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June 21-30 , 2004



(Quotes from Ed in Red)


Wed, 30 Jun 2004


Las Vegas Trading Tribe

Greetings Ed

I am committing to start a Trading Tribe in the Las Vegas area.

Meeting time and frequency will be updated following consultation with fellow tribe members.

Thanks for all your help and support to achieve this goal




Las Vegas,

Nevada !


See the Directory Page



Las Vegas at Night



Clip: http://www.accessvegas.com/



Mon, 28 Jun 2004


Acid Test of System Clarity


I am on my way up to cottage country for a quick golf getaway and will be out of touch for a few days. Thus, I am sending you my confirmation a couple of days early that I have stuck to my commitments made at the workshop.

While I am gone, my wife will be executing the trading system for me.

This is a simple, effective process for sticking to and getting clarity on commitments. We have now put into place in [our] Tribe.

Very nice.

Mon, 28 Jun 2004


FAQ Withdrawal


Trust you are doing well. Since FAQ has not been updated in 20 days, I assume your regular business, book, and other wonderful activities filling up your life. I so appreciate what you done for me and others with your TTP. Any thing I can help with book or trading just ask.

If you would like to edit and have skill and experience in publishing, send me your qualifications.

Sun, 27 Jun 2004


Dallas Tribe


Has anyone come forward to start a Dallas area tribe? I may be interested in doing so. Any thoughts or suggestions?

When you convert "I may" to "I intend" the tribe appears.

Date: 26 Jun 2004


Wrong Number


I was re-reading FAQ and I noticed that on Fri, 21 Mar 2003 there is a wrongly
stated analysis regarding the number of moves white could mate under the
chessboard picture. One move will just not do:

Rd1 + Kc2

Actually white cannot even mate in two moves, the unprotected bishop will be
taken in any next check combination.

Let's play some chess through the net, may I dare challenge you.

Be careful about betting too much on a sure thing, particularly one with a strong logical argument.



White to Mate in One


Hint: She may be hiding in the castle.

Fri, 25 Jun 2004


Help !

I have spent 1 hour navigating through your website.

I want to learn trend following trading system.

I did not see the system rules, charts, examples etc.

Can you please help me ?


I'm not sure what kind of help you want.


Perhaps you might like to check the Ground Rules, above, to get an idea about what this site is (and isn't).

Thu, 24 Jun 2004


The Family

Dear Ed,

Words cannot describe adequately my gratitude for the experience given me as a member of the tribe. When I first arrived I expected to learn how to "tweak" my system of buying support and selling resistance.


Instead, I found something that I cannot attach a value to which is this: buying the support of my family and selling their resistance is a recipe for a life unfulfilled.

You see it all changed last week when I asked my wife, "tell me what you like about yourself?" The answer I was sent, "nothing." At that point in time I knew the ideology of the tribe needed to become my way of life.


My second awakening came about thru my 4 year old boy. He asked me a few days ago, "Daddy can you read me this story?" My reply, "not now son, Daddy is trading." Within seconds I had an epiphany, my son will only be four once. My son will only want Daddy to read him a story before my son will want to borrow money to be with someone else.


I had become a babysitter to my children, trading had become my life and they (my wife and children) were missing a DAD. So I am giving up my trading life and becoming a full-time supporter of my wife and children's emotional wants and needs, for that is the role of a Father. A role that I have neglected for too long.

So I thank you Ed Seykota for sharing the tribe with me. I will be grateful the rest of my life.

Your friend,

You might wind up being a good father and a good trader.

Thu, 24 Jun 2004


Starting a Tribe in Washington DC

Hello Ed,

I would like to start a tribe in the Washington, D.C. area. Please let me know if you require any more information from me.


Thanks for FAQ!




Washington DC !


See the Directory Page



Scene From Tribal Capitol


Mr. Speaker,

I would like everyone's support

in exploring and experiencing my feelings

about campaign contributions.


Clip: http://www.luxury-hotels-resorts.com/



Thu, 24 Jun 2004


Solo Trading Tribe

Dear Dr. Ed -

After reading the reviews of your latest seminar online, I decided to put myself on the hot seat. The only problem was that I was all alone. But it didn't matter. I sort of went into a trance. I just asked myself which of the rules I wasn't following. Trading w/ the trend? Yes. Cutting Losses? Yes. Managing the risk? Yes. Following my system? Yes, for the most part. Riding my winners? HELL NO. So I asked myself, "Something happened to you in your life that is preventing you from riding your winners. What is it?" So I started going through all the big emotional events in my life. It didn't take long. It was the first one.

Growing up, I watched a lot of those buddy/buddy detective shows like Simon & Simon and Magnum PI. This taught me how friendships should be based, how you should stick by your friends through thick and thin.


Not surprisingly, my "friends" learned how to take advantage of this and I became sort of a slave to them. This contributed to a lot of self loathing which I only recently in the last 4 years overcame.

It felt like someone had smacked me in the back of the head with a baseball bat. I couldn't ride my winners because I thought they were friends about to betray me. There might be some other reasons too but this had to be 90% of it.

Keep up the great work,

Jumping to logical conclusions about the "causes" for problems might be a clever way to avoid experiencing forms you don't want to experience.



Logic can be a detour


around experiencing forms.



Clip: http://money.cnn.com/2003/08/13/




Thu, 24 Jun 2004


Living in the Now

Hi Ed!

I've been thinking about your suggestion to "live in the now." Actually most people associate that with doing the things they would like to do, instead of doing the things they think they should do. It all comes down to laziness. I've found out that your definition is quite different. The following sentence changed my view: "Trend Following systems that use stop-loss techniques automatically stay in the now moment as you respond just when the trend changes."

My experiences of trend following comes from trading my system in the stock market. I have used a system that fits my personality in my present situation. It seems to work out well so I'm hooked. Therefore I would like to approach other things in life as a trend follower too. Soon I discovered that to be able to be a trend follower, in life, you have to define what a trend is and what my signals are. Most things can be translated directly from trading; like entry, exit, bet size, sitting tight - so one successful area can spread into other areas.

One thing I wonder is why it seems I have to do models of everything. Why can't I work naturally as a human being like people in common? It seems like I have to complicate everything (for example building a model on how to communicate with people or how to train or eat). Sure, simplicity comes after figuring out the complexity, but I think to much! I would like to feel more and think less but that is not easy.

Since intention equals results I must like to have hard mind breaking dilemmas. Maybe I do on a subconscious level, but on a conscious level I feel stupid when I let minor things become huge problems. 


So if I understand you correctly, I have to work on the part that stand between what I want to accomplish and my feelings. I thought I had, but the endless stream of thoughts can't all be handled at the same time. Can you dissolve to much, I mean, can it become counterproductive at a certain level?

You know, my thoughts are exactly like this message - it starts somewhere and suddenly there are so many things I have thought about, so I just keep on writing ...

Thanks again, you have already helped me a lot on my path to freedom!

You might take your feelings about thinking too much - to tribe meeting, and develop the form more fully.



OK Mr. Dittmars, remember:

your new brain is only temporary

so don't think too hard with it.



Clip: http://www.th.physik.uni-



Thu, 24 Jun 2004


Trading Tribe Proposition

Hi Ed!

[When] you speak about your vision, we recognize that our vision is very similar to yours. My business partner and I intend to form an organization of traders with strong intentions, strong commitment, and a focus on TTP that underlies the organization and helps to provide a drama-free environment.

It appears we may have a shared vision and we intend to join forces with you to realize it!

Yes.  I envision an organization with a deep commitment to personal growth - that also serves the financial community. 


I plan to further define the vision and invite participation around mid-August.

Thu, 24 Jun 2004


Possibility of Joining Tribe

Dear Mr. Seykota,

I am currently a student of History and Politics in [College, Country]. I am aged 21 and have completed three years of what is a four year course. I am currently in the process of negotiating a deferral of my studies for one year with the authorities in my university.

I have been very much inspired by reading your interviews and your FAQ page. It is not so much that it is the trading that inspires me, but it is more that you tend to ask of people what they feel they really want to commit to and achieve in their life.


This appeals to me very directly, especially your emphasis in the Trading Tribe process of developing a very firm notion of one's intuition, and of one's creative capability. I feel that when we reach that level of commitment, success and clarity, that we are doing what we really ought to be as human beings, or as you have said we find our call, what makes us tick, or become connected.


I think think this notion of really finding what we must do, through total perseverance, and the parameter of total success, contentment and contribution, is what must be aimed for as humans. I think it is our human instinct to break through emotions, share them and express them, until we have found how we fit in seamlessly to the world.

This at least is my understanding of what I think I ultimately would like to achieve in my life, and it seems very much to me that you are an expert in discerning and drawing out this element, in those who are suited to your particular area of influence which is trading.

Although I have not so much in terms of capital at the moment this does not hinder my ambition. For I recognize in risk and focus the ability to overcome what are only short term impediments. If I could excel at trading I think now might be the time to do it, but I am trying to get a feel for what I think is right. Some part of me thinks if I could excel at trading, then I am nostalgic for what may be left behind, that is perhaps, youth.

The most striking thing I find about you is your apparently relaxed temperament, or at least that is the way you come across. My other options at the moment are such things as to travel with old friends for some months, on what would be an expense subsidized from elsewhere.


Save that, I could set out alone, perhaps to distant parts of the world and get involved perhaps in some volunteer work, or to travel, to write, or perhaps I would love to visit beautiful places such as monasteries, or perhaps learn an Asian language, and immerse myself in some way, in some other culture.

The point is I think the time has come perhaps to really take some action, in one or another way. I definitely think I would aspire to excel at trading, for the prospect of developing systems, making bets, controlling risk and seeing things clearly tends to excite me. But when I am not sure.

I appreciate very much that this is a rather crude outline of my intentions and what I aspire to and perhaps I am withholding a significant amount. But ultimately I am trying to get places and you seem to be the guy who gives direct and very tactful advice. My ambition would be to someday design a system of my own, akin to yours, that I would monitor and enjoy. I think I would really enjoy doing this.

But I am youthful and I intend in earnest to take everything this privilege of being young has to offer.

My knowledge of trading is not borne of experience nor of extensive monitoring of markets. In fact it is rather crude. I do not spend time following markets. It is just I am somewhat motivated by what could be possible if I applied myself. I am more seized by the idea of being able to trade many markets and not just one, and also by the notion of the personal discipline of being able to cut loss, and to get in sync with a trend, to ride it, to have the nerve to stay with it.


This I appreciate is a rather crude appreciation of the very intricate art that you are a master of. But I think my point is that it is the idea of winning in this fashion that appeals to me, through nerve and satisfaction, that seems to draw me.

Perhaps I am cutting things too loose here. I regret if you find this to be inappropriate, or too vague a statement of intention. It is just at present I am seized by the idea to live big, and you seem to be an expert in this area.

If you could make some reply to me I would be especially grateful, for I sincerely admire your level of personal expansion, and furthermore the contribution you make. If you have some suggestions or pointers in relation to affirming direction, they will be heeded with sincere attention.

In awe and admiration of the standards you compel in your own life and in the lives of those around you.

You might take your feelings to a Tribe Meeting.


Alternatively, you might consider writing long and ambiguous essays as a way to avoid doing so.

Wed, 23 Jun 2004


I Have a Dream ... With You In It

Hi Ed,

I had a dream last night and you were in it!!!! It's so strange!!!

The setting is that we are talking on the phone, just like you do when you follow up with me on how I'm sticking to my System 3. And I forget what the issue is, but I think in the end, I say my solution is to attend this particular new tribe's meetings. In fact I remember I correct myself as I say, "OK, right, my current commitment to (something else) runs till June 30th ... OK, I am committed to attend all of this new tribe's meeting until July 30th."

And then you say, "And how do you feel about that?"

I pause for a moment and say, "I feel I will do it because it is a commitment that I make ... although I feel like I will do it grudgingly because I am not sure if it'd really help and it is not necessarily convenient for me."

And then you say in an "aha" tone, "Ah, you will do it but you will do it grudgingly."

That's when I remember I said the same thing several weeks ago when we talked. I said my procrastination on my tasks gives me the feelings that towards the end of the day when time is running out and I need to finish the tasks that I listed in the morning, I have no choice but to force myself to work on the task, perhaps even grudgingly. Then you said you had a wild guess that it may be because of some issue with authority, that I may have that rebellion and so I do what I have to do, albeit grudgingly.

And then I ask, "But isn't that what athletes ... athletes (in fact, I remember
how I mispronounce the word in my dream) do too? I mean, the football players wake up for a 6am drill. They may not like it, and they do it grudgingly. But this is what the coaches demand, and so they do so despite they really want to have extra hours of sleep. This is how they build their character and their mentality for peak performance in the game, isn't it?"

And then somehow I wake up ... without getting to hear your response.

Dear Sir, what would you say if we were having that conversation on the phone?

If we were having that exact conversation on the phone, then I would say exactly what you recall me saying.

Wed, 23 Jun 2004


Group in Spanish

hi ed: if possible please post my ... email for those interested in the Miami group in Spanish.


Thanks for the kind words on the site.

Con mucho placer. Vaya al directorio a ver su email. Quizás usted puede escribir algo en español, para el FAQ.

Tue, 22 Jun 2004


Lying is Just Another Part

of Some Systems

Check out the “Listed Principals” of this firm ... [website] ...  seems [person] had a compliance issue just recently.

The Under-Fred network seems to magnetize all the liars into conglomerating.

And this is our competition? With our support team, I will go head to head with [any] of these ... clowns and put my foot so far up their [body parts] they will have trouble blinking.

I know such sites and such people - and receive mail letters from people who have sorry experiences with them.


The same names keep coming up from time to time. 


You might do well to check people out very carefully before dealing with them.

Wed, 23 Jun 2004




How an I learn your system of trend following and can I buy the software.

I just finished reading Trend following by Covel and Tool and Tactics of the Master
Day Trader by Velez & Capra. I also just set up a direct access account with [Firm] and funded by account with $13,000.00 I am just starting out.

Thanking you in advance,

Anyone claiming to have software for sale that contains formulas or methods of Ed Seykota is likely just incoroperating (see below) - beware.


TTGE, the Trading Tribe Growth Engine software, part of the vision,  is not for sale.

Wed, 23 Jun 2004


Tribe of Two

As an aside, my tribe has finally sprouted wings and the process has begun. Although there are only two of us, we are both motivated and already many interesting feelings have sprouted and been given voice. It is hard to explain the wonderful difference between reading and participating.

Many thanks for leading this process.

Best Regards,

Most all relationships proceed in segments of just two at a time.



Beak Performance


Clip: http://www.brookdale.cc.nj.us/


Tue, 22 Jun 2004


NY Workshop


Our NY Tribe has researched facilities for holding a weekend (Fri evening -
Sun afternoon) workshop in NY.

[Several] hotels can provide ... conference spaces with catering ... in the mid September through mid November time frame.

Let me know if any weekends in that time frame will work for you? Also, if you have any preference for hotels?

See the Ground Rules about using Trading Tribe methods and terminology. 


If you wish for me to attend, send me a complete description of your intentions.



Tue, 22 Jun 2004


Highway Incoroperation


Ed -

First of all, what you have done with the TTP process I find really fantastic. For many years, when I was in San Francisco, trading, we thought we wanted to re-create your “legendary” trading tribe process in the [Restaurant] group and then with a few trading buddies. We took the [Trading Coach] stuff, did a lot of good work and experience built, but it was nothing like we do, now, in TTP here in NYC.

We never understood, nor pursued the right techniques. I guess our intentions were not correctly aligned. However, I lived for three years in Asia from 2000 until early 2003. When I came back, I immediately searched and found the all these TTP groups all over the world. At first I was skeptical;


[Name] can tell you we talked on the phone. Exchanged emails, talked more, and I agreed to do a meeting, but was not very sure how the process could be so broadened after many years of what I considered secretiveness in the process.

I was happily reward by going! I have attended ever since the second meeting in January and the personal and tribal evolution for the Wednesday TTP group is remarkable. We seem to be going deeper every session and people who feared the hot seat, refused to accept issues and feelings, etc. are now eagerly jumping at the opportunity to experience their feelings. It is a cleansing process to say the least.

I have noticed that for me, the hot seat process has become more abstract in terms of conceptualizing or articulating what I am feeling. I don’t find childhood drama. I can’t articulate nor clearly depict what sometimes occurs inside me, but I do find that powerful feeling and energy are constantly demonstrated as plain for others to see, and myself to experience. In short, we all are experiencing feelings!

Anyway, what prompted me to email you was that [Name], a person whom I like as a person, but unsolicited, sent this mail out to many in the Monday group, today. I really don’t know the Monday group outside of [Names]. Out of respect for you, and your methods, I was prompted to clarify a statement that [Name] made.

I want you to know that I respect what you have done for us very much. I also respect your privacy and rights of concept. I also want you to know that what you have taught me directly, or vicariously, has made my life markedly better as both a trader and human being.

I suspect we will see each other at some point here in NYC or somewhere in the world, and just want to pass this email directly to you, out of respect, and say thank you.

-----Original Message-----

Just for clarification, purposes. It is true that I carried on a protracted fax/mail dialogue with Ed in the early to mid 1990s focused on money management, and specifically math and techniques that apply to my “controlled risk plunging” approach to investing.

Over the years, I also hired a former apprentice of Ed (re-joined me recently to run a fund), and I have met Ed at Bay Area events. Also, in the [Name] Group of Marin California I got to know [Name] (another Ed apprentice) as we did weekly meetings for several years in California. So, Ed’s methods are very much celebrated and incoroporated into all of our trading ecologies ...

-----Original Message-----

... has a great money management product ... which was designed with Ed's assistance and incorporates Ed's money management concepts.

His curious term "incoroporated," might be a Fredian synthesis of "incorrectly - appropriated."


He seems to be implying some kind of relationship with me.  You might encourage him to take his feelings about adequacy and deception into the Tribe as an entry point.





Bonnie and Clyde


famous for incoroperating banks



Clip: http://www.uncp.edu/library/












Tue, 22 Jun 2004


Galvanic Trader


copy of email

I don't care what Ed says ... or anyone else for that matter! I am right. I told you all that I would be one of the biggest traders in the World and today I became that. Your conversations helped me to galvanise my thoughts ... and I owe you one.

Maybe he can find someone to help galvanize his spelling.

Tue, 22 Jun 2004


More Idiocy


Here is some more moronic correspondence ... enjoy!

I am not suggesting day trading at all. If I use Shorts as Stops in a different account to my Longs ... my Short Stops could be put much further away than my opening price ... because I'm hedged. My testing shows that my Short Stop would not be hit often ... when it were hit ...  it would effectively lock in my profit. I would then put Stop losses for the Long and Short so that, should one of the Stop losses be hit ... I would start making money again with the other trade. I would then get a little bell to ring ... indicating that I needed to put my Stop back on and voila ... I would continue on my way to becoming one of the richest men in the world.

The trouble with these guys is that while they share their ideas freely, they are typically stingy about sharing whatever it is they are smoking.





Pot is statistically effective

in removing excess equity

from trading accounts.


Clip:  http://www.drug-rehabilitation.com/


Tue, 22 Jun 2004



Hello Ed,

I hope you are well.

I had an insight this afternoon while entering into some email correspondence with one so called "system designer" who got my details from the trading tribe directory.

It amazed me, that someone with absolutely no common sense, no practicality, no experience etc. could have such grandiose opinions of himself, and put himself in a different league to the likes of you.

Some of his ideas, and concepts we beyond belief, utterly ridiculous. For example, he suggested having 2 accounts, one long one short, and then if long 1000 shares of something, then go short of 1000 shares of it in the other account " to hedge". After explaining at length to him that this is the same as closing the initial long outright, but with the added hindrance of making more commissions and interest payable on the account.

He replied with this statement......

Hehehehehe ... I know I'm right. That two account system is the way you do it ... that's a fact! It's easy ... has 2 indicators ... fully hedged when the market goes sideways ... I don't even have to code it to know that it works.

I have everything Seykota has ... and more ... because I taught myself ... whereas he had to be taught by Commodity Corps ... I am in a completely different league to him ... much higher up.

I'll be joining him on his 80% per year ... because no-one can stop me ... You'd better tell him to move over ... because I'm coming thru!

This is utterly incredible to think that someone can have such an warped opinion of himself.

The insight I gained from this brief correspondence, was that knowing if there are idiots like this trading the stock market, then it makes it clear to understand the reason why good well grounded traders makes such huge gains.

Simply because they are getting filled on their orders by idiots.

I was wondering, is it possible you could mail me a draft copy of your book?

Seems like your correspondent has a method to stay high, and another method to avoid using stops.


You might examine your own feelings about him - as he might represent some disowned aspect of your own situation.





Standard Configuration


for trading a mechanical system

without an emotional support team.



Clip: http://www.echois.com/



Tue, 22 Jun 2004


The Best in the World

(inter-Tribe email)

I'm copying this to Ed. I have nothing to fear. I am the best trader in the World. And I am copying to TT!

-----Original Message-----

you method merely loses money. I am emailing Ed now, to tell him what an idiot you are ...

I suppose I'm the real idiot here for publishing this stuff.

Tue, 22 Jun 2004



Dear Ed Seykota,

Let me ask a number of questions.

1/ When trading I experience the phenomenon reported in some psychological works – we apparently store memories in emotional rather then logical order and therefore an experience of loss, known to every trader, tends to bring back memories of other losses, unrelated to trading. This is at least how my Fred works. Going through a series of such painful memories does little to keep me in the now. Well, this is not exactly a question but rather a kind request for your comment.

2/ What is the importance of volume changes relative to price changes in the art or science of trend following? Is it the price action alone, or price with some additional attention given to the volume action? I tend to eliminate volume from most decisions just because I want to have a simple entry/exit system, it seems that ambiguity is still too difficult for me to cope with and also I believe that less is better as far as criteria for trading decisions are concerned (quite possibly a wrong belief).

3/ You said (on March 18, 2003 FAQ) that it’s a nice thing for us trend followers to be out during choppy whipsaw markets. How do you (or a trend followers in general) make peace between the need to avoid any anticipation, to stay in the now, and an apparent giving up on a signal of a starting trend just because, say, recently we have spent a long time in a range and we still within the range and chances are this signal will be a false one? Not to mention guessing that we are just about to enter a choppy period. Sorry if this is too naïve a question.

4/ What do you think about importance of experience in trading given that some of us may have long bad experience (and then I guess need to unlearn a lot) while others ... were trained the right way from the very start and apparently succeeded without the ingredient of their own experience ?


This leads me to another question. I have started trading just a few months ago and thanks to the net had this luck of finding Reminiscences, Wizards, Your website and a few other books, sources. Where should I stop with these studies? I mean Seneca advised to limit one’s library to a few best books re-visted again and again.


However, many successful traders say they read everything on the markets and always find some useful bits of information. What do you think, Sir ?

Thank you and all the best,

1/ TTP works by experiencing forms.  TTP makes no claim that going through memories keeps you in the now.


2/ Importance depends on judgment, and is specific to the trader.  A thing might be important to one trader, unimportant to another.


3/ The desire to make peace between (1) a need to avoid anticipation and (2) an appearance of  giving up - might be unique to you. You might take the feeling of this desire as an entry point into TTP.


4/ See #2, above.


FAQ does not tell people what they "should" do.  See ground rules.




On a List of Important Things



generally ranks high up


while breathing drops of water

rarely appears.



Clip: http://nogfx.free.fr/gallerie/breathe.gif


Tue, 22 Jun 2004



It just occurred to me that I might be a gambler.

"Problem gambling is gambling behavior which causes disruptions in any major area of life: psychological, physical, social or vocational. The term "Problem Gambling" includes, but is not limited to, the condition known as "Pathological", or "Compulsive" Gambling, a progressive addiction characterized by increasing preoccupation with gambling, a need to bet more money more frequently, restlessness or irritability when attempting to stop, "chasing" losses, and loss of control manifested by continuation of the gambling behavior in spite of mounting, serious, negative consequences."



Is this about me? AGAIN?

You can bet on death and taxes - although it's hard to find someone to lay you any good odds on the other side.


You might take your feelings about gambling - to your tribe.




You Bet Your Life

with Groucho Marx


Tonight's secret word is gamble.


Clip: http://www.cnn.com/



Tue, 22 Jun 2004


Intriguing Spooks


Just after I sent the e-mail below, I tested the “Tribe Directory” link again, and it worked. I can see that there is no [Nearby] tribe. I am not serious enough to start one at this point. I’m still trying to understand more about the process.

I’m both intrigued and a little spooked by some of the descriptions of the most recent workshop.


You are cut from a different mold. That was evident in the Market Wizards interview. It is also what sparked my interest in finding out more about you. My interest in China was originally all about learning more about Taoism and Buddhism. After learning the language and graduating from college (1987), I turned to the world of finance to earn a living for me, my wife and two children.

You might consider exploring your feelings about intrigue and spookiness.



Some Intriguing Spooks


preparing for the Hot Seat



Clip: http://www.atticsalt.org/Images/


Mon, 21 Jun 2004


Uncle Point

Hi Ed!

Hope everything is going fine for you. Here ... everything is going fine. My tribe meetings are becoming more and more enjoyable, and the Process spontaneous. We have been able to dissolve strong barriers of judgment and resistance, and family dynamics is becoming healthier and stronger. I have been also adding (or discovering) a new dimension in my spiritual life, emotional alike. Thanks for your initiative in sharing with us your experience.

Now, I write you as I have been experimenting with system testing and implementation, and I would like to get some ideas about realistic expectations. Particularly, I read your article about risk management and, perhaps, you might clarify a few things for me.

Ed Says: "Traders seem to spend considerable time and effort trying to change their luck and their payoff, generally to no avail, since it is not theirs to change. The risk is the only parameter the risk manager may effectively change to control risk.

... since the bet stays proportional to the equity, it is theoretically impossible to go entirely broke so the official risk of total ruin is zero. In actual practice, however, the disintegration of an enterprise has more to do with the psychological UNCLE POINT.

In particular, one of the most important, and perhaps under-acknowledged dimensions of fund management is the UNCLE POINT or the amount of draw down that provokes a loss of confidence in either the investors or the fund management. If either the investors or the managers become demoralized and withdraw from the enterprise, then the fund dies. Since the circumstances surrounding the Uncle Point are generally disheartening, it seems to receive, unfortunately, little attention in the literature."

So far, I have considered a simple system which suits best myself and the market I am going to trade. One of my concerns is about the theoretical drawdown and what I might realistically expect. So I am attentive to its degree of robustness and I have done some tests over a portfolio of different markets. Once I get the overall picture and I see the system has a good degree of robustness, I proceed to test the best performing instruments so as to have an idea about the drawdown to expect.

Yet, I myself knowing how markets are likely to change, I would like to understand better how you define UNCLE POINT. Specifically, I understand that testing provides us only with a theoretical performance, which is subject to stress under real conditions. I also notice that fund managers and investors generally agree upon a maximum drawdown at which both will withdraw from the enterprise, and that's part of the risk management rules.


So, my doubt is: UNCLE POINT means a drawdown that goes beyond the theoretical, or the condition of approaching the maximum allowable one? I also understand that, as the account grows bigger, high performing systems will likely expand the equity volatility and the enterprise will likely have large, long-term drawdowns, which are beyond the guts and patience of most investors and managers, and I guess that you name this condition of UNCLE POINT.

Thanks for your clarification about this.

Best regards,

The Uncle Point is the psychological point at which confidence dissipates. 


It may or not the same point as the theoretical maximum drawdown.  It might not be the same point at which the investor and manger agree to abandon the enterprise.




Uncle Pointing


"I want you

to manage your risk."


Clip: http://www.biblehelp.org/



Mon,  21 Jun 2004

Blow Up

Its been almost 1 year since the beginning of my maniacal transaction. 750% in two months then all lost in a 10 month process. I figure I blew up simply because my gut is too weak.


I feel a bit lost and confused, because I don't know if I want to trade anymore. I devoted much of my time and made many life mistakes just to deepen my knowledge such as quitting college just to "concentrate on the trading process".


Now I look around and feel like a looser and lonely. I still live my mother, not bad for a 27 year old. I regret the whole year I left behind. Actually I regret many more years trying to reach something which now looks impossible for me to reach.


BTW, thanks for the Toxic Parents, I felt like I wrote 2/3 of the book myself, had a big headache and decided to go to therapy to clear a few issues. I haven't started the therapy but I intend too. I also intent to go back to college and get my masters in computer science, even though it may take a while.

I recall a pain in my chest. I quit smoking and the pain goes away. Thanks for the TTP. The craving feeling is just my body saying hi! to me.


It has been 4 months+ smoke free. I also started working out and joined a martial arts group and already got my first degree. It feels better, but sometimes I just want to crack:


I miss my girlfriend who left me. She thinks I'm a gambler or something. She's got bulimia. I want to help her. I think I still love her.

Did anybody here feel like starting everything over again and in the end continued nevertheless without regretting?

A 750 % gain in two months might indicate rather aggressive risk preferences - and a desire to self-destruct.  You might take your feelings of regret to a tribe meeting.






Use TTP to find

its positive intention.


Clip: http://www.apersonalsite.com/



Mon, 21 Jun 2004


from Inter-Tribe email

Having read so much on Ed's FAQ about service to others, I now volunteer at a local soup kitchen one Sunday a month. This is [name] group, we meet up to cook and serve meals to senior citizens at a local church.



Successful people are always looking for opportunities to help others. Unsuccessful people are always asking, "What's in it for me?" -- Brian Tracy



People Like To Help Each Other


until someone forces them to do so


Clip: http://freepages.genealogy.


Mon, 21 Jun 2004


What's the Mystery?

A sitting Fed Board member recently said,


“there is much about the inflation process we do not understand, and I have been surprised at the extent of the pickup in core inflation this year.”


Coming from the Fed, this is a bothersome statement. Especially given that inflation and deflation are very simple phenomenon.

Inflation is a decline in the purchasing power of money, or in other words, an increase in the average price of goods and services. Two factors determine the rate of inflation - money growth and the amount of goods and services in an economy. Inflation is caused when too much money chases too few goods. Deflation is the exact opposite. It is caused by a dearth of money in the system.

The Federal Reserve has complete control over the money supply and therefore has complete control over inflation and deflation. As a result, any deflation that existed in the late 1990s and early 2000s was entirely due to Fed policy mistakes.


There can be no other explanation. The Fed did not add enough liquidity to the economy to absorb the increase in output. When output grows rapidly, the economy needs more money to avoid deflation. However, too much money can cause inflation whether the economy is hot or not. This is the problem today.

Unfortunately, measuring money has become virtually impossible. So instead of targeting money growth, the Fed has targeted interest rates.


This simple fact has done more to obfuscate the “inflation process” than any other development in the past 20 years. The public, the press, and even Fed members have become focused on interest rates and actual economic data instead of money. Because of this, many are mystified by shifts in inflation.

But it does not have to be a mystery. The Fed does not control interest rates; it controls money. It is by manipulating bank reserves (buying and selling securities) that the Fed controls the federal funds rate. If the Fed wants the funds rate to fall, it injects reserves into the system. When it wants rates to rise, it subtracts reserves or slows their growth. So, when the Fed holds the funds rate below its natural rate, it does this by adding excess liquidity. This excess money causes inflationary pressures to increase. Sensitive market indicators - such as gold, commodity prices, the dollar, and the yield curve - are the first indications of either inflationary or deflationary monetary policy.

In the late 1990s, these sensitive indicators (gold fell from over $400/oz. to $256/oz.) all pointed to deflation. Since then, these indicators have all turned around and gold prices have climbed again. There should be no mystery here. Fed policy causes inflation, the markets signaled it was coming, and it did.


Economists try to map events into a linear, local, causality model. 


The one study for which economists have perfect data - and the one study they rarely publish - is the correlation between their own predictions and what actually happens.




The Fed Provides Assurance


that someone understands the situation

and can take care of the flock.



Clip: http://www.riber.net/




Mon, 21 Jun 2004


Incline Village Trading Tribe


In December I made a 6 month commitment to commute to the IV-TT beginning in January (about 3000 miles, round trip). I wish to extend my commitment with no deadline. IV-TT has become the epicenter of change in my life. I am excited to be a part of such a dynamic and cutting edge group.