Questions

(Quotes from Ed in Red)

Answers

Mon, 31 May 2004

Shorts

Hi Ed,

I don't see any shorts in the trading system definition. Without trading the downside haven't you lost half of the opportunity for profit?

I believe that stocks behave differently on the down side vs. the upside and so symmetrical systems don't work really well.

Yes, the trader has no provision for shorts in his system.  It also has no provision for selling pretzels at baseball games, another profit opportunity.

You might clarify your meaning by re-writing without using the word, "should."

I do not know to what "collaborator mention" you refer - please specify your reference by page, date and title.

What You Should Do

can twist your thinking

into pretzels.

Clip: http://filebox.vt.edu/i/ibertmar/

pages/backgrounds/backrandom/

Mon, 31 May 2004

Cool Hand Luke

I only sent part of my previous message ... here's the rest.

1. Air circulation promotes evaporation and tends to cool things off (wind chill effect).

2. Air flowing from high pressure (cheeks) to low pressure (whistle stream) cools off, by Pv=nrT. 

You and your son might like to devise some experiments to determine if either is responsible for the cool hand effect.

In running this experiment, and in waiting for schools to stimulate emotional intelligence, don't hold your breath.

If Fire Needs Air

I wonder how come

we can blow out candles.

Clip: http://www.mtwthailand.org/Team

/Missionaries/Veldhorst/Veld%20Photos/

2001/James%20B-day%20

Sun, 30 May 2004

The Monte Carlo, Rather Than Pair Wise

Calibrations Results

Showed a Positive Expectation


Hi Ed,

I was annoyed at a stock in my portfolio. It was down 55%. The system am using issued a sell stop on another stock that was down only 15% and held the 55% looser. “Yet another interpretation on selling losers and letting winners run,” I said to myself.

To pacify Fred, I took your advise and reduced my position size according to a stocks volatility and proceeded to recalibrate the system and to see how sensitive it was to this new advice. I rather than using a pair wise optimization, I use a Monte Carlo technique.

What struck me was that in comparing the calibration results with the baseline not much changed. The Monte Carlo technique varies the parameters (breakout, exit …) over a larger range of values. The calibrations results showed a positive expectation — not the best but not bad.

The lesson I learned was the following a system even if it not that great is better than not following a system.

You might try re-writing your post so that a 4-th grader can understand it.

Some People Have to Work Hard

to create confusion.

Others just seem to have

a knack for it.

Clip: http://www.uvm.edu/~mstorer/

escher/stuyck/woodtriangle.jpg

Sun, 30 May 2004

Deep Fears


Dear Ed,

Last week I ... want to go scuba diving with my friends. I recall having this desire for about 10 years. I am claustrophobic and fear suffocating -- so I am afraid to scuba. On Wednesday, I realize that I want to test whether I can use TTP to overcome these deep fears and achieve my desire to scuba.

I sign up. The first lesson in the pool is difficult. My mind is busy setting up the drama big-time. I am breathing fast and shaking during most of the lesson and sure enough, the first time I go under water, I panic.

I immediately stand up and thrash about until I get my face out of the water-- mask and respirator off.

I relax. I ask myself if I'm willing to feel and accept the feelings that will come with the panic. I say yes and I go back under the water. This time, in about 8 feet of water, I accept the panic attack as it happens ---- heart rate zooms, throat tightens, can't swallow, muscles tighten, etc I experience all that I'm feeling. I do not push away or judge the sensations ... I actually believe I hear myself saying "hmmm--that's interesting", and"ok".

I do not have a sense of time for this but the panic passes. I swim around. At some point I laugh and choke so I surface again -- but this time with a feeling of joy. Next, I swim underwater in the pool for about 20 minutes. I feel ready for the ocean dive to 30 feet.

The boat trip to the dive site is exciting but I start to think -- can I do at 30 feet what is possible in the pool. I start to think that I will panic -- perhaps 8 feet is okay because subconsciously I know I can easily get to the top. I just sit there in the boat and enjoy all the feelings that come up with these thoughts.

Congratulations on going deep with the process.

The depths contain

many interesting critters.

like a Galatheid Crab on lophelia

Sharks May remind Us

that one of the positive intentions of fear

is risk control.

Clips:

http://www.naturalsciences.org/

education/deepsea/gallery.html

http://www26.brinkster.com/

larine/shark.jpg

Sun, 30 May 2004

Interesting Article on Self-Control

This article (link below) implies conscious (non-natural) self-control is a negative, as it drains energy. Seems accurate with my experience.

http://www.apa.org/monitor/

That you have "accurate" experiences - is consistent with liking to logically control your feelings, and consistent with fear of letting your feelings free to inform your decisions.

Yes, Dear, Of Course I Love You

Just look at this proof, a readout

on my respiration rate, blood pressure,

glucose, and pupil dilation.

These readings are 99% accurate

as to my experience,

so that proves it once and for all.

So I hope you do not find it necessary

to bring this matter up again.

Clip: http://home.att.net/

Sun, 30 May 2004

Decision Making

Hi Ed

Could you please tell me what process you use to make very 'large' life decisions.

You do not provide specifics about your very large problem - only a generalization.   My guess is that your real pickle has to do with withholding information from others.

The Choice gets Clear

when you can feel

what's really important.

Clip: http://www.getfunnypictures.com/

Sun, 30 May 2004

See Missing a Tee Time May 15, a response to your earlier excuse.

Sun, 30 May 2004

Risk the Analysis vs. Risk the Process

Before I jump into risk, allow me to compare analysis and process. When one analyzes, things stop and are constructed piece by piece. The mind takes the object of what is being scrutinized out of the process and records its’ state. A film editing is a good example. Movies provoke drama. One can take a series of frames and order them to produce an emotional effect – romantic mood. Order the frames again and one can produce and intellectual effect – the reasons why a character fell in love.

The process of experiencing risk is far more lethal than the analysis of risk.

You might consider taking your feeling of fear into the process.

You might also consider running some computer simulations to find your optimal risk amounts.

Warm and Fuzzy

for many professional traders

might be in the area

of about 1/2 % risk.

7% might be a bit hot and frizzy.

Clip: http://www.candidgraphics.net/

Pages/GraphicDesign/Images/

Sat, 29 May 2004

Checking in --- and a Question


Hi Ed --

How are things, my friend? Hope all is well with your family.

Things here are going our kids are keeping us on our toes and are a lot of fun. They seem to be so different from one another -- [Name] is very intense and aggressive ... [name 2] is more laid back and passive. It's interesting to observe.

Anyway, I have a question for you. [Name] was observing that if he holds his hand up in front of his mouth --- about an inch away --- and then exhales with his mouth open onto his palm, that the breath he feels on his palm is warm. However, when he puts his lips together -- like he is going to whistle -- then blows out onto his palm again, that it does not feel warm, but much cooler on his palm.

He wonders why this is so.

Congratulations for raising a child full of wonder - a wonderful child.

The wonder of being full

with a wonderful child

Clip: http://katzphotos.com/pregnant.jpg

Fri, 28 May 2004

Under-Fred Question


Chief,

Can you describe the relationship, and specific differences if any, between
Jung's collective unconscious and the Under-Fred network? I understand such
questions may be outside the purpose and scope of the (trading-skewed) TT
writings but I have to ask anyway because I'm really curious about this!!

Ed Says: "Everyone has a Fred, and all the Freds connect together. Under Fred is the
primary communication network that connects all the Freds."


"Jung taught that the psyche consists of various systems including the personal unconscious with its complexes and a collective unconscious with its archetypes."

http://religions.myztek.com/

holbrook/colluncon.htm

Jung's Collective Unconscious contains cultural archetypes, myths and customs - language and imagery that we use to define our roles, our personalities, ourselves.

The Under-Fred Network connects our individual sub-consciousnesses.

If the Collective Unconscious is a catalog of dramatic roles we might play, Under Fred is the network we use to entrain each other to play them out.

Carl Gustav Jung 1875-1961

formulates archetypes

and then becomes one.

Clip: http://www.newgenevacenter.org/

reference/20th-1st2.htm#jung

Fri, 28 May 2004

Fred Alignment and Dreams,

per Carl Jung


Chief,

I have these questions about dreams and CM and Fred and TT.

I'm reading Carl Jung, his last book, MAN AND HIS SYMBOLS, written in 1961.

He writes about dreams and how dreams are a vital CM:Fred link. My experience reading the book is that the book is understandable in part from your writings on TT and my readings of it.

It seems the progression of thought on the CM:Fred connection is Jung, Erikson, Seykota ... I have checked the TT site for 'dreams' and have not found much.

Here's the thought from Jung that prompts my interest:

"For the sake of mental stability and even physiological health, the unconscious and the conscious must be integrally connected and move along parallel lines ... dream symbols are the essential message carriers from the instinctive to the rational parts of the human mind, and their interpretation enriches the poverty of consciousness so that it learns to understand the forgotten language of the instincts."

-Carl Jung, page 37, MAN AND HIS SYMBOLS, paperback edition

Can you consider a fairly detailed response on role of dreams in clear CM/Fred communication within the overall context of TT and TT processes?

Do TT processes prompt significant dreams [before, in-process, after] TT-process-generated insights/ahas?

Are feelings about dreams [invalid, valid, supervalid] inputs (or even entry points) into the TT process?

Does individual dreaming change in terms of significance (in any way) after TT aha/insights?

I hope I've articulated my questions regarding dreams and TT with enough clarity. Your writings are extremely interesting and I thank you for them.

Fred sends forms to CM in many ways, including dreams

A form may contain imagery, ideas emotions, feelings, thoughts, and somatic properties.

TTP is a process in which people  assist each other in experiencing forms, particularly ones that carry judgment and lie buried in k-nots.  

As a k-not loosens you may notice an increase in dreaming.

Dreams may Contain

symbols and images.

If you don't experience a form,

Fred may send you the real thing.

Clip: http://www.crab.rutgers.edu/

~pbutler/dream.jpg

Thu, 27 May 2004

Position Sizing Formula - Final

- FINAL VERSION -

Hi Ed,

Here is the final version of the position sizing formula for futures contracts, taking into account commissions. If you find it is accurate, please feel free to share it with other tribe members. Suggestions are welcome as well on improvement.

Graciously,


INPUTS
---------------------------
A= ACCOUNT SIZE
R= Risk % (i.e. entering 2 means .02 or 2%)
C= Commission per Round Turn per Contract
E= Entry Price
S= Stop Price
P= LONG/SHORT
U= Unit Cost (i.e live cattle =400, since a $1 move in cattle = $400)


OUTPUT
--------------------------
IF P=LONG, then

((A*R)/(E-S))/U=X

Y=X(round up to nearest whole number)*C

X-((Y/(E-S))/U) = POSITION SIZING OUTPUT (number of contracts to buy)

---------------------------
IF P=SHORT, then
((A*R)/(S-E))/U=X

Y=X(round up to nearest whole number)*C

X-((Y/(S-E))/U) = POSITION SIZING OUTPUT (number of contracts to buy)

In the moment of now, each event is the final one.

Thu, 27 May 2004

Position Sizing Formula - Disregard

Hi Ed,

Sorry to bother you. The commissions part is still not right. Please disregard my previous messages, and I will work on the formula some more. Feel free to offer suggestions if you like, which would be very gracious of you. Somehow I have to take the commissions times the number of contracts to be traded..

This formula is complicated to me, since the commissions part of the formula (second part) is dependent on the position sizing..

Thanks,

... hmmm ...

Thu, 27 May 2004

Position Sizing Formula - Correction


Hi Ed,

Sorry here is the correct formula I meant to post fro my last email. I had B in the equation which is really R.

INPUTS
------------------------------
A= ACCOUNT SIZE
R= Risk % (i.e. entering 2 means .02 or 2%)
C= Commission per Round Turn per Contract
E= Entry Price
S= Stop Price
P= LONG/SHORT
U= Unit Cost (i.e. live cattle is 400, or $400 for each $1 move)


OUTPUT
--------------------------
OUTPUT
--------------------------
IF P=LONG, then POSITION SIZE=

((A*R)/(E-S))/U=Y

Y-((C/U)/(E-S)) = OUTPUT
---------------------------
IF P=SHORT, then POSITION SIZE=

((A*R)/(S-E))/U=Y

Y-((C/U)/(S-E)) = OUTPUT

... hmmm ...

Thu, 27 May 2004

Position Sizing Formula

Hi Ed,

I am working on a position sizing formula for my clients, that takes into account commissions for commodities (but will work with stocks if Unit Size is set to 1 and you add up total commissions for two tickets).

I have spent a lot of hours on it. If you feel it is correct and useful, feel free to share it with other tribe members who might find it of value.

INPUT variables
---------------------------
A= ACCOUNT SIZE
R= Risk % (i.e. entering 2 means .02 or 2%)
C= Commission per Round Turn per Contract
E= Entry Price
S= Stop Price
P= LONG/SHORT (customer selects in a box)
U= Unit Size


OUTPUT
--------------------------
IF P=LONG, then POSITION SIZE=

((A*B)/(E-S))/U=Y (round up to nearest whole number)

Y-((C*(Y/U))/(E-S)) = OUTPUT
---------------------------
IF P=LONG, then POSITION SIZE=

((A*B)/(S-E))/U=Y (round up to nearest whole number)

Y-((C*(Y/U))/(S-E)) = OUTPUT

Cheers,

... hmmm ...

Wed, 26 May 2004

For Bears

Some pyramiders just don't know how to give up.

Wed, 26 May 2004

Future TTP Workshops

Dear Trading Tribe,

I would like to ask Mr. Seykota if he would be interested in hosting a TTP workshop in the Boise, Idaho area. I am curious to know what Mr. Seykota requires - such as # of participants, cost of lodging, etc. - before agreeing to participate.

Thank you for your time.

Regards,

Your indefinite proposal induces indefinite interest.

Wed, 26 May 2004

They say they do

but when it happens

they act like they don't


Hello Ed,

Long time since my last e-mail. I have set up a little investment fund based on trend following, risk management and money management. All of my associates and clients (investors) are very familiar with the way the accounts will behave.

Thank you for sharing your experience.

Tue, 25 May 2004

Sticking to the System


Hello Ed,

I am diligently working with TTP. I take the hot seat several times a month, experience many AHA's accompanied by great emotional release.

However my behavior of not 'sticking to the system' still shows up.

My trading is fully automated (the computer monitors and sends in orders  automatically/electronically to the broker etc). The only thing I need to do during the day is to ensure that connectivity (DSL) is up and trading platform is up. To do that I have to be around during the day. Thus this leads to the 'urge' to take a peak at how my system is doing intra day and this leave the door open to Fred, so I end up tinkering with system trades.

The system is fully back tested, I have been using it in real time for the past 12 months, the results it is producing are in line with the back tested expectations. However due to my interference I am under performing the system.

In the market Wizards interview you said that 'Watching the market during the day is like playing the slot machine, you end up feeding it all day'.

My friends have suggested that I just hire someone (student etc) to sit in my office and monitor the connectivity and trading platform.

However I know of people who are system traders, who sit in front of the market all day, watch it tick by tick, but have no 'urge' to tinker with their system.

Would you have any comments? After feeling the feelings are their also behavioral changes needed like not watching the market during the day etc.

All the best

You might notice the feelings you have at the tinker point and take them, as entries, into TTP.

Tinker Bell

for some, is the gong that sounds

to announce the start of trading.

Clip: http://www.theartofcomics.com/

renaud/images/Tinker%20Bell%20Web.jpg

Tue, 25 May 2004

Good News & Bad News


Hi Ed !

The good news is my account equity is almost full of stocks making new highs, 15 in number.

The bad news is my watch list for tomorrow has 56 more stocks all near new highs.

Crunch time. Which to hold, which to fold ?

Nice problem to have: too many stocks making money.

Yes, our problems tend to account for most of our income.

Tue, 25 May 2004

Emotional Diary

A popular market wizard recommends keeping an emotional diary. In this diary,
you would make note of when you feel anxious or emotional, detailing the
time, nature of the emotion, thoughts (self-talk), interpretation of the
self-talk, situation, and whether these feelings are new or recurring.

Later you would record your behavior at the time, whether you expressed your feelings or not, and how long the feelings lasted and what made them go away.

Thinking about your feelings and writing them down might help you to identify them. 

Writing about Emotions

may be a step toward

experiencing them

Clip: http://www.couplandesque.net/

culture/photography/writing.gif

Tue, 25 May 2004

ALL-Time Highs

Ed,

I am keeping in mind the Chart page located on The Tribe website and bought
these stocks at or approaching all time highs:

CCJ
CUNO
FRO
HOC
LAYN
SJH
TSO

FAQ offers no instrument-specific trading advice. See Ground Rules.

Tue, 25 May 2004

A Perfect Symbiosis:

Trend following and living like Pooh, the bear.

Have you read the marvelous book by Benjamin Hoff, The Tao of Pooh?

Yours sincerely,

TTP seems compatible with many schools of thought.

Mon, 24 May 2004

Causality and Responsibility.

If causality is a convenient conceptual illusion, ... then how is do I accept responsibility?

Wouldn't accepting responsibility hold me as the causal factor? And if causality is a conceptual illusion wouldn't that say it was not all my fault?

I do not ask these questions with any personal issues in mind. I find great implications in addressing these deeply philosophical questions.

Causality and Responsibility are notions; they have no existence, other than to organize perception. 

You can't buy a causality or a responsibility at Wal-Mart.

The causal model has very narrow application.

You can use causality to analyze what happens when the cue ball strikes the ten - you can't use it to analyze how the pool table, the balls, and the player all come to appear at the same place and time. 

The responsibility model, in which you intend a result and assume responsibility seems to provide a better fit for real-life situations.

The cue ball

may cause the ten to move.

The player

is responsible for the result.

Clip: http://www.cronullabeachyha.com/

budget-accomodation/

Sun, 23 May 2004

Letter Requesting Re-Admission

To The Incline Village Tribe


To The Tribe,

This is a letter requesting re-admission to The Tribe. Writing this letter forces me to face some black holes in my trading arena. These weaknesses are not only sabotaging my trading, but are also wreaking havoc on my personal life.

In the last month my life has emotionally spun out of control, culminating with me missing a Tribe meeting. The same feelings I have been avoiding in the trading arena have begun to effect my entire life. The core feeling is fear. Fear of learning to do the things that successful trend followers do. It is not a fear of commitment. It is not a fear of sticking or not sticking to my system. It is a fear of admitting to myself that I have no system to stick to. I like to call myself a systems trader, but that is dishonest. I follow my entries and stop-loss orders (2%). The anxiety begins when I’m up money. I take profits arbitrarily. I take profits when the money is burning a hole in my pocket. My lack of a defined exit strategy is wreaking havoc on my trading. I feel deep anxiety because I know in my heart that I am powerless to control myself from ending winning trades too early.

This letter of requesting re-admission to The Tribe is forcing me to ask What is really going on? Am I lazy for not just doing the research, finding an exit strategy that I like, and testing it out? Maybe. “It never was my thinking that made the big money for me. It was always my sitting.” (Reminiscences Of A Stock Operator p. 68). This quote resonates deeply with me because I have never, ever ridden a trend. I’ve never held onto a winner for more than a month. I don’t know what it even feels like. Even the thought holding onto a trade for months on end makes my stomach constrict. It requires patience. It’s a black hole of confusion; it’s undefined, and I’m not comfortable with uncertainty. Entering a trade, making some money, adding to the position, making some more money, ending the trade, that is my modus operandi. Then, for the next week, month, year, I watch the trade that I prematurely ended, get the calculator out, figure out how much I would have made on that trade. The cycle repeats itself.

Perfection. I want perfection. I want definition. I don’t have it now, the way I currently trade is not bringing me closer to perfection. When I was a child I colored in coloring books. I loved it; it was my passion. Yet, when I drew outside the lines, I immediately ripped that page out of the book and threw it in the trash. It was immediately imperfect. No discussion. When I end a winning trade I feel perfect at that second. It’s a feeling of purity, a feeling of bringing me closer to my dreams. Then, for the next week, month, year every time I pull up a chart of that trade I feel imperfect because, once again, I was powerless over my emotions. I now know that discipline in trading is a lot more than cutting losers. It is letting winners run. “Men who can both be right and sit tight are uncommon.” (Reminiscences Of A Stock Operator p. 69).

I feel embarrassed to ask other traders about exit strategies because it highlights my incompleteness. I feel others have power over their weaknesses, and I do not. The fear of facing these questions (even just thinking about confronting myself with these questions) makes my stomach constrict. Is this Fred in my trading? Overcoming this weakness will transform my trading. After writing this, and re-reading it, it is painfully obvious that the fear of holding onto winners is preventing me from becoming a more profitable trader, and I am afraid to become that person. It makes my heart quiver. It makes me feel like I will become someone else. I will have to give up being me, and become a new person; I don’t know if I am ready to give up being me, it makes me sad. Perhaps I secretly entertain this drama? Perhaps I secretly love to entertain this drama! Aha.

I have two choices: 1) embrace my dramas through the help of The Tribe and face my discipline issues head on. This requires learning and implementing a system that will prevent me from ending trades prematurely, or 2) remain an incomplete trader by inviting the same dramas to manifest themselves - thus not becoming the trader I want to become, not attend Tribe meetings, and continue to permit these dramas to wreak havoc on my life in general.

You might have some ripe entry points.  (Re-) Admission requirements include consistent attendance and full participation. 

In Coloring Outside the Lines, author Roger Schank asserts that raising smarter kids isn't about forcing information on them when they aren't ready or interested.

Maintaining that school is generally not the best place for active learning, Schank says parents can counteract any potential harm by emphasizing positive experiences.

Clip: www.amazon.com

Sun, 23 May 2004

You might have some feelings about wanting to know who people really are - perhaps even yourself.

Yesterday, upon the stair.

I saw a man who wasn't there.

He wasn't there again today.

Gee, I wish he'd go away.

Clip: http://kreative1.homestead.com/

Sat, 22 May 2004

The Hard Ball Process and Shyness #2

See below


Pollinator comment: Oh, in the hardball process, when one couldn’t verbalize it, they were encouraged to get into the physical feeling as their answer.


I hadn't read that when I sent you the message below. It's interesting how question and answer seem to happen at the same time of now.

See Below.

Fri, 21 May 2004

Primate Poker

Chief, you'll like this web site:

I see your coconut and raise you five bananas.

Only the Most Intelligent Species

(lower right)

have the desire and ability

to jump their systems

http://www.caterina.net/

Fri, 21 May 2004

OK.

Fri, 21 May 2004

The Hard Ball Process and Shyness

Hi Ed!

I have a question about the Hardball Process. I have opposite feelings about it. On the one hand, I witness that some of the proclamations I made in my family tribe meeting on December 31st have come true. Nevertheless, on the other hand, I am the kind of person who likes to keep one's objectives and goals hidden or secret, and I fear that they are threatened if and when I make them public, such as proclaiming them aloud.

You can conduct the hardball process with a proxy name for your goal, like "The Goal."  Then your receiver can prompt, "What's standing between you and The Goal."

You can also eliminate story from your responses, and express mostly somatically. This tends to accelerate the process and also preserve your confidentiality.

You can maintain your confidentiality

by expressing somatically

Clip: http://journalscape.com/