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July 11 - 20, 2006


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(Quotes from Ed in Red)


Thu, 20 Jul 2006


One Day Off


Metrics_Log_0-0.txt appears to be off by one day in equity.

Date:  21:06:27 -0400

The Metrics_Log_0-0.txt for the simple exponential average system appears to be off by one day in the calculation of Equity.

Metrics_Log_0-0.txt shows end of day prices for 82-09-01-W:

82-09-01-W Eq=1000000.00 OHLC:[ 119.30 119.75 116.90 117.15 ] slow=113.306 fast=114.035 Atr=3.089 +

Trade_Log_0-0.txt shows a trade was made during the day of 82-09-01:

SP----C 6500 82-09-01 119.525 83-12-20 159.600 260487.50

The trade for 6500 82-09-01 shows up the next day in the metrics file.

82-09-02-H Eq=984562.50 OHLC:[ 117.65 121.65 116.75 121.05 ] slow=113.408 fast=114.912 Atr=3.262 +

You might check if you are reading opening or closing equity for the day.

Thu, 20 Jul 2006



I'm wondering how Wikipedia can update in real time based on the content at http://www.seykota.com/rm/.


For example on 07/17/2006 Wiki updates referencing this page is nearly instantaneously.

I suspect the Bernoulli Effect is at play here. It seems a likely cause of the dramatic "lift" in Wiki response time.

I think Wiki responds to entries from contributors - so they may change at any time.


I use Wiki's entries on Radial Momentum as an indication about how clearly I am presenting the concepts.

Thu, 20 Jul 2006


Atr Multiplier

Hi Ed,

I'm used to looking at units, so I'm probably missing the inference in your Entry Risk eqn. My inference: ndAtrMultiplier is contract specfic and the "5" we use in the model incorporates the $2.50 / pt for an S&P contract. My intention is not to question the obvious, but just to clear up some of my "fog". I'm used to seeing ...

(ATR)>>(Dollar Volatility)>>(Unit Size)>> (Position)
where the units are (CT points) ($/CT) (CTS) (CTS)

As long as we are here, I wonder where the 5 factor comes from.

If you have a question about TSP, please cite the URL to the page and some indication of where to look on the page.

Thu, 20 Jul 2006


Which Comes First


Technical follow Fundamentals - is it so ?

You can see it either way and also in other ways.




Dog Chasing its own Tail


You might wonder

if the dog or the tail comes first.


In the Causal Model,

we look for causes and effects.


In the System Model

we view the simultaneous interactions

of all the elements.


Clip: http://www.softwaremag.com/


Wed, 19 Jul 2006


Commitment and Fidelity - 2

see: Commitment and Fidelity


I just have a meeting with my girlfriend, we are expressing our feelings honestly but don't experience them. Basically we give each other entry points and commit to work with those issue apart from each other.

I find this very powerful as we are improving our relationship by helping each other to grow individually. I feel very free at this moment.

My girlfriend points something very interesting out to me: She currently experiences a lot of depression.


Every time she gets in that mood, I try to cheer her up. I can't stand it when she's down like that.


Tonight she tells me that she wants me to just be there with her and listen to her and show her that I care ... sounds familiar. Even though I practice this in our tribe I realize that I don't transfer this behavior to certain aspects of my life.


Then I get my next entry point: my mom is also going through a lot of depression lately, seems like I have an issue with important females in my life being depressed.

A week ago I am frustrated that I don't make much progress in the tribe lately and I am questioning my willingness to push through some major issues. I visit the [another] tribe on Friday night.


The chief uses flashcards to promote feelings. I don't support that process since I believe he acts out one his dramas in that process. I tell him I am unwilling to pick up a card and go with that feeling. Since then I have major AHAs and do great work in our tribe meeting. Seems like the flash card process does work, since it helps me to experience unwillingness.

Thank you for sharing your process - and your insight about supporting people while they grieve.






In TTP, we commit to sticking around

and to being there for each other

and to supporting each other

in experiencing our feelings


especially when we don't feel like it.



Clip: http://www.twilightsite.com/


Wed, 19 Jul 2006


Trading Tribe

Hello Ed,

I am very interested in joining The Trading Tribe. [I hear many people] speak so highly of the whole experience, that I feel I should do this for myself and my family.


I just moved to Incline in May and am experiencing things in my personal and trading life that I am sure can benefit from the Tribe. I also feel I have a lot to offer others.


I have read through your web site and am anxiously awaiting the book I ordered from you. I see you are in England through the weekend and that there is a TT meeting in Incline Village on August 3.


Would be possible to attend that meeting? I really look forward to meeting you.


See the Directory page for information about how to join a Tribe.

Wed, 19 Jul 2006


Commitment and Fidelity

Hi Ed,

I am reporting my latest hot seat experience which I find exceptionally insightful for me.

I am dating my girlfriend for over a year and I care about her very much, she is one of the most wonderful people I ever meet.


However I am not committing 100% to the relationship. She confronts me and some powerful feelings come up.

I take these feelings to the tribe. The PM acts like he is my girlfriend: "you need to set your priorities straight. you need to show more commitment to this relationship."


I start humming and shaking my head like I don't want to hear it. Then it all starts, I get into the feeling quickly. Several issues come up: my ex-girlfriend who cheats on me and never commits to me.


A lot of pain comes up. I fully experience it. Hot girls I see walking on the street come up. I feel like I am missing out, there is so much opportunity and I am not grabbing it. I experience this feeling and start to get closer to these hot girls until I touch them and I burn my hands, more pain from my ex-girlfriend.


Somehow another girl comes up I really care about. We are intimate for a while, but she is in a relationship. She wants to end the other relationship and be with me but I tell her that I don't want that. I experience the feeling of missing out on a good opportunity.


I tell the PM that these three are my major relationships in my life so far. I start to experience all relationships at the same time. My arms are flying all over the place until I start to calm down. I feel peaceful. The PM acts like my girlfriend again: I answer that I am not sure and that I need time to think about if I want to commit to this relationship.


During the check-out he points out that throughout the years I play all three roles in the drama:
1. I am madly in love with girl #1, she doesn't commit to the relationship and cheats on me.
2. This guy is madly in love with his girlfriend and she cheats on him with me.
3. My current girlfriend is madly in love with me and I am not committing to her, but rather have an urge to pursue other women.

I am shocked when he points this out, and I am starting to feel free. After the meeting on my way home I begin to doubt that I want to be with any of these three girls. The next day I share my feelings with my girlfriend. We are still working on the issue. I also have more feelings coming up relating to this issue. I feel good being able to share my feelings with my girlfriend.

Side note: One member forgets his snapshot. We challenge him to describe his snapshot to us with words. Major issues are clearly visible. We find it is beneficial to the snapshot process to:
1. Prepare a snapshot before the meeting.
2. Describe the snapshot to the tribe without showing it to the tribe.
3. Then after that presenting the picture. (this might help to spot variances between what the presenter tells us he wants and then what he actually draws as his snapshot).

Thank you for sharing your process.


In the Incline Tribe, the Process Manger may ask for one or another of the receivers to volunteer as a surrogates to help engage the sender's drama.  The PM does not usually take that role himself.


The role of the PM is to hold the space in which the Receivers can validate the Sender and to assist him in experiencing his feelings.


During check-out, the Sender generally reports waves of insights arising from within.


The receivers and PM generally tell their own experiences, rather than providing shocking analysis about each other.


Your might consider taking your feelings about  <wanting to fix others> to the hot seat.




Shocking Insights


In traditional therapy

shocking insights

may come from the therapist



they arise from within.



Clip: http://random.average-bear.com/



Wed, 19 Jul 2006


Clarifying my post "back adjusting"

I am clarifying my question from my post on Jul 13th "back adjusting"

According to TSP

tribe/TSP/Trends/index.htm, what is the percent ROC for following data:

Current Price: 5
Historical Price: -5 (5 day exponential lag)

I am wondering if it makes sense to calculate a percent ROC for this situation. I am also wondering how I can compare the ROC of different futures contracts , for example two-year futures and gold futures. Maybe normalizing for volatility might be a good idea as in (current price - historical price) / volatility.

Rate of Change (ROC) depends on the differences between prices, regardless if those prices are positive or negative.

Wed, 19 Jul 2006


Question about the Role of Drama

I sent this email to my tribe for their response. I'd like your response as well:

My original question was:"If you find yourself in a drama, is it your drama, and can you enjoy the drama?"

My follow-up email was:

I pose this as a question. I have always thought that the reason that TTP has us experience feelings is so that Fred does not create dramas for us to experience those feelings.

Am I on the right track so far?

So if I take my feelings to the hotseat I can reach the joy point, file the feeling away, and possibly work towards reducing the dramas in my life, maybe even reducing them to zero? (I have experienced some reduction of drama in my life regarding issues that I brought to the hotseat.)

Okay so far?

Now what I read this morning (nothing to do with TTP though I'm using TTP terms), Fred / Under Fred / Over Fred creates these dramas for us so that we'll learn something. These dramas will repeat until we learn the lesson, at which point we'll probably move on to our next drama. The goal is not to avoid the drama, not to play the role of victim to the drama, but to accept the drama, embrace it as a learning / growing experience.

So the answer to my question: "if you find yourself in a drama. Is it your drama, and can you enjoy the drama?" is yes.


Here's something else interesting I read by Carl Jung a few days ago that I feel really supports TTP: "The psychological rule says that when an inner situation is not made conscious, it happens outside, as fate. That is to say, when the individual remains undivided and does not become conscious of his inner contradictions, the world must perforce act out the conflict and be torn into opposite halves." (Carl G Jung "_Collected Works_", vol. 9 Bollingen Series XX)

PS I admire your tenacity with your radial momentum project. The Establishment du jour always has problems with people like you who think out of the box. As history shows again and again, eventually, they'll be the ones knocked out of the box.

Yes, TTP is a way to implement the insights of Carl Jung by helping to make the "inner situation" more conscious.




Carl Gustav Jung

(July 26, 1875 – June 6, 1961)


Everyone carries a shadow, and the less it is embodied in the individual’s conscious life, the blacker and denser it is. If an inferiority is conscious, one always has a chance to correct it. It is constantly in contact with other interests, so that it is steadily subjected to modifications. But if it is repressed and isolated from consciousness, it never gets corrected.

— from Psychology and Religion, 1940.


Clip: www.jashford.com/Pages/


Tue, 18 Jul 2006


The Plane Truth

Howdy Ed,


I've been reading your web site and wanted to thank you for all of the hard work that you have done.


I often wonder why a flat wing plane would fly and your explanation makes more sense than all of the other stuff I've read.


I made some modifications to a balsa wood rubber band powered flat wing plane, I got the idea from the web its not exactly like the original but it’s very close.


Well when I fly the plane it climbs at about a 75 degree angle then stalls out and noses dives down and levels off and comes in for a prefect landing every time. The whole time it’s in the air the plane is very stable.


I was wondering what you thought of the modification. I have several more modifications planed for this plane if you are interested, please contact me.



Thank you for sharing your designs. 

Technology seems to evolve as a series of insights by individual people who tinker around in their garages. 

Yes, I'd like to see your designs, how they differ from other designs and how these design changes translate into different flight performance. 

Also, I'd like to know how you explain the differences in performance.

Sun, 16 Jul 2006


Associate On the Road

Hi Ed!

The Associates group intention and my snapshot to increase money under management are both taking shape.


Next week in New York I plan to meet with people looking for managers.

I wonder if you might have a test and an optimization of my rules, similar to the Donchian page, completed and delivered to me by next weekend which I could show to those people.





Trading Tribe Associates

is a support team


that insists on your success.



Clip: http://www.galilmc.com/images/


Sun, 16 Jul 2006




I notice a different tone to your Radial Momentum website.

Yes, no more Mr. Nice Guy.


See www.radialmomentum.com and branch to Overview.

Sun, 16 Jul 2006


Breathwork Weekend


Hi Ed,

I am excited to hear the updates on the Breathwork Weekend in August. I am writing the essay and preparing for a snapshot.

Meanwhile, I also need to make travel arrangements ASAP. May I also attend the Tribe Meeting on Thursday as a guest, to see first hand how you run the IV Tribe? If so, when does the meeting start so that I know which flight I need to catch? (I read in the FAQ that it starts some time in the afternoon, correct?) Also, as I recall from the last Breathwork in Dec '04, the Breathwork weekend ended early Sunday morning after a checkout, so I was able to make my flight at noon. Is it going to be similar this time?

Thank you Ed.

Yes, breathers are welcome to attend the pre-Breathwork Tribe Meeting and the post Breathwork Party. 


I plan to begin accepting applications on July 19, two weeks + 1 day prior to the Tribe Meeting.




Some Fancy Birthday Breathwork



Clip: http://homeclubs.scholastic.com/


Sun, 16 Jul 2006


Trading Tribe Associates

see The Knot, below

Ed Says:


When you identify and experience your k-nots, your knotty Catch-22 situations seem to melt away, leaving you at the Joy Point.

If you wish to apply to the TT Associates Program, follow the instructions at the link, above.

All right, Ed, I thought I'd catch you. I am eager for the challenge. Incidentally, just a few minutes ago I made some additional simulations with two trends and I have just discovered that my system can be improved. Interesting. I shall prepare the papers within a week to apply for the TT Associates Program.

By the way, I have already asked out the girl on a date.

Commitment empowers intention.

Sat, 15 Jul 2006


Four Part Synergy

Dear Ed,

I read the FAQ for a year.


I see the emphasis on body health along with the mind. I am in synergy with the pie chart of right livelihood, body, relationships and fun.


I am running a preschool and am a futures trader. Both are an integral part of what I am.


I run the school better than I trade. Thank you for being there.


Sat, 15 Jul 2006


The K-not

Ed Says:


For example, we would likely challenge your assumption that there is nothing to improve about your system.

We might also proceed by identifying the feelings and forms that are standing between you and assembling a track record, raising money and obtaining excellent programming services.

We might also support you in creating, clarifying, supporting and realizing Snapshots of your trading business, personal life, key relationships, and health.

It looks like a good idea. I think that a necessary introductory step into the business of managing other peoples' money is to manage our own and have a positive track record, not just theoretical.


My first contact with trading was through some commodity futures and, later, options contracts around six years ago. Just like most naive beginning speculators I was thinking about making the big money, while I myself had almost none to stake and lose for that matter. Once I even borrowed some from a relative. The rest of the story I guess you know.

Over the past two years I have put together the pieces of a trend following system which I deem to be robust and "reliable", provided the assumption that markets will continue to trend. Of course there are some aspects that could be improved, particularly with regard to improving the frequency and reducing the volatility of equity curve through proper and higher diversification.

Yet I think that's beyond my means right now. I am a low net worth individual, esp. to American standards and to a lot of standard contract sizes, and I have vowed to invest only my savings that I can afford to allocate for a long term investment, for such is the nature of my trend following system.


My theoretical track record since 1980, is of around 32% compound return per year, for a maximum drawdown of 42% on august 2003. The theoretical frequency is 0.6628. I designed the system for a maximum probable drawdown around 30%. Given the low diversification and relatively high leverage I consider the theoretical drawdown to be OK.

When I heard about the Associates Program I felt enthusiastic. I have already studied the basics of compliance rules applicable to the American markets and I feel that there are a lot opportunities in your market provided that I could assemble or join a team of high integrity individuals and bring the pieces (of trading, programming, compliance and marketing) together. I think that the Associates Program is a good setup in which to bring in investors/clients and associates for a long term commitment that such an enterprise requires.

I think I have a lot of ideas and little money and so I am afraid that your 5% fee won't pay your lunch, except if we "assemble a track record" and "raise money". That's the knot.

A K-not, in the TTP sense, does not refer to a knotty situation or Catch-22 arrangement.


It refers to a feeling intertwining with a judgment about the system.


When you identify and experience your k-nots, your knotty Catch-22 situations seem to melt away, leaving you at the Joy Point.


If you wish to apply to the TT Associates Program, follow the instructions at the link, above.



He would be crazy to fly more missions and sane if he didn't.  But if he was sane, he had to fly them.  If he flew them he was crazy and didn't have to; but if didn't want to, he was sane and had to. - Joseph Heller in Catch-22



Catch-22 refers to

circularly contradictory,



Sat, 15 Jul 2006


Associate Gets out of the Box

Hi Ed !

Originally, when thinking about the Associates program, I recall feeling fear of "locking myself in a box".


After accepting that feeling as ok, I go ahead.


Later I discover the program actually gets me out of my self-created "box". Amazing. Perhaps anticipation of this discovery was my real fear.

The Associates test verification methodology reveals several flaws, biases and incorrect assumptions in my trading system, which nether my software nor I detect.

The daily variation reports uncover other rules which I trade with but had not coded. It feels good to incorporate these previously unofficial rules into my system. I also like that the report can accommodate intuitive, or discretionary methods as well as strict mechanical rules.

The best part is your intelligence and experience behind the process. You don't impose your system, but through a Socratic process, help a trader develop and improve his own system.

I see the hotseat process as an integral part, as feelings do arise when, for example, testing reveals that an assumption one had relied on for years has some problems.

It appears the program will help me grow as a trader for years to come, and has the flexibility to accommodate the changes in markets and changes in me.

Thank you for sharing your process.


Sometimes, what you find in a box is another box.




Box in a Box


The smallest box in a box

that touches all six faces

of the larger box

has sides 3/5 the length

of the sides of the larger box.



Clip: http://www.ics.uci.edu/~eppstein/


Fri, 15 Jul 2006


Associate Program

Hello Ed and all,

I convinced my bosses about the associate program. I work in a brokerage house and we have a regulated investment advisor license in [Country].

I have a few questions:

Assuming that I meet the rest of your conditions for the program:

1) Can I visit the Incline Tribe and stay for a few months (4-5 months, starting from November)?

2) As an associate, do I need a workshop in order to participate?

1. Yes, we construct the program around your particular situation and preferences.


2. Many of the processes that help you develop a Snapshot and then to bring you in line with your snapshot follow the Tribe model. The Workshop provides a good introduction to Tribe work.

Sat, 15 Jul 2006


Trading Tribe Associates Program


I have some questions about the Associates Program.


Say, I don't think there is anything I want to improve about my system. I designed the system on the premise or intention of having a robust, reliable system and I have only one assumption: that markets will continue to trend, i.e., move up, down and sideways as they always did.

I see that "sticking to it" is an on-going process shared by the trader and his relationships if any (such as clients), and I think that TTP suits best this purpose.


I myself would like to manage clients' money but I don't have any track record, clients' "money" for that matter, any support personnel for programming, compliance and marketing.

I am not clear about the "mission" or intention of the Associate Program.


Does it target traders who already have a business? Does it serve the sole purpose of "supervising" trading execution and system design? Thanks.

The Associates Program is an extension of FAQ and TSP for traders who want direct, personal and ongoing support.


For example, we would likely challenge your assumption that there is nothing to improve about your system.


We might also proceed by identifying the feelings and forms that are standing between you and assembling a track record, raising money and obtaining excellent programming services.


We might also support you in creating, clarifying, supporting and realizing Snapshots of your trading business, personal life, key relationships, and health.


Yes, part of the program monitors your trading and other commitments to detect variations. We then use these variations as entry points to identify k-nots, untie them and set you free to realize your right livelihood.

Fri, 14 Jul 2006


Breathwork Weekend August 4-6, 2006


I am wondering if I can apply for the Breathwork weekend or if I need to attend a workshop first?

Yes,  You may apply.


See the link, above, for instructions.

Fri, 14 Jul 2006


TSP Math Error #2

see previous



1) Simple Exponential Average Crossover
a) How the system works

@ The Position_Size, then, is 100,000 / 15.575 = 6430.5+ and rounding to the nearest 250, we get 6500 units.

actually 6420.5+

Thank you for the catch and for the follow-up.

Sat, 15 Jul 2006


TTP Relationship to Hypnosis

Hi Ed,

Is there any relationship between hypnosis and TTP?  How about past life regression?


A relationship between two methods does not exist in the methods; it is something you (or I) bring to them as a relationship perception.


My perception is that everyone is always in some sort of trance and that people shift from one trance to another much as they shift from one program to another on a computer.


In TTP we encourage the sender to go deeply into his form; in hypnosis, the hypnotist encourages the subject to go deeply into a trance.


TTP forms tend to be physically active and to engage the entire body; trances tend to quiet the mind and the body. 


A Past Life Regression seem to be a metaphor that exists in the now, that some people like to use to support their personal growth.  When people get around to changing and growing, they always do so in the now.



Bunny In a Trance


Putting bunnies in a trance can help when you need to trim toenails, give medicines or amaze your friends.


To trance a bunny, flip him over on his back and pet his cheeks and nose area at the same time.

To get him on his back, pick him up with your right hand under the front legs and your left hand on the butt and then flip the bunny into the crook of your left elbow as if you are cradling a baby.


Once there, pet his face with your right hand. As he goes in, you can see his head start to fall backwards.


To wake him up, simply move him or flip him back to the feet-down position.


With experience, you can trance him with your intention and without all these maneuvers.


Putting humans into trance is similar.

Clip: http://www.mybunnies.com/trance.htm

Sat, 15 Jul 2006


Cambridge Photos

Dear Ed,

I love the pictures of Cambridge on the Web site.

Please note some minor inaccuracies.

The photo which says Trinity College is NOT Trinity
College it is Kings College. The river is referred to as Thames River this is not Thames it is the River Cam. The river Cam was named before naming the town of Cambridge. House on Canal picture is that of Darwin College. The picture titled Cambridge University is that of Trinity College.

I hope you do not mind me point this out.

Thank you for the multiple catches.

I think the page now stands correctly,  per your corrections.  Be sure to click [refresh] or press [F5] to make sure your browser is showing you the latest version.


Please let me know if you see any other problems.

Fri, 14 Jul 2006





Saw this on Yahoo home page and thought of you so I send links:



Thank you for the mind candy.

Fri, 14 Jul 2006


High Returns

What do you think of these returns?

Funny how (this advisor's service) service doesn't get actual returns like this?

For one year the record is 29,233% using margin on high flying Internet stocks.

You can get just about any returns you want by carefully selecting events from the non-existing past.


With this guy,

you might do well to consider

the return of your money

as well as

the return on your money.


Thu, 13 Jul 2006


Back Adjusting

I am wondering how to apply the trend study in TSP to back-adjusted futures data. Trend as it is calculated in TSP can change simply by back-adjusting data. I am also wondering how do deal with negative prices when measuring trend.

Unless you want to cope with the mechanics of rolling positions from one contract to another as they mature, you might consider running your back-testing over a continuous series.  In order to eliminate the inter-delivery price steps you get by simply splicing deliveries, we have various ways to smooth (back-adjust) the series.  See TSP for more information.


Trends, both up and down may appear in both negative and positive series.




The Fish to the Right


is under water and trending higher



Clip: http://www.rescuediver.org/gallery1/


Thu, 13 Jul 2006 21:44:09 -0500

Following My System # 2

See previous

One day later I do receive a sell signal in the NASDAQ. I could have sold a day earlier at a better price by anticipating my signal, I actually end up missing out.


The good news is that that is fine with me, after taking the feeling to the tribe I am able to stick to my system 100%.

I do feel some frustration in my stomach and my face from wanting to improve my system but not having any success for the last 3 months.

Thank you for sharing your process.


By following your system, you wind up with no profit or loss the first day and an increasingly  profitable position on the second day.


An alternative drama might include: jump your system on the first day and enter the position, see it go against you the next day and get out at a loss - and then decide not to take the eventual winning signal.


You are winding up with less drama and more profit.


To continue on this path, you might consider taking your feelings of frustration in your stomach and face to the hot seat.  The more you untie k-nots in a Tribe Meeting, the less you have to dramatize them in the markets.

Date: 13 Jul 2006


What Babies Know


HI Ed !


Why Love Matters; How Affection Shapes a Baby's Brain - by Sue Gephardt


From the book:


"Ironically, what has now been discovered by these scientific processes is that "feelings come first" as the poet e.e. cummings put it, and that our rationality, which science from its inception prized so highly, is built on emotion and cannot exist without it ... the rational part of the brain does not work on its own, but only at the same time as the basic regulatory and emotional parts of the brain:  Nature appears to have built the apparatus of rationality not just on top of the apparatus of biological regulation , but also from it and with it (Damasio 1994: 128)


The brain constructs representations of internal bodily states, links them to other stored representations, and then signals back to the body in a process of internal feedback, which may then trigger off further bodily feelings in a cyclical process.

Hmmm ... Sounds like Fredian Psychology for Parents.


Thu, 13 Jul 2006


Drama, Drama Everywhere

Dear Chief,

I think calculation to find highest bliss function is drama.

Also, I think personification of "Fred" is drama.

Thirdly, I think the subconscious using drama to get the conscious to experience feelings not only doesn't work well but makes it much harder to experience the feeling fully.


I wonder what the intention of the subconscious is when it produces drama.

I feel happy to share my thoughts. I feel selfish and do not want to share my thoughts.

Perhaps, with your keen ability to perceive drama in so many areas, you might consider a career in Theatre.



To Someone Who Sees Drama in Everything


this perfectly normal

group of FX traders


may seem to be doing

the old book-head dance.



CLip: http://www.bris.ac.uk/drama/images/intro1.jpg

Thu, 13 Jul 2006


Donchian Math Problem


I was looking at the Donchian System results. It shows 1m increasing to around 16.8m from Jan 1990 to April 2006. This works out to a return of around 18.9% return rather than the 17% return shown on the webpage.


Annualized Return

= ( EndCapital / StartCapital ) ^ (1 / #years) – 1
= (16.853/1)^(1/16.3288 years) -1

= 18.88%

This would improve the “Bliss” to 0.30 rather than 0.27

You are using an annually compounding growth rate while TSP uses an instantaneously compounding growth rate (see TSP) per the formula:


= ln( final / initial ) / years

Using your figures in this formula, we have



= ln( 16.853 ) / 16.3288

= 0.173

Thu, 13 Jul 2006



Hi Ed,

I am busy working on my system. I feel ok about this as getting my system square away is my priority.

I also want to discuss the Associates program. I have had a couple weeks to let my thoughts and feelings concerning the program and my trip to IV to become clear. Here are my concerns:

1 - I am worried about the potential of the program to attract capital.

2 - I feel it is too expensive as it seems to only provide a method of enforcing adherence to a trading system.

3 - I feel the organization needs a high degree of exclusivity and professionalism to succeed. I feel the program is too casual at this point.

4 - I feel the concept either needs to be focused on research (in which case it would be free), or actually setting up an umbrella organization which shares accounting, marketing, fund raising, software, and legal resources with traders.

5 - I am disappointed that my trip to IVTT did not yield more tangible results for my system. I was expecting to enhance, fine tune, and add a few features to my system.

Ed, those are my concerns. At this point, the way the concept is laid out, I do not believe that I will participate in the Associates program. I am more than willing to offer any help or feedback that I can. My thoughts on the concept are as follows:

- get commitments from a small group of traders who have shown a strong commitment to TTP to participate

- from this group, collaborate on the concept to see how it can best meet the needs of the group

- use this group to showcase the power of the TTP as it manifests results that are easily measured and objective

Let me know if there is anything I can do to help.

All the best to you and your family,


Thank you for volunteering as a test-pilot and for sharing your comments.


1. The program does not attract capital.  A trader with a profitable system and the ability to stick to it attracts capital.


2. So far, you are enjoying the results of a day of free system analysis and testing (see #5, below). Your cumulative cost is $0.00 and you owe nothing.  I do not know how to reduce it further. 


In your case, you might have issues about spending and / or losing money - and also about setting up for disappointment. These issues are likely to haunt your trading unless you can find a method to "only" enforce adherence to your trading system.


3. As the organization continues to evolve, I continue to clarify my vision of the program and to find ways to increase the qualifications to participate.


4. I do not know how to provide on-going free research to you and pay my staff and still show a profit. 


If we also handle your accounting, marketing, fund raising, software and legal resources, for free then I wonder what role you expect to play.


5. The test results on your system are tangible and rigorous. The optimizing study reveals something your own software does not show in all your months of testing, namely: about two thirds of your rules are non-essential and or counter-productive.


Sometimes you have to tear  one structure down to the foundation before you can begin re-building.


6. I notice you do not mention your commitment to create a large and profitable trading company or to abandon your earlier idea of holding total equity under management to under $400,000 in order to save money on filing fees.


The Associates program relies on the willingness of the Associate to press through his issues. 


Absent your willingness to continue, I agree with you that the Associate Program is no longer essential to your process.






One Way to Set Up for Disappointment


is to ignore the call

of a dragonfly, a lady frog


or a trading opportunity.



Clip: http://www.elm.esu3.k12.ne.us/


Thu, 13 Jul 2006


Going to Cambridge

Hi Ed,

I trust you are well.

I attach with this mail the Trading Tribe Information Document for our Tribe.

We have been meeting regularly, ever since inception, and all members report progress in their lives. The Tribe has become a valuable forum for all of us to articulate our respective visions for ourselves (through the Snapshot Process), and to help us resolve issues that stand between us and our Snapshots.

All 4 members of our Tribe Tribe will be traveling to Cambridge later this month to attend the TTP Workshop, and we're all excitedly looking forward to the event.

Thanks for playing the part you do in enriching all our lives so much.

Thank you for sharing your process.

Thu, 13 Jul 2006



Dear Mr. Seykota,

First, I would like to make a proposal for the graphic of the equity curve of your Donchian system on the chart page:

Would it be possible to add a logarithmic scale to the equity curve, so it is possible to see the percentage gains and drawdowns of the system and the current value of the portfolio in numbers?

Second, I would like to ask you a question regarding your concept of portfolio-"heat":

"Heat", as I understand it, is the distributed betsize of the instruments, that are traded.

For example: When I trade 20 markets with 100% heat, I use 5% risk of running equity per position.
Now, when I have a dynamic portfolio selection and from my 20 markets I watch, sometimes I select 3 or 5 etc. , because of special criterions, and I want to have the heat-level ( 100% ) constant, how would you recommend to set the %risk per position?
Is it better to vary the bet-size ( for example: When I select 5 markets, 20% for each market to achieve my 100% heat ) or because of operating in 20 markets I let the bet-size at 5% risk per position?

Many thanks in advance for your answer and I appreciate it to be a part of this great community!

The study shows monthly percentage gains and losses.  You can run the tests yourself, as an exercise, to determine numerical values and show them on a log scale.


Heat, as I use it, is the measure of equity-normal trade risk.


For example, if you trade a $1,000,000 account with 1% heat, your risk budget for your next trade is $10,000.


If each contract has a risk-to-stop of $2000, you enter five contracts.




If You Can't Take the Heat


reduce your exposure



Clip: firstIMPRESSIONS@wfa.org

Thu, 13 Jul 2006


First TT Meeting

Good morning, Ed.

I am very happy to report the first meeting of our new tribe taking place yesterday evening, both members in attendance.

We follow the instructions in the The Trading Tribe Workbook up to and including Step 7 : "Developing Forms in a Small Tribe". In our check-out, we both express great satisfaction with this start and commitment to our small tribe.

I am looking forward to meeting you at the UK Workshop !

Thank you for sharing your process.

Thu, 13 Jul 2006



I was on Maui today at a restaurant that our company just finished. I was meeting with our engineer on the project. I was told he had a summer intern inside the restaurant doing the layout. When the young man came out I knew I had met him before, but I did not remember where.


As he introduced him as Ed, I knew I knew him as someone’s kid but I couldn’t figure it out. I asked him his last name, since he looked familiar and he proudly said “Seykota” I told him I knew his father and that I had been at their home last July for the Breathwork and earlier in the year to Reno for a workshop.


He informed me he was working the summer in Maui and off to school next fall.

Small world.

He can run - he just can't hide.

Tue, 11 Jul 2006


Disagreeing and Supporting

Hi Ed,

Hope you are well. My hotseat follows:

At the snapshot process, I begin to feel embarrassed as it is my turn to present to the group. I have been absent for a couple of meetings and suggest I have no commitments from the last meeting to present.


I am then asked about the commitments I made at the last meeting I attended. I have no evidence to present and am 0 for 4 in the process. I feel frustrated, embarrassed, and angry that I let these commitments slip so easily. I think of excuses to justify not completing my commitments.

That evening at the tribe meeting, I experience similar feelings in forms. I have awareness of often not wanting to accept others completely. The process manager sets up a situation to further tease the feelings out of me. I realize how silly the situation is and feel a smile overwhelm my face. I understand I can accept others completely even when I disagree with their beliefs and the way they handle certain situations. I can support and accept others best by letting them be themselves.

Thank you for sharing your process.




Strive Mightily as Adversaries

over the chessboard of life


and then eat and drink as friends.



Clip: http://library.shu.edu/gallery/


Tue, 11 Jul 2006


Following my System

This morning I am anticipating to receive a sell signal in the NASDAQ from my system at the end of the business day. I am tempted to sell before I receive the order, to get a better fill so I don't have to chase the market.


I know this feeling from the hot seat, I don't make the trade, instead I am confident in my test results and know that everything takes care of itself if I follow my system.


The feeling keeps coming back during the day as the market sells of. At the end of the day NASDAQ futures close in positive territory. I never receive a sell signal and I am following my system. I don't know what might happen tomorrow and that is ok. It is a great feeling to follow my system.

Yes. Successful traders have a profitable system and they stick to it. See the Associates Progeam, above for more information.

Tue, 11 Jul 2006


Intention = Result

Hi Ed,

This guy starts out on 7/12/05 with one red paper clip with the goal to trade up to a house


and a year later, 7/12/06, he gets the house






Reminds me how intention manifests as results :-)

I wonder if you'd like to venture a guess as to the compounding percent gain on this series of trades.

Tue, 11 Jul 2006




(From the Wall Street Journal)

Go Ask Alice: Mushroom Drug Is Studied Anew

July 11, 2006; Page B1

In a study that could revive interest in researching the effects of psychedelic drugs, scientists said a substance in certain mushrooms induced powerful, mind-altering experiences among a group of well-educated, middle-age men and women.

Johns Hopkins Medical Institutions researchers conducted the study following carefully controlled, scientifically rigorous procedures. They said that the episodes generally led to positive changes in attitude and behavior among the 36 volunteer participants and that the changes appeared to last at least two months. Participants cited feelings of intense joy, "distance from ordinary reality," and feelings of peace and harmony after taking the drug. Two-thirds described the effects of the drug, called psilocybin, as among the five most meaningful experiences of their lives.

But in 30% of the cases, the drug provoked harrowing experiences dominated by fear and paranoia. Two participants likened the episodes to being in a war. While these episodes were managed by trained monitors at the sessions where the drugs were taken, researchers cautioned that in less-controlled settings, such responses could trigger panic or other reactions that might put people in danger.

A report on the study, among the first to systematically assess the effects of hallucinogenic substances in 40 years, is being published online today by the journal Psychopharmacology. An accompanying editorial and commentaries from three prominent neuroscientists and a psychiatrist praise the study and argue that further research into such agents has the potential to unlock secrets of consciousness and lead to new therapeutic strategies for depression, addiction and other ailments.

In one of the commentaries, Charles R. Schuster, a neuroscientist and former head of the National Institute for Drug Abuse, called the report a "landmark paper." He also expressed hope that it "renews interest in a fascinating and potentially useful class of psychotropic agents."

Still, the research is likely to stir controversy. Though psilocybin mushrooms, which can be found growing wild throughout the world, have been used for centuries in some societies during spiritual rituals, they also were agents, along with such hallucinogens as LSD and mescaline, that fueled the "Turn On, Tune In, Drop Out" counterculture of the 1960s personified by Timothy Leary.

Researchers acknowledge that the study's positive findings may encourage inappropriate use of the agents. Roland Griffiths, the Hopkins neuroscientist who headed the research, warned against viewing the results as a green light for consuming the mushrooms. "We don't know all their dark sides," he said. "I wouldn't in any way want to underestimate the potential risks" of indiscriminate use of the drugs.

The National Institute for Drug Abuse, which co-sponsored the study as part of its support for research into drugs of abuse, also warned against eating psilocybin mushrooms. They "act on serotonin receptors in the brain to profoundly distort a person's perception of reality," the institute said, possibly triggering psychosis, paranoia and anxiety.

Psycho-active substances such as psilocybin, LSD-25, and MDMA (Ecstasy) may have an inhibiting effect on the cerebral cortex so that the subject can gather a direct and intense connection with his own feelings.


We achieve a similar and milder effect in Tribe Meetings using drumming and relentless validation.


In Breathwork sessions, we aim to extend this effect by using hyperventilation to reduce specific CO2 and induce mild alkalosis which also inhibits the cerebral cortex.


Psycho-actives, however, may also inhibit the subject's ability to consciously integrate his experience and convert it into useful wisdom.  In case of over-dose, psycho-actives may also occasion a "bad trip" from which the subject cannot easily or quickly escape.


"Bad trips" seem to involve the subject resisting one or more of his feelings, entering paranoia,  resisting the paranoia, getting panicky, resisting the panic, etc. Practitioners of TTP and people who practice enjoying all their feelings do not usually have "bad trips." 




Science Miraculously Rediscovers Mushrooms


every 20 years or so


and judiciously supplies warnings

about inappropriate use.



Clip: WSJ

Tue, 11 Jul 2006


Chartbook '95

Dear Ed,

I would like to update my Technical Tools Software and database.

I do not have any information as to the status of that particular software.


This site provides charts at the Chart Server link, above.


Tue, 11 Jul 2006


Galloping Gertie




The film clips of the event suggest the wind excites the bridge to oscillate at its own resonant frequency.


To see how this works, you can raise the  height of a child in a playground swing by several feet by applying a series of small pushes at the resonant frequency of the child-swing system.



Galloping Gertie


On Nov. 7, 1940, the 5,939-foot long four-month old Tacoma Narrows Bridge breaks apart, succumbing to winds of about 40 miles per hour which induce a convulsive, twisting and waving movement.

Prior to the break-up, consulting engineer Farquharson suggests drilling spill holes in the girders to let the wind pass through. The bridge authority never tests or implements his idea.


Clip: http://www.djc.com/special/


Tue, 11 Jul 2006


TSP Math Error

The Position size is the same but in the section under "How the System Works"

Risk Budget/Entry Risk per Lot

100,000 / 15.575 = 6420.5

Thanks for the exercises they have been most helpful.


Thank you for the catch. Please include the URL to the specific page and item heading, so I can find the entry.