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Ed Seykota's FAQ

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August 11 - 20, 2009


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Contributors Say

(Quotes from Ed in Red)

Ed Says

Thursday, August 20, 2009


Ways of Delays - Feedback

Hi Nick and Ed,

Thank you for sharing your work on delays.

I notice what appears to be a disagreement between your text and the image "System Response to Step in the Target." The caption notes: "The Target steps from 0 to 5 cups per second at t = 2 seconds." The image seems to indicate a step from 0 to 10.

Another caption reads, "At a Frequency of 0.25 radians / (per month) the Outflow Rate tracks the Inflow Rate closely." I notice that the corresponding image labels the vertical axis in US$/month rather than radians / (per month). This last unit suggests a measurement of angular acceleration, as in radians/month/month.

Further down the page, you ask the reader to "Note: at Frequency Factor 1 the cycle takes 6.28 seconds (2 * pi) to complete." I notice that images above and below this note use months rather than seconds on their horizontal scales. I notice some difficulty correlating the text and the images.

Thank you for your feedback.


We are currently repairing and clarifying these sections.

Thursday, August 20, 2009


Appreciates Reader Contribution

Hi Ed,

As a beginner I feel to thank the author of the "Tenth Anniversary" for the experience he / she shares: it's a source of many questions I like to ask ...

I hope for you a continuous growing success in the future.


Thursday, August 20, 2009



Hi Ed,

As always I follow regularly the Tribe FAQ: I really appreciate your work and support.

On August 16, in "Risk of Ruin" when you say "1%constant-risk trading" I think it means to calculate 1% of equity and trade with that value.


Consequently, equity can go up or down but every time I need to make orders I calculate the 1% to risk and this make it constant. I wonder if you can clarify the meaning of "1% proportional risk core trading".

Thank you

Core Equity = Total Equity - Equity at Risk.

Thursday, August 20, 2009


The Ways of Delays

Hi Ed

I am enjoying reading the Ways of Delays. Today I started with the no feedback simple systems which makes perfect sense to me. Having been a loan officer in the past I could relate to the step function in other practical ways such as a step loan or a step foundation in construction, the ramp as a pitch of a roof, the pulse as an interest only loan and the sine wave similar to a loan tied to an index such as LIBOR.

I wish to thank Nick and you for all your efforts in making system dynamics so clear.

I'll keep reading for clarity and understanding.


Thursday, August 20, 2009

Hello again,

Hereby attached, TTID template to register a new tribe in Amersfoort, Netherlands.

Many thanks







Thursday, August 20, 2009


Feelings Without Positive Intentions

Hi Ed,

Is it possible that some feeling have no positive intentions? If so, how do you eliminate the drama associated with those feelings?

I wonder exactly what feeling you have in mind.


You might consider taking your feelings about <nebulous theories without specific examples> to Tribe.

Wednesday, August 19, 2009


Belief in Himself

Dear Ed,

I think if our aim is to prepare Trading Tribe members to trading, then it could be good for all of us to have your opinions about the belief.


Especially belief in himself. How can a trader increase his belief in himself? How can he trust himself in such kind of process trading?


Because I fell on myself that this is one main thing on trading. I think it is very necessary to stick to your system and so on. Some traders use the automatic systems to avoid [his feelings] during trading.

What do you think about it ? What kind of advice you can give us.?

Thank you in advance

You might consider taking your feelings about <beliefs> to Tribe.

Wednesday, August 19, 2009


Position Maintenance and Sadness


Whilst I have a range of good insights into markets, and over the years I develop a pretty accurate sense about markets, I have trouble with the same problem - maintaining my position in spite of the market action.


It is a curious thing that whilst I claim to have insights that would manifest over the ensuing days or weeks, I often close positions within the session because of nervousness that things "aren't going my way." That is, I'm so worried about loss that I take my losses too quickly.


This is a problem that causes me significant frustration and sadness. I feel there is sadness lying somewhere beneath it, but I am yet to locate it. Perhaps it's the sadness of not having a guru in my life, and perhaps it is you that I'm trying to employ as my guru.

If you have a sadness K-not, Fred might help you engineer some loss drama.


You might consider taking your feelings about <loss> to Tribe.




One of the Positive Intentions of Sadness


is risk control.





Clip: http://breshears.net/wp-content



Wednesday, August 19, 2009


Getting to the Core


In your answer of the message "risk of ruin" of Sunday 16th August, what is the difference between trading and core trading?

Do you mean "Core equity" or "core capital"?

Core_Equity = Total_Equity - Equity_at_Risk


With Constant Position Sizing, you size your trade to same number of shares (contracts) on each trade.


With Proportional Position Sizing, you size your trade proportionately to your Total_Equity.


With Proportional Core Position Sizing, you size your trade proportionately to your Core_Equity.

Wednesday, August 19, 2009


Sources of Earnings

see previous

Sir -


If you honestly think that [company] makes money through "selling securities" and conventional "broking" business, you are very much mistaken. [Company] is, and has always been, a firm of traders run by traders.


Take a look on Page 2 of their recent earnings release and their 10Q for more details and the breakdown.

You might consider confirming that [company] has no profit centers other than trading.


The company reports are conspicuously absent of a breakdown into "day-trading" profits and other trading profits.


You might consider taking your feelings about <errors> to Tribe.




Erasers Can Deal With Some Kinds of Errors


In the TTP Model

everything is intentional


so "errors" don't exist.




Clips: http://successco.typepad.com/photos/



Wednesday, August 19, 2009


IBM Stock and Systems


Dear Ed,

I was looking at a 10 week breakout system applied to IBM from 1970 to present. The system worked well until the late 90's.

This gave me pause. The system would have looked good for 30 years prior to failing.

I am looking at trading different spot FX pairs based on a 20 day breakout for entry and 5 day reversal for exit. This strategy also looks good for a long time historically.

I know it is against the ground rules to ask for specific trading advice. I am not asking for that. I was just wondering if you had any general thoughts on system death. Do you?

If this email violates the spirit of the ground rules, I apologize.

Corporations, like people, tend to come and go.


Many of the "big name" companies from the inception of the Dow Jones Averages no longer exist.


A system is a set of procedures.  Systems don't die.  Some of the instruments a system trades may die.




Stocks, Futures and Trend Followers all Die


Trend Following is Forever





clip: http://hackedgadgets.com/


Wednesday, August 19, 2009


When the Level = 0

Dear Chief and Nick,

Thank you for sharing you knowledge and your step by step to build the models in EcoNowMics.
I'm constructing the models in Excel and I notice that in the system "The Hole in the Bucket Model" when Nick is in Step 5 and he compares the Flow with the Level, in the spreadsheet in the row 2 column 6 (Time Constant at Each Level) in my calculations the number is a little different that in the site. I got 28.65 (0.096 divided 2.75). In the website the number is 28.57.

I got some differences too when the level is 0 in the same Step 5.

When the level is 0 (last row) there is no flow then the time constant is 0 and the gain is 0 too.

In the site the time constant is 8.33 and the gain is 0.12 (equals with the level 0.25).

Thank you again for your guidance and I hope to help steer the project.

Thank you for your feedback.


When the level = 0 is never.


In this part of the model, there is no formal "time constant."  The "virtual time constant" is an abstraction from the table of rate and level values.

Wednesday, August 19, 2009


Intentions = Results


"Win or lose, everybody gets what they want from the market."

Many a time, sir, we hear majority of people losing in markets rather than winning, that too in huge amounts. From the above quote, sir, is it true that all those who lose, intend to lose at sub-conscious level ?

If it is so, what type of events, in the life of a person, may have led to register subconsciously to lose.

In the TTP model every result is everyone's intention.


You might consider taking you feelings about <losing> to Tribe.

Tuesday, August 18, 2009


Logic and Feeling

Hi Ed,

Do you know what kind of positive influence could bring to the man trading. If you understand the psychological and philosophy of it. I am sure you know. Especially the method which you use.


It is similar to Zikmund Freud therapy. Therapy is good for those who accept it without any resistance. The resistance which brings the feelings of human.

Trading is a good therapy.

I would like for you to explain to me and the rest of the Trading Tribe the following: 


Struggle between logic and feeling. For example: Logic says that by some analysis, you need to make some thing this way. And you also know it and also understand that this is the right way. But, for the same time some thing from inside says to do the opposite. And most of the time, man will choose the opposite way from logic. And see the bad result of it.

We can see this on trading for example as we speak before when a man chose day trading instead of long term trading. In spite of that fact that he understands that he makes a bad choice. We say that such a man does not live in right livelihood.

What is the problem? What makes man so? How does he need to change himself ? Maybe the problems are his belief?

I feel I have this problem. And I am not shy to declare it.  I want to treat myself, and I am sure that others do too.

Thank you in advance.

You might consider taking your feelings about <illogical feelings> to Tribe.



Tuesday, August 18, 2009


Reading to Dad

Dear Ed,

I want to thank you very much for everything you are doing for us rookies in trading - trend following. Without your help it would be so much

My English is not brilliant so I want to tell you my story in short.

I have economic education (Human Resources and Finance). In University I started my adventure with markets. At the beginning I was 100%
fundamentalist (read everything about Warren Buffett, Benjamin Graham, etc). I finished many courses how to invest in fundamental way -
everything worthless.

I was completely hopeless. I couldn't explain why, But I was still looking, reading as much as I could about different investors, traders - anything I could find.


In MW I found my path thanks to you.

It was like a thunder clap, in one moment I knew it is my way, right way. I couldn't understand why I didn't notice it before because I read MW earlier.
After studying your site, TTP and FAQ it comes to me easily. Fred talked to me.


epend on me and my mom- he can't even move, only blink. This state last 5 years, at the beginning doctors gave him 10% chance to live - he was unconscious for 7 months, but we believed in him, we made a plan and we totally stick to it. Day after day, week after week, month after month, year after year, and we are still doing it, without thinking about the past or future. Just this moment. Earlier I couldn't stick with anything for a long time but I managed it, I still do. I think you've already got my point.


This experience made me trend follower in life. I didn't even know it and prepared me for trend following in markets.

That's why when I reread MW it was so obvious. I started this new (old) trip without hesitation because I know it is right. Your website, knowledge, help ... everything you do helps me to understand and order things, thoughts, opinions. Thanks to you I'm aware of what I'm doing. I'm very thankful.

I read to my father everyday some parts from your website - He blinks so I know he likes it.

He has a similar sense of humor to you, he is an engineer so I think trend following makes sense for him.

Thank You one more time.

All the best for You and Your family and friends

P.S. I'm worried about something. I printed from your web site some pages to read my father and read for myself without a screen, make some notes.

I just realized there is a comment "Write for permission to reprint". I want ask for your permission to print from your great website. I want to apologize for not doing it earlier and if I broke principles I'm very very sorry and I destroy immediately all pages I've printed. Please let me know.

One more thing do you have any tribe group in [Country]? Is it possible establish one??

Thank you for sharing your process.


You may print the items and read them to your father.



Tuesday, August 18, 2009


Right Livelihood

Ed says,

In matters of Regarding Right Livelihood your own satisfaction is a function of how well you satisfy others.

Thank your for your observation. My feeling is that I make the first impression like gold but seldom don't live up to it when it comes time to satisfy others.


Tuesday, August 18, 2009


Day-Trading = Right-Livelihood ???


Day-trading - Is it different from working towards right livelihood ?

Day-trading seems to work out pretty well for brokers, newsletter-vendors and day-trade-seminar vendors, all of whom might appear in the same person.




 DT = DT


Day Trading may have more in common

with Delirium Tremens


Clip: http://recovery101.today.com/files/



Monday, August 17, 2009


Humiliation, Arrogance & Equality

Dear Ed,

In my previous Big Wave report (#7) I describe how my confidence gets undone by occasions where I feel humiliated. I describe how I intend to fight humiliation, by being more assertive.

A day later, I read Ed’s comment to my earlier report (#6) on FAQ. Ed says:

Your judgment about humiliation is consistent with your pattern of attracting drama in which the payoff is that you get to feel humiliation. […]

When you discover the positive intention of the feeling of humiliation, the drama surrounding this feeling is likely to disappear.

After reading Ed’s comment I am totally confused. I even have trouble sleeping at night, pondering the possible positive intention of the feeling of humiliation. (I keep having trouble understanding TTP-logic.) Could it be humbleness, i.e., am I arrogant?

I find it very, very hard to piece this puzzle together.

I think Ed suggests that I avoid deeper feelings by getting angry when humiliated. Maybe avoiding feelings of being unloved, maybe vulnerability, maybe humbleness. As long as I avoid these feelings, and as long as I want respect from everyone, I will continue to attract humiliation drama…

I remember being very afraid of rejection as an adolescent and young adult. Until age 25 or so, I mainly feel sad (not angry) when disrespected. I try to befriend everyone, out of fear that someone might not like me. I am like that dog, tail between legs. I remember an older guy at my first office who habitually addresses me with a slur word (instead of my name).

But then, when I have some success, I turn a corner. I feel I don’t need to be-friend everyone anymore. I feel I deserve some more respect.

This doesn’t mean I am equal now among equals. No. I now feel better than others!

I start to behave arrogant and stuck-up, at least in what I say to myself about others: I reject most people right away …

My arrogance feels like a protective shield, but I deeply dislike it. Meanwhile I am still inviting humiliation drama, only from different people now.

When I get even more successful, I become rude and more arrogant, and I dislike myself even more. Success seems to drive me in the wrong direction; I seem not to be able to handle it well. I quit my job (15 years ago). After that, I never make any serious money again. Maybe better so.

My next Tribe meeting is in 2 weeks. At that meeting I intend to explore my feelings regarding humiliation, arrogance and equality further….

As always, thank you very much for your continuing support.

Thank you for sharing your process.


You might also consider adding your feelings about <intimacy> to the list.

Monday, August 17, 2009


Right Livelihood


Hi Ed,

I recall your description of right livelihood as a special gift, something one is really good at, something one can share with others.

I notice feeling that the things I'm good at are things that n obody needs. I feel that I'm peddling fool's gold -- it may be interesting and ornamental, but has no real value. It glitters like gold only at first glance. Pyrite costs $4 per ton 100 years ago as a precursor to sulfuric acid and has no commercial value today.

I recall my mother, a geologist, telling me about her fieldwork in remote areas of Central Asia. She says that when locals would hear that they were geologists, they would offer to show them, with some hesitation and secrecy, a "gold find." She says that without exception the find was pyrite.

Thank you for sharing your process.




In matters of Regarding Right Livelihood


your own satisfaction

is a function


of how well you satisfy others.



Clip: http://www.photo.frigge.eu/angel/



Sunday, August 16, 2009


Elliott Wave

Dear Ed,

I think for everybody from the tribe will be interested in your opinion about Elliott Wave.

What do you think about this?


Actually as I said, I read all your FAQ from the  beginning and find out there is an opinion that Elliott Wave is too subjective. I also see that it has some element of prediction, that is why it is not suitable for us as trend followers.

But when I learn the structure of the wave I find out that it is approximately the same with trend structure. Even when Elliott described his entry place to the market and exit place it is similar to the reversal part of the trend which looked like the head and shoulder pattern. Also the same thing we can see ... when price broke maximum level of A wave by the 3 wave. The opposite direction when Price broke the minimum level of A wave by the C wave.

The same thing we can see when 5 EMA cross with the 34 EMA or the 34 EMA cross the 155 EMA.

For my observation which brings confusion to the trader [is] that after 3 impulsive waves, [the] trader waits for opposite side direction movement. But I think it could be not from 3 impulsive wave it could be 4 or 5 maybe more until trend not broken. For my opinion this expectation bring more confusion. I think there are not 3 impulsive but it could be more.

But dear Ed what do you think about Elliott Wave? What can you say which I don't know about Elliott Wave which could be useful for me and for others.

Thank you in advance.

The Elliott Wave is a subjective indicator, mostly useful in conjunction with wishful thinking for generating a justification for almost any trade you wish to engage.


The Elliott Wave theory does not include rules for position sizing, market selection or position exit. The Elliott Wave's ambiguity gives it an exemption from rigorous back-testing.




R. N. Elliott




To Perform The Elliott Wave


aim your body toward Chicago

and repeat this mantra:


"Good-bye Money."


Clip: http://www.rutherfordjournal.org/images/





Sunday, August 16, 2009


Risk of Ruin


You ask how I use my formulas to manage an account.

I need to know a mean and a standard deviation. I can measure the mean and standard deviation per trade, or per week, or per month, or per year.

I need to express the mean and standard deviation as a percent of my account. Bigger bets will increase these percentages, and smaller bets will decrease them.

For example, suppose I look back at my trading and find that I have a monthly mean of 5% return with a monthly standard deviation of 8%. This is a good trading system. I could double my bets, and then I would have a monthly mean of 10%, and monthly standard deviation of 16%. The mean and standard deviation will move together with a ratio of 5/8. I could cut my bets in half and I would make 2.5% per month with a standard deviation of 4%. I know all this stuff is logarithmic, but for returns in this region, these numbers are close enough.

To apply this to manage an account, let's assume I choose to use the bet size that gives me an average 5% return per month with a standard deviation of 8% of my account.

The probability of losing one standard deviation, or 8% of my account, is e^(-2*0.05/0.08) = e^(-1.25) = 0.287. There is a 28.7% chance to lose 8% of my account from any point on the equity curve. I will spend 28.7% of my time in an 8% drawdown.

Suppose I do not reduce my bets as I lose money. The probability of losing 40% of my account is e^((-2*0.05*0.40)/(0.08*0.08)) = e^(-6.25) = 0.00193. There is a 0.193% chance to lose 40% of my account from any point on the equity curve. I will spend 28.7% of my time in an 8% drawdown. This is the risk of ruin formula for insurance companies, published by D. R. Cox and H. D. Miller. Insurance companies cannot reduce their bets as they lose money. Traders who can only afford to trade one contract have difficulty reducing their bets.

Suppose I do use fixed fractional trading to bet a fixed fraction of my account on every trade, so I do reduce my bets as I lose money. Then the probability of losing 40% of my account is less because it takes more losers to lose 40% because my bets are getting smaller as I lose. The probability of losing 40% of my account is e^((-2*0.05/0.08)*(ln(1-0.4)/ln(1-0.08)) = e^((-1.25)*(-0.511/-0.083)) = e^(-7.658) = 0.00047. There is a 0.047% chance of losing 40% of my account if I use fixed fractional trading to bet a constant fraction of my account on each trade, and have a mean return of 5% per month with a standard deviation of 8%.

You say that I pre-suppose knowing the loss in advance. I pre-suppose knowing the distribution in advance. I do not need to know each loss in advance. I do need to know the mean and standard deviation of my returns. It is easy to measure the mean and standard deviation of past trades. It is not so easy to know that this distribution will walk forward into the future.

If I am managing an account, I can look at the percentages I calculate, and decide if they are acceptable. I can reduce risk of ruin by reducing my bets. Or I can increase return and increase risk of ruin by increasing my bets.

Let's see what happens if I double the bet, to get 10% average return with 16% standard deviation. The probability of losing 40% of my account is e^((-2*0.10/0.16)*(ln(1-0.4)/ln(1-0.16)) = e^((-1.25)*(-0.511/-0.174)) = e^(-3.662) = 0.026. There is a 2.6% chance of losing 40% of my account. I will spend 2.6% of my time in a 40% drawdown. If I am willing to accept that risk, then I can enjoy an average return of 10% per month with a standard deviation of 16% per month.

If I improve my trading system, then I can get a higher return, or a lower standard deviation.

If the standard deviation of the market I am trading doubles, then I might want to reduce my position size.

If the input variables to these equations change, then the output will change. Common sense is still required. The standard deviation of the stock market went up in October 2008. Wise traders will pay attention and bet smaller when the market goes nuts.

With 1% constant-risk trading, your account can grow linearly, and it can go broke.


With 1% proportional-risk core trading, your account can grow exponentially and cannot go broke.

Sunday, August 16, 2009


Loneliness and Drama

Hi Ed. Thank you for responding to my last post, which you entitled "Missing His Girlfriend."

My mind becomes clearer. I notice my desire for control is weakening. I begin to think much more positively in regards to my plan for life and trading. I notice how beautiful this world is and can enjoy the things that the masses would call "good / bad or right / wrong." It makes me laugh, at times, because I see how easy it can be to become distracted from the plan and become influenced by others' opinions - especially those closest to you.

I do feel lonely at times. I remember the times in my life when I felt lonely that I did, in fact, become less controlling which always seemed to attract another girl. But, then I would become controlling again and the cycle would repeat itself several times over the months / years. Following my first post to you, I begin to become more vocal to my family and friends (my Tribe) regarding my controlling issues and the need to know things (not necessarily asking why, but the facts in general).


I notice the tension in my neck loosens, teeth do not grind as much, heart does not pound as much, hands do not make fists when I feel anger, etc. I feel the smile on the face and see it on others'.

I realize that it may take some more practice / focus for me to fully correct my control issues and maybe even more time for others to adjust to my less-controlling behaviors. I feel OK with this. I am confident that this will result in more money, fun, sleep, intimacy with others, sex and less drama.

I will report on my progress.

Thank you for sharing your process.





When You Come to Accept

the positive intentions of your feelings


the drama associating with those feelings


tends to disappear.


















Clip: http://2.bp.blogspot.com/_eB5Hr9OK_fw/




Sunday, August 16, 2009


Starting to Trade

Hi Ed,


I have been reading up about trading for a few years and decided to take some action. I started paper trading a using Donchian 5 and 20, changed to EMA’s, read a lot of FAQ and your money management techniques. I have started trading for real with $200.00 a month, money I can afford to lose at the moment just to get some of those emotions going and see how I handle the fear, greed and hope.


It’s been fun. A lot of what I had read only started to make sense when I started doing.

I know I need to get more familiar with math, get a back testing program and learn to program code. I just wanted to say thanks for all the free advice.


Saturday, August 15, 2009


Tenth Anniversary

Hi Ed,

I am coming up to my 10th anniversary in the trading business.

Here are my approximate yearly results and a brief description for these first 10 years.

1999: 0K I start part time stock trading in August '99 with $25K. I more or less break even at the end of the year.

2000: -7K I double my account in first few months of 2000, only to give it all back + some.

2001: - I do not trade in 2001.

2002: -30K I attempt full time stock trading starting with $50K while out of work. I fail miserably. I go back to my day job.

2003: +50K I get very lucky in 2003 trading options.

2004: -20K I start futures trading, I pay $20K 'tuition'.

2005: +30K I manage to find and develop a testable edge for trading futures

2006: +30K

2007: +200K I diversify my futures trading and go full time.

2008: +400K

2009: +700K Up $700K so far in 2009.

In my first five years of trading I am not serious, I use a web 1.0 based trading interface and I am trading part time mostly. I have absolutely no edge whatsoever. My trading in these years is better described as gambling rather than trading.

I get serious about trading in the middle of 2004 when I open an account with a direct access futures broker and I start doing detailed trading research. I also try to find as many of your trading beliefs as I can from books and the internet and use these as a model for my own beliefs.

I think a beginning trader needs to read as many trading books as he can and have a very open mind. There are many well known trading ideas
he can develop and refine to make his own. I think it is how well he executes these ideas that is more important. Executing a trading plan is very hard but not impossible, and if he can pull it off then he can make a lot of money.

I think that if a beginning trader is going to commit years of his life to trading, he needs to get serious about it, and he needs to make sure he is improving and learning every year. He has to be very hungry for trading success; it has to be a very important part of his life.


Saturday, August 15, 2009


From Control to Intimacy

Dear All,

I report in on my Big Wave (I give my wife and children all my support and love and give up control).

I have a long talk with my son (11 years) about his feeling of loneliness, of not being accepted by pairs, of not belonging to the group. To me, this is a phenomenal breakthrough considering that 6 months ago my son did not talk at all about his feelings and was afraid of me. I tell him about my own experiences with loneliness and rejection. We embrace each other several times, we share feelings and tears. It is wonderful.

It takes some more discussion to resolve the issue "family vacation". After a first agreement (my wife visits her family for 5 days, and after that we travel together), she mentions that she is very sad about the change of plans. This is a novum, since she avoids speaking about her feelings. As I offer her to discuss alternatives, she reacts with anger and reproaches. It is big time drama: she shouts, shuts down, turns off the lights, and leaves me and the children in the darkened room. I stay calm and receive her. Sporadically I experience "anger" myself, but I enjoy it. Maybe too much: I smile while she shouts, and she turns angrier. I realize that I still have to learn a lot about receiving other people's feelings, about kindness and compassion.

While the children enjoy the talk about options for the holiday, my wife takes a mattress to the living room and announces that she does not want to sleep in our bedroom.

In the night I visit her. I have a health problem and am worried about it. I share it with my wife. Maybe I should acknowledge her wish to be alone, I don't know. I acknowledge her anger and sadness about the holiday. We talk. She does not apologize for her reaction, I am again the one looking for an agreement.

The next day she spontaneously looks for an alternative holiday. We find a nice hotel with many activities for the children, and book it.

I am very worried about Ed's comments on FAQ regarding the agreement to share physical contact 30 minutes each morning, and me acting as if I own my wife.


I abhor the idea and am appalled about me making no progress and still trying to control people. I experience a horrible feeling that I cannot describe: maybe "despair". I decide to take the feeling "I make no progress" to the hotseat.

I share my worries with my wife. I tell her that I am trying to be a better person. She mentions that I am already a great guy. I am very moved. She mentions that for her it is not possible to be as open and empathic as I am, since I have been practicing for months. I feel that maybe she cannot give up control herself.


I mention to my wife that during the day we have almost no physical contact. She answers that it was her method to punish me (she uses the word) for not helping enough with house chores. She also "punished" me by eating dinner earlier with the children. As I arrived home, frequently I did not get something to eat at all. She mentions that right now there is nothing to punish. It takes me some hard negotiation, but we agree that the whole family takes dinner daily at 7:00 PM. It works great.

I suppose that in a control-centered relationship both people try to control each other with different methods.

During the workshop I committed to make my marriage work. I do my best and am patient; however, if my wife decides not to give up control and open herself, there is no way to make this marriage work. In this case, well, I just move forward.

I thank you for your support.

Thank you for sharing your process.


As I recall, my comment about ownership is not specific about who might own whom.




In a Master-Slave Relationship


the master generally needs the slave

and the slave generally needs the master.


Who ever needs the other the least

is generally the one


who is actually in control.










Clip: http://www.nancyfarmer.net/images/



Saturday, August 15, 2009


Gut Wrenching Stress

see previous

Dear Ed,

Thanks for your response to my FAQ: Thursday, August 13, 2009 Riding a Loser

I am worried that it might deprive me of the gut wrenching stress and journey to self destruction I seem intent on so for now I think I'll have to feel this one to the uncle point or that feeling is simply going to have to come from somewhere else before I can move on and I'm worried the events needed to put myself through this without the aid of the financial markets could be even worse.

I have been working on an [Name] crossover 'system' using monthly signals. So far I am pleased with the results, it has turned a profit on 90% of stocks I have tested it on and has out performed the stock on many. There is a 10% loss on any entry and no stock has lost more than 15% since 2000. (I know my back test isn't sufficient). This seems to reinforce the idea that systems work best when signals are not so frequent.

I haven't figured out how I can test them as a portfolio yet.

Testing always leaves me with a hollow feeling, that my system isn't the 'best' and is either not optimal or made 'too optimal' to fit what I'm testing.

Sometimes I think my system can't work as it's too simple and if it was that easy everyone would be doing it. Then I go to work at my firm in [City] and see most people aren't in it for the money alone and a system won't fulfill all their needs. I guess I still fall in to their camp.

Sometimes I wish I never starting trading but I feel when I grow up and learn to take losses I might have some success hidden in me somewhere.

Maybe I just don't want to grow up, I'm drowning financially but this gives me contact with my (divorced) parents and I wonder if it's this need to be needy that keeps me losing.

A weekend of walking and thinking ahead.

Thank you for sharing your process.

Saturday, August 15, 2009


From Control to Intimacy

See Previous


Thank you for your answer. I tested myself and my wife for willingness in several areas about 10 days ago. Maybe you can accept that I preferred not to report it in detail for FAQ, since it touches very intimate aspects of my wife. We discussed what we both want from our relationship, and how the other person is willing to participate. She mentions that I am doing everything that she needs / wants. She is willing to do many things to improve our relationship, and she can imagine being open for new ideas.

Systems need some time to re-adapt. If I have, let's say, back pain that prevents me to help with housekeeping, I cannot commit to help with housekeeping, but I can commit to go to a physiotherapist to work on my back pain. The "30 minutes in the morning" were part of this agreement. However, we both see that it is artificial and that we prefer a more spontaneous approach. Since we apply it, things work even better.

I see substantial changes in my wife regarding physical contact. For her it is still very difficult to accept my feelings and almost impossible to talk about her own feelings.

But now she knows exactly what I need and what I expect from our relationship, and I know exactly what she needs and that she does not need to change. If she does, it is for love to me.

But it is like with me: I can say "I do the work - I give up control" and keep on hiding and making excuses just not to change things. She can do the same: she mentions that she is willing to move towards me, but maybe she does not. I have seen that a couple of times before and reacted mostly with anger. Now, I can calmly observe if she is just cheating and yield a proactive answer.

In my weekly report I describe how she mounts a majestic drama as I talk about my feelings of sadness. After a huge struggle she can accept them.

You write "Perhaps you like the drama and are unwilling to trade it for intimacy". No. I do not. I am sick and tired of this drama. I love my wife, she is great. During the workshop I committed to make my marriage work. I am willing to be patient and to see if she can also commit to and create an intimate relationship. If she does not, I cannot make my marriage work. Then, we go separate ways. It is not nice, but it is not a tragedy. If I accept the drama and stay by her, I just that I lack the balls to be happy.

I sincerely thank you again for your help and guidance.

Thank you for sharing your process.

Saturday, August 15, 2009


Feeling Addiction and Satisfaction

Hi Ed,

What about my feelings of addiction and satisfaction. Addiction is that when a man wants to get out from some problem but he can't because his brain is busy by the having adrenalin from the process on which he engaged. Or from some dozes of something which he have it could be alcohol or the narcotic. Some times I think that sex is the biggest addiction of human, but it is impossible addiction without satisfaction. Exactly because of the satisfaction, which human have from that process to which engaged could not stop.

IN that is why trader who engaged to day trading have some adrenalin from the process, which cover his more deeper felling which he would like to cover. IN that is why the day trader addicting to day trade because of satisfaction.

How I understand from your notice that if you have right livelihood you will have satisfaction from the process which you do also. But I think the differences between these two is that at first you want to stop yourself but you can't and second if your process is right livelihood you don't want to leave it. You want [it to] continue. In that is how I understand right livelihood.

By the way Dear Ed I read so many books about trading I could not see the article where explain clearly about day trading. I mean about day trading as not profitable and not suitable for right livelihood. If anybody is not on right side .He will always have addiction from which he doesn't want to be.

Also I could not find a [well known] successful day trader. But most common literature about success of day trading. IN that is why trader makes mistakes, not being right livelihood.

As I said before I do not [want] to be a lucky trader, I want to be a professional trader who understands the differences between right and not right livelihood.


Thursday, August 13, 2009


Wants a Deal on the Workshop


I have a strong feeling that I need to be at your upcoming workshop. I'm starting Grad School at [Name] University next Monday for agricultural economics and was wondering if you're willing to help me by finding a workshop price that works for both of us? (Since tuition just took a giant chunk from my checking account).

I wonder what your economics studies indicate about the various roles of price in economics. 


For example, one of the functions of the Workshop price is to help select participants who are ready and willing to participate - and who already demonstrate a level of financial mastery in their own lives.

Thursday, August 13, 2009


Control to Intimacy

See Previous


I think a lot about your answers from Monday, August 10, 2009 (From Control to Intimacy II) and Tuesday, August 11, 2009 (Owning Your Mate). I think a lot about the issue "due I act as if I own my wife?" (in fact, it is 3:00 AM and I cannot sleep due to this). It would be abhorrent.

After reading the websites:






and consulting textbooks I see how men can ruin the sexuality of women: how a husband can cause female headaches, lack of desire, boredom, sexual aversion, even panic attacks during sex . Uff.

After talking with friends and associates, I see that the frequency of sex is very different and ranges from once a week to twice daily. However, they all touch, cuddle, embrace and kiss their partner several times a day. My wife usually refuses physical contact during the day, and she is too tired at night. She is also afraid that I can see physical contact as an invitation to sex.

I talk about the issue with my wife. I ask her if she agrees with the idea of reserving 30 minutes every morning to share physical contact. I mention that some sources suggest that it could improve our sexual life. She likes the idea, also the fact that I put no pressure on her, that we have a time limit, and that she can decide what we both do. In other words, that she controls the situation. It is not that I am giving her 30 minutes of my time for physical closeness: she is sharing her time with me, and during it she is free to act and I fulfill her wishes.

In fact, I would prefer an embrace in the night, a "good morning, darling" and a kiss as we wake up, just to feel the touch of her hand. Sometimes this can lead to sex. However, the time limits and keeping it in control is important to my wife.

If I act as if I own my wife, I want to stop it. But I am asking her about her opinion, I am doing what she wants, I only do what she agrees with. I feel rather that we are both investing time and effort to improve our relationship. I don't think that I act as if I own my wife. But it would not be the first time that I am wrong.

I am open and thankful for your advice and guidance.

Thank you for sharing your process.


I do not recall your reporting the results of applying willingness testing to your mate and to yourself. See previous.


Willingness testing is a pretty good way to end the drama.  Perhaps you like the drama and are unwilling to trade it for intimacy.

Thursday, August 13, 2009


Riding a Loser

Dear Ed

I find myself once again having a tough time betting against the trend. I am short the

[Name] and have been since 4185.

I have added to this loser several times on the way.

This trade has cost me around 75% of my capital and put a lot of strain on my life and relationships.

As I often do when feeling down I reached for your book and read the chapter about causality versus responsibility, this is what I came up with?

If intentions = results and I do not like the results I am getting I need to look at what my intentions could be.

Are they:

1. To push myself as far as I can enduring stress?

2. To get people to feel sorry for me?

3. To lose all my capital so I can stop trading (and find a job I enjoy)?

4. To be proven right at some point if the market falls back?

5. All of the above?

My guess is all of the above and some more that deep I haven't discovered them yet.

I'm not ready to cut this loser yet, I must want to feel more stress or lose more money. I'm not sure why though.

I hope all is well with you.

Thank you for sharing your process.


You might consider, as an alternative to your trading strategy:


You can send me the balance of your account that  and we can agree I am not to trade these funds.  At the end of each calendar quarter, I can charge you a fee of 5% of your remaining balance. 


This way, you have a guarantee of a loss - you can even predict the amount of loss. Furthermore, you would do considerably better than you are currently doing. In addition, your balance would decline exponentially so it would never run out.



Radioactive Decay


exponential decay

never goes "broke."







Clip: http://www.blackcatsystems.com/pics/



Thursday, August 13, 2009

Risk of Ruin

Hi Chief,

Sometimes I feel sad about my drawdown, and I express sadness to the Tribe. Sometimes I feel joy when my account hits a new high, and I express joy to the Tribe.

Once you ask me "Why don't you do what you want all the time?" It is good advice for any moment of now. It is better than doing what I want only when I am winning.

I write an article on how to calculate risk of ruin. Futures magazine publishes the article in the August 2009 issue on page 38. Simple formulae are available to calculate the probability of losing any fraction of your account if you know monthly mean and standard deviation of returns (or mean and standard deviation for any other time period).


If you like, I can write a summary of these formulae for you to place somewhere on your website. I find them useful to get my position size at the right heat for me.

I enjoy your Whipsaw song. I listen and smile.

The risk of ruin for core betting is very small.


Your formula for computing losses seems to pre-suppose knowing the loss in advance.


I wonder how you actually employ your formulas in managing an account.

Thursday, August 13, 2009


Addiction and Satisfaction

Dear Ed.

I would like to talk about the one of the problems of young traders. That is confusing between trading for living and trading for satisfaction. I think everybody who start to trade they main aim is to gain more big money. But after starting to trade he some time lose or some time win some big money. But at the result he loose all his money because in spite of main aim to trade for living changes after some trading operation to the trading of satisfaction. And the main problem is that he cant feel it. In spite of his loose he cant stop and still trading.

That is exactly the same addiction as to alcohol and narcotic. But during this time the brain of a man cannot to make logical decision. In that is why he cant stop himself.

And day by day he has only more lost. It could continue as long as you not say to your self STOP! Because if something is going wrong it is mean that you make something not right. In that is why you need to stop and and to change yourself. Your attitude.

In that is why it is very dangerous if you not or cant to trade for living.

Addicted man can treat himself only by one way. To willing to change, understand really situation and not to afraid to look at reality how it is hard.

Ed could you say me what man need not to do for trading for living?

In TTP Right Livelihood includes both earning a living and also having job satisfaction.


You might consider taking your feelings about <addiction> and <satisfaction> to Tribe.




The Difference Between Drama ...



... and Right Livelihood


shows up in job satisfaction.


Clip: http://www.arrowitod.net/images/







Wednesday, August 12, 2009


Day- Trading -- The Truth

Dear Ed,

I keep hearing stories - no day traders make money, 95% of day traders lose, 70% of day traders lose but [a recent article] counters that.

What is the truth??

The brokerage firm you cite earns income by marketing (retailing) securities such as US Government paper.  It also holds some positions for a considerable length of time.  It also engineers complex securities deals.


The report does not indicate how much of the income associates with what you refer to as "day-trading."

Wednesday, August 12, 2009




[Your Whipsaw Song video on YouTube] is an absolute riot. Great work!

I am on a warpath to build the baddest set of systems ever known to man. I still really want to meet you and wish you would take the initial interaction on good faith. I have gotten over my pouting.

By the way, check out [Trading Instrument]. Does that qualify on your systems as a breakout? :)

We picked it up long ago and have been "Vampiring" it short for two days.

You might consider taking your feelings about <being right> to Tribe.




who try to suck the last drop of blood

from every wiggle in the market


can wind up losing a few teeth.



Clip: http://animals.nationalgeographic.com/




Tuesday, August 11, 2009


Missing His Girlfriend

see previous

Hi Ed.


Thank you for responding to my last post, which you entitled "Letting Go of Drama."

I begin to become one with myself and the market. However, I notice when the market is slow during the day, I become lonely and impatient. I begin to think about my "girlfriend" and wishing that she would call. I think about how badly I want to be with her again and show her the "new and improved" me.

I ask myself, "What the heck are you thinking? Impatience is devoting your attention to something that has not happened yet. Focus on feeling impatience (tight throat muscles, clenching teeth and fists, getting chills down my legs) and the positive intention of it (wanting what I desire now without the stress of the unknown)."

I, then, recall [her] saying that I have no boundaries and am a "pushy [Nationality] boy." I begin to laugh. I realize Fred's intention is not to be with her at all, but to get a taste and push away - then become impatient and aggrivated when I do not have her anymore. I begin to laugh again realizing how completely stupid this is because my concious-mind wants to be with her all of the time. I am hysterical laughing and enlightened because I am getting to the root of my knot.

This process of untying my knots is painful. I feel the desire to cut corners and create a drama that will end the pain (i.e. doing something that will likely end our relationship). I begin to feel anxiety when I think about the unknown. I want to ask more questions and get answers for free without doing any work.

I, then, think about the times I've had with her. I see images of her smile, her puffy cheeks (I love them), the feeling of her hand on mind, the look in her eyes when she looks at me, her face when she puts on her make-up, the many times we laugh together. I feel chills down my back and on the tip of my nose when we have an intimate moment (a kiss, hug, etc). I see images of what, I imagine, our wedding would be like and what she would look like in the white dress. As I write, I am teary-eyed in happiness. I am fully confident in myself and commit to change.

Right livelihood is difficult.

You might consider taking your feelings about <being alone> and <impatience> and <your girlfriend is not available to you> to Tribe.





We Tend to Entrain Drama


that associates with feelings

we are unwilling to experience.







Clip: http://blogs.targetx.com/slu/


Tuesday, August 11, 2009


Owning Your Mate

see previous


Thank you for accepting my feelings about "prostitution" and for removing the word [from your response to my previous item].

As I read your answer, my first reaction is “Ed is missing the point: I am not treating my wife that way, I am continuously asking for willingness and offering her to share her feelings with me”.

As I read the changed version of your answer


Giving it Out in 30-Minute Intervals

works well for owners of curbs

and owners of people



[that replaces the earlier version]


Giving it Out in 30-Minute Intervals

works well for owners of curbs

and for prostitutes



I am confused.


I think “Ed means that I am treating my wife as my property”. I experience anger about myself ( I cannot give up control!), and about the futility of my effort to improve myself.

I re-read the sentence. Maybe you mean “your wife handles your feelings and your needs for physical closeness as if she owned you”.


- - - - -

I remember you asking me during the workshop to lecture about control-centric and intimacy-centric relationships. I remember not knowing what you were talking about and improvising a speech about how we can use our feelings as allies and the under-Fred network.

I feel that in the months after the workshop I am fulfilling your request with my contributions to FAQ and also fulfilling my intention, to help and support other workshop participants.

I wonder about the strange ways that we use to reach our goals.

Thank you for sharing your process.

back to the future