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May 18-24, 2003




Sat, 24 May 2003


London Tribe

As there's no Tribe nearby I forward my details to start one.




London, England!


You are now on the

Tribe Directory Page.



Little Ben


Famous London tourist attraction

for the budget-minded traveler.




Sat, 24 May 2003



See: Gambling

Dear Ed,

Thanks for your answer. My father gambled and views trading in the same light and would much rather I went and got a "proper" job. Your answer made a lot of sense "aha", I will get my CM to listen to Fred on this matter.

thanks again

Feelings of needing to gamble might transform into other forms of frolic.




Lamb Gamboling



Sat, 24 May 2003


Processing the Process

Hi there ...

I was wondering if you could you bring your insight to bear on something...

I've started applying the process to myself. When I feel a "drama" coming on, I stop, sit tight, and meditate on the feeling ... exploring it, trying to find out how and where I experience it ... and just "go with the flow" - see where it takes me ...

I have one feeling that now I'm actually paying attention to it, I recognize it as being quite common ...

Something happens ... usually bad ... money related, or perhaps "done something wrong" or "in trouble again". I feel it as an "unpleasant" surprise, I'm hit by a "thud" in the stomach as it drops, tense jaws, kind of frozen in a "now what?" type feeling ... As I concentrate, I note a slight headache and perceive voices. One is kind of wordless, more of a shocked feeling than can be summarized as "How can this be happening?" "They can do this to me", "This shouldn't be happening like this" or even "why does this have to be happening".


It's a "shock" that "not doing anything" (i.e. inertia, head in the sand, irresponsibility or rather not taking responsibility) either hasn't made a problem go away, or has actually caused a problem instead of making everything OK, as I'd kind of hoped it would. Also, as I concentrate, I get fuzzy little snippets of memories of times when good things seem to just have "happened" without me actually having to do much. At the same time I'm telling myself "You should have acted earlier", "its your own fault", "you knew you should have done something", "you could have seen this coming" or "you knew this could happen" culminating in "Jeez, why don't you act when you have the chance?" and a few other self-referencing expletives.

I've been meditating on this for a while, and although I "understand" rationally what's going on, and am fully aware of what I *should* do for these situations not to arise in future, the feeling hasn't resolved (I haven't resolved it?) into an aha.


When I imagine the situations again, I still feel more attracted to the old method of "ignore it and maybe it'll go away" rather than to the new method, "lets sort this out now", which has immediately "unpleasant" consequences.

Just keep at it? Or am I missing something?


Trying to figure things out interrupts TTP. You might formulate your need to analyze into a feeling and notice where it takes you.


When you run your narration of the thud, tense jaws, voices ... you might try suspending the judgment that these are bad feelings and just get in to them as pure experience.


Notions about "should" can interfere with experiencing the way markets are actually trending.


A skillful receiver can help you focus the feeling, keep validating it and encourage you to keep going forward.




A Rose


Analyzing it, judging it, evaluating it ...

all interfere with experiencing it.







Sat, 24 May 2003


Hello Ed,

Your model of the mental process intrigues me. This model does have some basis in a number of psychological, scientific and religious theories including Ying/Yang, Left/Right Brain, Conscience / Unconscious, Physical / Spiritual, Foreground / Background, Right / Left, Conditioned / Unconditioned reinforcement to name a few.

Correct me if I am wrong, but you believe that having the two sides working together in harmony would help the trader in the trading process or for that matter in any human process. You have found the Trading Tribe methodology as a way to get there.

In the sixties they called groups like the Trading Tribe sensitivity training. In the seventies they called them T-Groups. I don't know what they call them now. Do you see any differences between them and your methodology?

I was a Psych major until I read the debate between B.F. Skinner and Carl Rogers about psychology, determinism and Free Will. You might, if you haven't read it already, enjoy a book by Carl Rogers called "Becoming a Person". It talks about communication between one's conscience and unconscious sides, and with other people.


I liked Rogers because he wasn't afraid to test his theories and get rid of them if their results didn't fit. One might compare it to back-testing of a trading system. Rogers has also written books about T-Groups. Other authors like Alan Watts, Richard Bandler, John Grinder, Freud, Anthony Robbins all share your CM/Fred model in one way or another.


However, some psychologists like B.F. Skinner and other behaviorists only look at behavior and think the CM/Fred split unnecessary baggage.

For the record, I see myself as a great trader yearning to get out of a terrible trader's mindset. I love to trade, but my CM limits me from doing so - to keep me out of the "poor house"! I have made more money playing blackjack than I have every made trading the markets. Perhaps your Trading Tribe methodology would help.

Would you be willing to "back-test" your Trading Tribe methodology? If so, how would you do it?

Thanks for your FAQ,

See Trading Tribe Process, at Other Methods


In the case of yearning to get out, you might locate the feeling of being trapped, and allow Fred to present it fully to CM.


Feeling trapped in a position can lead to the Drama of panicking out of your winners.


You can get a sense of the how TTP works by reading comments from contributors who are experimenting with it and reporting back.




Some yearn to get out ...


some to get in.








Sat, 24 May 2003




I believe your position on trader feelings is: that these must be expressed, "or else"; and that for full expression to occur, other people (and ideally a structured process) should be utilized.

Who were your own people and what was your own process as you worked on successfully expressing your own trader feelings? What I am getting at is, there was no one pioneering TT when you did this stuff. There was no model to work from, I believe.

Or was there?

Did you attempt to use journaling of another self-referential (singular vs. social) technique or process to express?

If so, why do you think it failed?

If not, how did you know to go directly to expressing to others?




I believe you must have deeply examined your own feelings and motivations to begin and continue to develop and maintain FAQ and develop TT.

If so, could you share these and also mention any relation or basis your feelings and motivations might have ... to the zero-sumness of trading.

Also, what did you think you would experience of leading TT and FAQ compared to what you actually have experienced to date.

The Trading Tribe avoids the use of "must", "should be", "must have" as these tend to invalidate feelings and shut down communication from Fred to CM.


Ideas about what markets "should" do can be expensive.


You might examine your feelings of wanting to control conversations, and avoid the unpredictability of intimacy.




Control Replaces Intimacy





Sat, 24 May 2003


Personal Growth

Dear Mr. Seykota,

Thanks for posting my last email on your FAQ.
Your comment, "If you are the amender, you might have some feelings about projecting yourself in public, letting others know who you are", pinpointed a message from Fred inside me - before CM realizes.


Probably Fred wants me to express myself more in the public but my CM is blocking me in some ways. So is this "AHA"?


Indeed, it is a great experience. A question came up in my mind, what if somebody does not want to be mirrored or feel very uncomfortable during the Trading Tribe Process? (too stubborn / aggressive?) Or they do not want to be exposed about their feelings?


Does that mean they should not join the tribe?

After all, I suppose the whole point of personal growth is when CM listens to Fred. Is that right?


See: Trading Tribe Home Page and Trading Tribe Process.




The Trading Tribe follows trends in the markets, trends in feelings. It supports people being how they are, does not tell people what they should feel or do.


People who are not ready for TTP generally do not join a Tribe.






Some are Shy and Stay Distant


Others bring their shyness to the Tribe

as an item to experience.




Fri, 23 May 2003


Your Metaphor


If you have one, what is your trading metaphor?

If you don't, what is trading a meta for?

Here's one:


The Path


A track or way.

A road to a purpose: path to wisdom.

The route along which something travels or moves: path of a trader

A course of action or conduct: path of learning.




A Path at Harbin Hot Springs




Fri, 23 May 2003

Lake Ratio

Dear Ed,

For years I've been fascinated by the graphic display of quantitative data and believe such displays will improve greatly as inventive minds use ever-more powerful computers.


Your Lake Ratio is an elegant and practical improvement over Sharpe Ratio.

To determine the Ratio, the draft states "volume of lake divided by volume of earth underneath". I don't see how that could be accurately calculated, as I believe the volume of each would vary depending on the graph settings. Possibly do you mean "depth of the lake divided by the depth of the earth underneath" ?


Or do I need to spend more time at Lake Tahoe to fully understand?

The Lake Ratio measures volatility over the history of the account. Plot the equity on a scale starting at zero.


The Trading Tribe goes with the flow of feelings, with the flow of the markets. Understanding is optional.


You might consider Lake Tahoe as a nice place to resolve your need to understand.



You might like to be a shoe.


Specialist in under-standing.





Date: Fri, 23 May 2003

Emotional Intelligence

Daniel Goleman has an "emotional intelligence" test. I took it and flunked it! Yeow. This was 2 years ago. The net effect of failing has been to caution me about my emotional frame of mind. I check myself a lot.

Well, I'm off to meditate...

You might take the actual physical feelings you associate with flunking tests, particularly the items you miss, into your meditation. 


If you try to ignore Fred, you might wind up taking tests in the markets



Failing the Diet


Suppress the Feeling of Hunger

and Fred Still Finds a Way




Date: Fri, 23 May 2003

Trading Tribe Meeting


Hi Ed,

Thanks for the enlightening meeting yesterday. I saw firsthand how the Tribe and each individual reflexively help each other accomplish magical changes, with your guidance to keep it on track.

I see teamwork gets things done better and look forward to next meeting.








Fri, 23 May 2003


More on Inflation


Thank You.

Thank you for the picture of the squirrel. Laughter is good medicine.


Also, big, big kudos for your definition of inflation. I hear so called experts claim over and over that prices are going up, and blame it on inflation.


Prices can go up or down for a host of reasons that all figure into the supply/demand curves. The prices of computers and other electronics have been dropping for decades.


I never hear people blame deflation. Money is a medium of exchange and printing too much relative to production causes inflation.

Governments, like people, tend to inflate a bit as they mature.




Some Forms of Inflation


depend on hot air.




Fri, 23 May 2003



Mr. Seykota,

I found your posting "Rules and Authorities", seemed to hit me directly. You say "When CM doesn't listen to Fred's feelings about childhood trauma ... Fred keeps setting up dramas to get CM's attention".

I find myself acting out these dramas nearly every day in my current job, but can't seem to make the connection. Although I'm very capable to perform well in my current job, I seem to find ways to ensure my failure. I will commit to ambitious deadlines for projects, and fail to meet them consistently, and apologetically.


Afterwards I feel terrible about myself and vow not to do the same thing again, but then the cycle repeats.


I procrastinate on working on almost every task, which always leads to a few very stressful hours or days prior to giving project updates to others. The strange thing is that I know the cycle, but I can't seem to break myself from it. I actually have a very understanding boss who always gives me the benefit of the doubt when I perform poorly, but I just continue to push the limits further.

I've always rationalized my poor performance by telling myself that I'm just bored with my job, and I'd rather be spending my time learning to trade / testing my ideas. The ironic thing is that if I were performing up to my capabilities in my job, I would probably already have been able to accumulate enough money that I would be able to trade professionally (assuming that my ideas work/ and I'm compatible with them).

I suppose that I did have a traumatic childhood, I was abandoned by both of my parents when I was 6 years old and went through several homes following that. But I really can't see the association between this and my current problems. Any thoughts, suggested readings?


Likely you have very deep feelings about trusting other people.




Here We Are, Joined Together


now, again, and forever.

I see you reflect love's beauty

You make my life so worthwhile,

my Child




Lyrics: Child (c) Ed Seykota, 2003


Fri, 23 May 2003

Feelings About Not imposing

See:  Reference


For the last two days, I've been trying to feel the feelings about doing it all on my own. Using The Process has been very difficult because I had a hard time feeling the feelings. I tried and tried, and tried some more, and still ... nothing. I then thought about how to logically identify the source of the problem by working backwards:

1. Seykota says, "You might take a look at your own feelings about wanting to do it all on your own - not impose on others." I thought I was being polite - what was that all about?

2. Why do I dislike imposing on others? Come to think of it, I rarely ask for people to help me at work and at home - they always come and ask me for help. How did Ed get that one? And is this an ego / pride thing?

3. Was I brainwashed to not impose on others? Is it rude? Asian culture teaches us to not impose / be an imposition on others, and to be unassuming.

4. When I was young, I remember my parents telling me to not ask so much of others - it's rude.

5. Even though tracing it back this way seems logical .. somehow, that feeling of imposing is still there ...

Unlinke the Aha moment I experienced about the 4th grade English class and commitment, it's very hard to resolve this imposing issue by myself. THAT is when I realized that the problem has surfaced again! I just said, "It's very hard to resolve this imposing issue by myself."

Now I know how the Trading Tribe Group setting can help: by mirroring the feelings of an individual, the group becomes very supportive, all participants know and embrace the same feelings, and it becomes easier for the person to feel the feelings.


It was very very hard to feel the feelings on my own, so I am looking forward to our first meeting. I haven't felt the "true reason" yet for this issue, but I'm sure it will eventually come to light ~

When you fully experience the feeling of wanting to do it on your own, you may realize the importance of a great team in helping you, well, do it on your own.






A driver is as good as his team.






Thu, 22 May 2003



Dear Ed,

After 8 yrs trading pa (last 2 full time) I am having difficulty in breaking a pattern i.e one where I am consistently profitable then end up blowing the majority away in some sort of gambling frenzy.


When this occurs I go back to certain books and try and find out why I do this, one passage I read is your answer in wizards where you speak about everybody gets what they want.


On a conscious level I definitely do not want this to happen yet understand that the consistency of these blowouts means I am fulfilling some other need.


How do I get to the root of the problem, I did see a NLP practitioner some time ago and thought that would work and maybe it helped but I would very much like to solve this once and for all.

take care & good luck

The Trading Tribe Process gets CM listening to Fred. This breaks the pattern.


In a holistic world, the question, "why" has no meaning.


You seem to have some deep feelings about gambling. You might ask your Tribe to help your CM experience Fred on these matters. 


Once Fred informs CM directly, the need for drama disappears and the feeling transforms into its positive intention: perhaps, to warn you about gambling.




Gambling to the Max


Fred finds a way

to get the Message to CM.




Thu, 22 May 2003


Bright Bulb


Would you recommend a good back testing site or software that is user friendly?


My assistant is willing and able but not the brightest bulb, so we need something REAL simple.

You may have some feelings about abusive language, offending people, people leaving you.



Don Rickles


Mr. Nice Guy



Thu, 22 May 2003



Dear Ed,

I have done a few sessions of the Process with friends and I have two questions: 

1. How important the receiver's capabilities are ?


If I come up with issues that are "too much " for the receiver, if the receiver is overwhelmed by the feelings, can he/she stop performing the assigned task properly by skipping mirroring certain statements and feelings? In other words how important is the training of the receiver(s) and how important it is that they do not have the same issues as the person in the hot seat? 

2. I notice that when in hot seat, constant mirroring throws me out of my continuum of feelings, it is interrupting.


I wait for the receiver to finish mirroring before I can move on. What can you suggest as far as frequency of mirroring ? 

Overall, the Process works, it does something. I am not sure where it is taking me, but I plan to stick with it as long as I feel is necessary. 

Do you need help preparing the program leading to mastery of the Process ? Can I do anything to make it available quicker? 

Thanks for your help

Receiving is critical.  The receiver keeps the process alive - or kills it. 


A receiver can get Fred complete in a couple of minutes ... or prevent it for hours.


Working with the Trading Tribe and fielding FAQ questions is helping develop materials. 


Mastery seems to come to those who practice sending and receiving with masters.





Washington Huskies' Cody Pickett


Completion depends on both

the sender and the receiver.




Thu, 22 May 2003




Autor will evaluate possibility of diversification
in financial future as EN,MCT,LFT

Dissadvatage can be :

1. Financial futures market give limited opportunities vs. stock market (a lot of different positions)

2. Return is not better by traders with comparable qualifications.

But what of advantages can have financial future market vs. Stock market ?

1. Monday -Friday trading without stop ?
Is financial future market active overnight ?
Exist good oportunity overnight ?

2. More margin ?

3. Anothers ?

It's crackers to slip a rozzer the dropsy in snide.









 Potrzebie Axolotl


Etaoin Shrdlu.




Thu, 22 May 2003


Application to Incline Village Trading Tribe

Dear Ed,

It makes sense a master trend trader would live in "Incline" Village ... during up-trends at least.

I want to join your Intentional Community, as I need help in emotional aspects of trading, and wholeheartedly can contribute for the good of the group.

Last night I spent hours reading your FAQ. I am awed. Driving home, reflecting on two concepts turned my parasympathetic nerve system inside out:


my habitual recurrent hyperactive trading and resultant sadness.


my profound regret over missing signals-trades-profits.


Shuddering tears poured out. All those sad situations flashed in front of my face. I embraced and experienced. I feel a "spell" broke, one which I no doubt cast on myself.

I can be at a Tribe meeting as soon as you say ok, including tonight.

warm regards for sharing your gifts,


Fri, 23 May 2003


The Tao of Trading

Dear Mr. Seykota,

I read about you mentioned "Going with the flow" and I had very deep feelings about this concept. The philosophy of trend-following style trading is surprising similar to what Lao Tze's philosophy in his "Tao De Jing".


I wish to share the following wisdom amended from the original passage:

"The best of trader is like water,
Which benefits all trends, and does not contend with
Which flows in places that others disdain,
Where it is in harmony with the Way.
So the trader:
Lives within nature,
Thinks within the deep,
Gives within impartiality,
Speaks within trust,
Governs within order,
Crafts within ability,
Acts within opportunity.
He does not contend, and none contend against him."

Kind regards,

The identity of the amender is ambiguous. SVO-p grammar supports  identifying the subjects. See: Trading Tribe Process.


If you are the amender, you might have some feelings about projecting yourself in public, letting others know who you are.



Who is that Masked Man ....

He offers 30-year mortgages at 2.5%.


That, my friend, is the loan arranger.




Thu, 22 May 2003


Following a System

I am using a fixed fractional position sizing method. If I'm trading $500,000, then my optimum position size is Equity/10 or $50,000. I work my way up to my optimum position size through pyramiding. I take an initial position of $10,000 then as the stock increases (for longs) by 1 ATR, I add another $10,000
until I get to $50,000(assuming the stock continues).

I use a 2 ATR stop.

This works, and quite frankly don't really follow anyone or anything else.

Just wanted to share my strict discipline of
entry, adding and exits.

Everything works sometimes and something works every time. FAQ does not endorse any particular systems. See Ground Rules.

Thu, 22 May 2003



Dr. Ed -

In your Market Wizards interview you commented that inflation was how the "old order" was swept away. As I was in diapers during the 1970's, what was the "old order" that was swept away during that period of inflation.

Inflation is increase in the money supply. Prices rise in response to inflation.


1970 you can buy a new car for $2,000. 


For examples of Sweeping Away, check the German hyperinflation and the recent events in Russia. 



Have I Got a Drama for You


Just vote for me and I'll keep raising the debt limit and we can make life more fair.



Thu, 22 May 2003


Nothing Works


Dear Mr. Seykota,

My name is [xxx] and live in Germany.

I am trading the market since 1997 (Dax, E-Mini), but I am not successful. I am always losing.

I read a lot of books and took a lot of trading advice via internet etc. I also took a trading course by [xxx], nothing help me.

Maybe I am stupid for trading?

But before I give up my trading career, I want to try give me one chance more (or again).

I have lost my believes and my trust in me.

So I am writing to you in hope, that you can help me.

If you offer some teaching material, advice, seminar or personal coaching it would be very
kind of you, if you could tell me the details (price, description, etc.).

With kindest Regards

P.S. Sorry for my bad English

You report feeling unsuccessful, unworthy, stupid, etc. You also seem willing to follow other's advice even with evidence this does not work.


If you have unresolved feelings of inadequacy, and are unwilling to experience them, you can count on Fred to arrange for you to keep acting out Dramas such as the ones you mention.


Joining a Tribe or forming one, and experiencing the feelings of inadequacy pass from Fred to CM ... might be simpler than having to act it out over and over.



CM Catches the Pass from Fred


so Fred does not have to set up dramatic end runs.





Wed, 21 May 2003


Enabling (myself?)

"You might see if Toxic Parents (see the Books Page) rings a bell for you.

If so, you might take your feelings into The Trading Tribe process."

Sure, it does. Nevertheless I think the title is a bit too strong. "Toxins" usually come from generations and, as always, I prefer to look for the positive aspect of everything first.


As the old sage said: "In every stone sleeps a crystal." Anyway, I think we might reconcile a strict upbringing with healthy attitudes towards our children, so as not to incur in emotional abuse and its unpleasant consequences. I'll pick a copy for me as it might help me cure my own emotions.

I have had very positive experiences when dealing with feelings, either through my previous thread in another community and through your FAQ. In personal relationships too, sometimes we find people who lend great support and help us achieve our best.


This is the case, for example, with a female coworker who's been a great friend and through our friendship helped me a lot in the "Process", in a natural and spontaneous way. In this sense, I think intentional communities are very positive.

"Your anecdotes are consistent with co-dependent enabling behavior.

You may have deep feelings about wanting to save people, make excuses for them, get meaning by being the strong one, etc."

Could you elaborate a bit more on this, in light of the Process? Thanks.

You might look up enabling and co-dependent to find their meanings in the context of relationships.


You seem be uncomfortable looking at "negative" aspects. The negative label is part of your way of not experiencing feelings. A Tribe can help you experience this tendency and release it.


Your co-worker sounds like a healthy and supportive friend ... you might ask her to pace your experience as you explore your feelings ... you might start with your feelings about judging feelings as good and bad.




Some People Can Experience A Grapefruit


and notice its color, flavor, texture, temperature, aroma, sweetness ...

and others just decide it's good or bad.




Wed, 21 May 2003


Wining & Losing Feelings

Dear Ed,

When Fred eventually gets the message through and I feel the feeling, is it enough to do it once or repetitions help?


Maybe, if repetitions occur, it means the message is not fully understood or received?

I have analyzed my feelings about wining and losing and came to the conclusion it is feeling of inferiority that I want to mask and avoid. Deep inside I feel weak and a loser, on the outside I win. Wining requires ruthlessness in my case. I have to see the opponent as an enemy not worth any kind of compassion. And I actually enjoy it, I become like an animal, predator, something primal awakes in me and I go with one objective in mind-win.


I define what is to win, when to stop at a profit and loss and stick to it. What bothers me is that feels so ... (I am having trouble exactly describing it right now) ... so inhuman, or so unfair to others ... I do not want the world to be based on this kind of behavior. Ha, maybe I am afraid of being simply on the other side and getting beaten?


But there is some kind of animalistic satisfaction after I win. Maybe it is only relief that I did not lose? I feel confused about the subject... I need to dig deeper till it resolves itself.

The feeling of inferiority repeats itself despite of having felt it . What does that mean ?

Thanks for your help.

Fred's unexpressed feelings tend to nest in tangles and knots:


feeling inferior

wanting to mask feelings

wanting to see opponents as enemies

wanting to feel like a predator

feeling guilty about fairness

The Trading Tribe encourages fully experiencing the entire system of feelings; this might involve returning to feelings recursively, like pulling apart the strands of a knot.



The Essence of the Knot


is knot feeling your feelings.



Wed, 21 May 2003

Off to the Lake

I would like to say the Lake Ratio provides a simple and concise breakdown of all drawdown conditions that other methods don't account for. This rule of thumb, as you refer to it, is simple, and highly intuitive. Fits me.

Can you please present the precise math involved in calculating the Lake Ratio?

Always thankful of all your insights.

The Lake Ratio is a rule of thumb; you can derive a formula for it by inspection.


You might have some deep feelings about needing precision - not being able to proceed on incomplete information.



Kids Jumping Into a Lake


even without knowing the precise temperature, and dissolved carbonate content, in parts per million.




Wed, 21 May 2003


No Spoon


Do you remember the film "Coming to America?"

There's a scene in the barber shop when the old white guy tells a story about eating soup in a restaurant. Perhaps you remember it. It seems to be a humorous parallel to the trading tribe process.

Restaurant Patron: "Taste the soup."
Waiter: "I don't wanna taste the soup."
Patron: "Taste the soup."
Waiter: "But, I don't wanna taste the soup."
Patron: "Just taste the soup."
Waiter: "Why do you want me to taste the soup."
Patron: "C'mon, just taste the soup."
Waiter: "I can't, there's no spoon."
Patron: "AHA*..... AAAAHHHHAAAA*!!!"

Murphy lacks a spoon; he could get one by asking for it.


The incident, however triggers some feelings Murphy has about about not getting what he wants (irritation, inferiority, sadness) which he likely does not like to feel.


So Murphy's Fred arranges a drama in which he puts down the waiter; the waiter sets up his own compatible drama by not setting the table properly.


The Trading Tribe Aha is not a big noise during the execution of a drama - it's a subtle release of tension as Fred finally succeeds in informing CM about an experience.




Excuse me, sir.  I need a spoon.




Wed, 21 May 2003


Cleaning Up

Dear Sir:

Thank you for your FAQ website. It has been a big eye opener.

With regards to repressed feelings:


how can I know when they are all cleared?

How can I distinguish between a "drama" and just life?


I suspect I have a few dramas going on in my life, but how can I be certain?. Is it always safe to express anger during a tribe meeting during the clearing process?. I suspect that I have a lot of anger stored within, and wish to know how to safely release it to get to one or more AHAS.

Thank you for your attention.

Yours sincerely.

When you finally get to the center of the onion, you get another onion.


It's all drama and it's all just life.


Trading Tribe Customs:


You may express anger, by reporting the feelings (temperature, size, location, associating emotions, etc.)


You may not express the drama that Fred uses to get CM's attention (throwing chairs, insulting people, breaking things). Violence is a drama Fred entrains when Fred cannot express anger.


You might consider the positive intention of anger - hint: the positive intention of thirst is to make sure you have enough water in your body.



Feelings Have Positive Intentions



Wed, 21 May 2003

Trading and Poker

What is your take on the link if any between the modes of thought that lead to quality poker play, and quality trading play?

Risk Management.


Wed, 21 May 2003

Fox on the Run

You say that for the process of dissolving you need someone there? You cannot do it alone? How come?

CM's nature is to do whatever it has to do to avoid Fred's communication about your issue.


Putting your own CM in charge of the Trading Tribe Process is promoting a Fox to take care of the Chickens.




Sure thing, no worries.


Of course I'll take good care of them.




Wed, 21 May 2003


Harem Management

Dear Sir Ed,

Thanks for putting Karachi. Pakistan online.

I believe Successful Trading is going against human nature. A trader rises above natural tendencies, faults.

I believe Trading is amazing journey of Self- Discovery and Change for better. As one change the environment and the past only change him or her selves.

I believe Trading Tribe will have a larger impact on all of us involved it will change, for better our Psychological make – up and to change that is difficult and I believe only a trader like you can accomplish this with all your mentoring, wit, straight forwardness, success, wisdom and confidence you bring to all of us.

I had known that you had the talent of boiling downs complicated thoughts into simple sentences, but your internet surfing skills and content picking talent I just got to notice. It amazes me. How you find all relevant images and captions from the net for answering nearly all the questions.

I wanted to ask you is it true and necessary to have more than one system to trade with for different market conditions and market itself.


A collection of them that if one is not dong well you go for the other one to get consistent performances like when market moves in ranges one shift from a long-term trend following system to one suited for shorter timeframe etc.

I read that best traders have more than one system to trade with it. Do you find it necessary? I am asking you this because I always believed that best trader have to and do, sit and wait for the right market conditions suited to their trading methods or until the right low risk, high return idea comes up and it only then they trade did I get anything wrong in here.

I also wanted to ask you it said make a good method and follow it but what is meant by know the exceptions? Now as we trade the trends how do we know the exceptions or when markets moves in extremes, but is it not predicting and second guessing one system? or we simply have to use our common sense which only looks simple in the hindsight

When Sir Ed we could pick your book off the shelf?

If you have several sub-systems and a systematic way to combine them, then you have one overall system; you can even simulate it to find optimal risk management parameters.


If you do not have a systematic way to combine them, then you are setting up a nice playground for Fred.




You can play on the ladder, the swing and the slide ...


and go back and forth  between them

whenever Fred wants attention.







Tue, 20 May 2003


Quick ... Gimme the Trade Secret


FAQ - A Bit of Your Experience, Please

Hi Ed:

Since you have many years of trading experience and testing of systems, I would like to get an answer to a simple question.

Based on your research, which trend-following method have you found to be more profitable? An "always in the market" system or a system that is out of the market (flat) when trend momentum has diminished?

I hope you will part with this trade secret because I feel that it is a very fundamental and key component of a trading system. Through your experience and wisdom (or is that "wizardom"), I expect that your insight will save me years of "reinventing the wheel" (trading system).

I appreciate any opportunity that I may have to learn from you, including your website.


A man calls up a tire shop and says:


"I want to ask a simple question: which tire is the best."


He doesn't tell the salesman what kind of car he has, or what kind of driving conditions he expects, or the price he has in mind.


The salesman simply listens.


The man goes on, "I want to know the Trade Secret about:

always-on, year-round tires

or a summer and winter set."



So When You Figure Out

What You Want


we probably have it in stock.




Tue, 20 May 2003




see Life Unfairness


As I read the "How to use 'fairness' to get free stuff" technique I acknowledge I have been exploited a lot in this way. I just let the pain flow and I have had many insights. Thank you very much, Ed.

There is, however, an interesting link between "Life unfairness" and my previous post about getting into power struggles with girls I would fall in love with.


I notice I have been linking love with pity and I am usually attracted to girls whom life has been "unfair" to.


In a rather pathetic way, I have been trying to be the hero who spare them from life's unfairness. However, in a rather harsh and rude way, I have always been told that they do not care about my intentions.


Actually, they are usually interpreted as unwanted interference and self-interest. In a vicious circle, as this has been usually in a harsh way, I would feel badly treated and resented towards life's unfairness, and the drama would repeat again. (--Oh, my Fred, don't do it again. Alright, that's O.K. You're right. I give up. :-)

Thinking about starting a community in my area. Please let me know what you think.

Your anecdotes are consistent with co-dependent enabling behavior.


You may have deep feelings about wanting to save people, make excuses for them, get meaning by being the strong one, etc.


Sometimes, when an alcoholic reforms, the enabling spouse dumps the reformed alcoholic and finds another practicing one.


You might see if Toxic Parents (see the Books Page) rings a bell for you.


If so, you might take your feelings  into The Trading Tribe process.


The Trading Tribe supports the formation of Tribes and Intentional Communities. See Tribe Directory Page.



Enabling is a Drama Too


When Fred and CM communicate,

drama disappears




Tue, 20 May 2003

MA Question

Ed! Another question from your frequent fan...

After thoroughly studying Technical Analysis over the last few years, via reputable textbooks, online discussions, learning by doing, etc, I have observed that:

Probably the only way to assure profits is to follow the trend (surprise), both up and down/long and short. After researching, trying, back-testing, etc, probably the majority of the TA indicators, tools, etc, that exist, I keep returning to Moving Averages.

MA's are simple, they work, they trend, you can't break them ... indeed, some stocks are very haphazard and volatile, but some respond quite nicely to MA's. MA's have helped me identify all rallies/declines in the indexes, with the fundamentalist investor press only picking them up weeks later.

Maybe because MA's were "discovered" in the 1930's by Richard Donchian, and are not the latest gee-whiz, high-tech gadget, is why they are not in the first chapter of all the "hot" trading books and magazines.

Yet again, MA's WORK. They make me feel comfortable, and I like them. Did I mention they trend follow?

Ed, I do not want to know what I should do. What I should do is do what works for me (MA's.)

In Market Wizards (MW) you mentioned Exponential MAs as something you used (to what extent or success I do not know) in the early 70's. You also state you were intrigued by Donchian's works and his 5/20 crossover system. In MW, you also stated that you use end-of-day data.


Furthermore, in Van Tharp's book "Trade your Way to Financial Freedom" you are mentioned as having taught a college course using a 10 and 20 MA system. Based on these observations, I can only conclude that you use MA's to some extent in trading (correct/incorrect?)

My question to you is, in your professional trading experience, do you share similar views as I do about MA's and have you put them to extensive use in your own trading?

Ed, thanks and take care of yourself.

Exponential Averages compute per:


EA(t) = EA(t-1) + (1/TE)[P(t) - EA(t-1)]


Moving Averages compute per:


MA(t) = sum[t->T+1](Px) / TM


MA evolves by discarding the earliest price while EA evolves by discarding the average price. To equalize ramp tracking, use:


TM = 2*TE - 1


A 5-day moving average

tracks a ramp the same as

A 3-day exponential average.


With this adjustment, MA and EA seem to give similar results.  The "right" system for you depends on your psychology.


If there were one right car, everyone would have the same one.



No Need For So Much Variety


Everyone Can Just Pick The Best One




Your story about the college course:


is not in SVO-p syntax

does not identify the reporter

is apocryphal



Tue, 20 May 2003



What about checking the feeling of wanting to
experience feelings?

Very nice!


First, experience the feeling of wanting - lack and incompletion - it disappears.


That leaves the feeling of experiencing feelings - the light joyous nothingness of the persisting moment of aha.


Trying to keep the aha going - just takes you back to the feeling of wanting.


So goes the cycle.



Moving and Being Stuck


Define Each Other


Tue, 20 May 2003

The Market

Dear Ed,

I think I made quite a progress in the market study. Among other things, I noticed that places where market direction changes (in the way I define it) are quite risky.


Incidentally, now we are in such a place. So, though market indeed in the switch tone now, it is quite volatile and risky to participate now (according to what I see). This is like middle of 1998, and beginning-middle of 1990.

I think that the risk is increased now without reward. What do you think ?

I hope this is not a reflection of my fear of the market ...

Wednesdays are some of the riskiest days to trade. The others are Monday, Tuesday, Thursday and Friday.


To Find the Risky Days


Look on a Calendar



Tue, 20 May 2003


Great Work!


Hey Ed,

Your doing great work. I just had to congratulate you. From what I can see the problem most traders have is gaining control over their emotions. In essence you're teaching people how to use trading as a means to become strong willed. Although trading is not my method, I too am on this quest.

I also read your paper on risk management. I had no idea that there are optimal percentages to bet based on the potential rewards and losses as well as the odds of success. How did you first discover this?

Another thing I noted is that libertarian principles are something you believe all members of TT should strive for. Are you an active Llibertarian? I was for awhile myself and still consider myself a Libertarian in principle.

Keep up the great work!

The Trading Tribe does not tell people what they "should" do or what they "should" strive for.


It seems that as people clear deep feelings, they develop a taste, on their own, for freedom, respecting the rights of others and taking responsibility.


In the process they seem to cast off false authorities.




Evolution of Authority


Tue, 20 May 2003

Wants to See the Future

Your coin example is understandable.


As you stated, luck and payoff may change with changing market conditions. Therefore RISK is the only parameter the manager can control. Can computerized back-testing ever give the trader a realistic feeling of how his or her system will behave if the above statement is true.

Fundamentalists predict. Trend Traders postdict and simuldict.






Peering into the Fuschia




Tue, 20 May 2003

Surprisingly simple!

I'd like to share something that I think may be helpful to others, and also as a thank you to Ed.

I sent three comments in on the same night. In chronological order they were:

1) the Kelly and Shannon post (to which Ed aptly responded with the scarecrow)

2) the I, me you and us (to which Ed responded with an appropriate comment about my perceptions of boundaries between myself and others)

3) Humorously in hindsight, I then posted the sram and yuri question (which Ed responded to with a comment on existentialism and the aha.)

Funny that I seemed to be leading myself in the right direction but insisted on asking Ed for the answer.

It is almost as if I posted the Kelly and Shannon question because I knew I was beating a dead horse but I wanted Ed to tell me the horse was dead because I didn't trust myself. This led me to investigate my feelings on the need for external validation. A mini aha resulted.

I realized I had been placing myself in the very confusion loop that I propounded could be so constructive to others! Just read the posts and it is abundantly clear! Another mini aha resulted.

Then a big aha came about a half hour later out of nowhere and completely unintentionally. The "a" and "ha" floated away along with my previously unresolved issues. It was like letting go of a helium balloon that I have held tightly in my clutches for 23 long years and just watching it float off into the distance until it disappeared.

Fantastic! Surprisingly simple! Makes me sing and dance.

Thanks Ed!





Getting Ready for the Open




Riding the Trends







Tue, 20 May 2003


Risk Management/Position Sizing


I read your website article re: Risk, and found it interesting, but I have a comment. I am a full-time equity trader using self-developed mechanical systems triggered by EOD data. I have spent a great deal of time on the topic of position sizing and risk.

At one point, I took my system's result parameters and created a Monte Carlo analysis on Excel, simulating 100 years of "theoretical" results from my system, in order to examine variability of returns and drawdowns. While the results were useful to a degree, I kept coming back to a conceptual issue that I think is also pertinent to your coin toss example in your "Risk" article:

Since your coin toss example, and a general Monte Carlo analysis rely on a statistical estimate of a "success ratio/win rate", I feel that there is an inherent oversimplification in the assumption that this win rate is "constant" over time. Example: If your system generates 500 trades in a year, and 250 of them are successful, then you would naturally infer that your method has a 50% success/win rate. However, while this may be true for all of the trades considered as a single group, the far more likely situation is that this 50% "win rate" is nothing more than an "average" of many shorter-term "hot" and "cold" streaks experienced throughout the trading year.

There may be favorable market periods within the year where your win rate is 70%, and subsequently, there may likely be other unfavorable periods where your win rate is only 30%. Either of these periods may exist for quite awhile, while still "summing" at year's end to a 50% win rate. It is during the "cold periods", where the win rate drops to, say, 30% for a time that I feel traders are vulnerable to "blowing out" if using a simple 50% win rate assumption when calculating position size.

I really feel that the best way to calculate optimal position size for "success" (as opposed to maximum profit) is to:

1. Determine in advance the largest % drawdown you are comfortable with.

2. Examine the actual historical drawdowns of your method and in doing so, vary the hypothetical trade size until the maximum drawdown is at, or even a bit below your self-imposed limit.

3.Accept whatever return accompanies this sizing algorithm. This is as opposed to calculating optimal position size for maximum profit, which may lead to a drawdown larger than statistically likely assuming a "constant" win rate. It is here where many traders may inadvertently hit what you described so aptly as their "uncle point"



Tue, 20 May 2003


Feeling More

Dear Ed,

These feelings, it is really powerful stuff. Makes me feel alive. Most of my life is dull, but when I feel and experience the feeling fully without expecting anything ... live is rich, pulsating and bubbling experience.

I am looking forward to feel more than before. When I allow myself to feel, I feel free ... , time seems to stop or disappear and nothing really matters except for the current moment and the state I am in. I have a faint intuition that if feeling appears and it hurts is not the feeling that hurts but defending against it. But I am not sure, it can be both ... or something else.

I know that in the end I want to experience certain feelings. What steps I take in the process to feel depends on the level and frequency of the feeling up to this moment, which depends on my resistance to feel. My resistance is big, too big for me to live like this anymore. I want to change this. I am glad that I came across your web site. It is great. And I want to join the Trading Tribe. So, my question is: Can I join the Tribe?

Thanks for your time and expertise.

To join a tribe or to start your own, see Tribe Directory.


To dissolve resistance, treat it as another feeling; experience the resistance and it turns into aha. 




The Match and the Air

Experience Each Other






Tue, 20 May 2003


Florence Tribe


Dear Mr Seykota,

I would like to start a Trading Tribe here in Firenze (Italy). I read the Trading Tribe Member philosophy and the membership checklist.

Even if I have been in the futures market for 10 years and traded as 'local' in the LIFFE pits I have a lot to learn. Especially when it comes to shifting my trading from intra-day to medium and long term trading and to left winners ride and cut losses.

Best regards, as ever




Firenze, Italia




View From Piazzale Michelangelo


You are now on-line

on the

Tribe Directory Page.




Mon, 19 May 2003


Life Unfairness

"Life is not fair; if it were, you would look like me. You might examine the feeling of wanting things to be fair."


I feel we have touched a very sensitive area and I locate feelings of resentment towards life unfairness. I feel deep pain. How to cope with that?

The way to cope with it: stop coping with it and to start experiencing the feeling of it.  The rest is automatic.


Pain about fairness runs deep in our culture; some people even specialize in exploiting the cultural avoidance of experiencing the feeling.


Here's how to use "fairness" to get free stuff. The technique is pretty cool.  It works like this:


Tell someone he should feel guilty about owning something nice.

If that doesn't work, start pouting and tell him it's just not fair that you don't have one too.

Link Fairness to sharing things. Tell him if he doesn't share, he should feel guilty. This usually gets the guilt flowing.

Then, since most people do not want to feel guilty, he will give you lots of stuff to make you and the feeling go away.

Don't worry if this sounds like extortion, most people will never catch on ... and if they do, they will never call you on it, since it is politically impolite to do so and they do not want to risk feeling guilty about being inappropriate.


Note: The tactic fails against the Trading Tribe since:


Members are not afraid of their own feelings ... they even like to explore them and get ahas. Feeling guilty is just another opportunity to get an aha.

Members know, from experiencing it, that guilt is the feeling of doing something wrong, not the feeling of owning something nice.  The positive intention of guilt is to keep integrity high.

Members know life is fundamentally unfair and that people are wonderfully different; if life were fair, everyone would have to look like Ed.  People don't really want fairness, they just want free stuff.

Members know that people who link fairness to sharing, are just trying to use pettifoggery and extortion to get free stuff.


Foundations like The Center for Character Development help support  cultural notions about fairness, by conducting fairness trainings for children.



CCD Training Exercise

Links Fairness to Sharing


The Caring Meal


1. Set up 2 long tables. Prepare a feast for your students. This feast could be just candy, fruit, bread and other goodies.


2. Put all the goodies on one table. Put only some bread and water on the other table.


3. Have some of your students sit at the feast table and some at the bread and water table.


4. Have the students eat what is at their table.


5. Watch and see if the people at the feast table share with those at the bread table.


6. After a while ask the students how they feel about this feast and discuss the character principles of caring and sharing.



Note: The Center for Character Development affiliates with Indiana Department of Education, Purdue, Notre Dame, etc.



Mon, 19 May 2003


Rules and Authorities

Year 198X
Jack Schwager: What are the trading rules you live by?

Ed Seykota:

a. Cut losses
b. Ride winners
c. Keep bets small

Year 2003

Ed Seykota writes an article on Risk management :

Risk Management - Summary

1. Clarifying trading and risk management systems until they can translate to computer code.

2. Inclusion of diversification and instrument selection into the back-testing process.

3. Back-testing and stress-testing to determine trading parameter sensitivity and optimal values.

4. Clear agreement of all parties on expectation of volatility and return.

5. Maintenance of supportive relationships between investors and managers.

6. Above all, stick to the system.

7. See #6, above.

And Ed is not asking to break the rules (system)! Why change of heart and preach what you don't practice?

You seem to have some deep feelings about authority figures: relying on them, trusting them, finding them inconsistent, having them hurt you, trying to confront them.


You might take your feelings (likely anger, sadness and grief) into the Trading Tribe Process and see what ahas arise.


Perhaps when you resolve your authority issues into ahas, you may find it much easier to find and keep harmonious employment.




Childhood Trauma


When CM doesn't listen to Fred's feelings about childhood trauma ...




Adult Trauma


... Fred keeps setting up dramas to get CM's attention.






Mon, 19 May 2003


Birth of Another Trend Trader


Dear Ed,

I thought thoroughly about your words.
Indeed, I think my intention is to catch tops and bottoms. Indeed, if I imagine myself in the past, and slowly unfold the prices, I would like switch at the tops/bottoms. And, indeed, unfortunately, I don't have a recipe for doing that. In its limit, this would mean intraday buying and selling - a prohibitively expensive proposition.

I hope however that there is something behind that. Namely, I would (like to) think that, probably, there are some statistically reasonable strategies for improving the performance of the trend following. I'll try to do that.

The more I play with the data and the more I watch the market, the more I see that my interpretational abilities should be removed from decision making.

The only rational way is to explicitly make rules, perform numerical simulations, estimate profit/loss/risk, and play with couple of parameters. Augmented by money management, this (supposedly) may be a basis of trading.

Market is too big and formidable for me to make interpretations. Probably, some people can do that, but not me.

Yours Igor.


Mon, 19 May 2003

Vern in your FAQ

Dear Mr. Seykota

Sorry but possibly is not all right with your web page. If I login to my broker open your page and press button FAQ on your page original image and text in page of my broker [xxx] substituted with text of your FAQ . In old frame with adress line of my broker I can see your FAQ, but not my portofolio, quotation & But in case of second broker [yyy] it work okay.

Excuse me, is it possible to think that your www page infiltrated with viren? And page of one of my brokers is not very secure?

Thanks for the notice. I am posting it to warn the others. Maybe a good idea to wear protective headgear for a while, until the danger passes.




Official FAQ Upgrade Kit


Warning !!!


FAQ may contain Verns and Viren, and may be hazardous to your belief systems.



Mon, 19 May 2003



Dear Ed,

Regarding the comment, "life is not fair". My father in law has the best saying, "There are two fairs, one at the county seat and one at the state fairgrounds."

Just thought I would pass it on.


So the fair maiden pays a fairly fair bus fare to go have an affair on a Ferris Wheel at the fair.



She gets there fairly late ...


... and winds up in a different basket with a Dilithium Salesman from Gronk ... and that hardly seems fair.


Mon, 19 May 2003


San Jose Trading Tribe First Meeting

Hi Ed,

We are scheduling our first meeting next week, and I have two requests:

1. Can you put our first meeting date up on the website? It is going to be Tuesday, May 27 at 6:30 PM.

2. Can you give us a short phone call around 7:00 PM that evening? I know all of us want to say hello to you, but I want to keep that as a surprise (I wouldn't want people to come to the meeting just because they want to hear from the mysterious Ed Seykota~) If you can do that for us, we would greatly appreciate it! - I've been receiving a lot of requests, and I know many people just want to be associated with your name without taking the time to really understand what you are doing.)

Many Thanks,

Your meeting time is on the Tribe Directory page.


At this time, attendance at a tribe or intentional community meeting does not confer any form or certification of licensure from The Trading Tribe


I generally telephone newly forming tribes during their first meeting to say hello and extend congratulations.


You might take a look at your own feelings about wanting to do it all on your own - not impose on others.



Even Hermit Crabs

Form Symbiotic Relationships


Some hermit crabs place anemones on their shells as camouflage and protection from predators. The two invertebrates share food. When the crab outgrows its shell, it leaves it behind and finds a new, larger shell and transfers the anemones onto it.


Mon, 19 May 2003

Feeling the feelings


Dear Ed,

Thanks for an absolutely superb forum. I've often hunted around the internet looking for stuff by you, and now finally found something ongoing.

About feeling the feelings: When I start focusing on one strong feeling (eg. the need/drive to get into the market, before my signal is fully confirmed ie. impatience / over-eagerness etc), it then takes me to another 'picture' in my mind with a different feeling attached (eg. a family member, along with a new feeling).


The original feeling then pales into the background (ie. the impatience / over-eagerness). I sometimes think "Hang on, let me get back in touch with the impatience to make sure I've felt it fully".


This I presume is the wrong approach, isn't it? I should go along with the new feeling, and then the new feeling after that etc etc until hopefully the so-called Aha comes. Is that right - it's kind of like a journey from one feeling to the next, until it's resolved? (My concern here is that sometimes the original feeling only seems half-felt, because new images and feelings rush in).

Anyway, I'd appreciate your comments here.

By the way, your explanation of feelings in respect of the limbic system etc makes such perfect sense. For the first time I can truly understand why it's so important to feel the feelings (particularly from a physiological point of view). I notice that page isn't there anymore, is it possible for you to perhaps email it to me.

Thanks for everything again


Some feelings guard others, in protective layers. When you start to experience one, another feeling (that you don't want to feel either) may come up as a protector.


A friend or group can help you focus your feelings during these evolutions, and also help you return to the primary feeling as the protectors disappear.


The Trading Tribe Process includes mention of the Limbic System in the description of Fred.






Some feelings guard others. To get through them all, experience them as they appear, and convert them all into ahas.


Mon, 19 May


Chess and Trading

Hi Ed

I find this link interesting:


It reminds me of how your site is developing, especially the last paragraph titled: "To Learn How to Win, Learn How to Lose".



To Learn How to Win, Learn How to Lose

There's a problem with learning chess when you're young: You're going to lose a lot. And, of course, ego gratification is probably the main reason why a child does anything. But if, as a young person, you can learn how to handle defeat, you can eventually learn how to win. That's one of the primary functions of a good chess teacher -- to get students through the pain of losing.

My lessons consist of a lot of silence. I listen to other teachers, and they're always talking: "Why are you making that move?" "What other options are you considering?" I let my students think. If I do ask a question and I don't get the right answer, I'll rephrase the question -- and wait. I never give the answer. Most of us don't really appreciate the power of silence. Some of the most effective communication -- between student and teacher, between master players -- takes place during silent periods.

When I do talk with students, my goal is to help them develop what I consider to be two of the most important forms of intelligence: the ability to read other people, and the ability to understand oneself. Those are the two kinds of intelligence that you need to succeed at chess -- and in life.

In my classroom, I have what I call a "hot corner." One or two students will sit with me at a board and talk chess. They are not allowed to move the pieces physically. They can't "show" me their moves. They have to tell me their moves. I make them play the game in their head. They deeply fear that moment in the hot corner -- because they don't know if they can do it. My job is to show them that, yes, they can do this impossible thing. We all can do it. We all have amazing capabilities. At first, playing the game in your head feels like work. Eventually it becomes intuition.

Chess, backgammon and other games of strategic risk-taking provide rich metaphors for trading.




Emanuel Lasker 1868-1941

World Chess Champion: 1894-1921

Lasker's underlying philosophy: play an "effective" game of chess, as opposed to a "perfect" game of chess and take calculated risks




Mon, 19 May 2003


London Tribe

Dear Ed,

I contacted you a few days ago with a couple of questions about a new tribe in London and training / coaching.

If you wish to set up a London Tribe, see Tribe Directory.

Mon, 19 May 2003 10:03:17 -0400

Report from Toronto Tribe

Hello everyone,

Is anyone concerned about the possibility of not having an “aha” orgasm in their first meeting?  We have had four meetings in Toronto with a total of five people on the hot seat and I have witnessed two ahas.


Just like an orgasm, there is no mistaking when you have had one! However, a public aha is not always required. An aha or simply some deeper thinking may come hours or days later to the hot seat occupant.

In our first meeting I took some time to review the importance of emotions in trading and life. However, we spent the majority of the meeting checking in and getting to know each other.


Near the end of the meeting we gave the hot seat a try. While we all fumbled around a bit, and while there was no aha, we were able to get a feel for how it works. We had our fourth meeting this past Tuesday and we continue to learn and improve on the process. The hot seat is now where we spend the majority of our time in our meetings.

Being physically present is very important for me when pacing and mirroring. While the language is critical, I find that I really pick up on the physical cues in the meeting. Also, the group dynamic is interesting and helpful. It seems to allow each person the time to move in and out and flow.

Last week I introduced a talking stick (it was actually my putter) for the students in the group. I found it helpful as it gave the person in the hot seat time to respond before someone else began speaking. As the leader, you will need to focus everyone on staying in the present, expressing feelings and avoiding questions, judgment and advice. Other than that, just let it happen.

I look forward to hearing how it went and learning from your experience.

All the best,


Mon, 19 May 2003


Don Juan Calling In

Dear Mr Seykota

I am a futures trader and NLP student. I really like the your FAQ, no quick fix or holy grail but many clues to learn and grow.

I always try to learn something new about myself, the others and the markets. I noticed that when I am focused on learning, trading doesn't seem like trading at all, is just absorption and fun. In order to stay focused on learning I need to act like Carlos Castaneda's Warrior.

The Warrior threw his ego into the dustbin, he has no expectations, he's not fighting against the others, he is fighting only against himself, against his limits.


He fights for knowledge and he is conscious about death. He know that he could die tomorrow and so he tries to act in the best way in every single act. He tries to transform any single moment in something magical and because he has no expectations he's free from the fear and the limits of personal history.

I would like to start a TT here in Florence. Trading Tribe and some teachings of "Don Juan", what is your opinion?

FAQ encourages the formation of intentional communities. See: Tribe Directory.



Carlos Castenada


Carlos Castenada's New-Age Shamanistic writings contain metaphors about the Noble Warrior and Mystical Journeys.


Mon, 19 May 2003 07:44:29 -0400

Risk Control

Mr. Ed Seykota

Mr. Seykota stated in Risk Management at 17 may 2003

... A losing streak of even one trade, without proper risk control can be a Waterloo.

1. No close to open risk, without exception,
for each instrument.


2. Multiple account by different brokers.


3. Not more as 2-2.5 % bet value from total equity for all instruments.


4. Only securities liquid enough for autor trading volume.


5. Multiple communications chanels with brokers.


6. No option underwriting activities ,separate option account with account value not more as 25% from total equity. Option transaction volume not more as 10% from all volume.


7. After losing streak started with 4-6 consecutive loss from possible 30 ,change tactical approach and after that folloving bet reduction.

8. Two order praxis.  First order buy or sell short ,second stop loss.


9. No money management for third party.  No bank/third party debt. Only money,which autor is ready to loss.

Can you give a suggest to anothers means ? Autor would very pleased for you.

You seem to have deep feelings about communicating clearly.



Dilithium Salesman ...


... starts gronking away, forgets to establish rapport with the buyer, and loses the sale, even though the buyer needs at least 2 ounces for his tradefader.





Mon, 19 May 2003


Joining Incline Village Trading Tribe


Greetings again and thank you for your response.

I live in Sacramento and am of 30 years of age. Originally from Los Angeles, I decided a few years ago that a change of location was due since a majority of family members had already congregated to the general area.

Regarding my trading, it continues to evolve. While I used to test the quick in and quick out types of trades, I have come to realize commissions present a formidable problem within such a short term time horizon.


Also, a crucial part of my progress revolves around the recognition that the study of past historical market data can ultimately help optimize my choice of current trend possibilities.

Another essential part of trading for myself involves the need for emotional balance. While my heart pounds less and my nerves seem settled more than when I had first begun, I recognize that there is still a psychological impact when a trade is made capable of affecting the "go with the flow" type of plan I embrace.

It is my understanding that The Trading Tribe meetings uncover and explore emotions rather than attempting to obstruct them from reaching the conscious mind. By experiencing them, there is no longer a need for the subconscious to provide dramas in an attempt to create an awareness of such feelings resulting from past events. It is also my understanding that The Trading Tribe provides an atmosphere of non judgment accompanied by active encouragement and support for the process from fellow members.






Mon, 19 May 2003 00:37:54 -0400

Sram and Yuri

see Trader Models 3

Great point under the Sram and Yuri Pics.


 "You may have feelings about them, and you may have judgments about these feelings."


At times, we can throw ourselves into confusion loops based on this idea. Example of a Confusion loop: Say I pass a judgment, then I have feelings about passing the judgment, then I pass judgment on my feelings about my judgment. Then I have feelings about my judgment about my feelings about my initial judgment.


Now I might talk to someone about my feelings about my judgment about my feelings about my judgment about my feelings about my initial judgment. Then we might talk about talking about it. The cycle can proceed infinitely and snowball into a big mess.


Confusion loops can be devastating and waste a great deal of time. If one is philosophically and / or analytically inclined, one can be especially at risk to confusion loops. If we let them go we can recognize the inherent perfection of things just as they are.


No judgments, no feelings about judgments It's like the psychological swoosh; just feel it!

When CM tries to consider feelings and judgments about itself, without consulting Fred, things seems to go round and round, in a big cycle.



When Fred and CM collaborate, such issues become ahas, existentialism gets interesting, to the extent that it's fun.




Soren Kierkegaard (1813 - 1855)

Father of Existentialism



Jean-Paul Sartre (1905 - 1980)

Modern Existentialism


Soren and Jean-Paul find Fred,

do some ahas together, and become

a couple of regular party animals.




Mon, 19 May 2003



see: Trading Times Predictive Method

Dear Ed,

The Trading Times Predictive Method IS the most enlightening post I have ever read!!!


The picture of the broker knocked out a lot of drama in my CM!!!

I am at Zero Point right now.

Thank you poster.

Children seem open to feel whatever they feel. Their moods change from moment to moment as they keep experiencing their feelings. As we mature, we learn to contain our feelings.



Ha Ha Ha Ha Ha!  Aha !  Got Milk ?




Sun, 18 May 2003



I encourage others to examine trends (and swings) in various time frames (15 minute, 30 minute, 90 minute) for a different perspective.

Keep the brain stimulation trending up.


I do not know of any trading system with a track record for consistently profitable trend trading using a 15 minute time horizon.



The Holy Grail

turns out to be a stopwatch.




Sun, 18 May 2003


Danger situations = Creativity at its Max performance

Danger/ = Creativity at its Max

Yoshiro Nakamatsu, holder of the most patents in the World, does his “creative” thinking underwater in his pool until he needs to rise to inhale oxygen.

He claims that when the brain is deprived of oxygen, the limbic system (instinct) is at its peak performance.


This is because the instinct’s instinct is to find the best way out of this dangerous situation; therefore it is a work-horse during these moments of near-death situations. I am not talking about taking reckless risks to spur creativity. I prefer peaceful ways to do it. Any thoughts? Is this one of the primary reasons most of the best traders/investors come from humble / hungry / beginnings?

Or is the mind at its peak performance when it is not thinking/worrying about anything(ie free and clear and dancing with abandon)?

I am improving my creativity by participating in abstract hobbies such as music, art, or doing absolutely nothing walking at beach---things that I like to do. And it is very fulfilling.

I hope you don’t mind sharing with everybody how/when/where you arrive at your creative spark. Or maybe it is spontaneous.

You claim the best inventors come from humbleness and hunger. You ask me for reasons for this.


For Trend Traders, reasons are optional. In a holistic world, everything effects everything else.


You might have some deep feelings about humbleness and hunger.




Floppy Disks and Memory Chairs


“I have been a part of many great innovations,” says Dr. Yoshiro Nakamatsu, who holds more than 3,000 patents. “At the end of the next millennium, they may forget that I invented the floppy and the digital watch and remember me for improving sex with the Love Jet.”


The Love Jet helps the body secrete the sex hormone DHEA, which Dr. NakaMatsu calls “the medicine of love,”  and has been dubbed by the media as spray on Viagra.   


Some of Dr. NakaMatsu’s other inventions include Yummy Nutry - Brain Tobacco (to stimulate your brain to new creative heights as you smoke) — and the Cerebrex (a chair that supposedly improves memory, math skills and creativity just by sitting in it) but these never caught on in the marketplace.





Sun, 18 May 2003


Risk management During the Trade

Hello Ed,

Very good this stuf about risk management. I use the kelly formula for initial positions.

I trade futures in 2 ways
1. Swing trading
2. Long term trend trading (something like turtle)

The central question I have is:


The risk you are talking about is always the initial risk when you start a position. My feeling (I'm studying it) is that there is a lot of profit in the way you manage risk DURING a trade.

I think the way in which you add to winners is crucial for (big) profits.

I don't always agree with the turtles..
Sometimes they are too aggressive and sometimes I think that you should still add, and they don't....

My idea is: you should use e.g. the Kelly formula for the initial position. But then?

Please read about the following situation:

I have a initial position and my system tells me to put my stop at or better than my initial position.


My risk = 0, but the question is should I put again risk to my position or should I wait until my initial position + stop have a profit, which I can risk. Psychologically you are happy that you cannot lose anymore, but the other thing is that you cannot win (more) if you don't risk more.

What goes around in my mind when I manage positions is the last, so I add rather quickly. I do it intuitively. Now I want to organize this better and I want to develop a plan. A way to look at it is to trade more systems. Adding to positions means "re-acting on a signal of a second system".

So what should you do?

Take the system (1) on which you got the signal for the first position.

Suppose you bought at price p1. Take a certain amount (e.g.) 2% or 2 ATR. Now test your system when you would have bought not at p1, but at p1 + 2% (or +2atr). If the statistics are oké you can buy. How much you can buy depends on the Kelly formula. Of course this system has a lower performance than the first system. So the parameters in the Kelly formula are different. So you must add less than the first position...agree.....

But the 2 trades are 100% what do you do with the total risk....?

So the next thougt is:

Suppose you can add
First quantity at p1
Second quantity at p1 + x
Third quantity at p1 + 2x
Fourth quantity at p1 + 3x

x is a certain amount of price movement, e.g. 2% or 2 atr.... (depending on your time frame)

Depending on the stop values you have a certain risk when you have the total could set that on 3% e.g. and than pray everything goes all right....


I think that using more or less different systems for adding at different price levels is the best way. Each system delivers parameters for the Kelly formula and this will give you the optimal bet for each system.

I hope that you can follow mind brainstorming and can give your judgment for this (never heard!) way of thinking over "adding to winners"...

Perhaps we can start a nice discussion.

Best regards

You seem to have a system that you follow for initial entries, and then you place add-ons by gut feel.


You might consider taking the feeling of all that drama into the Trading Tribe Process to find out what Fred is trying to tell you.



The Exciting Thing About

Adding On To Pyramids:


Sometimes They Fall Down






Sun, 18 May 2003


I, Me, You and Us



In the natural state, we care deeply about the feelings of others. Since none of exist independently of one another; I do not care about you, nor do you care about me, we care about us.


Once seeing this; it sometimes pains us deeply when some of us see ourselves as others and it causes suffering.


This of course is a result of the fact that their suffering is not theirs at all, but ours. This is great; because we can quickly avert the emotional reaction and see that there is no suffering, and no joy, and so the "suffering" becomes "joy" which becomes nothing.


Unfortunately, the "joy" of this process can not be felt by those of us who see them selves as those of us as opposed to just us, or rather suppress "their" inherent understanding of the system in favor of attachments to the ego and the concept of the individual existence.


At times, We may even react negatively to this and allow us to become I and experience the suffering in the negative independent view independently of the joy of the positive collective view.


We care about us. Helping I's who imagine themselves as I's rather than us's can be difficult; especially when us becomes I (as in first person I, or "me.") Having, at times, seen us as I, we want to help us's when they become I's.


What are your feelings on the possibility of aiding an I in the process of seeing the us; or must the I first uncover the inherent understanding of the us and want us?

You might have some deep feelings about individuation and boundaries between yourself and others.




Early on it can be difficult to know who's who. Later on it can still be difficult.






Sun, 18 May 2003

Kelly & Shannon

If I am not mistaken, you've done some investigation into Kelly's "A New Interpretation of Information Rate," which is came about primarily as a result of Claude Shannon's "A mathematical Theory of Communication."

At the end of Mr. Kelly's paper, he mentions that "Theorems remain to be proved showing in what sense, if any, our strategy is superior to other involving a(s/r) which are not constant."

He seems to be propounding that his static scheme may or may not be improved upon by combining it with or transforming it to a dynamic scheme.

The only thing that remains static in this world is dynamics. In other words; we can only be sure of one constant, which is change. This being said, it seems logical that a dynamic scheme might be better suited to a system of positions in the financial markets which is in constant flux.

I'm curious as to whether or not you have investigated this possibility. Would you care to share any thoughts on this topic?

Trend Trading uses position sizing and trailing stops to control risk in inherently dynamic markets.


You indicate some kind of dynamic super sauce that makes "trimming trades" to improve on trend trading.. 


If you can produce a sample of such a sauce for, say, a simple 5/20 moving average system, I'm sure many would like to know the recipe.


You might be a very bright person with deep feelings about wanting to figure it all out, rather than simply going with the flow.


As a temporary work-around, you might self-medicate the feeling by ceremoniously awarding yourself a  prestigious diploma in trend following.




Ray Bolger in Wizard of Oz

 Metro-Goldwyn-Mayer, 1939.


The feeling of wanting to get some brains  motivates Scarecrow to follow the yellow brick trend all the way to Oz. The Wizard informs him he already has enough brains, and lacks only a diploma.




Sun, 18 May 2003




thx for turning me on to Reminiscences of a Stock Operator. I wish I had read this five years ago. So many of his mistakes make me think the book had been written about me. A timeless classic. I've already recommended to two others.

Thx again ... I enjoy your site.





Old Turkey

"It's a bull market, you know."


Edwin LeFevre's 1923 classic contains characters and messages that linger in the mind and in the gut.




Sun, 18 May 2003


Likes Looking at Lake

Dear Ed,

Thanks for clarifying.

The definition of your Lake Ratio is very clear with the graphic, also since it addresses the drawdown duration - I feel it is yet another significant contribution by you to the money management community.

Keep up the great work and thanks again for your mail.


The Lake Chart visually illustrates drawdown duration and magnitude.


The Lake Chart


More: Risk Management

Sun, 18 May 2003


The Trading Tribe Process

Hi Ed,

I'm getting more and more curious how you feel about what I wrote to you. Each missive has moved me forward from the last. Like dropping rose pedals.


Now, I am thinking that Fred is not so much a psychological model of mind as a sociologic model of Mind (as Gregory Bateson used the term - one Mind in which we are all participating). This makes much better sense of what you are saying.


The Trading Tribe Process has an individuated focus, and a group (Mind) impact. The 'hot seat' is a conscious node (identified patient) of an associational network of connections in and between the members of the tribe present.


Others change 'by metaphorically' mapping their experiences onto the hot seat sitter. This suggests more possibilities than mere explanation.


If the Trading Tribe is intent on breaking down the artifice of individual difference between one another and bring more of the wisdom of the group Mind to everyone, then perhaps two traders could 'exchange' problems (or resources) - possibly without reference to their content.

Yes. The Trading Tribe seems to have a collective wisdom about the markets.


Exchanging knots is one of the methods.




Rose Petals - The One




Rose Pedals - The Two




Echinopsis Layii Petals - The Many


These Cactii may take five years to mature from seed. Curiously, they all spring into bloom on the same day, like traders discovering a market at the same time and having a collective, colorful aha.