August 11 - 20,
2009
<==
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Contributors Say
(Quotes from Ed in Red) |
Ed Says |
Thursday,
August 20, 2009
Ways of
Delays - Feedback
Hi Nick and Ed,
Thank you for sharing your work on delays.
I notice what appears to be a disagreement between your text and the
image "System Response to Step in the Target." The caption notes: "The
Target steps from 0 to 5 cups per second at t = 2 seconds." The image
seems to indicate a step from 0 to 10.
Another caption reads, "At a Frequency of 0.25 radians / (per month) the
Outflow Rate tracks the Inflow Rate closely." I notice that the
corresponding image labels the vertical axis in US$/month rather than
radians / (per month). This last unit suggests a measurement of angular
acceleration, as in radians/month/month.
Further down the page, you ask the reader to "Note: at Frequency Factor
1 the cycle takes 6.28 seconds (2 * pi) to complete." I notice that
images above and below this note use months rather than seconds on their
horizontal scales. I notice some difficulty correlating the text and the
images.
|
Thank you for your feedback.
We are currently repairing and
clarifying these sections. |
Thursday,
August 20, 2009
Appreciates
Reader Contribution
Hi Ed,
As a beginner
I feel to thank the author of the "Tenth Anniversary" for the experience
he / she shares: it's a source of many questions I like to ask ...
I hope for you a continuous growing success in the future.
|
OK. |
Thursday,
August 20, 2009
Core
Hi Ed,
As always I
follow regularly the Tribe FAQ: I really appreciate your work and
support.
On August 16, in "Risk of Ruin" when you say "1%constant-risk trading" I
think it means to calculate 1% of equity and trade with that value.
Consequently,
equity can go up or down but every time I need to make orders I
calculate the 1% to risk and this make it constant. I wonder if you can
clarify the meaning of "1% proportional risk core trading".
Thank you |
Core Equity = Total Equity - Equity
at Risk. |
Thursday,
August 20, 2009
The Ways of
Delays
Hi Ed
I am enjoying reading the Ways of Delays. Today I started with the no
feedback simple systems which makes perfect sense to me. Having been a
loan officer in the past I could relate to the step function in other
practical ways such as a step loan or a step foundation in construction,
the ramp as a pitch of a roof, the pulse as an interest only loan and
the sine wave similar to a loan tied to an index such as LIBOR.
I wish to thank Nick and you for all your efforts in making system
dynamics so clear.
I'll keep reading for clarity and understanding.
|
OK. |
Thursday,
August 20, 2009
Hello again,
Hereby attached, TTID template to register a new tribe in Amersfoort,
Netherlands.
Many thanks
|

Welcome
Amersfoort
Netherlands
|
Thursday,
August 20, 2009
Feelings
Without Positive Intentions
Hi Ed,
Is it possible that some feeling have no positive intentions? If so, how
do you eliminate the drama associated with those feelings? |
I wonder
exactly what feeling you have in mind.
You might
consider taking your feelings about <nebulous theories without specific
examples> to Tribe. |
Wednesday,
August 19, 2009
Belief in Himself
Dear Ed,
I think if our aim is to prepare Trading Tribe members to trading, then
it could be good for all of us to have your opinions about the belief.
Especially belief in himself. How can a trader increase
his belief in himself? How can he trust himself in such kind of process
trading?
Because I fell on myself that this is one main thing on
trading. I think it is very necessary to stick to your system and so on.
Some traders use the automatic systems to avoid [his feelings] during
trading.
What do
you think about it ? What kind of advice you can give us.?
Thank you in advance |
You might
consider taking your feelings about <beliefs> to Tribe. |
Wednesday,
August 19, 2009
Position Maintenance and Sadness
Ed,
Whilst I have a range of good insights into markets, and over the years
I develop a pretty accurate sense about markets, I have trouble with the
same problem - maintaining my position in spite of the market action.
It is a curious thing that whilst I claim to have
insights that would manifest over the ensuing days or weeks, I often
close positions within the session because of nervousness that things
"aren't going my way." That is, I'm so worried about loss that I take my
losses too quickly.
This is a problem that causes me significant frustration
and sadness. I feel there is sadness lying somewhere beneath it, but I
am yet to locate it. Perhaps it's the sadness of not having a guru in my
life, and perhaps it is you that I'm trying to employ as my guru. |
If you have a
sadness K-not, Fred might help you engineer some loss drama.
You might consider taking your feelings about <loss> to
Tribe.

One of the Positive Intentions of Sadness
is risk control.
Clip:
http://breshears.net/wp-content
/uploads/2009/03/windowslivewriter
sadness-12e62sadness-2.jpg |
Wednesday,
August 19, 2009
Getting to the Core
Ed,
In your answer of the message "risk of ruin" of Sunday 16th August, what
is the difference between trading and core trading?
Do you mean "Core equity" or "core capital"? |
Core_Equity =
Total_Equity - Equity_at_Risk
With Constant Position Sizing, you size your trade to
same number of shares (contracts) on each trade.
With Proportional Position Sizing, you size your trade
proportionately to your Total_Equity.
With Proportional Core Position Sizing, you size your
trade proportionately to your Core_Equity. |
Wednesday,
August 19, 2009
Sources of Earnings
see previous
Sir -
If you honestly think that [company] makes money through
"selling securities" and conventional "broking" business, you are very
much mistaken. [Company] is, and has always been, a firm of traders run
by traders.
Take a look on Page 2 of their recent earnings release
and their 10Q for more details and the breakdown. |
You might consider confirming that
[company] has no profit centers other than trading.
The company reports are
conspicuously absent of a breakdown into "day-trading" profits and other
trading profits.
You might consider taking your
feelings about <errors> to Tribe.

Erasers Can Deal With Some Kinds of Errors
In the TTP Model
everything is intentional
so "errors" don't exist.
Clips:
http://successco.typepad.com/photos/
uncategorized/2007/09/24/eraser.jpg |
Wednesday,
August 19, 2009
IBM Stock and Systems
Dear Ed,
I was looking at a 10 week breakout system applied to IBM from 1970 to
present. The system worked well until the late 90's.
This gave me pause. The system would have looked good for 30 years prior
to failing.
I am looking at trading different spot FX pairs based on a 20 day
breakout for entry and 5 day reversal for exit. This strategy also looks
good for a long time historically.
I know it is against the ground rules to ask for specific trading
advice. I am not asking for that. I was just wondering if you had any
general thoughts on system death. Do you?
If this email violates the spirit of the ground rules, I apologize. |
Corporations, like people, tend to
come and go.
Many of the "big name" companies
from the inception of the Dow Jones Averages no longer exist.
A system is a set of procedures.
Systems don't die. Some of the instruments a system trades may
die.

Stocks, Futures and Trend Followers all Die
Trend Following is Forever
clip:
http://hackedgadgets.com/
wp-content/_popup_tombstone_2.JPG |
Wednesday,
August 19, 2009
When the Level = 0
Dear Chief and Nick,
Thank you for sharing you knowledge and your step by step to build the
models in EcoNowMics.
I'm constructing the models in Excel and I notice that in the system
"The Hole in the Bucket Model" when Nick is in Step 5 and he compares
the Flow with the Level, in the spreadsheet in the row 2 column 6 (Time
Constant at Each Level) in my calculations the number is a little
different that in the site. I got 28.65 (0.096 divided 2.75). In the
website the number is 28.57.
I got some differences too when the level is 0 in the same Step
5.
When the level is 0 (last row) there is no flow then the time
constant is 0 and the gain is 0 too.
In the site the time constant is 8.33 and the gain is 0.12 (equals with
the level 0.25).
Thank you again for your guidance and I hope to help steer the project. |
Thank you for your feedback.
When the level = 0 is never.
In this part of the model, there is
no formal "time constant." The "virtual time constant" is an
abstraction from the table of rate and level values. |
Wednesday,
August 19, 2009
Intentions = Results
Sir,
"Win or lose, everybody gets what they want from
the market."
Many a time, sir, we hear majority of people losing in markets rather
than winning, that too in huge amounts. From the above quote, sir, is it
true that all those who lose, intend to lose at sub-conscious level ?
If it is so, what type of events, in the life of a person, may have led
to register subconsciously to lose. |
In the TTP model every result is
everyone's intention.
You might consider taking you
feelings about <losing> to Tribe. |
Tuesday,
August 18, 2009
Logic and Feeling
Hi Ed,
Do you know what kind of positive influence could bring to the man
trading. If you understand the psychological and philosophy of it. I am
sure you know. Especially the method which you use.
It is similar to Zikmund Freud therapy. Therapy is good
for those who accept it without any resistance. The resistance which
brings the feelings of human.
Trading
is a good therapy.
I would like for you to explain to me and the rest of the Trading Tribe
the following:
Struggle between logic and feeling. For example: Logic
says that by some analysis, you need to make some thing this way. And
you also know it and also understand that this is the right way. But,
for the same time some thing from inside says to do the opposite. And
most of the time, man will choose the opposite way from logic. And see
the bad result of it.
We can see this on trading for example as we speak before when a man
chose day trading instead of long term trading. In spite of that fact
that he understands that he makes a bad choice. We say that such a man
does not live in right livelihood.
What is the problem? What makes man so? How does he need to change
himself ? Maybe the problems are his belief?
I feel I have this problem. And I am not shy to declare it. I want
to treat myself, and I am sure that others do too.
Thank you in advance. |
You might consider taking your
feelings about <illogical feelings> to Tribe.
|
Tuesday,
August 18, 2009
Reading to Dad
Dear Ed,
I want to thank you very much for everything you are doing for us
rookies in trading - trend following. Without your help it would be so
much
harder.
My English is not brilliant so I want to tell you my story in short.
I have economic education (Human Resources and Finance). In University I
started my adventure with markets. At the beginning I was 100%
fundamentalist (read everything about Warren Buffett, Benjamin Graham,
etc). I finished many courses how to invest in fundamental way -
everything worthless.
I was completely hopeless. I couldn't explain why, But I was still
looking, reading as much as I could about different investors, traders -
anything I could find.
In MW I found my path thanks to you.
It was
like a thunder clap, in one moment I knew it is my way, right way. I
couldn't understand why I didn't notice it before because I read MW
earlier.
After studying your site, TTP and FAQ it comes to me easily. Fred talked
to me.
epend on me and my mom- he can't even move, only blink.
This state last 5 years, at the beginning doctors gave him 10% chance to
live - he was unconscious for 7 months, but we believed in him, we made
a plan and we totally stick to it. Day after day, week after week, month
after month, year after year, and we are still doing it, without
thinking about the past or future. Just this moment. Earlier I couldn't
stick with anything for a long time but I managed it, I still do. I
think you've already got my point.
This experience made me trend follower in life. I didn't
even know it and prepared me for trend following in markets.
That's why when I reread MW it was so obvious. I started this new (old)
trip without hesitation because I know it is right. Your website,
knowledge, help ... everything you do helps me to understand and order
things, thoughts, opinions. Thanks to you I'm aware of what I'm doing.
I'm very thankful.
I read to my father everyday some parts from your website - He blinks so
I know he likes it.
He has a
similar sense of humor to you, he is an engineer so I think trend
following makes sense for him.
Thank You one more time.
All the best for You and Your family and friends
P.S. I'm worried about something. I printed from your web site some
pages to read my father and read for myself without a screen, make some
notes.
I just realized there is a comment "Write for permission to reprint". I
want ask for your permission to print from your great website. I want to
apologize for not doing it earlier and if I broke principles I'm very
very sorry and I destroy immediately all pages I've printed. Please let
me know.
One more thing do you have any tribe group in [Country]? Is it possible
establish one?? |
Thank you for sharing your process.
You may print the items and read
them to your father. |
Tuesday,
August 18, 2009
Right Livelihood
Ed says,
In matters of Regarding Right Livelihood your own satisfaction is a function of how well you satisfy others.
Thank your for your observation. My feeling is that I make the first
impression like gold but seldom don't live up to it when it comes time
to satisfy others. |
Ok. |
Tuesday,
August 18, 2009
Day-Trading
= Right-Livelihood ???
Sir,
Day-trading - Is it different from working towards right livelihood ? |
Day-trading seems to work out pretty
well for brokers, newsletter-vendors and day-trade-seminar vendors, all
of whom might appear in the same person.

DT = DT
Day Trading may have more in common
with Delirium Tremens
Clip:
http://recovery101.today.com/files/
2009/02/drug_addict.jpg
|
Monday, August
17, 2009
Humiliation, Arrogance & Equality
Dear Ed,
In my previous Big Wave report (#7) I describe how my confidence gets
undone by occasions where I feel humiliated. I describe how I intend to
fight humiliation, by being more assertive.
A day later, I read Ed’s comment to my earlier report (#6) on FAQ. Ed
says:
Your judgment about humiliation is consistent with your pattern of
attracting drama in which the payoff is that you get to feel
humiliation. […]
When you discover the positive intention of the feeling of humiliation,
the drama surrounding this feeling is likely to disappear.
After reading Ed’s comment I am totally confused. I even have trouble
sleeping at night, pondering the possible positive intention of the
feeling of humiliation. (I keep having trouble understanding TTP-logic.)
Could it be humbleness, i.e., am I arrogant?
I find it very, very hard to piece this puzzle together.
I think Ed suggests that I avoid deeper feelings by getting angry when
humiliated. Maybe avoiding feelings of being unloved, maybe
vulnerability, maybe humbleness. As long as I avoid these feelings, and
as long as I want respect from everyone, I will continue to attract
humiliation drama…
I remember being very afraid of rejection as an adolescent and young
adult. Until age 25 or so, I mainly feel sad (not angry) when
disrespected. I try to befriend everyone, out of fear that someone might
not like me. I am like that dog, tail between legs. I remember an older
guy at my first office who habitually addresses me with a slur word
(instead of my name).
But then, when I have some success, I turn a corner. I feel I don’t need
to be-friend everyone anymore. I feel I deserve some more respect.
This doesn’t mean I am equal now among equals. No. I now feel better
than others!
I start to behave arrogant and stuck-up, at least in what I say to
myself about others: I reject most people right away …
My arrogance feels like a protective shield, but I deeply dislike it.
Meanwhile I am still inviting humiliation drama, only from different
people now.
When I get even more successful, I become rude and more arrogant, and I
dislike myself even more. Success seems to drive me in the wrong
direction; I seem not to be able to handle it well. I quit my job (15
years ago). After that, I never make any serious money again. Maybe
better so.
My next Tribe meeting is in 2 weeks. At that meeting I intend to explore
my feelings regarding humiliation, arrogance and equality further….
As always, thank you very much for your continuing support. |
Thank you for sharing your process.
You might also consider adding your
feelings about <intimacy> to the list. |
Monday, August
17, 2009
Right
Livelihood
Hi Ed,
I recall your description of right livelihood as a special gift,
something one is really good at, something one can share with others.
I notice feeling that the things I'm good at are things that n obody
needs. I feel that I'm peddling fool's gold -- it may be interesting and
ornamental, but has no real value. It glitters like gold only at first
glance. Pyrite costs $4 per ton 100 years ago as a precursor to sulfuric
acid and has no commercial value today.
I recall my mother, a geologist, telling me about her fieldwork in
remote areas of Central Asia. She says that when locals would hear that
they were geologists, they would offer to show them, with some
hesitation and secrecy, a "gold find." She says that without exception
the find was pyrite. |
Thank you for sharing your process.

In matters of Regarding Right Livelihood
your own satisfaction
is a function
of how well you satisfy others.
Clip:
http://www.photo.frigge.eu/angel/
060227-Egypt-Aswan-042.jpg
|
Sunday, August
16, 2009
Elliott
Wave
Dear Ed,
I think for everybody from the tribe will be interested in your opinion
about Elliott Wave.
What do you
think about this?
Actually as I
said, I read all your FAQ from the beginning and find out there is
an opinion that Elliott Wave is too subjective. I also see that it has
some element of prediction, that is why it is not suitable for us as
trend followers.
But when I learn the structure of the wave I find out that it is
approximately the same with trend structure. Even when Elliott described
his entry place to the market and exit place it is similar to the
reversal part of the trend which looked like the head and shoulder
pattern. Also the same thing we can see ... when price broke maximum
level of A wave by the 3 wave. The opposite direction when Price broke
the minimum level of A wave by the C wave.
The same thing we can see when 5 EMA cross with the 34 EMA or the 34 EMA
cross the 155 EMA.
For my observation which brings confusion to the trader [is] that after
3 impulsive waves, [the] trader waits for opposite side direction
movement. But I think it could be not from 3 impulsive wave it could be
4 or 5 maybe more until trend not broken. For my opinion this
expectation bring more confusion. I think there are not 3 impulsive but
it could be more.
But dear Ed what do you think about Elliott Wave? What can you say which
I don't know about Elliott Wave which could be useful for me and for
others.
Thank you in advance. |
The Elliott Wave is a subjective
indicator, mostly useful in conjunction with wishful thinking for
generating a justification for almost any trade you wish to engage.
The Elliott Wave theory does not
include rules for position sizing, market selection or position exit.
The Elliott Wave's ambiguity gives it an exemption from rigorous
back-testing.

R. N. Elliott

To Perform The Elliott Wave
aim your body toward Chicago
and repeat this mantra:
"Good-bye Money."
Clip:
http://www.rutherfordjournal.org/images/
020104-03.jpg
http://hotair.cachefly.net/hotair.com/wp/
wp-content/uploads/2007/04/waving.jpg
|
Sunday, August
16, 2009
Risk of
Ruin
Ed,
You ask how I use my formulas to manage an account.
I need to know a mean and a standard deviation. I can measure the mean
and standard deviation per trade, or per week, or per month, or per
year.
I need to express the mean and standard deviation as a percent of my
account. Bigger bets will increase these percentages, and smaller bets
will decrease them.
For example, suppose I look back at my trading and find that I have a
monthly mean of 5% return with a monthly standard deviation of 8%. This
is a good trading system. I could double my bets, and then I would have
a monthly mean of 10%, and monthly standard deviation of 16%. The mean
and standard deviation will move together with a ratio of 5/8. I could
cut my bets in half and I would make 2.5% per month with a standard
deviation of 4%. I know all this stuff is logarithmic, but for returns
in this region, these numbers are close enough.
To apply this to manage an account, let's assume I choose to use the bet
size that gives me an average 5% return per month with a standard
deviation of 8% of my account.
The probability of losing one standard deviation, or 8% of my account,
is e^(-2*0.05/0.08) = e^(-1.25) = 0.287. There is a 28.7% chance to lose
8% of my account from any point on the equity curve. I will spend 28.7%
of my time in an 8% drawdown.
Suppose I do not reduce my bets as I lose money. The probability
of losing 40% of my account is e^((-2*0.05*0.40)/(0.08*0.08)) =
e^(-6.25) = 0.00193. There is a 0.193% chance to lose 40% of my account
from any point on the equity curve. I will spend 28.7% of my time in an
8% drawdown. This is the risk of ruin formula for insurance companies,
published by D. R. Cox and H. D. Miller. Insurance companies cannot
reduce their bets as they lose money. Traders who can only afford to
trade one contract have difficulty reducing their bets.
Suppose I do use fixed fractional trading to bet a fixed fraction
of my account on every trade, so I do reduce my bets as I lose money.
Then the probability of losing 40% of my account is less because it
takes more losers to lose 40% because my bets are getting smaller as I
lose. The probability of losing 40% of my account is
e^((-2*0.05/0.08)*(ln(1-0.4)/ln(1-0.08)) = e^((-1.25)*(-0.511/-0.083)) =
e^(-7.658) = 0.00047. There is a 0.047% chance of losing 40% of my
account if I use fixed fractional trading to bet a constant fraction of
my account on each trade, and have a mean return of 5% per month with a
standard deviation of 8%.
You say that I pre-suppose knowing the loss in advance. I pre-suppose
knowing the distribution in advance. I do not need to know each loss in
advance. I do need to know the mean and standard deviation of my
returns. It is easy to measure the mean and standard deviation of past
trades. It is not so easy to know that this distribution will walk
forward into the future.
If I am managing an account, I can look at the percentages I calculate,
and decide if they are acceptable. I can reduce risk of ruin by reducing
my bets. Or I can increase return and increase risk of ruin by
increasing my bets.
Let's see what happens if I double the bet, to get 10% average return
with 16% standard deviation. The probability of losing 40% of my account
is e^((-2*0.10/0.16)*(ln(1-0.4)/ln(1-0.16)) =
e^((-1.25)*(-0.511/-0.174)) = e^(-3.662) = 0.026. There is a 2.6% chance
of losing 40% of my account. I will spend 2.6% of my time in a 40%
drawdown. If I am willing to accept that risk, then I can enjoy an
average return of 10% per month with a standard deviation of 16% per
month.
If I improve my trading system, then I can get a higher return, or a
lower standard deviation.
If the standard deviation of the market I am trading doubles, then I
might want to reduce my position size.
If the input variables to these equations change, then the output will
change. Common sense is still required. The standard deviation of the
stock market went up in October 2008. Wise traders will pay attention
and bet smaller when the market goes nuts. |
With 1% constant-risk trading, your
account can grow linearly, and it can go broke.
With 1% proportional-risk core
trading, your account can grow exponentially and cannot go broke. |
Sunday, August
16, 2009
Loneliness
and Drama
Hi Ed. Thank you for responding to my last post, which you entitled
"Missing His Girlfriend."
My mind becomes clearer. I notice my desire for control is weakening. I
begin to think much more positively in regards to my plan for life and
trading. I notice how beautiful this world is and can enjoy the things
that the masses would call "good / bad or right / wrong." It makes me
laugh, at times, because I see how easy it can be to become distracted
from the plan and become influenced by others' opinions - especially
those closest to you.
I do feel lonely at times. I remember the times in my life when I felt
lonely that I did, in fact, become less controlling which always seemed
to attract another girl. But, then I would become controlling again and
the cycle would repeat itself several times over the months / years.
Following my first post to you, I begin to become more vocal to my
family and friends (my Tribe) regarding my controlling issues and the
need to know things (not necessarily asking why, but the facts in
general).
I notice
the tension in my neck loosens, teeth do not grind as much, heart does
not pound as much, hands do not make fists when I feel anger, etc. I
feel the smile on the face and see it on others'.
I realize that it may take some more practice / focus for me to fully
correct my control issues and maybe even more time for others to adjust
to my less-controlling behaviors. I feel OK with this. I am confident
that this will result in more money, fun, sleep, intimacy with others,
sex and less drama.
I will report on my progress. |
Thank you for sharing your process.

When You Come to Accept
the positive intentions of your feelings
the drama associating with those feelings
tends to disappear.
Clip:
http://2.bp.blogspot.com/_eB5Hr9OK_fw/
RmO2_qPGLQI/AAAAAAAAAzY/iOMt7gwjbn4/
s400/pain%2Bin%2Bthe%2Bneck.jpg
|
Sunday, August
16, 2009
Starting to
Trade
Hi Ed,
I have been
reading up about trading for a few years and decided to take some
action. I started paper trading a using Donchian 5 and 20, changed to
EMA’s, read a lot of FAQ and your money management techniques. I have
started trading for real with $200.00 a month, money I can afford to
lose at the moment just to get some of those emotions going and see how
I handle the fear, greed and hope.
It’s been fun.
A lot of what I had read only started to make sense when I started
doing.
I know I need to get more familiar with math, get a back testing program
and learn to program code. I just wanted to say thanks for all the free
advice. |
Ok. |
Saturday,
August 15, 2009
Tenth
Anniversary
Hi Ed,
I am coming up to my 10th anniversary in the trading business.
Here are my approximate yearly results and a brief description for these
first 10 years.
1999: 0K I start part time stock trading in August '99 with $25K. I more
or less break even at the end of the year.
2000: -7K I double my account in first few months of 2000, only to give
it all back + some.
2001: - I do not trade in 2001.
2002: -30K I attempt full time stock trading starting with $50K while
out of work. I fail miserably. I go back to my day job.
2003: +50K I get very lucky in 2003 trading options.
2004: -20K I start futures trading, I pay $20K 'tuition'.
2005: +30K I manage to find and develop a testable edge for trading
futures
2006: +30K
2007: +200K I diversify my futures trading and go full time.
2008: +400K
2009: +700K Up $700K so far in 2009.
In my first five years of trading I am not serious, I use a web 1.0
based trading interface and I am trading part time mostly. I have
absolutely no edge whatsoever. My trading in these years is better
described as gambling rather than trading.
I get serious about trading in the middle of 2004 when I open an account
with a direct access futures broker and I start doing detailed trading
research. I also try to find as many of your trading beliefs as I can
from books and the internet and use these as a model for my own beliefs.
I think a beginning trader needs to read as many trading books as he can
and have a very open mind. There are many well known trading ideas
he can develop and refine to make his own. I think it is how well he
executes these ideas that is more important. Executing a trading plan is
very hard but not impossible, and if he can pull it off then he can make
a lot of money.
I think that if a beginning trader is going to commit years of his life
to trading, he needs to get serious about it, and he needs to make sure
he is improving and learning every year. He has to be very hungry for
trading success; it has to be a very important part of his life.
|
OK. |
Saturday,
August 15, 2009
From
Control to Intimacy
Dear All,
I report in on my Big Wave (I give my wife and children all my support
and love and give up control).
I have a long talk with my son (11 years) about his feeling of
loneliness, of not being accepted by pairs, of not belonging to the
group. To me, this is a phenomenal breakthrough considering that 6
months ago my son did not talk at all about his feelings and was afraid
of me. I tell him about my own experiences with loneliness and
rejection. We embrace each other several times, we share feelings and
tears. It is wonderful.
It takes some more discussion to resolve the issue "family vacation".
After a first agreement (my wife visits her family for 5 days, and after
that we travel together), she mentions that she is very sad about the
change of plans. This is a novum, since she avoids speaking about her
feelings. As I offer her to discuss alternatives, she reacts with anger
and reproaches. It is big time drama: she shouts, shuts down, turns off
the lights, and leaves me and the children in the darkened room. I stay
calm and receive her. Sporadically I experience "anger" myself, but I
enjoy it. Maybe too much: I smile while she shouts, and she turns
angrier. I realize that I still have to learn a lot about receiving
other people's feelings, about kindness and compassion.
While the children enjoy the talk about options for the holiday, my wife
takes a mattress to the living room and announces that she does not want
to sleep in our bedroom.
In the night I visit her. I have a health problem and am worried about
it. I share it with my wife. Maybe I should acknowledge her wish to be
alone, I don't know. I acknowledge her anger and sadness about the
holiday. We talk. She does not apologize for her reaction, I am again
the one looking for an agreement.
The next day she spontaneously looks for an alternative holiday. We find
a nice hotel with many activities for the children, and book it.
I am very worried about Ed's comments on FAQ regarding the agreement to
share physical contact 30 minutes each morning, and me acting as if I
own my wife.
I abhor the
idea and am appalled about me making no progress and still trying to
control people. I experience a horrible feeling that I cannot describe:
maybe "despair". I decide to take the feeling "I make no progress" to
the hotseat.
I share my worries with my wife. I tell her that I am trying to be a
better person. She mentions that I am already a great guy. I am very
moved. She mentions that for her it is not possible to be as open and
empathic as I am, since I have been practicing for months. I feel that
maybe she cannot give up control herself.
I mention to
my wife that during the day we have almost no physical contact. She
answers that it was her method to punish me (she uses the word) for not
helping enough with house chores. She also "punished" me by eating
dinner earlier with the children. As I arrived home, frequently I did
not get something to eat at all. She mentions that right now there is
nothing to punish. It takes me some hard negotiation, but we agree that
the whole family takes dinner daily at 7:00 PM. It works great.
I suppose that in a control-centered relationship both people try to
control each other with different methods.
During the workshop I committed to make my marriage work. I do my best
and am patient; however, if my wife decides not to give up control and
open herself, there is no way to make this marriage work. In this case,
well, I just move forward.
I thank you for your support. |
Thank you for sharing your process.
As I recall, my comment about
ownership is not specific about who might own whom.

In a Master-Slave Relationship
the master generally needs the slave
and the slave generally needs the master.
Who ever needs the other the least
is generally the one
who is actually in control.
Clip:
http://www.nancyfarmer.net/images/
05_07_30_fn021_001web.jpg
|
Saturday,
August 15, 2009
Gut
Wrenching Stress
see previous
Dear Ed,
Thanks for your response to my FAQ: Thursday, August 13, 2009 Riding a
Loser
I am worried that it might deprive me of the gut wrenching stress and
journey to self destruction I seem intent on so for now I think I'll
have to feel this one to the uncle point or that feeling is simply going
to have to come from somewhere else before I can move on and I'm worried
the events needed to put myself through this without the aid of the
financial markets could be even worse.
I have been working on an [Name] crossover 'system' using monthly
signals. So far I am pleased with the results, it has turned a profit on
90% of stocks I have tested it on and has out performed the stock on
many. There is a 10% loss on any entry and no stock has lost more than
15% since 2000. (I know my back test isn't sufficient). This seems to
reinforce the idea that systems work best when signals are not so
frequent.
I haven't figured out how I can test them as a portfolio yet.
Testing always leaves me with a hollow feeling, that my system isn't the
'best' and is either not optimal or made 'too optimal' to fit what I'm
testing.
Sometimes I think my system can't work as it's too simple and if it was
that easy everyone would be doing it. Then I go to work at my firm in
[City] and see most people aren't in it for the money alone and a system
won't fulfill all their needs. I guess I still fall in to their camp.
Sometimes I wish I never starting trading but I feel when I grow up and
learn to take losses I might have some success hidden in me somewhere.
Maybe I just don't want to grow up, I'm drowning financially but this
gives me contact with my (divorced) parents and I wonder if it's this
need to be needy that keeps me losing.
A weekend of walking and thinking ahead.
|
Thank you for sharing your process. |
Saturday,
August 15, 2009
From
Control to Intimacy
See Previous
Ed,
Thank you for your answer. I tested myself and my wife for willingness
in several areas about 10 days ago. Maybe you can accept that I
preferred not to report it in detail for FAQ, since it touches very
intimate aspects of my wife. We discussed what we both want from our
relationship, and how the other person is willing to participate. She
mentions that I am doing everything that she needs / wants. She is
willing to do many things to improve our relationship, and she can
imagine being open for new ideas.
Systems need some time to re-adapt. If I have, let's say, back pain that
prevents me to help with housekeeping, I cannot commit to help with
housekeeping, but I can commit to go to a physiotherapist to work on my
back pain. The "30 minutes in the morning" were part of this agreement.
However, we both see that it is artificial and that we prefer a more
spontaneous approach. Since we apply it, things work even better.
I see substantial changes in my wife regarding physical contact. For her
it is still very difficult to accept my feelings and almost impossible
to talk about her own feelings.
But now she knows exactly what I need and what I expect from our
relationship, and I know exactly what she needs and that she does not
need to change. If she does, it is for love to me.
But it is like with me: I can say "I do the work - I give up control"
and keep on hiding and making excuses just not to change things. She can
do the same: she mentions that she is willing to move towards me, but
maybe she does not. I have seen that a couple of times before and
reacted mostly with anger. Now, I can calmly observe if she is just
cheating and yield a proactive answer.
In my weekly report I describe how she mounts a majestic drama as I talk
about my feelings of sadness. After a huge struggle she can accept them.
You write "Perhaps you like the drama and are unwilling to trade it for
intimacy". No. I do not. I am sick and tired of this drama. I love my
wife, she is great. During the workshop I committed to make my marriage
work. I am willing to be patient and to see if she can also commit to
and create an intimate relationship. If she does not, I cannot make my
marriage work. Then, we go separate ways. It is not nice, but it is not
a tragedy. If I accept the drama and stay by her, I just that I lack the
balls to be happy.
I sincerely thank you again for your help and guidance.
|
Thank you for sharing your process. |
Saturday,
August 15, 2009
Feeling
Addiction and Satisfaction
Hi Ed,
What about my feelings of addiction and satisfaction. Addiction is that
when a man wants to get out from some problem but he can't because his
brain is busy by the having adrenalin from the process on which he
engaged. Or from some dozes of something which he have it could be
alcohol or the narcotic. Some times I think that sex is the biggest
addiction of human, but it is impossible addiction without satisfaction.
Exactly because of the satisfaction, which human have from that process
to which engaged could not stop.
IN that is why trader who engaged to day trading have some adrenalin
from the process, which cover his more deeper felling which he would
like to cover. IN that is why the day trader addicting to day trade
because of satisfaction.
How I
understand from your notice that if you have right livelihood you will
have satisfaction from the process which you do also. But I think the
differences between these two is that at first you want to stop yourself
but you can't and second if your process is right livelihood you don't
want to leave it. You want [it to] continue. In that is how I understand
right livelihood.
By the way Dear Ed I read so many books about trading I could not see
the article where explain clearly about day trading. I mean about day
trading as not profitable and not suitable for right livelihood. If
anybody is not on right side .He will always have addiction from which
he doesn't want to be.
Also I could not find a [well known] successful day trader. But most
common literature about success of day trading. IN that is why trader
makes mistakes, not being right livelihood.
As I said before I do not [want] to be a lucky trader, I want to be a
professional trader who understands the differences between right and
not right livelihood.
|
OK. |
Thursday,
August 13, 2009
Wants a
Deal on the Workshop
Ed,
I have a strong feeling that I need to be at your upcoming workshop. I'm
starting Grad School at [Name] University next Monday for agricultural
economics and was wondering if you're willing to help me by finding a
workshop price that works for both of us? (Since tuition just took a
giant chunk from my checking account).
|
I wonder what
your economics studies indicate about the various roles of price in
economics.
For example,
one of the functions of the Workshop price is to help select
participants who are ready and willing to participate - and who already
demonstrate a level of financial mastery in their own lives. |
Thursday,
August 13, 2009
Control to
Intimacy
See Previous
Ed,
I think a lot about your answers from Monday, August 10, 2009 (From
Control to Intimacy II) and Tuesday, August 11, 2009 (Owning Your Mate).
I think a lot about the issue "due I act as if I own my wife?" (in fact,
it is 3:00 AM and I cannot sleep due to this). It would be abhorrent.
After reading the websites:
http://www.marriagebuilders.com/graphic/
mbi5047_qa.html
and
http://www.marriagebuilders.com/
graphic/ss/50-1.html
and consulting textbooks I see how men can ruin the sexuality of women:
how a husband can cause female headaches, lack of desire, boredom,
sexual aversion, even panic attacks during sex . Uff.
After talking with friends and associates, I see that the frequency of
sex is very different and ranges from once a week to twice daily.
However, they all touch, cuddle, embrace and kiss their partner several
times a day. My wife usually refuses physical contact during the day,
and she is too tired at night. She is also afraid that I can see
physical contact as an invitation to sex.
I talk about the issue with my wife. I ask her if she agrees with the
idea of reserving 30 minutes every morning to share physical contact. I
mention that some sources suggest that it could improve our sexual life.
She likes the idea, also the fact that I put no pressure on her, that we
have a time limit, and that she can decide what we both do. In other
words, that she controls the situation. It is not that I am giving her
30 minutes of my time for physical closeness: she is sharing her time
with me, and during it she is free to act and I fulfill her wishes.
In fact, I would prefer an embrace in the night, a "good morning,
darling" and a kiss as we wake up, just to feel the touch of her hand.
Sometimes this can lead to sex. However, the time limits and keeping it
in control is important to my wife.
If I act as if I own my wife, I want to stop it. But I am asking her
about her opinion, I am doing what she wants, I only do what she agrees
with. I feel rather that we are both investing time and effort to
improve our relationship. I don't think that I act as if I own my wife.
But it would not be the first time that I am wrong.
I am open and thankful for your advice and guidance.
|
Thank you for
sharing your process.
I do not
recall your reporting the results of applying willingness testing to
your mate and to yourself. See previous.
Willingness
testing is a pretty good way to end the drama. Perhaps you like
the drama and are unwilling to trade it for intimacy. |
Thursday,
August 13, 2009
Riding a
Loser
Dear Ed
I find myself once again having a tough time betting against the trend.
I am short the
[Name] and
have been since 4185.
I have added to this loser several times on the way.
This trade has cost me around 75% of my capital and put a lot of strain
on my life and relationships.
As I often do when feeling down I reached for your book and read the
chapter about causality versus responsibility, this is what I came up
with?
If intentions = results and I do not like the results I am getting I
need to look at what my intentions could be.
Are they:
1. To push
myself as far as I can enduring stress?
2. To get people to feel sorry for me?
3. To lose all my capital so I can stop trading (and find a job I
enjoy)?
4. To be proven right at some point if the market falls back?
5. All of the above?
My guess is
all of the above and some more that deep I haven't discovered them yet.
I'm not ready to cut this loser yet, I must want to feel more stress or
lose more money. I'm not sure why though.
I hope all is well with you. |
Thank you for
sharing your process.
You might
consider, as an alternative to your trading strategy:
You can send
me the balance of your account that and we can agree I am not to
trade these funds. At the end of each calendar quarter, I can
charge you a fee of 5% of your remaining balance.
This way, you
have a guarantee of a loss - you can even predict the amount of loss.
Furthermore, you would do considerably better than you are currently
doing. In addition, your balance would decline exponentially so it would
never run out.

Radioactive Decay
exponential decay
never goes "broke."
Clip:
http://www.blackcatsystems.com/pics/
GM/RadonDecay.gif
|
Thursday,
August 13, 2009
Risk of Ruin
Hi Chief,
Sometimes I feel sad about my drawdown, and I express sadness to the
Tribe. Sometimes I feel joy when my account hits a new high, and I
express joy to the Tribe.
Once you ask me "Why don't you do what you want all the time?" It is
good advice for any moment of now. It is better than doing what I want
only when I am winning.
I write an article on how to calculate risk of ruin. Futures magazine
publishes the article in the August 2009 issue on page 38. Simple
formulae are available to calculate the probability of losing any
fraction of your account if you know monthly mean and standard deviation
of returns (or mean and standard deviation for any other time period).
If you like, I
can write a summary of these formulae for you to place somewhere on your
website. I find them useful to get my position size at the right heat
for me.
I enjoy your Whipsaw song. I listen and smile. |
The risk of
ruin for core betting is very small.
Your formula
for computing losses seems to pre-suppose knowing the loss in advance.
I wonder how
you actually employ your formulas in managing an account. |
Thursday,
August 13, 2009
Addiction
and Satisfaction
Dear Ed.
I would like to talk about the one of the problems of young traders.
That is confusing between trading for living and trading for
satisfaction. I think everybody who start to trade they main aim is to
gain more big money. But after starting to trade he some time lose or
some time win some big money. But at the result he loose all his money
because in spite of main aim to trade for living changes after some
trading operation to the trading of satisfaction. And the main problem
is that he cant feel it. In spite of his loose he cant stop and still
trading.
That is exactly the same addiction as to alcohol and narcotic. But
during this time the brain of a man cannot to make logical decision. In
that is why he cant stop himself.
And day by day he has only more lost. It could continue as long as you
not say to your self STOP! Because if something is going wrong it is
mean that you make something not right. In that is why you need to stop
and and to change yourself. Your attitude.
In that is why it is very dangerous if you not or cant to trade for
living.
Addicted man can treat himself only by one way. To willing to change,
understand really situation and not to afraid to look at reality how it
is hard.
Ed could you say me what man need not to do for trading for living?
|
In TTP Right
Livelihood includes both earning a living and also having job
satisfaction.
You might
consider taking your feelings about <addiction> and <satisfaction> to
Tribe.

The Difference Between Drama ...

... and Right Livelihood
shows up in job satisfaction.
Clip:
http://www.arrowitod.net/images/
punch-small.jpg
http://nrscope.files.wordpress.com/2009/
05/happy20man20looking20at20
computer20small.jpg
|
Wednesday,
August 12, 2009
Day-
Trading -- The Truth
Dear Ed,
I keep hearing stories - no day traders make money, 95% of day traders
lose, 70% of day traders lose but [a recent article] counters that.
What is the truth??
|
The brokerage firm you cite earns
income by marketing (retailing) securities such as US Government paper.
It also holds some positions for a considerable length of time. It
also engineers complex securities deals.
The report does not indicate how
much of the income associates with what you refer to as "day-trading." |
Wednesday,
August 12, 2009
Vampire
Ed,
[Your Whipsaw Song video on YouTube] is an absolute riot. Great work!
I am on a warpath to build the baddest set of systems ever known to man.
I still really want to meet you and wish you would take the initial
interaction on good faith. I have gotten over my pouting.
By the way, check out [Trading Instrument]. Does that qualify on your
systems as a breakout? :)
We picked it up long ago and have been "Vampiring" it short for two
days. |
You might consider taking your
feelings about <being right> to Tribe.

Vampires
who try to suck the last drop of blood
from every wiggle in the market
can wind up losing a few teeth.
Clip:
http://animals.nationalgeographic.com/
staticfiles/NGS/Shared/StaticFiles/animals/
images/primary/vampire-bat.jpg |
Tuesday,
August 11, 2009
Missing His
Girlfriend
see previous
Hi Ed.
Thank you for responding to my last post, which you entitled
"Letting Go of Drama."
I begin to become one with myself and the market. However, I notice when
the market is slow during the day, I become lonely and impatient. I
begin to think about my "girlfriend" and wishing that she would call. I
think about how badly I want to be with her again and show her the "new
and improved" me.
I ask myself, "What the heck are you thinking? Impatience is devoting
your attention to something that has not happened yet. Focus on feeling
impatience (tight throat muscles, clenching teeth and fists, getting
chills down my legs) and the positive intention of it (wanting what I
desire now without the stress of the unknown)."
I, then, recall [her] saying that I have no boundaries and am a "pushy
[Nationality] boy." I begin to laugh. I realize Fred's intention is not to be
with her at all, but to get a taste and push away - then become
impatient and aggrivated when I do not have her anymore. I begin to
laugh again realizing how completely stupid this is because my concious-mind
wants to be with her all of the time. I am hysterical laughing and
enlightened because I am getting to the root of my knot.
This process of untying my knots is painful. I feel the desire to cut
corners and create a drama that will end the pain (i.e. doing something
that will likely end our relationship). I begin to feel anxiety when I
think about the unknown. I want to ask more questions and get answers
for free without doing any work.
I, then, think about the times I've had with her. I see images of her
smile, her puffy cheeks (I love them), the feeling of her hand on mind,
the look in her eyes when she looks at me, her face when she puts on her
make-up, the many times we laugh together. I feel chills down my back
and on the tip of my nose when we have an intimate moment (a kiss, hug,
etc). I see images of what, I imagine, our wedding would be like and
what she would look like in the white dress. As I write, I am teary-eyed
in happiness. I am fully confident in myself and commit to change.
Right
livelihood is difficult. |
You might consider taking your
feelings about <being alone> and <impatience> and <your girlfriend is
not available to you> to Tribe.

We Tend to Entrain Drama
that associates with feelings
we are unwilling to experience.
Clip:
http://blogs.targetx.com/slu/
MadisonStarinieri/lonely.jpg |
Tuesday,
August 11, 2009
Owning Your Mate
see previous
Ed,
Thank you for accepting my feelings about "prostitution" and for
removing the word [from your response to my previous item].
As I read your answer, my first reaction is “Ed is missing the point: I
am not treating my wife that way, I am continuously asking for
willingness and offering her to share her feelings with me”.
As I read the changed version of your answer
Giving it Out in
30-Minute Intervals
works well for owners of curbs
and owners of
people
[that replaces the earlier version]
Giving it Out in
30-Minute Intervals
works well for owners of curbs
and for prostitutes
I am confused.
I think “Ed means that I am treating my wife as
my property”. I experience anger about myself ( I cannot give up
control!), and about the futility of my effort to improve myself.
I re-read the sentence. Maybe you mean “your wife handles your feelings
and your needs for physical closeness as if she owned you”.
Aha.
- - - - -
I remember you asking me during the workshop to lecture about
control-centric and intimacy-centric relationships. I remember not
knowing what you were talking about and improvising a speech about how
we can use our feelings as allies and the under-Fred network.
I feel that in the months after the workshop I am fulfilling your
request with my contributions to FAQ and also fulfilling my intention,
to help and support other workshop participants.
I wonder about the strange ways that we use to reach our goals. |
Thank you for sharing your process. |
back to the
future
|