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January 1 - 8, 2007


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(Quotes from Ed in Red)


Sun, 7 Jan 2007


Attending Incline Village Meeting

Dear Mr. Seykota,

I found out about the Trading Tribe less than one month ago when I was reading the December Trader Monthly. I really appreciate your willingness to go all the way out to help us to improve ourselves, both in trading and in life.

I am going to attend your next workshop. I did not go to your January 5th workshop because I think I am not yet well prepared at this point. I have been reading the FAQ but still far from reaching the end of 2006 yet.

I know your Incline Village Trading Tribe is currently open to new members and I am hoping I can join. I am able to attend the meeting regularly and I am willing to meet and participate in all other requirements.


If because of that I have not yet attended your workshop I can not join, can I at least be one of your group's guest?

When I am qualified, I am going to establish a new group in [City]. I believe by helping others to improve we are helping ourselves to improve. I really don't like the "what is in it for me attitude."

Briefly about myself. I am a self-taught private trader and I have been trading NASDAQ stocks full-time for close to three years; I still work part-time as an accountant once or twice a week after the stock market closed.


I do my trading based on chart pattern with focus on volume and short interest. My trading result is still not yet consistent. Although my account is up about 150% since August last year I am not sure it is because my trading skill has improved or because it has been a bull market, which I think is turning bearish.

After reading the FAQ, I am starting to pay attention to my feelings during my trading hours. I am getting to know when I made a mistake but I still can not pinpoint why I made that mistake.


For example, I knew that the market was about to turn but I don't why I did not liquidate my positions and took out all the paper profit that I had. I am hoping by keep reading the FAQ and attending TT meeting I can improve myself further in trading and in life.

I really appreciate your effort to provide such useful medium to all of us.

You might consider taking your feelings about "preparation" and about "selfish" to a Tribe as entry points.




Lack of Preparation


can be a reason for

not taking a Workshop


and not a reason for

not attending IV Tribe meetings.


Clip: http://www.dribbleglass.com/


Sun, 7 Jan 2007


Accelerating Around Curves


I am currently testing long term trend trading systems with a basic back testing engine. I am coming up with good systems back tested over 10-15 years of data.

I have noticed that some of these systems have an accelerating equity curve while others have a decelerating one.

My question is, am I over optimizing by selecting systems based on recent strength? In order to clarify myself, let me give you an example.

System A has CAGR of 56%, MaxDD of 46%, a MAR of 1.21 and a decelerating equity curve

System B has a CAGR of 39%, MaxDD of 37%, a MAR of 1.05 and an accelerating equity curve

I would tend to select system B based on the same logic as in selecting "strong" instruments to trade.

Is this consistent with trend following?

As always, thank you for sharing your wisdom.

Acceleration is the first derivative of velocity (trend) and the second derivative of position (price).


Acceleration is the trend of a trend.


The process of measuring a trend introduces a computational lag. 


The process of measuring the trend of a trend introduces additional lag.


I do not know of a way to optimize the acceleration of a system.


You might consider taking your feelings about choosing between system A and System B (or between chocolate and vanilla) to your Tribe as entry points.




The Act of Choosing


is a way to assert and register

your own responsibility.



Clip: http://www.through-the-maze.org.uk/


Sun, 7 Jan 2007


Wants a Non-TTP Process

Hi Ed,

A quick, but big question.

I have been working for 3 years for an investment bank, although only in operations. So far it’s really boring.

My problem at the moment is that I am not sure what I really want in life – should I stay in a corporation, should I go full time trading for myself, should I pursue my big passion – music, but it’s a very uncertain career …

Do you have a method or approach (other than the TTP process) that can clear up my mind and give me some direction.


I am talking about specific questions, or things to look at when considering those options … now, I feel I am being thorn apart by too many endeavors, which results in neither of them being done properly.

Many thanks Chief

Hmmm... You might consider not taking your feelings of non-boredom to a non-Tribe and not getting on the not-Seat.




This Ice Chair


provides a cool alternative

to the hot seat.



Clip: http://arthouse.oulu.net/ots/jujar/


Thu, 4 Jan 2007


Taking Some Profits on the Way Up


After a nice run since the early October breakout (and some additional buys since ) I find myself wishing that I have my whole account in [Stock] today, so I'm taking half off the table.


I know of no way to back-test this sell-half when giddy rule, so I wonder how to determine if this rule is a prudent equity smoother or a self-limiting "profit protector".


I also wonder how profit taking rules fit within a general trend-following philosophy. The two seem in conflict to me and thus likely to entrain drama.

Thank you for sharing your process.


At the very top of the market, every trend is up.


Taking profits on the way up is a counter-trend strategy.


I know of plenty of ways to do this and most of them assist the trader in having feelings of getting out too soon.


You might consider taking your feelings just before your sale, just after your sale, and now to your Tribe as entry points.




Circle Shows Giddy Point


The October buy at $24

and the January sale at $32

nets $8 on $24 or about a 33% gain.




What do you do when you catch a trend?

You ride that sucker to the end.


- from The Whipsaw Song

Thu, 4 Jan 2007


Accurate Dreams

I'm a trader, and have been doing research on market dreams. I personally have had many, and every one has been extraordinarily accurate. I have an interesting idea regarding the application of these dreams, and was wondering if Mr. Seykota might want to comment.

You might consider describing one or more of your dreams, along with the method you have for measuring their accuracy.




Dreams May Help Link


your conscious mind

and Fred



Clip: http://growabrain.typepad.com/


Thu, 4 Jan 2007


Choosing an Honest Career

You might not recall me but I am the [Nationality] guy that has been writing you whenever I have feeling to talk about.

I wrote you to thank you for the website, your book and the book recommendations (especially Toxic Parents and Trading Tribe). Those combinations have definitely change the way we think and act, is amazing.

I got married on August 13 of 2006 after 6 years of a wonderful relationship with the woman of my life, in some of those 6 years we worked together in my uncle’s real estate office, she as an architect and I as the project manager assistant, and we save our money by living a very cheap lifestyle.


Unfortunately, we quit the real estate business because my uncle was a little toxic, his ambition was so immeasurable that he stopped being honest with the clients to the point of encouraging the sales agents to lie to their customers.


We decided that we do not need that kind of influence in our lives and we quit.

After our marriage we decided to move to the United States because it was easier for us to live a better life both by living away from bad influence and because we think this is the best country for business.

We know you are a very busy man but we would like to visit you, meet you personally and talk about a deal that we are willing to make with you:

We have save up to US$38,000 in our old job and after moving to Florida we had to spend some in buying furniture, a car etc. but we want to invest US $20,000 with you for a period of 10 years with no right of withdrawing within that period and after that 10 years, in 3 years increment with the same treatment. We are proposing this because we want you to make sure we will not give you any grief.

Regarding the visit, please do not misunderstand us, we are not trying to get a counseling for free, we can go back right after a handshake and a picture if you wish so. If you decided to reject us then please give us the chance to be your friend, we know there is a 35 years gap between you and us but we hope that does not make any difference, we are very thankful for your support.

If you agree please let us know when do you think we can go and meet you.

Thank you for sharing your process.

I typically managing less than 10% of my clients' speculative funds - so a 50% account drawdown translates to a 5% client drawdown.


I recommend the minimum account size for trading futures these days is about $ 1/2 million so you might consider having a net worth of about 5 million before speculating with futures.


If you are contemplating trading yourself, you can certainly make up your own rules.



Picking Pockets


can be excellent training


for careers in law and politics.



Clip: http://www.newint.org/issue154/


Thu, 4 Jan 2007


Gets off Alcohol, Gets on a System

and Gets a Natural High

Trading wise I have a bad 2006. I trade on ‘gut’ using an intraday timescale and have bouts of success followed by disasters. I return to www.seykota.com  do a TSP and then return to my ingrained habits. I feel the good times but don’t let myself fully feel the bad times, I ‘put a brave face on it’, ‘look on the bright side’; I use alcohol to avoid feeling what Fred is trying so hard to make me feel. I am in denial that this way of trading wont work for me.

Over Christmas I relax and drink very little and concentrate on feeling everything as strongly as I can. I spend time at my desk building a system; it’s so much easier when the markets aren’t open.

I back test and back test and stretch my capabilities to find exactly what is wrong in it that makes it perform so well. I find mistakes and I iron them out. Still skeptical, but unable to disprove my system, and with sensible money management I commit to using it for the whole of 2007 only stopping if 50% of my initial capital is lost.

Immediately I relax, I feel deep down I must believe in this, I have never felt comfortable with what I’ve developed before.

I follow the system so far this year (only a couple of days I know) I can see how it works and why it works and as I trade off the signals I feel reassured it can work. I feel I’ll have no problem placing the orders and walking away from the markets to let what will happen happen.

I know 2007 is going to be better than 2006 and that is thanks to www.seykota.com , the TSP, my own commitment and the wonder of freedom to trade capital markets.

I also have found a new exercise with helps me feel more intensely. When I go to bed and close my eyes often they keep on moving and I can ‘see’ different colors and shapes and flashing in a dark galaxy like setting. Before I’d roll over and try harder to get some sleep finding this annoying.


Now I lie on my back and take it all in. I don’t know what it is, what causes it or what it means but I know my brain is trying to tell me something so I go with the flow and take it all in.


In this time my mind works quickly I think of answers to problems I’m working on, I feel intense love for my girlfriend and have conversation with people I know. I can only describe it as like being ‘high’ as I’ve imagined it (on illegal drugs) or in a trance feeling and thinking more freely. Sooner or later I fall asleep and problems and conflicts seem to have been solved in the morning.

I wonder if Ed has any knowledge or experience in what causes this state or has used it before, maybe it’s my own kind of meditation.


Thank you for sharing your process. 


The state you describe reminds me of the zero and bliss points that we experience during Tribe meetings.






People Use Various Methods

to medicate their feelings


including Medicinal Rocks.




Clips: http://alcohol.blogsome.com/wp-admin/images/cerebro_drogas.jpg

Wed, 3 Jan 2007


Afraid to Trade

Mr. Seykota,

I am an aspiring trader living in [City]. I have been working on my craft for a little under 5 years, with mixed results so far. I am interested in meeting and / or talking with you about trading in general. I recognize through the numerous articles written about you personally and your investment track record that your experience and insight are truly exceptional.


I have read numerous times the chapter written about you in Market Wizards, the many citations and quotes about you included in the book Trend Following (which I am still reading), and the recent article inducting you into the Trader Magazine Hall of Fame.

My trading approach is a catalyst based, short time frame strategy. What is holding me back, in my opinion, is an inability to embrace uncertainty and a more general fear of failure.


I say this because I am very disciplined in my trading, I honor my stops on losing trades, let my winners run, and trade with the prevailing trend quite well. I believe I am not getting enough "at bats" to achieve consistent profitability because I am hesitant to follow my instincts out of fear of a "losing trade". I am sure I am not the first trader to experience this, and I would very much like to work through this challenge.

If you are willing to meet or talk sometime, I would
greatly appreciate it. I would be happy to come to Lake Tahoe and meet for lunch or coffee sometime. Great mentors are few and far between!!

Thank you for your consideration, and congratulations on your achievements.

Thank you for sharing your process.


You might consider taking your feelings to your Tribe as entry points.


You might come to experience the positive intention of fear.






Until you have the courage

to lose sight of the shore

you cannot know the terror

of being forever lost at sea.




Clip: http://despair.com/fear.html

Wed, 3 Jan 2007


The Secret

Dear Ed,

I was introduced to your website by a tribe member in the [City] region. I must say, I was very impressed with what I read (Learning about FRED and the Rocks Process) so I am now in the process of joining the [City] Tribe.


The reason I am writing is to ask if you have ever heard of the movie "The Secret." In short, it emphasizes that the key to success is the Law of Attraction and positive attitude. I have never been to a tribe meeting but the movie made me think that this would be of interest to the members. I look forward to hearing your response and working with you in the future.

Best Regards,

TTP holds that all attitudes and feelings have positive intentions, that intentions = results and that you get what you want.




If The Law of Attraction is a Secret


the secret is

that someone wants

to sell it to you.



Clip: http://www.toothpastefordinner.com/


Tue, 2 Jan 2007


Tribe Rejects Applicant

Chief Ed,

Happy New year!

Congratulations on being inducted in to the Trader's Hall of Fame and on the article in the Trader magazine.

Since your interview in the Trader magazine, we got a flurry of inquiries. As a result we have a few guests coming to our first meeting of the new year.

I wanted to update you re our local tribe. We are now a core of 4 members and additional 4 are new. The new ones are about to audit as guests.

We also had a "guest" joining us at our last meeting. Unfortunately, after this individual's visit, the tribe voted to not invite him back.

We felt that there was a strong negative energy in the tribe when he audited and unanimously we came to the decision of not inviting him back. I felt bad about having to take such an action but as the "Fred" directs I had to trust mine and everyone else's instincts.

I wanted your advise / guidance and perhaps if you can, I would like to ask you if you had such an incidence of having to reject TT membership
to a person.

Thank you for sharing your process. 


FAQ encourages personal growth groups and Intentional Communities and provides a bulletin board and directory to assist like-minded people to connect, at their own risk.  See Directory page.


I support you in running your Tribe as you see fit.



FAQ, Unlike this Bra


offers support


with a minimum of restriction.




Tue, 2 Jan 2007

Happy New Year !

To you, to your family, to all you love so much
I wish a great 2007, for a year full of joy, smiles, discoveries and that satisfaction that comes from knowing that, after all, what you do and how you do it makes the world a better place where to live, together ...

All the best,

Thank you.


Happy now to you and yours.

Tue, 2 Jan 2007



Ed Says:
You might consider taking your feelings to your Tribe. Feelings of Abandonment in a K-not can entrain curious drama.

Yes. Life has got to have more meaning and purpose than living in curious, meaningless and pathetic dramas.


Mon, 1 Jan 2007

Rocks Process Write-Up



Attached are my observations about the rocks process for FAQ.

There is something in my unwillingness to experience insecurity and my general unhappiness at being rich (as measured by how I was brought up) that is holding me back that I would like to do the rocks process on when I can get back up to Incline.

Thank you for the opportunity for me to be there.

Thank you for sharing your process.


I am posting it on the Rocks page.

Mon, 1 Jan 2007


Wants a Partner


Ideally, and at the risk of making an audacious suggestion, I would like you to be my financial partner.


As I imagine it, the two of us would create a partnership (as informal or formal as you wish, as simple or complex as you wish). I would invest $50,000 (the maximum amount that I should responsibly invest, based on the criteria you previously shared with me).


You would invest $250,000 or any other amount you believe is required or desirable. You would have maximum flexibility. You would set the terms of the partnership and manage the partnership as you deem appropriate. You could add or not add other partners, at the inception or thereafter, as you wish. You could run the partnership assets independently or jointly with other investments, etc., etc., as you see fit. Period.

It has been my goal to invest with you for approximately two to two and one half years. The above is the only solution that I can think of. However, If the above described arrangement is not workable for you but you believe there are other ways for me to achieve my goal of investing with you, I am open to your suggestions.

Thank you for your consideration.

OK.  How about you put up all the money and keep all the profits and you report to FAQ and I watch.




Partnerships Between Un-Equals


rarely are.




Mon, 1 Jan 2007


Wants to Break the Law

Dear Ed,

A little more about my investment objectives. As I mentioned I started a limited company with a friend a few years ago. The aim was to build a portfolio of properties over time and to invest our money in "the markets". Over the years I have read around the subject of investing and trading and realized that if we were to make significant gains over time, we needed to invest with a trader with a long term track record. I have read both Jack Schwager's books and more recently Trend Following by Michael Covel. You appear to be one of the most successful traders detailed in their books.

We would like to invest £20k. This amount of money is 12.5% of our available cash to invest. If we lost half of this amount it would not cause any hardship or distress. I understand that this possibility is part of our risk.

My career in medicine started in [City]. I qualified in 1987 and after a couple of years in the ER, I became a hospital physician for 3 years. After spending too little time at home and our first baby being born, my wife and I decided that we would move to the country and become a family physician. I know work in [geographical area]. I enjoy my job. I try to do my best for the people I come into contact with. After 20 years in medicine I feel I am committed to the work I do.

What do I intend to accomplish with my life?

I want to give my wife and my children a life that they enjoy. I want them to have a good standard of living and to be able to do the things they are interested in. I want my children to have the confidence to do what they love in life. I want to be the best person I can be. I want to be a creative entrepreneur. I want to invent a magnetic motor that produces more electricity than you need to drive it (working on this at present). I want to continue my esoteric reading.

I am fascinated by your radial momentum experiments. I'm sure you could adapt jet engines to use this principle. Also you could adapt ion motors to use radial momentum.

The daily price fluctuation for futures contracts can be in excess of several thousand dollars per day for one contract.


Keeping daily risk in the 1/2 % per day range indicates a minimum portfolio size of, say, .005 X = $2,500. This gives X at about .5 Million. You might consider investing in a fund and/or pooling with others.


Your magnetic motor idea seems to break the second law of thermodynamics:


First: You can't win.



Second: You can't break even.



Third: You can't get out of the game.

Absolute zero is unattainable.



Incidentally, these three rules also apply to traders with day-trade addictions.

Thank you for the encouragement with my work on Radial Momentum.