn EDS/TTP. One psychologist
wants to support me to further evaluate the technique and its
applications. I plan to introduce the principles to interested students
by demand.
3. A young girl attends my Department. She wants to lose some weight. I
explain her the principles of training and diet and ask her about her
need for losing weight. She tells me that her father is very fat. He is
schizophrenic / paranoid. I receive her sadness and pain. She keeps on
telling about the divorce of her parents, about her being raped by a guy
with a positive HIV test, about the police scolding her and not
believing her story, about her getting pregnant from her boyfriend some
months ago and carrying out an abortion ... She tells, and tells, and
tells, as I receive. Later, she mentions that she does not understand
it, she plainly could not stop talking. This receiving stuff is strange
... I know that I can help this girl in a very deep level. However, I
may not. I am not a psychiatrist, I am not a children psychologist, I am
not a pediatric doctor. If I use TTP, no matter the results, I can get
into very deep trouble. I realize that, if I want to move forward, I
have to leave the official health system and create something new.
4. My wife expresses that she is released as I leave. She mentions that
now she does not have to make an effort to talk with me or to share
physical contact; instead, she can watch TV or listen to her radio. On
the other side, she is sad about me leaving and mentions that she loves
me. She does not know what to do: to work on the relationship, or to
give it up. It is the same decision I face during the spring workshop. I
remember your question "What is the best for the children?" and me
answering "that we stay together". Now, I think that there are a good
and a bad option. The good one for the children is to have two loving,
happy, satisfied parents. The bad one, to have two fighting parents. A
family is, of course, the best, but not at any cost. I mention that to
my wife. She does not know what she wants. I support her in her
uncertainty.
5. As I leave my wife I observe what seems a growing frequency of little
annoying events: flat tires, reclamations, people not responding my
emails. I look for the form: it is FURY. I am furious about the
annoyances. I go into the form. After a couple of seconds I enjoy being
furious. Then, sadness appears (do you remember it happening in Reno?).
Endless sadness about the end of my marriage. I let it flow. As it is
gone, Fred talks. I smile and understand: I am finishing my marriage to
start something better. I fall asleep. As I wake up I see the solution
of many problems.
6. A new doctor joins my Department. She is very interested in TTP and
willing to learn it. I carry several teaching sessions with her. She
seems open to learn how to share her feelings and to accept the feelings
of other people. She is extremely nice, she looks good, she is single
...
7. I enter trance more and more often, more and more easily. I see so
many things ...
|
Thank you for sharing your process. |
Wednesday,
January 27, 2010
Tape on the
Floor
In reading about your upcoming workshop, I see mentioned things like
Rocks, K-Nots ... but am not familiar with "Tape-on-the-Floor"
Could you please elaborate to point me in the direction of the answer?
|
I sometimes use tape to mark lines
and areas on the floor of the Workshop room.

Success With Adhesives
and with life in general
can be a matter
of sticking to it.
Clip:
http://media.spokesman.com/photos/
2009/09/02/ducttape.jpg
|
Wednesday,
January 27, 2010
National Anthem - Video
Ed,
Here's a video of the
National Anthem at Eagles / Patriots’ Game:
http://www.youtube.com/watch?v=9ETrr-XHBjE
And this my friends is the way it should be sung.
|
Thank you for the clip. |
Wednesday,
January 27, 2010
EcoNowMics
Ed,
How is the EcoNowMics project coming along? I eagerly await to read the
next section. I enjoy EcoNowMics so much that I decide to purchase
iThink. The evolution process continues.
Talk to you soon
|
I am in process of generating more
materials and a book. |
Tuesday,
January 26, 2010
Defining a Trend
Dear Mr. Seykota,
I have some questions for you Mr. Seykota:
- How do you define a trend? How do you recognize it?
I want to learn from you Sir. You are such a successful trader
|
You bring a trend into existence by
defining it.
Depending on your definition of
trend, the long-term trend might be up, the intermediate trend might be
down and the short-term trend might be up.
"The Trend" does not exist in
nature, outside of your definition of it.
Note: FAQ does not ...
offer specific trading advice, or
recommend specific trading system parameters. See Ground Rules, above. |
Tuesday,
January 26, 2010
Dabbling and System Trading
Dear Ed,
“Thank you” to the person who writes on the evolution of his or her
thinking about “Intention and Results” on January 13, 2010. I find it
very helpful to think about the different awareness levels that
associate with this valuable concept.
Since Breathwork Weekend I trade my computerized trend following system
methodically. It performs well. It reflects my intent to allocate risk
daily in a predetermined fashion. I enter and exit markets on system
signals. My equity grows and shrinks accordingly. My feelings rise and
fall in the now with the equity curve. I keep a trading diary. Writing
really helps keep me on track with my system and helps focus behavior on
productive activities. Even so, I screw up periodically when I let my
guard down and engage in short-term trades. I call it “dabbling.” More
on that later.
I spend a good deal of time testing system variations and new ideas. The
result is surprising. I find myself happy with the production system as
it is and resist the temptation to frequently tweak it. There is
satisfaction in entering stops every day and otherwise keeping hands off
in order to build an actual performance record to compare against
back-tested results. I move to a quarterly system upgrade policy from my
past daily/weekly “tweaking” policy. Although most trades are relatively
small losers or winners, and lately the drawdown increases, testing
gives me confidence that when a big trend emerges I am sure to be
onboard. Most importantly, I feel confident that my risk is well managed
in case it takes a long time for some major trends to emerge from these
choppy markets today. That is, I have a system that favors longevity and
fits my personality fairly well. My goal is to improve upon that even
more.
By systematically trading many markets on a small scale I learn a great
deal about trading operations and the idiosyncrasies of exchange rules,
trading hours, order entry, contract specifications and software design.
Often the learning comes with a price tag set by the market. In order to
operate without variance I change my sleep habits to be online to set
stops when certain foreign markets open, as I learn the hard way that
good-till-cancelled orders do not always execute as planned. The
structural change to my daily routine helps achieve the result that I
intend to get.
“Dabbling” is this trader’s curse. It is the temptation to “load up” on
a system-identified trend that seems especially enticing. From time to
time I get bewitched by a market and take on excess risk. Sometimes I
win. Sometimes I lose. The bait is always the real-time chart.
“Having a
quote machine is like having a slot machine on your desk,”
I believe you
once said. How true. And as with a slot machine, the odds favor the
house. My Tribe work and my Diary enable me to see this behavior for
what it is. I decide to change the structure of my workflow in order to
eliminate the behavior, and do so. Now I only use my trading platform,
the one with real-time data, to enter orders. After order entry, I turn
it off until needed again. No twitchy charts, no bewitching patterns, no
dabbling. There is a new structure to my work environment. I do not
dabble anymore. Ahhh—that’s better. Time to go walk the dog.
The work I do with my Tribe, the Breathwork Weekend, the Workshop and
the FAQ all contribute to major progress toward my desire to trade
profitably and pursue right livelihood.
An
acquaintance asks me to manage money. A professional trader offers to
partner in a trading business. Good stuff happens! I feel good, focused
and aware of those weaknesses as a trader that require work.
Thank you so
much for your continuing work and generosity with these tools and
technologies.
|
Thank you for sharing your process. |
Tuesday,
January 26, 2010
Acceptance and Judgment
Dear Ed,
I notice that I have another 19 hour week working on system creation. I
feel good about my progress and am very thankful the help and
communication of my support group. Again, there are some subtle things
people say or examples they set that effect my path. Thanks.
I stop taking snap shots of my Now throughout the day and notice a
change. The lack of awareness or acceptance is typically supplemented
with a seemingly innocent, yet controlling / judgmentally thought. I
have chosen to put it in my calendar to take make a habit of taking
snapshots through out everyday.
Awareness and
acceptance is the opposite of judgment and thought. I may have brought
this thought up in a previous report, what is different in my
understanding is that it is an either / or process.
One is on the
other is off. I discover that I prefer awareness and acceptance at all
the moments I choose to be aware and accepting and prefer the opposite
if I am unwilling to experience it. Man, I have a urge to judge that
last sentence. |
You might consider alternately
judging and accepting the way you go back and forth between acceptance
and judgment.

You May Not Get To Change
the way the merry goes round
You may be able to change
your experience of it.
Clip:
http://blog.myphysicaltherapyspace.com/
WindowsLiveWriter/merry-go-round-16-
12-2005.jpg |
Monday,
January 25, 2010
Snoring
Ed,
My brother is in my city for 2 weeks, so I receive him in my flat during
this time.
He is a big huge snorer since our childhood, he snores like a chainsaw
every night. He snores so loud that I wake up at night. The wall between
our bedrooms are not enough soundproof and his snoring is really loud.
Face to that already known case - I mean before I make the distinction
between causal model and system mode l- I would have waken him up, then
ask him to change his position when he sleeps, because he is the "cause"
of the noise. I repeat it till I can sleep again after getting on my
nerves.
But today, I change my point of view, as you teach us there is no
exogenous cause for "noise" and we are responsible of OUR experience of
THE situation. As you teach us, intention = result, so even the noise I
hear comes from my intention if I take responsibility.
So I decide to change my intention because I'm not satisfied with the
result. I change MY structure(=intention) with 2 great earplugs then I
get a great behavior(=result) :now I sleep like a baby at night and I
don't need to wake him in his sleep.
This situation seems to be similar to what happens on markets. There are
a lot of "noises", so many hot news flash, but as you teach us, we can
choose to act responsibly then put those noises right into the trash.
Yes, we have choice and responsibility pushes us to act in the best way
in the system we live.
Thank you for your lesson great teacher.
|
Thank you for sharing your process.

If You Snore So Loudly
that you wake yourself up
you might try sleeping
in a separate room.
Clip:
http://jmccull.files.wordpress.com/
2009/04/snoring.jpg |
Monday,
January 25, 2010
Betting it All
Dear Ed,
I am interested in the question of optimal betting as discussed here:
http://www.seykota.com/tribe/risk/index.htm
You use a
simple example of a 50:50 probability bet with a 2:1 payout. The net
return is -100% of
the bet for a loss and +200% of the bet for a win.
As you point out, on the optimum strategy from the perspective of
maximizing expected compound return is to bet 25% of net worth every
time.
Prompted by a question [Name] raises about running small accounts, I
investigate optimum betting strategies further. I find that for
realistic relationships between wealth and happiness, and incorporating
the fact that people can save money after losing their betting stakes,
the optimum bet fraction can vary considerably from the 25% that
optimizes expected compound returns. The range I come up with varies
from 1000% to 15%, depending on wealth.
Is it best to optimize expected compound return?
The optimum bet from the perspective of expected net worth - the total
outcome after N bets averaged across the range of possibilities weighted
by probability - is to bet *100%* of net worth every time.
Why optimize expected compound return (ECR) rather than expected net
worth?
First ECR also optimizes median expected wealth. If you follow the
strategy of betting 100% of your money on every bet the median return
after more than 1 bet is -100%. After 6 bets or so the 99th percentile
is even -100%. There is a very small chance of a huge return and a large
chance of losing all your money. This does not seem sensible.
ECR also optimizes utility if utility is a logarithmic function of net
worth. [Utility is way of measuring how happy you are, given your
wealth].
Betting everything optimizes utility only if happiness is proportional
to wealth. But is someone with $1bn really a thousand times as happy as
someone with $1m? This seems unlikely.
Optimizing expected compound return optimizes utility if utility is a
logarithmic function of wealth. A logarithmic utility is more realistic
than a linear utility. With logarithmic utility, a given amount of extra
money becomes less valuable as you get wealthier. For example, a person
with $1b is unlikely to get very excited by finding a $100 note, but
someone who is very poor may well be very pleased.
However logarithmic utility leads to some strange results. A person
having no money should be infinitely unhappy. I have experience of this
situation and don't recall being infinitely unhappy. It also predicts
that no matter how much money I have, there is an amount I would bet all
but $1 of it against, on an even money bet. I would suggest that I would
never take such a bet no matter how much you offered me. Logarithmic
utility also predicts that for negative net worth, happiness would be an
imaginary number.
Optimizing a different utility function
I construct a utility function that seems more realistic in my case at
least. Here it is in spreadsheet form:
Utility = power(0.5, max (Wealth - 300000, 0)/1000000 * 0.1) * -0.85 +
1.00
This does not have the problems of logarithmic utility.
None of this is original - it is discussed at length by economists.
However they generally use logarithmic utility function because it is
easier to calculate with [economists often take this approach to
problems].
I rerun the simulations, trying to optimize for my utility function,
rather than logarithmic utility. I find.
The optimum bet falls as one becomes wealthier. This is basically
because when you are wealthy you have more to lose than to gain [there
are few more dismal spectacles that a formerly wealthy person who lost
it all]. At $30m the optimum falls to about 15% of net worth. A 99%
drawdown is quite possible and would be very distressing ($30m->$300k).
I also consider what happens at low levels of wealth. I note that if you
lose all your money, you probably have the chance to save up another
stake and try again. I rerun the simulations taking this into account.
What I find is for realistic estimates of saving capacity, it can be
better to bet 100% of wealth (or even more, if the other party allows it
- I assume 10% margin in my simulations which means 1,000% bets at low
wealth). While you may lose it all, you may make large gains and become
very wealthy quickly, and this can be more significant than the risk of
losing all your current wealth. I notice that a number of the people in
the dreaded "Market Wizards" book actually followed this strategy
initially, with
success, though most of them did not intend to do so.
I also take into account bankruptcy (which cancels debts after a delay
of a couple of years). This makes no difference to the optimum strategy
as it turns out.
I also look at the effect of granularity of bet sizes ie minimum bets. I
find that at least for a single stream of bets, the minimum bet actually
makes no difference - the minimum bet is less than the optimum bet.
As a trader gains wealth, if he or she continue to bet a high percentage
of net worth they will start to move markets and reduce returns. This
factor also drives smaller bets as a percentage of net worth as wealth
grows.
This ignores the issue of "gut". Betting more than net worth may create
unmanageable fear and greed in the trader and lead to irrational
decisions. On the other hand losing all your net worth can have a very
motivating effect on some traders, leading them to take trading and
their research more seriously, as we also see in "Market Wizards".
If a strategy has a negative expected return, the optimum bet is zero.
It still remains important to back test a strategy to be sure it has a
positive return, and to understand the distribution of returns, in order
to come up with the best strategy in each case. |
Betting 100% (or taking unnecessary
risk) might be a pretty good strategy if you know someone who stands
ready to bail you out when you lose. |
Saturday,
January 23, 2010
Ice Cream You Scream
Dear Ed,
I thought you
would like this:
THE COW AND THE ICE CREAM
--From a teacher in the Nashville area
"We are worried about 'the cow' when it is all about the 'Ice Cream.'
The most eye-opening civics lesson I ever had was while teaching third
grade this year...
The presidential election was heating up and some of the children showed
an interest.
I decided we would have an election for a class president.
We would choose our nominees. They would make a campaign speech and the
class would vote.
To simplify the process, candidates were nominated by other class
members.
We discussed what kinds of characteristics these students should have.
We got many nominations and from those, Jamie and Olivia were picked to
run for the top spot.
The class had done a great job in their selections. Both candidates were
good kids.
I thought Jamie might have an advantage because he got lots of parental
support.
I had never seen Olivia's mother.
The day arrived when they were to make their speeches.
Jamie went first.
He had specific ideas about how to make our class a better place. He
ended by promising to do his very best.
Everyone applauded and he sat down.
Now is was Olivia's turn to speak. Her speech was concise. She said, "If
you will vote for me, I will give you ice cream."
She sat down.
The class went wild. "Yes! Yes! We want ice cream."
She surely would say more. She did not have to.
A discussion followed. How did she plan to pay for the ice cream? She
wasn't sure.
Would her parents buy it or would the class pay for it. She didn't know.
The class really didn't care. All they were thinking about was ice
cream.
Jamie was forgotten. Olivia won by a landslide.
|
Hmmm... this sounds vaguely
familiar. |
Monday,
January 25, 2010
Re-Thinking
Dear Tribe;
My account is
down- probably a lot (10%). It is currently somewhere in space between
my old brokers and my new brokers. I planned on the market taking a
nosedive- I put in all my stops, but I still don't know whether my stops
were actually followed. I feel foolish and regretful. There will be some
transition issues for the next week or two.
I am taking all your helpful advice to heart- and changing my
commitments accordingly.
I will re-think these this week and have another version for next week
My re-hashed visualizations and commitments.
1) I commit to
doing everything in my life in a more professional manner . Closure and
Precision.
2) I commit 5
hours a week to the [Names] Corporation exit strategy. These numbers can
overlap- and will be adjusted to circumstances.
3) I commit to
spending 20 hours researching, testing and trading my account, so that I
am earning 100% return this year.
4) I commit to
reading the FAQs, exercise and good health habits.
|
Thank you for sharing your process. |
Monday,
January 25, 2010
Starting a
Fund
Hi Everyone,
This is the first report summarizing my progress toward fulfilling my
commitment for 2010.
1. Commitment Summary: At the last workshop, I commit to working on my
fund starting in January 2010. Specifically, I commit to building out
the fund's infrastructure, and to raising capital so that I finish 2010
with $50m in managed assets. To that end, I also commit to completing a
business plan by the end of March, and to circulating two reports per
month summarizing my progress.
2. Fund Performance: Net of fees, our trend following model finishes the
year with a +4.74% return. In comparison to the top twenty largest trend
following funds, our performance ranks third best. More importantly, I
finish the year having followed my rules with no drama.
3. Progress Summary: The first two weeks of January start slowly. I
expect to sell a technology business I own by the end of December,
freeing up more time for the fund. The sale does not take place on time
and requires that I negotiate an extension. I now expect the sale to
occur by the end of April, and must continue managing the business until
then. Given my commitment to work on my fund, I expect to encounter
extreme time constraints. In response, I develop a weekly worksheet I
can use to better allocate my time across various priorities. I put the
worksheet into effect this week.
4. Next Steps: To write an effective business plan, I first need to
obtain information about the process of building out a hedge fund. To
that end, I want to: (1) find people who manage investment funds; and
(2) learn from these people how they do it. If you know of anyone who
fits this description, I would greatly appreciate a reference.
Thank you for agreeing to support my commitment. It is a major goal, and
I appreciate your willingness to help.
I look forward
to a great 2010! |
Thank you for sharing your process. |
Monday,
January 25, 2010
Up Against the Wall
Dear Mr.
Seykota,
I knew you from your website.
I have very strong engineering and programming background and I know
there are quite a lot platform on which traders can set up their own ATS
(automatic trading system) based on their own trading ideology.
I used to use
MT4 for forex trading and now I plan to choose Openquant or
QuantDeveloper to trade commodity and financial future, forex etc. If I
can develop a good ATS, I may raise a fund in the future. (that’s too
ideal I guess)
However, I also have some concern, I know wall street hire some most
brilliant talent PhD, programmer, economist, they can also afford super
computer and very complicated software to monitor the investment
opportunities globally.
So my questions is : how can we compete with them? What’s our edge
technically speaking? (Suppose I have all the other capability such as
psychology matter). |
Thank you for
sharing your process.
You might
consider taking your feelings about <too much competition> to Tribe.

When People Start Following These Rules ...

... And These Rules ...
you might have some real competition.
Clips:
http://blog.beliefnet.com/everydayethics/
ten_commandments_2.jpg
|
Sunday,
January 24, 2010
Starting a
Fund
Dear Support Team:
Thank you all for your encouragement and involvement in my Big Wave. I
continue to move forward with my Big Wave with great enthusiasm.
I am also continuing with system design and enjoying this aspect very
much!
Today I go skiing with a potential client and the meeting goes very
well.
Tomorrow I have a call with a firm in [Country] regarding company
formation and setup.
Hope all is well!
Thank you for your support.
|
Thank you for sharing your process. |
Sunday,
January 24, 2010
Daughter
Stops Dad From Working
Ed,
I notice one feeling that stands between me and getting a job. I like
being with my daughter. I wake up with [her] and play with her for 2-3
hours every morning until either she goes to sleep or [my wife] wakes
up. The three of us usually take a 1.5-2 hour walk in the middle of the
day. I give [my daughter] a bath before she goes to bed for the night. I
am afraid of losing all that when I start punching clock.
Assets:
$524,937.28
Liabilities: $552,143.58
Net:
-$27,206.30
500oz goal: $542,000.00
Job applications: 0
Interviews: 8
Offers: 0
|
Thank you for sharing your process.
You might consider compiling a list
of all the other reasons you can't get a job (like the ones you might
recall using before the birth of your daughter.)
Since you are, indeed, surviving,
you are living proof that you don't really need a job.
You can, for example, continue
living off your wife, at least until your daughter is old enough to
start supporting you.

Babies Like Sucking On Their Mothers
Sometimes they grow out of it
and get to right livelihood
and sometimes they don't.
Clip:
http://cache.static.tsavo.com/wordpress/
uploads/2009/04/mother-nursing-baby-1.jpg |
Sunday,
January 24, 2010
Falling
Dollar
Ed,
The Question of the Day is ...Will the Dollar fall or not?

|
You can get a pretty good idea about
what this particular dollar is likely to do by monitoring the spread. |
Sunday,
January 24, 2010
Right Place
and Time
Hi Ed,
I have been following your FAQ for the purpose of improving my trading
skills and to make lots of money. Ironically, your wisdom that I
gathered from your FAQs, together with Deepak Chopra's book and other
self development books I've read led me to a different, more satisfying,
less stressful path. For some reason, things in my life are happening at
the right place and time. I've begun to appreciate the positive
intentions of everything that happens.
About a year back I asked for your advice about day trading. Your reply
(and my trading losses) led me to abandon trading altogether and do what
is most enjoyable to me. I'm still looking for the livelihood that I can
be most passionate about. Any thoughts on how I can find it?
Thanks for keeping the FAQ running!
PS. Is your TTP book applicable outside of trading?
|
Thank you for sharing your process.
One way to find right livelihood is
to keep serving others.
The book's application depends
mostly on how you apply it. |
Friday,
January 22, 2010
Early
Bail-Out Plan
Hello Ed and my valued Support Team,
Well, I violated some rules this week and exited some positions before
my stops were hit. In a couple of cases the instruments kept right on
going through the original stops and still haven't stopped, so my
actions lowered my losses. In a couple other cases, only time will tell
if I bailed very near the low of the reaction. I learned a lot. 1. Even
using a multiple ATR stop, my positions are still too large.
2. When the
s--- hits the fan I run like a scared puppy.
3. I need to work on
fortitude, patience and discipline.
4. I am not 100% compatible with my LTTF system as it currently is designed. Either it or me has to change.
Thanks Ed for your response to my last report and to my supporters for
their feedback. |
Thank you for sharing your process.
Your overall system comprises your
math and your ability to follow your math.
By working on your math and by also
working with your feelings, you can discover a system with good math
that you can follow. |
Friday,
January 22, 2010
Progress
Report and Some Questions
Dear Ed and Support Team,
I send you an update after a long time. I experience some feelings of
guilt at my delay. But I am happy about the progress I make and the path
I choose. I have some questions and I greatly appreciate your help with
answers and feedback. I list my questions in the broad categories they
fall into so as to improve readability:
1. TRADING
1. Is there an optimal number of markets for a systematic trading
algorithm?
2. Ed, in your Donchian system demo you choose 5 markets (S&P, Bonds,
Soybeans, Copper and Eurodollar) – is this merely a random choice, or do
you arrive at this list by some methodology?
3. When I construct continuous contracts should I use all the contracts
in a series or only the ones which have high open-interest (OI) and
volume? For example, in the case of Soybean, I see that the March and
November contracts have most OI and volume typically, but the full cycle
is Jan, Mar, May, Jul, Aug, Sep and Nov. So is it best to make a
continuous series of Mar and Nov only, or is it better to use all the
other months as well?
2. FORMS
1. Ed, I re-read your book and feel I do not understand what you mean by
“honouring” a judge. How is “honouring” different from “experiencing”?
2. Do forms always and necessarily increase in tempo and movement as the
sender goes deeper into his emotions?
3. When in the hot seat, I sometimes have deep feelings that I am unable
to express fully in a physical manner. This is not always the case but
it happens a few times and when it does, I feel I have not gotten to the
core of the issue. I feel that some other members in my Tribe have a
similar experience. I do a site-search on the FAQ and discover an entry
where Ed visits a Tribe and participates in their process and gives them
feedback to not ask the sender repeatedly how he feels during the
hot-seat (as it pulls him into his conscious-mind and away from his
Fred)
http://www.seykota.com/tribe/
Pollinators/2004_J_01_ES.htm
This is a
mistake that I and my Tribe also make. I share the link with my Tribe so
as to improve our process and eagerly await our next meeting. I am
afraid I do not have enough experience to “see” a form and help the
sender develop it. I greatly appreciate any suggestions or exercises to
help overcome this.
3. SVO-p
1. I practice to talk and write in SVOp. Initially I feel embarrassment
at the awkwardness of this syntax. But soon this feeling passes away. I
suddenly realize that SVOp is a simple yet amazingly powerful tool to
help me stay in the now. I share this insight with my family (my sister,
my 9-year old son and my ex-wife). I feel happy. I decide to help my
family, my friends and my Tribe to stay in the now by using the SVO-p
tool, and to remind myself of this intention at every check-in.
4. COMMITMENT
1. I am in love with a woman who does not trust me, but tells me that
she loves me. I repeatedly assure her of my fidelity, all to no avail. I
live in [City] and she lives in [Another City] . My feelings of love
towards her are intensely strong. I decide to move to [her City] in
order to be with her. Initially she encourages me in this, but then
shuns me yet again.
I show her all
the commitment that I can and all I get is another cold shoulder. I do a
couple hot-seats on this issue. Gradually I feel much better. I love her
still. But I accept her for who she is. I decide to stop my “explain and
convince” cycle with her. I want to share my life with a woman who is my
soul-mate – someone who wants me as much as I want her. I decide to live
my life fully and not to wait for her. I trust that the right woman will
appear as I walk the path of my right livelihood.
2. The futile pursuit of the woman I love makes me realize that I show
commitment to others but not to myself. Over the past few years I put a
lot of effort to build a trading system but it remains incomplete. I am
afraid I don’t have the capability to pull it off. Then I see a comment
from Ed on FAQ
http://www.seykota.com/tribe/faq/
2009_Nov/01/Index.htm
with the image
of a bacon and eggs breakfast and the words: “the chicken is in, the pig
is all-in”. I love it. I absolutely love it. I know what I must do. I
get a bonus in the next few weeks that gives me about 12 months worth of
pay.
I decide to
use this opportunity to quit my job and work full time to develop my
trading algorithm. My mum and dad and my sis, even my ex-wife fully
support me in this. Others, who know me less, tell me that I must not
take any wild steps – after all I have to provide for two households (my
own and my ex-wife’s) and that the market is soft and that there is a
raging recession etc. I feel a lot of fear. Sometimes I wake up in the
middle of the night with a cold sweat. But I want to do this. It makes
me happy to finally give myself a chance.
I keep you updated on my progress. And I thank you for your support. |
Thank you for sharing your process.
1.
1. The definition of your objective
function (the function you wish to optimize) implies an optimal value
for all system parameters.
2. Using five instruments (rather
than, say, 40) makes the demo easier to follow and replicate.
3. FAQ does not tell people what
they "should" do.
2.
1. Honoring goes a little further
along the road toward appreciation and acceptance.
2. Some "medicinal" and "necrotic"
forms show little motion.
3. You might consider staying in the
now and expressing the physical form of <I can't express feelings
physically>.
3. OK.
4. OK. |
Thursday,
January 21, 2010
Perceiving Pressure
Dear TT Support Team:
I have exited more trades today and in the past week and am writing to
report my progress.
Overall I feel
I have stuck to my rules, so far this year I have done 8 trades, 4 were
small losses, 3 started right, but failed to continually behave, and
were exited around breakeven. 1 did all right and generated a modest
profit (5 R) relative the trading size. So, even with this 1 modestly
winning trade, it pays all the losses, and netted a small profit.
Since I perceive that the general stock market is under pressure, and a
correction seems to be in the making. I am all in cash. I will report my
progress once I enter and exit trades.
Thanks for your continuous support.
Happy Trading! |
Thank you for sharing your
process.
You might consider formalizing your method of "perceiving pressure" to
determine if it is inherently analytical or emotional.

Pressure
is energy / volume
and also
force / area.
Clip:
http://www.geekologie.com/
2007/04/darth-vader-balloon.jpg |
Thursday,
January 21, 2010
Risk Management
Hi Ed,
It seems to me that you'd agree risk management is very important in
trading.
Do you think you can manage risk?
How do you feel about managing risk?
Thanks.
|
Risk, by nature, is chancy
and probabilistic; you cannot directly manage risk.
You can manage your exposure to risk by entering buy and sell orders.

You Cannot Control
Where the Ball
Lands.
You can control
the extent to which the ball affects you.
Clip:
http://fourthandverylong.files.
wordpress.com/2008/12/roulette-wheel_hr1.jpg
|
Thursday,
January 21, 2010
Intimacy Cycle
Hi Ed,
What is the Intimacy Cycle?
Thanks. |
I do not know the reference. |
Thursday,
January 21, 2010
Controlling the Kids
Hi Ed,
I struggle with the responsibilities of parenthood. I try to use TTP
with my kids, but I get pushback about many parts of family life (Me: "I
want you to clean your teeth / pick up your toys / do your homework
etc." Kid(s): "NO"). I try to avoid ultimatums ("do your homework or you
can't go skiing") but often feel I have no choice.
My patience is challenged everyday, and my patience is getting stronger.
Many times, we can negotiate mutually acceptable solutions (example:
pick up toys THEN watch movie).
One second order influence is my wife has a different parenting style.
She uses loud commands in the imperative tense, tosses out ultimatums
constantly, uses lots of emotional "muscle" and so on.
I feel confusion at how to get my kids to brush their teeth, do their
homework, eat their vegetables, etc. I try to lead by example, to accept
them fully and to give them as much autonomy as possible. But at the end
of the day, I'm substantially responsible for their well being until
they are old enough and able to take care of themselves.
Feedback appreciated.
|
You might consider taking
your feelings about <controlling the kids> to Tribe.
Meanwhile, you might consider teaching
your children by brushing your
own teeth, picking up your own toys and doing your own homework.

Teaching Kids by Scolding
mostly teaches them
how to scold.
Clip:
http://www.ibabuzz.com/tricitybeat/files
/2008/05/mother-scolding-bad-boy.png |
Wednesday,
January 20, 2010
Being Accountable
Ed,
It is another productive week. I meet with the [City] TT on Monday and
have a productive hotseat. My last TT is in the beginning of November, so it
is nice to get back to receiving and sending. I experience feeling
broken inside along with many other things. In the end, I notice that I
choose to put that image or thought there and this brings some
separation. It is great I have a chance to talk with [Name] about
trading systems.
My programming column is continuing to change definition. My intention
of this column is to hold me accountable to do more hands on
investigating and creating and less academic studying. It does help with
this. I am including in this time studying charts and analyzing
different systems.
On Tuesday I sit down with [Name] at his office. It is impressive and I
feel lucky to sit in on a couple of new sales people first day training.
As a salesperson, I always enjoy watching someone with some much passion
and experience get their message out.
Things are moving. Work is busy, making it more challenging to log
hours. I would like to get back up to 28 hours consistently.
|
Thank you for sharing your
process. |
Wednesday,
January 20, 2010
Fixing the
Fall
Ed,
Fixed one very important memory in my life which related to falling in a
ski race in which I had had the best run of my life.
Second run I fell.
Two runs to one slalom race with the combined best times winning. In any
event I fell on the second run and after the fall I skied the best that
I have skied in my life.
You are allowed to get up and finish (won't get
into technicalities) In any event the memory in my mind has a break
where I fell. Today running through the memory I catch myself falling
and correct and finish skiing the best that I have skied. The relevance
of this is that skiing is the only thing that I have confidence in
saying that I do well and that was always a whole in my "skiing memory"
which was fixed today. As I fix the fall a huge "spark" fills my body. |
Thank you for sharing your
process.

In Skiing and in Trading
be sure to assume no more risk
than you can handle.
Clip:
http://www.alpineworld.com/adventure
/Butler_Gulch/Wipeout.jpg
|
Wednesday,
January 20, 2010
Sand Painting - Video
Hi Ed,
I thought this video would be of interest to you and others...I like the
way she is creating and recreating rapidly.
It's only sand but art comes in many mediums...
the people connect to their emotions and the emotions of their memories.
Art is emotion made manifest.
http://www.youtube.com/watch?
v=vOhf3OvRXKg&NR=1 |
Thank you for the clip |
Tuesday,
January 19, 2010
Recovery
Ed,
Ed says, "Likely the market is trying to move
people out of real estate speculation and out of the service sectors and
and into profitable manufacturing. The government is likely to impede
this process, thus slowing the recovery." (FAQ, "How Much is Too
Much Speculation", 10/26/08)
If I understand it correctly, it sounds like you are implying that
manufacturing is preferable to service sectors in terms of a speedy
recovery.
1) Can you clarify what you mean by recovery? Is it measured by the
country's GDP?
2) Regardless of your answer to (1), I wonder what your thought is on
GDP - for example, whether you think it is a reasonably good measure of
a country's economic health.
Your choice of adjective (profitable) to describe manufacturing seems to
me that you are in favor of producing more "stuff", so long as one can
sell the "stuff" at a higher price than the raw materials + labor.
3) If so, I wonder if a house can also be a profitable "manufactured"
product, so long as one can sell it at a higher price than the raw
material + labor?
4) In addition, can there be profitable "service sector"? If so, do you
think moving people into profitable service sector can help recovery?
Thanks.
|
I am referring to the cycle
phase in which the aftermath of a speculative bubble (such as real estate
bubble) clears the economy of marginally
productive enterprise.
In the case where subsidies keep marginally profitable enterprise in
business, it tends to delay the recovery.
Tool building, an essential component of capitalism distinguishes some
forms of manufacturing from the services sector. |
Tuesday,
January 19, 2010
Baseball and Trading
Hi Ed.
My system is up and running as of January 4, 2010. I am 25 years old and
my process continues to evolve. I enjoy sharing my experiences from my
baseball career and applying them to trading. I share one such
experience below.
It is four years since I stop playing baseball following a severe lower
leg injury (broken right tibia and fibula). From time to time, I have a
catch or play a little on the weekends. Despite ~15 years of game-play
and practice, I feel that my mechanics and focus are depreciating. I
notice that I am a casual player now. This angers me as I remember
during my playing days that I despise casual players. These are people
who I define as not taking the game seriously and expect above average
results. Also, they are the last ones to arrive at practice, the first
ones to leave, never get worked up over losing games, etc.
What is funny to me is that trend following appears to be a "casual"
style as it never puts you in the move before anyone else (late to
practice), gets you out of the move before the majority sells out (first
ones to leave practice) and shrugs off losers (moves on to the next
trade). However, I know from experience in baseball and trading that the
rigorous work is done behind the scenes so the "casual" nature exhibited
on the playing field is not to be confused with laziness. I find that
players in baseball and trading, who exhibit effortless execution tend
to be the ones who put in the most effort when no one is watching.
Talk to you guys soon |
Thank you for sharing your
insights. |
Tuesday,
January 19, 2010
Austin
Tribe
Hi Ed.
I wonder how
things are going for you after the Breathwork.
Since you have
been through the Breathwork already does it still make a big difference
in your life? Have you noticed any changes? I read other participants
reports and wonder how it is for you.
At the weekend
you mention looking at property near Austin and I wonder how that is
going. Do you still plan to move? I have wondered about these for awhile
now so I thought I would write to see.
I hope everything is well with you.
|
Yes, I am moving forward with
plans to re-locate to Austin. |
Tuesday,
January 19, 2010
Tires and
Skids
Dear Ed,
I am sure you will pleased to know that the [Name] Tribe has had its
first official meeting.
Just two of us present but a very meaningful session.
The problem I wanted to drill into was the reason why I bail out of
highly responsive stocks (Longs with high correlation to the indices)
before they hit my stops when a sharp sell off occurs in the overall
market.
The reasons for me doing this are to avoid large drawdowns, but these
exits are rarely re-entered into when the market rises again and
although
these exits protect me from large drawdowns on that day or over the next
few days, they ultimately cost me money in the long run.
After going round in circles for about an half an hour, and being asked
what the feeling was that I have when pressing the sell button in these
cases, I came to the conclusion that there was no emotion, no feeling
and no fear it was just an automatic response from my subconscious mind.
This told us
both that it must have a lot of "hidden stuff" behind it, I began to
feel uncomfortable when I said "I remember Ed said I had a blockage of
fear" as the feeling of discomfort grew, we stayed on the point, I
remembered some occasions in the past when I had felt fear, but this
proved to be irrelevant.
Strangely after we stopped the session I was still in deep thought mode
and about 5 minutes later I recalled being walloped when I was a young
boy of around 5 for wearing right though the back tire and inner tube on
my bicycle because I was skidding by locking the back brake on, this
earned me a harsh spanking punishment from my father as he had told me
not to skid my back wheel.
I learned very early in life that any mistakes of this nature I made
would earn me a punishment either from my father shouting at me, or a
spanking or some loss of privileges.
I recalled how scared it made me feel. Could it be that this knee jerk
reaction to sell offs was my subconscious mind "knowing" I had to avoid
mistakes to avoid being punished?
I figured that this was exactly the whole reason behind it all.
After the
session, I felt very upbeat about it, and decided to build this set up
into my system as an upgrade because the first part of the drama (the
selling of highly correlated stock in sharp declines) was correct, but
the failure to buy back in if they remained long by my system, after the
sell off ended, was incorrect.
This is the solution to the problem I have been debating endlessly in my
mind for the last 10 years. It will reduce drawdowns without reducing
profits, as the original trade will be re-entered
usually a few points lower at the original size and the stop in its
original place.
If you have any thoughts on these points they would be appreciated.
|
Thank you for sharing your process.

"Don't Skid Your Rear Tire."

"OK Dad."
The K-nots you give your kids
are likely to keep them busy
for the rest of their lives.
Clips:
http://www.aboutstreetbikes.com/upload1/
Burn%20Out%20%28Awsum%29.jpg
http://maryvictrix.files.wordpress.com/2007/
08/angry-dad2.jpg |
Monday,
January 18, 2010
Looking for
a Job
Dear Ed,
I attend a "reverse job fair" this Saturday ... Job seekers set up
displays which recruiters and hiring managers visit.
I lose track
of how many companies' representatives I speak to or hand my resumes to.
I don't know how to count these mini-interviews and maybe-applications.
I am just
catching up on email from them after two full-time days (yes, some of
them email me on Sunday). I have two interviews earlier today.
Assets:
$528,671.28
Liabilities: $552,143.58
Net:
-$23,472.30
500oz goal: $564,000.00
Job applications: many
Interviews: many
Offers: 0 |
Thank you for sharing your process.
Looking for a job can be a good way
to avoid getting one. |
Monday,
January 18, 2010
Wants
Real-Time Monitoring
Dear Ed,
Potential institutional clients are asking if there is a way they can
see their investments with us
in real time or on a daily basis.
Is this crazy to ask for?
How might we provide this?
|
Yes, you can implement real-time
reporting.
You might ask your clients how they
intend to use real-time data; to the extent that your clients use such
information is medicinally, it might be counterproductive to long-term
trend following.
You might consider qualifying your
customers as to their ability to stay with the system over the long
term. |
Sunday,
January 17, 2010
On the Path
Hello Ed,
Our local Trading Tribe holds a meeting and I spend quality time sending
and receiving feelings from Tribe members. Our Tribe grows and I
experience the joy in seeing others participate in TT and proceed with
their own perspectives of right livelihood.
I review my feelings about "missing out on a market move" and move thru
a few forms.
I understand
that I fear being wrong and imperfect may result in my parents not
loving me. I experience the form of crying and recall that my parents
have always stood by me and have never stopped loving me even if I make
mistakes and I am not perfect. I feel better and recognize that missing
out on market moves is okay. Some trades are profitable, some trades are
not profitable, and some trades never start. All of these outcomes are
okay with me.
I am surprised that the feelings of missing out are linked to memories
and fears from childhood experiences. I recall that I like to hide the
bad test scores from my parents and show them the good ones. It is okay
to show them the good and the bad test scores. It is okay to have both
profitable or equity reducing trades.
My personal commitment to working with the Trading Tribe process began
only recently. I notice that since I started actively working on my
feelings, trading is more enjoyable, stress free, and profitable.
I learn a lot by receiving feelings of fellow Tribe members. During the
receiving process, I remain detached from the senders feelings and focus
on encouraging the flow of forms and feelings. Afterwards, I notice that
I easily empathize with the senders' experience on the hot seat. I am in
touch with those feelings again. I thank the sender for sharing.
I renew my commitments to experiencing and enjoying all of my feelings
professionally as a trader and personally as a community member. I
intend to embrace my feelings and follow my trading plan. I intend to
continue holding and organizing Trading Tribe meetings.
Thank you for your support, |
Thank you for sharing your process. |
Saturday,
January 16, 2010
Pyramiding
Research
Ed,
After
duplicating the results for your SRS, EAS and ROC systems in the TSP I
decided to modify your SRS system to allow for pyramiding. I ran the
system using the same parameters used in your system test (140/20 5%
heat) except I added one position. I also re-ran the test using 3% heat.
I have attached the results (system summary, metrics log, equity log and
trade log).
Sept 9, 2003 - Ed Says “Pyramid up to your risk
budget, not on top of it.”
My Observations:
Running the SRS system at 5% heat and pyramiding once generates higher
return, higher drawdowns and similar bliss when compared to the original
system. The pyramiding system run at 3% seems to generate similar output
to the original system except the number of trades and the size of the
positions seems to be larger.
It would appear the manner in which I am pyramiding with the SRS system
does not provide much benefit. Perhaps pyramiding smaller than the
original position size would be more stable. Like the Pyramid of Skulls
Cézanne, circa 1901 (FAQ May 17th 2003).
I’ll continue exploring. I am also testing the SRS system with a
portfolio of securities and will provide some feedback related to
diversification. |
Thank you for sharing your research. |
Saturday,
January 16, 2010
The Secret
Toothbrush
Dear Ed,
Was reading
your site and saw a post Regarding "The Secret" I wanted to share this
review with you.
http://www.amazon.com/review/
R2X2TB3S4O5I60/ref=cm_cr_dp_cmt?
ie=UTF8&ASIN=1582701709&nodeID
=283155#wasThisHelpful
The Secret saved my life!, December 4, 2007 Please allow me to share
with you how "The Secret" changed my life and in a very real and
substantive way allowed me to overcome a severe crisis in my personal
life.
It is well
known that the premise of "The Secret" is the science of attracting the
things in life that you desire and need and in removing from your life
those things that you don't want. Before finding this book, I knew
nothing of these principles, the process of positive visualization, and
had actually engaged in reckless behaviors to the point of endangering
my own life and wellbeing.
At age 36, I found myself in a medium security prison serving 3-5 years
for destruction of government property and public intoxication. This was
stiff punishment for drunkenly defecating in a mailbox but as the judge
pointed out, this was my third conviction for the exact same crime. I
obviously had an alcohol problem and a deep and intense disrespect for
the postal system, but even more importantly I was ignoring the very
fabric of our metaphysical reality and inviting destructive influences
into my life.
My fourth day in prison was the first day that I was allowed in general
population and while in the recreation yard I was approached by a
prisoner named [Name] who calmly informed me that as a new prisoner I
had been purchased by him for three packs of Winston cigarettes and 8
ounces of Pruno (prison wine). [Name] elaborated further that I could
expect to be raped by him on a daily basis and that I had pretty eyes.
Needless to say, I was deeply shocked that my life had sunk to this
level. Although I've never been homophobic I was discovering that I was
very rape phobic and dismayed by my overall personal street value of
roughly $15.
I returned to
my cell and sat very quietly, searching myself for answers on how I
could improve my life and distance myself from harmful outside
influences.
At that point,
in what I consider to be a miraculous moment, my cell mate informed me
that he knew about the situation and that he had something that could
solve my problems. He handed me a copy of "The Secret". Normally I
wouldn't have turned to a self help book to resolve such a severe and
immediate threat but I literally didn't have any other available
alternatives. I immediately opened the book and began to read.
The first few chapters deal with the essence of something called the
"Law of Attraction" in which a primal universal force is available to us
and can be harnessed for the betterment of our lives. The theoretical
nature of the first few chapters wasn't exactly putting me at peace. In
fact, I had never meditated and had great difficulty with closing out
the chaotic noises of the prison and visualizing the positive changes
that I so dearly needed.
It was when I
reached Chapter 6 "The Secret to Relationships" that I realized how this
book could help me distance myself from [Name] and his negative
intentions. Starting with chapter six there was a cavity carved into the
book and in that cavity was a prison shiv. This particular shiv was a
toothbrush with a handle that had been repeatedly melted and ground into
a razor sharp point.
The next day in the exercise yard I carried "The Secret" with me and
when [Name] approached me I opened the book and stabbed him in the neck.
The next eight weeks in solitary confinement provided ample time to
practice positive visualization and the 16 hours per day of absolute
darkness made visualization about the only thing that I actually could
do.
I'm not sure
that everybody's life will be changed in such a dramatic way by this
book but I'm very thankful to have found it and will continue to
recommend it heartily. |
Thank you for sharing your process.

Clear Communication
can help others get the point.
Clip:
http://farm1.static.flickr.com/198/
492829379_9dc4b85816.jpg
|
Saturday,
January 16, 2010
Ups and
Downs
Dear Support Team,
Per my commitment, I am reporting that my system exited 2 positions
automatically based on my pre-established stop loss orders. The
cumulative effect to equity is ~1.8%. I feel fine with this. Losses have
been cut short. My portfolio as a whole, however, got smacked down
pretty good this week.
Correlations
in my "diversified" portfolio have essentially gone to 1. I find that my
mood gets mildly depressed when things are going against me. I also
notice that I get virtually immediate onset tension headache when I see
my equity dropping. I wonder if headaches are my signature emotional
form.
I think
sending in these reports is beneficial even if no one else reads them. I
am finding that designing a profitable much shorter term system (to
diversify my long term system) is proving a much more difficult task.
I thank you all for your support, observations and suggestions. |
You might consider back-testing your
system to optimize your time constants.
Many systems optimize with time
constants in the range from three months to two years. If you are
trading on a "two-week" basis, you might be playing for emotional ups
and downs.

Ups ...

... and Downs
can alternately
expose your throat
and your butt.
Clip:
http://www.diane-lee.com/photo1.htm
http://www.diane-lee.com/images/yoga1_2.jpg |
Friday,
January 15, 2010
Lessons
Hi Ed,
I wonder what are some of the most important lessons you've learned
since the Market Wizards interview.
|
You might consider taking your
feelings about <life is a series of lessons> to Tribe. |
Friday,
January 15, 2010
Thanks
see previous
Dear Ed,
Just a quick
thank you for your responses to my previous two emails on FAQ's. They
help me to better experience the now. |
Thank you for your support.
|
Friday,
January 15, 2010
Low on Cash
Hi Ed
Thank you for hosting the workshop. I got really excited when I saw it.
I went to visit the travel agent to see how much it would cost to travel
to Reno. The aero plane ticket will cost me $2,500. I estimated that I
would need about another $1,000 approx for the hotel bill. I also saw
that I would need $2,500 for your workshop fees.
I spoke with my wife about attending the workshop. She thinks I’m crazy
to want to spend so much money on a “personal enrichment program” as she
calls it. She doesn’t support me in this but says “Why are you asking
me, You do what you want anyway”.
I have enough for the air ticket but not much more.
I figure it would not be prudent to load up the credit card with debt
that we have just spent a year clearing.
I also feel guilty that we have not been able to have a holiday even
somewhere locally.
I also have no support network to look after my wife and the kids when
I’m away. We don’t have any relatives here but her folks should be here
from July onwards so the October one may be better for me.
There is really only one way for me to get the cash to attend your
workshop, that is to sell my car. (our 2nd car)
If I can sell the car in time, I guess I would like to attend the
workshop. If not I will probably have to wait for the October one.
I’m not trying to make any excuses I just lay the facts and difficulties
I have before you as I see them. I do very much wish to make the
workshop and meet you but I have to find a way to overcome these
obstacles.
|
Thank you for sharing your process.
You might consider waiting to buy
things until you can afford them without going into debt or selling
things you need.
You might consider taking your
feelings about <spending> and <going into debt> to Tribe. |
Friday,
January 15, 2010
Perception
Ed,
What role do
you think perception has in trading?
|
Sometimes you have to believe it to
see it.

... as in ...
turning on the lamp.
Clip:
http://www.moillusions.com/2009/
08/the-lamp-optical-illusion.html |
Back to the
Future
|