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January 15 - 31, 2009


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Note: The intention of inclusion of charts in FAQ is to illustrate trading principles - The appearance of a chart does not imply any kind of indication or recommendation to buy, sell, hold or stay out of any positions.




(Quotes from Ed in Red)


Saturday, January 31, 2009 6:51 PM


Hi Ed,

I wonder how you feel in the last several months whenever you hear about another bank / auto company needing bailout?


My feelings about the evolving financial bailout keep changing.



The Intention of a Bailout

is to increase buoyancy.


The current "stimulus" methods

are more likely a form of




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


Saturday, January 31, 2009

Just Wanna Say Thank You

Hi Ed,

Just reading over some of your answers to my questions on the FAQ (esp. Seeking and Attaining, Too much speculation, both 10/26/08), and
I just feel an urge to say thank you. THANKS!

(I feel like giving you a big hug if I am face-to-face with you!)

Thank you for your encouragement.


I like hugs, in person and by email.

Saturday, January 31, 2009

Trading the Passage of Capitalism


Ed says, "I, too, am grieving about the passage of Capitalism, the funeral of which is also in DC." (FAQ, 1/25/09)

So what does a trend trader do with the death of capitalism? How can he go with the flow?

Ed says, "I suspect Trend Traders are about to get the ride of a lifetime." (FAQ, 12/19/08)

How to get the ride of a lifetime if capitalism is dead?

The passage from one form of government to another associates with changes in many ratios.


For example, consider the length of time an entry-level employee has to work to earn enough money to buy a McDonald's hamburger.


If this ratio in the US were to approach that in Egypt, your Big Mac would cost about $50.



Australia 16 mins

Japan 22 mins

Britain 22 mins

France 25 mins

United States 30 mins

Chile 43 mins

Russia 53 mins

Argentina 1 hr 40 mins

Mexico 2 hrs 33 mins

Brazil 2 hrs 56 mins

Indonesia 3 hrs 3 mins

South Africa 4 hrs 52 mins

Egypt 5 hrs 15 mins



The Big Mac Index


is a pretty good indicator


of the level of prices

and the level of freedom


in various countries.



Data: http://www.reuters.com/article/






Saturday, January 31, 2009

Haiku / System Dynamics

Hi Ed,

I note much of what you write reads like Haiku - I'd be interested in whether Haiku is an influence for you.

Also, I wondered how much of an influence System Dynamics are on your work and thinking?

I am a fan of both Haiku and System Dynamics and seek to consider both more in my thinking.





Levels and Rates


serve to model the structure


of feedback models.



Clip: http://www.flowersgrowing.com/wp-content/uploads/2006/12/bamboo.jpg

Saturday, January 31, 2009

Favorite Books



Here is a list of books that I have recently read. If you like Corvettes, plan on having a child, enjoy boating or are looking to develop a profitable trading system I suggest you read them.

Corvette – America ’s Sports Car Yesterday Today Tomorrow – Jerry Burton - This book is improving my life by educating me about the car I have always wanted to own. The book is also a reminder that dreams can come true. Ever since I was 14 years old I have always wanted a Corvette, and approximately three years ago I actually went and purchased one. For the majority of my life I have always read about Corvettes, looked at them and dreamed of owning one. It feels good that I have accomplished one of my goals.

Gentle Baby Care – Elizabeth Pantley - This book is improving my life by providing me with the knowledge to improve my parenting skills. My wife and I intend to have children and being a good parent and caring properly for a child is something I value.

Chapman Piloting – Seamanship and Boat Handling 63rd Edition – Elbert S. Maloney - This book is improving my life by providing me with information that makes me a better boater.

Starting out with Visual Basic .Net 2nd Edition – Gaddis, Irvine , Denton - This book has provided me with the knowledge and skills required to program various trading strategies. This book is improving my life by moving me toward my goal of developing and trading a profitable trading system.

The Trading Tribe – Ed Seykota – (You’ve probably read this one) - This book has improved my life, by moving me closer to my goal of developing and implementing a profitable trading system. The book has taught me the importance of feelings in both trading and in life.

There are several other books I have enjoyed regarding trading, but I know you have already read them.

BTW thanks for the reply to my question regarding the support and resistance TSP.

Take care.

I read you.

Saturday, January 31, 2009

Drift-Adjusting Definition,

Trading Metrics & Diversification

Mr. Seykota,

Thank you for showing interest in the definition of drift adjusting. ‘drift adjusting’ definition: adjusting the price of the panama style continuous contract to eliminate the drift.

I believe that the drift-adjusted continuous contract offers an improvement with respect to the continuous contract because we no longer have to cope with the drift effect. The price of the drift-adjusted continuous contract matches the price level of the original futures contract. Perhaps it is of value to the TSP.

Trading Metrics Diversification

The simple support and resistance system selects from the optimization table the timing parameter with the highest frequency. However, trading with the single optimal timing parameter does not imply that the future performance of the system will be anywhere close to the historical performance. Therefore, a trader may wish to diversify the system by choosing a range of timing parameters.

The optimization table of the simple SR system indicates the range of timing parameters with high frequencies that are suitable for diversification. For a given instrument, initially we select from the optimization table a trend definition metric that seems to work well (e.g. slow = 150).


For that trend metric, we choose from the optimization table a few trading metrics with high frequencies (e.g. fast = 70 / 80 / 90 / 100 / 110 / 120 / 130 / 140). Next, the system distributes the heat to the trading metrics. Each trading metric is allocated heat that is proportional to its frequency. Therefore, the system consists of a portfolio with one instrument, one trend definition metric and several trading metrics.

Furthermore, when a market reaches a higher price level (e.g. from the 150 day high to the 300 day high) the optimization table indicates that, for slow = 300, the frequencies of the trading metrics (fast = 70 / 80 / 90 / 100 / 110 / 120 / 130 / 140) have changed. So the system re-distributes the heat to the trading metrics in proportion to their new frequency. The same process repeats again when the market reaches a 450 day high and so forth.

In the Gold instrument, when the market reaches a 150 day high, fast trading metrics are more significant because they have higher frequencies with respect to slower trading metrics. When the market reaches a 300 day high, all trading metrics are approximately equally significant in terms of their frequency. When the market reaches a 450 day high, slower trading metrics become more significant. In this case the system will progressively allocate more heat to the slower trading metrics as the market price moves from the 150 to the 300 and then to 450 day high.

Preliminary Results

Initially I generated the optimization table of the support and resistance system for Gold. Next I back-tested the system using the optimal timing parameter (trend/trading metric = 150 / 80, frequency = 0.1924, heat 0.05). Next, I back-tested 1 portfolio with trend metric = 150, trading metrics= 70 / 80 / 90 / 100 / 110 / 120 / 130 / 140, maximum portfolio heat 0.05. With respect to the SR system running on the single optimal timing parameter, the frequency, mean historical risk and maximum historical risk of the SR portfolio is reduced.

The motivation of this study is to see how the system would perform with market data it has not been optimized for. I back-tested the SR system with data from various markets: S&P 500, Crude Oil, Copper, Eurodollar and Soybeans. With respect to the SR running on a single timing parameter, the diversified SR system tends to over-perform in terms of frequency.

These results indicate that diversification does its job. A report with detailed results is included in the attached word document. I am working further to complete the ‘Trading Metrics Diversification’ study.

Would you perhaps be interested in the this study and could it be of value to the TSP?

Thank you.


Perhaps you can clarify some points..


I do not see a definition of "drift."


A continuous contract does not have "a price." It has a series of prices.  If all the prices match those in the original contract, then it is an original contract.


A trading metric (parameter) has a value, such as 50 days; it does not have a frequency.



Saturday, January 31, 2009


see: Random Acts of Violence


Thank you for the very powerful imagery in response to the 1/28/09 posting.

I felt viscerally moved and stirred to deep feeling's of compassion for the innocents.

I wonder if you can also feel compassion for the perpetrators.


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

Saturday, January 31, 2009


Carrots and Foxes

see: Receiving and Fighting


Yes, and I love it, and it is exactly what I want to do with my life now.

Thank you, Chief!

I wonder how the interaction below might evolve with you in the picture, receiving both sides.

Saturday, January 31, 2009


Fighting about Reasons




You might like this video - O'Reilly and Frank  argue about  the current credit contraction.


Hmmm ... I notice two senders and no receivers.

Saturday, January 31, 2009


Catching Rabbits - by Receiving

Do you know the best method to catch a rabbit? You stand very still and make a noise like a carrot. As a receiver, I am likely a very loud carrot: after few hours in [Country] people who I don't know start contacting me and telling me about their most intimate problems.

Thank you for sharing your process.



In TTP we come to experience



the art of behaving as a carrot




and the art of behaving as a fox



in matters of catching rabbits
and people's hearts.










Friday, January 30, 2009

A New Capitalist



Guess who says:

"... some are tempted to expand state economic intervention to the greatest possible extent. The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation. …

We are convinced that those who will create attractive conditions for global investment already now and will be able to preserve and strengthen sources of strategically meaningful resources will become leaders of the restoration of the global economy.”


Vladimir Putin - January 2009 speech in Davos



Predators and parasites tend to regulate themselves;  strains that work out symbiosis with their hosts survive, while ones that kill their hosts entirely also perish.




Savvy Foresters,  like Savvy Governors


balance harvesting

with planting.




Fox and Rabbit Populations


naturally oscillate


in this predator-prey model.









Friday, January 30, 2009

TT Conference Question
Hi Ed,

I am 23 years old, and currently my last year of University. At the end of this year I will graduate with with degrees in both Mechanical Engineering and Honours Business Administration, similar to yourself.

I am a huge advocate of your work and I have been developing my own trading system over the last year. On the TT website I saw you hosted a conference last summer in Nevada. Are you doing another conference again this summer? I am extremely interested in attending, but I haven't found anything on the site. Do you offer other conferences as well?




In response to gathering interest,  I am now hosting a Workshop for April 24-26, 2009 in Reno.

Friday, January 30, 2009

Induced Madness

Hi Ed,

please explain "induced madness" in FAQ. I am very curious about your opinion on that issue.

Yours sincerely,

Induced - past tense of induce - to cause.


Madness - obsolete term for lunacy.


I do not know the phrase "Induced Madness" to be a medical or therapeutic form.  It's first component has linguistic roots in the causal model and in the past.


The primary users of the phrase, Induced Madness, appear to be people who claim to suffer from it. 


Professional IM sufferers (victims) try to capitalize on their imaginary disease by having others pay attention to them, or feel sorry for or guilty about them.


IM victims, who wish a cure rather than attention, might consider celebrating their forms; they might start by re-stating their condition in SVO-p.


For example, change from:

I suffer from induced madness


I enjoy pretending I am loony.



The Joy of Lunacy


Important Observation:


Tweety, Elmer and Porky

all have the same doo.


Friday, January 30, 2009

Trend trading Trending Up


Ed Says:


our total system comprises your mechanical system that generates trades and your emotional system that deals with the results.

In general, for a simple robust system such as some solutions of the Donchian method, the parameter set seems to work, more or less, over extremely long time frames - if and only if you can stick to it.



The temptation to tinker with the system in search of the perfect system, or the holy grail of trading systems, so as to avoid the unavoidable uncertainty of the future and the nagging feelings that come with it is indeed great.

Just a side thought, I notice that the trend of books on trading system research and "quantitative trading" is up.


Do you think that we're approaching a kind of "AHA" with regard to systematic trading? If so which are the possible implications to trend trading?


Thank you for sharing your process.


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





Developing a Taste for Uncertainty


can help you stay on track


with Trend Trading.



Clip http://www.peirnet.net/moodle/


Friday, January 30, 2009 2:49 AM

Magnets - Cool Video




I know you like to experiment with magnets, copper and motion.  I think you might like this.



Thank you for the clip.


Another demonstration I like at the Exploratorium in San Francisco suspends a powerful magnet between two thick copper plates.

Thursday, January 29, 2009


Feelings About Paying Interest

Hi Ed,

Thank you for your suggestion that I take my feelings about paying interest to Tribe. I want to take them to IV Tribe. I commit to ten meetings in IV. I have a goal I want to attain. I want to find my right livelihood.

When I am 14, I think of myself as socially awkward. I cannot succeed in forming relationships. I observe that when I program computers, I need no human interaction. I decide on a career in software engineering. I reason that in this line of work, I need no social skills to succeed.

When I am 29, I run engineering at a small startup. I notice that programming computers revolves around communication, mostly between humans.


Each programmer communicates with the author of his operating system, the author of his compiler and the author of the libraries he uses. He must understand documents [what] these humans write, and assumptions they make, sometimes many years and miles away. He communicates with his users through his user interfaces or library routines he exposes. He must communicate the intended use and limitations of his software, often across years and miles.


Also, programmers often communicate with co-workers, product managers, project managers, designers and testers. I notice that I enjoy this communication more than I enjoy the engineering itself. I observe that I chose my career based on faulty assumptions. I wonder if I can find a more fulfilling livelihood.

When I am 28, I develop an interest in trading. I read /Reminiscences/, /Wizards/ and a number of trader memoirs. I reason that my programming experience is an edge over other traders. I think of the market as a way to capitalize directly on what I think of as my superior intellectual ability. I reason that my success or failure in trading will be mine alone and will not depend on bosses, subordinates, customers, investors or the economy.

In the moment of now, I am 31. I no longer try to use the market to prove my intellectual superiority.


I am more humble and introspective now. I accept many more of my feelings now and they become my allies. I have many more new allies that I am looking forward to. I observe that my interest in trading stems from a faulty assumption. I wonder if I can find a more fulfilling livelihood.

Thank you for sharing your process.


Your total trading system comprises your mechanical logical rules and also your emotional ability to follow the rules.


Lots of bright people report going broke by being right.





Wednesday, January 28, 2009


Random Acts of Violence

Hi, Ed Seykota.

I am from [City-Country]. In Aug'2007 I join [Firm] as (Technical & Derivatives Analyst) they are in process of starting their broking business. I sense that that it is going to take a long time before the operation is up and running.


I have the whole day at disposal. In Oct'2007 I Google for Ed Seykota (I think every one first read about you in Market Wizards). I follow the link to TTP website and start exploring it everyday. I am hook to TTP site, days and weeks are gone. I am almost done with exploring the website beside the FAQ.


I start reading the FAQ's after reading all FAQ’s for 2007 I am bit lost as to the context of the flow in the FAQ's, certain terms like Rocks, Hot Seats, K-not's. So I start reading FAQ's backwards from 2003. I finish reading the FAQ's in couple of months and got various insights.


By end Aug'2008 I get the TTP book. The book provides insights to the drama that entrains my life it also explains the TT process. Then [Other Firm] buy the [Country] operation of [Firm]. I become part of the downsizing process. I am now unemployed at home.

I write to [City] Tribe for participation and wait another three months for reply. Finally I Google the name of the tribe leader reach his face book and leave a message. The tribe leader reply after 8 days. I talk to the leader and we schedule a meeting for this week.

I write to Ed and tell the drama in my life. The drama (pattern) is as follows.

Life is good I am happy and feel good, slowly things stagnate then the downhill starts and finally I am in distress, I am miserable, I am in pain, I try hard to wriggle out of the situation and fails.

The miserable state do not decorate further it stay put, but I slowly run out of patience and cry in isolation. I keep looking for help and silently beg for help which will alleviate me out of the situation. I am in this situation for some time and my senses numb. I continue in pain but longer feel the need of a helping hand as none is coming. Slowly things start looking up. Slowly I get out of the miserable state. The uptrend accelerate and I reach a new high, I remain on the highs and then follows the downhill. I hit the bottom remain in a rut and the cycle repeats.

The TTP book jump start me to think.

I think about my childhood. My father is disciplinarian and punishes me and my elder brother randomly. I am completely confuse and think that we have done something terribly wrong hence we are being punish.


My father get angry and do not know why I and my brother is physically assaulted this follow a very dreadful punishment to remain in the posture of a "Hen" where in you bend your knees, tilt your head down inwards and catch your ears by taking your hand below your knees and remain in this posture for at least an hour. I remember my mother crying for us and begging mercy for us from my father but that is of no avail.


Then being in the "hen" posture in immense pain and in tears I pray to god to some how relieve me of from the pain. After some time we are ask to get up then follows a big lecture and then situation normalize. The process repeats randomly at least twice a month also some scolding in between. As I grow into a teenager the form of the punishment changes into a silent protest by not talking to me ignoring me and avoidance by my father. I ask forgiveness abut my father do not budge, my mothers gets into the situation and she tells my father to forgive but he remains angry for 1-2 days the then the situation normalize to be repeated again.

The setup continues with some modifications with the same outcome. I realize that my father keeps punishing me for invalid and trivial reasons. I do not subscribe to his views and hence I am at fault, and thus entitles the punishments. I am frustrated with this exercise and starts putting up to my mother that I am not sorry because I have not done any mistakes. Though I give into mother demand and ask for forgiveness from my father to buy peace for the family.

In 2002, my career as a Fundamental Analyst is over. I start Daily Day Trading on the basis of technical analysis. I have a wining first month of day trading. I break-even and also move out of my father home after he gets upset and put up with a friend. Then I Lose 50% of my margin. Then I lose more, by September I am done. I am broke, have no money to live, I am also in credit card debt. I borrow from friends, from brother, even look up to my father for help but he is not talking to me as he is angry at me.

I remain in no job, no money situation for 5 months. In June 2003 I get a job that pays peanuts with a financial portal as a online technical analyst. I also day trade intermittently and lose some money.

In Feb 2004 I take a decent offer, start doing well financially. I again day trade intermittently and lose some more money. My salary increases and my lifestyle improves. Things look good and I am enjoying life. I reach another high in my career by joining [Firm] in Aug-2007. The pattern repeats and here I am hurt, frustrated and striving to put things together.

I am a trend follower now. Since my visit to TTP site and at [Firm] my trading calls improve dramatically. My confidence in my trading calls scales to a new high. I have complete confidence in my system.

I adhere to the trading tribe process to follow trend, ride winners cut losses, manage risk, use stops and follow the system.

Post [Firm] I plan to trade. I get my finance for trading margin and living expenses together only to realize that am short of fund for trading. The Exchange increases the lot size of Stock Futures contract for March Series by 2.8X and my margin money will no longer support my trading plan. I am now frustrated, distressed, scared that my plans to trade will fail and I’ll fall flat on my face.

From childhood to adulthood I grew with a constant fear of things going wrong anytime. I live this fear every time.

PS: I make an attempt to write the above text in SVOP.


Thank you for sharing your process.


Punishment is a penalty for violation of a rule. 


Violence is overtly intentional physical aggression toward another person.


If the treatment from your father is random and if you do not consistently associate your treatment with breaking any particular rule, it is likely not punishment; randomness more likely associates with your father's predilection toward violence.


Your father is  likely venting and / or medicating his own feelings - likely those he inherits from his (and your) ancestors.


You and your Tribe now have an opportunity to "replace the rock" and to find out how to avoid passing the pattern down to your own children.


You might consider taking your feelings about <anger> <punishment> and <violence> to Tribe.


Your Tribe may be able to assist you in coming to celebrate your feelings, to see their positive intentions and to get to the Zero Point.





When we come ...




... to experience ...




... our feelings ...




... of violence ...




...  against children ...




... we have an opportunity ...




... to end it on the planet.






When We Come to See


the abusers


as former recipients of abuse


and to forgive them their rocks,


we set them, and ourselves





Note: "Forgiving the Rock" is part of the rocks process in which the sender rejects the offer of  behavioral resources from a childhood role model.


This prepares the sender to replace his medicinal rock with a pro-active rock that he, working with his Tribe, creates.






























Monday, January 26, 2009

Re-Optimizing / Tinkering



Ed Says:

Back-test parameters do not predict anything.

They guide your response to the markets in the ever-evolving moment of now.

Hi, Ed! How are you? I hope you're well. It's been a while since I used to send frequent e-mail to FAQ. I guess I am letting go of my 'incorrigible pattern'. I feel I still have some minor work to do anyway.

Over the past several weeks I have been doing several back-tests on a system I wish to put on-line as a long term investment vehicle for myself. Owing to the constrictions of a small account, I will be limited to 6 instruments (currency pairs) in the portfolio.

In the backtest process I took the necessary precautions to test for robustness of the strategy against a portfolio of diverse liquid futures markets for the last ten years, and I also made several experiments of rolling optimization so as to simulate the transition from back-testing into actual trading.

My strategy is based on a Donchian type support and resistance system with a trade direction filter. I have chosen the Donchian model because I feel that it's the most reliable and robust one.


Although I conducted tests with other models, such dual moving average crossovers and Bollinger band breakouts, in a hope to use two different models, I have found that they are not as effective and robust as the Donchian type. As a matter of fact, I wonder why so many traders like dual moving average crossovers, as I feel they are anything but robust trading models.

My research is practically done by now. I have attached two equity graphs for comparison: one is for 6 instruments in the period of 1996-2009, with a MAR ratio of 0.97 (Sharpe ratio 1.02), and the other is for 4 instruments in the period of 1980-2009, with a MAR ratio of 0.87 (Sharpe ratio 0.92).

The equity curves are not quite smooth, but I feel it's the best I can achieve with a limited portfolio while keeping the strategy robust.

One aspect of this system design process I am quite aware of, is that future actual performance may certainly be different of backtest results, and the future optimal parameters set might be different from today's values, as markets keep changing.

So I wonder how I can manage this process of change in the 'ever-evolving moment of now'. I am thinking about setting a schedule to review the system and make a re-optimization of parameter values, such every 5 years. Anyway it's the best I can think of so far. How do you deal with this dynamic aspect of trend trading?

Best regards.

Thank you for sharing your process.


Your total system comprises your mechanical system that generates trades and your emotional system that deals with the results.


In general, for a simple robust system such as some solutions of the Donchian method, the parameter set seems to work, more or less, over extremely long time frames - if and only if you can stick to it.


You might consider taking your feelings about <tinkering with your system> to Tribe.






A tinker is, originally,

an itinerant tinsmith.


A tinker's dam is, originally

a piece of wet bread

useful for arresting the flow

of hot metal.


In system trading,

a tinkerer

is generally an itinerant trader.


A tinkerer's damn

is an expression of remorse

at not following a signal.



Clip: http://forum.mflenses.com/userpix/


Monday, January 26, 2009

Trouble With SVO-p

Hello Ed,

Thank you for your proof read on my project for publication on FAQ.


I am having trouble replacing the line, “if only I had bought yesterday”, with something in the present tense that conveys the same feeling of frustration that someone missing out on a move feels, do you have any suggestions?

I intend to make the changes you suggest, and some minor formatting changes of my own, and submit a final copy to you that is ready for publishing.

I like how your study is coming along.


For an SVO-p approach, you might try something along these lines ...

I feel regret and remorse in my chest as I keep replaying the trade over and over, changing the script so that I am buying the bottom instead of selling it.


My mental revision works only for a while to keep out the sad truth which keeps rising in my chest and then flooding in over the dam of my wishful delusions.


The awful truth is, my trade stands alone, with the dubious distinction of marking the exact bottom of  the move.


Now, as the price swiftly rises, with me short instead of long, the feelings of anger and frustration rise with it ... etc.

Monday, January 26, 2009


Getting Clear on Trading Software


My intention is to trade long term trend following systems such as Michael Covel's "Trend Following" book describes.

I intend to use the software I  am writing to operate a successful trading business, trading my own accounts. I do not intend to market the software and technology or be a software vendor.

I am funding the R&D myself. My work on this project is ongoing, off and on for over 10 years, between various contract / consulting jobs.

I am not trading now. I am in the process of establishing software, technology and a system that I'm compatible with, have confidence in, can trade and stick to.

I have a $100k grub stake ready to start with.

Thank you for sharing your process.


You might consider taking your feelings of <actually starting trading> to Tribe.

Monday, January 26, 2009


Goal and Process

Dear Ed,

I've been trying to work out which of the following approaches to life gives the most life enhancing results:

1) focus on work, exercise, diet, meditation, visualization - etc. i.e. focus on the PROCESSES of life.

2) focus on the end results, the specific snapshot intentions, i.e. focus on the OUTCOMES I want.

With 1), I find that the processes get perfected, and there is a joy in living in the now. I also feel I am crafting or perfecting my habits.

With 2), I find that there is more attachment and clinging, or grasping, feelings the Buddha spoke about. I find that sometimes though the outcomes are caused without thinking. But there is less experience of the present moment, as the mind is focused on getting what it wants.

I find it difficult to balance focus on both. Do you have a view, and if so what is it please?


You might consider taking the feelings of <process orientation> and <goal orientation> into the Polarity Process.


You might find you experience your "answer" at the zero point.

Monday, January 26, 2009


One Minute to Aha

Dear Ed,

I’m a 35 year old married mechanical engineer / trend trader / hobby musician and medium distance runner, married with a wonderful [Nationality] woman, living in [City] at the moment.

Eight weeks ago my wife and me where blessed with the birth of our first child (a cute daughter).

I’m trading since 2001, got into Trend trading around 2003 and read next to „Reminiscences of a stock operator“ all Jack Schwager books including your interview.

I was very impressed, found your website and was reading the complete FAQ.

From 2004 to 2007 I made about 800% in the stock market with riding the strongest shares.

I used a mixture between your exponential averages as trend indicator and the Ryan O´ Neil approach to go long at a new high as an entry signal.

After this results I decided to trade fulltime at the end of 2007 (with at that time about 400k USD Trading account size plus two small managed family accounts ).

My job as an engineer in the [Country] car industry as an engine designer / technical manager for product strategy is very time demanding and my heart is much more into trading than in my employed job.

I started in November 2007, when the stock market long trends ended.

Because of a new more professional account I had the possibility to use leverage for my trading the first time

plus I had „too much time for trading“ because I could sit the whole day in front of the screen and used it to much for doing to too many trades.

Long story short I made too many mistakes.

In November 2007 I lost about half my account size (from the maximum point).

After that shock I needed weeks to trade again and till today I trade only small with only break even results. (still 200k USD account)

Calculated from 2004 I’m still up 300% in my account but my goal to trade full time is delayed.

Since October 2008 I’m back in my engineer job, could even find a better paid position with more management / strategy involved but my love is devoted for trading.

I wanted to participate in your yearly TTP seminar last year, but had the feeling that after my mistakes I „could not afford“ the additional money (I know: „Take your feelings about cannot afford to loose to Tribe…“)

Some time ago I contacted the trading tribe leader from [City] (who visited you in Incline Village last week) to participate in a Tribe meeting

Last weekend I participated for the first time and it was mind blowing.

After one minute at the hot chair I was in the middle of my strong suppressed feelings of „Anger“ (an issue with my parents).

After an eruption of emotions I felt strong joy and I had to laugh for minutes because I could fully experience this anger and had several „Aha´s“ during the following days.

I will continue to participate in this tribe and I want to commit myself to join the next Trading Tribe seminar with you that will take place hopefully.

I want to thank you for all the good things that you have done to me and all others who’s are willing to feel their feelings and to work on themselves in trading and in live.

All the best to you and your beloved ones.

I end this letter with the wish to meet you personally in the future!

Thank you for sharing your process.

Sunday, January 25, 2009


IV Tribe Meeting Series Coming Up

Hi Ed,

Thanks for the head's up reminder. I am in DC for a funeral and a little behind on my reading. I am making progress but it's been a month of unpredictable distractions.

I recently read the part about how we as a society are terrified of rejection, try to avoid it, and get a k/not.


I am trying to be grateful for every experience, pleasant or not. I have experience with this idea of "saying yes to everything" but I am out of practice.

Unsure when you want to start next tribe, I recall you said this year sometime. Let me know if it's soon and I will finish the book ASAP.


I offer my condolences and prayers on the passage of your friend.


I, too, am grieving about the passage of Capitalism, the funeral of which is also in DC.


Part of the effective way to fix things is to stop trying to fix things,


I am starting up a new series of Tribe Meetings in Incline.


Every two weeks, on Thursdays, with a ten-meeting commitment to mastery of some process and / or attainment of some goal.

Sunday, January 25, 2009


FAQ Reference to a Specific City


Thank you for giving me an opportunity to experience my feelings about compromising my anonymity.


Sunday, January 25, 2009



Hi Ed,

Thank you for your email. Please note that I am working on programming the system in excel with the previously described additions. I attach for your review a comprehensive document of the system ideas that I intend to research. This has helped clarify and structure my thoughts as the previous version I sent was a bit muddled in thought and in build. I expect finalize the macro soon and will send that to you.

The system is also programmed in [Software Package] however this also needs further review due to some unexplained trades. I attach a copy of a test for your information.

As an update to progress, my programming skills are not up to scratch for writing macros or programming in [Language]. I am inspired by an FAQ poster’s comments on learning programming of Sunday 9th November 2008; “Programmer Goes Ballistic” and intend to start an excel course to learn more about VBA and macros programming.


Thank you for sharing your progress.

Sunday, January 25, 2009


Support and Resistance System TSP Project



I am working on the support and resistance system in your TSP project and I am having difficulty understanding how you calculate your entry points.


I have managed to recreate the metrics log except for the last column which is always a negative or positive “1”. I believe this is how you determine whether the long term trend is up or down. Positive “1” being long term up trend and negative “1” being a long term down trend. Can you advise how you calculate positive or negative “1”? Thanks for your help Ed.


The long and short column flows from penetrations of support and resistance.

Sunday, January 25, 2009




I send you the report of my visit to IV and the consequences.

The Vice-Head of the Dept. of Psychiatry of our University attends his first TTP meeting last Friday.

The trend is strong, time to start pyramiding up!

My visit to Incline Village: The meeting is scheduled for 5:00 PM. I tell Ed that I will arrive at 4:45 PM. I park my car at Ed´s house at 4:44 PM. It is a feat, after travelling for 20 hours and covering 5.500 miles. I finally meet Ed in person, experience the glorious view of Lake Tahoe from his living room, and see its legendary dish washer in action.


The first hot seat: We are four. I am the first on the hot seat. I bring an issue in which I worked with my tribe, but without success (see Monday, December 8, 2008 “Breasts, Management and Embarrassment”). In the weeks after the meeting I still feel a pressure on my stomach each time I receive emails from Professor A and Doctor B (two women, I am a man). I do not like the pressure on my stomach: I hate this feeling. I experience the pressure when I feel “I am going to have problems and experience anger”. Emails from A and B usually mean problems. When I concentrate on the pressure on my stomach, I develop the form “ducking and bending my wrists”. Ed asks me thoroughly about the issue. We find the problem: when I am a little child my mother and my grandmother fight about me and try to keep me for themselves. I do not experience a relationship which favors growing, but I rather feel like an object which two women try to keep for themselves. I react with anger, withdrawal and tiredness: I get myself to sleep, or get mad, or run away.


We do a role playing: one tribe member plays my mother and another plays my grandmother. They fight for me and try to keep me for themselves. They hug and cuddle me and try to convince me to go with one of them. I am confused and not know what to do. Ed plays my father; he provides me a rock with the resources “anger”, “withdrawal” and “go to sleep”. I realize that they are not helpful. I see that I use the rock each time people treat me not as a person but rather as an object, or if they try to impose me their will, or if they do not respect me: in these cases, I get mad or I withdraw.


Ed asks me several times if I want to get rid of the rock. I am not certain. I am surprised about this uncertainty, but I understand: I have been acting this way for about 4 decades.


Finally, I firmly reject the rock. Ed tries several times to give it to me, and I use the chance to improve my English: I shout loud several four letter words while rejecting the rock.


In a second role playing, I receive a new rock. It contains the new resources:


“I take a deep breath and think about a better reaction”,


“I firmly tell them my opinion”,


I laugh at them and see that they are ridiculous”,


“I ask them about their feelings”,


“I share my feelings with them”,


“I tell them that I don't play their game, stand up and go”,


and also “I get angry”, which can be useful under certain circumstances.


My “mother” and my “grandmother” try to hug me and cuddle me. I firmly reject them; I tell them that I love them, but that I don't like the physical contact and the feeling of being an object. I ask them to share their feelings with me. Both are surprised and sad and feel it impossible to hug me! I share my feelings with them, and they with me.


Ed asks me to commit to apply the new resources, and after some hesitation I do it. I release the Tribe members from their roles and we check out.


Intermezzo: I return to my city. I still feel the pressure on my stomach, and still do not like it. However, when I go into the feeling, the old form “ducking and bending wrists” (anger) is no more there.


The following days I observe a substantial increase in the need of my wife for physical contact with me. The change is remarkable, since the lack of physical contact substantially affected our relationship in the last years. Aha.


Ten days after the hot seat I have a meeting with Professor A, Doctor B, and two other members of the Faculty. Our group has a problem regarding a research project. The Faculty evaluated the issue and decided that A and B made a serious mistake, and that I am right. Now, A and B try to make me responsible for the mistake. I am immediately under massive attack. A and B are full of reproaches and accuse me of incompetence and of blocking the project. I feel fear: It is the pressure on my stomach. My hands sweat and my throat and mouth are extremely dry: in fact, I can barely speak. I try to explain my point of view, and they keep attacking me. I take a deep breath (a new resource) and tell them,


"See, I am here to try to solve a problem with you. However, I feel that you are here to attack me. Please tell me what you want to do. If you want to resolve the problem, I stay. If you keep criminalizing me, I leave” (another new resource).


Shortly after that, A receives a phone call and leaves the room (it seems to me that she cannot handle my new responses, and someone helps her by calling her away…). B stops attacking me and we look for a positive solution. When A returns, she changes her strategy: this time, she does not use “fear” but “anger”. But I have worked on my “anger” issue in IV! I really enjoy her being angry. I ask her if she is angry at me, or at the situation. I ask her to share her anger with me. She is confused and does not know what to say. I keep on enjoying her being angry at me. It is FUN!


After 90 minutes I see that we are not going to find a solution, I stand up and leave the room. I feel that they are ridiculous and I don't want to waste my time with them (another new resource). Furthermore, my Tribe is waiting for me. I don't care about the problem anymore: The Faculty has decided that I am right, and I feel that A and B only want to generate drama. Well, this is not my issue.


The second hot seat: I feel a lot of “fear” during the meeting with A and B, and I bring the issue to my Own Local Tribe, one hour later. First, I ask for a process manager: several Tribe members have themselves a problem with “fear” and hence cannot help, but another member is ready and volunteers.


This underlines the importance of having a larger Tribe. I go deep into the pressure on my stomach, and this time “ducking and bending wrists” does not appear. Instead, I am scared and afraid. We increase the form. I go into an embryonic position; I cover my eyes and shout. I am in panic. The process manager prompts me to freeze the form and to increase the feeling. At this point, I experience an explosion of joy and start laughing loud.


I think about A and B. They are RIDICULOUS! They are trying to scare ME! It is LAUGHABLE! I start shouting “Boooooh, boooooooh! I am afraaaaaaaaaiiid!” and keep on laughing. I discover that I really like the pressure on my stomach. Fear is FUN! Fear is COOL! Fear prevents you from doing silly things, or from taking too much risk (I handle stock options and experience a huge daily volatility, which generates, well, feelings of fear…I also start risky personal projects which lead to feel, of course, fear…).


Experiencing “fear” is good, while feeling afraid is useless. I enjoy the pressure on my stomach: It is a sensual feeling. I keep on rubbing my stomach and enjoying it, while I say “hmmmmm, hmmmmm”.  I like experiencing fear! I go back to the child I was and comfort him: He does not need to be afraid, I am more experienced and I can take care of him (as I write these words, I feel a pouring of emotion and my eyes fill with tears).


I also realize that the feeling of fear I had as a child was, in fact, loneliness. At night, I was not afraid: I needed company, and nobody was there. But a child is not able to differentiate the feelings and tells the parents “I am afraid of the monsters in my room”. They respond “There are no monsters, you don't need to be afraid, go to bed”…I suggest the FAQ readers to think carefully about this.


I feel deep compassion for A and B: They manipulate people with fear and anger instead of constructing positive personal relationships. They have a very bad reputation among Faculty members. Just two poor women…


I keep on imagining that I receive emails from them: I still feel the sensual pleasure on my stomach. I LOVE fear and look forward receiving more emails from them!


I also recognize the efforts of the press, the government, the media…to manipulate people using fear.


I want to sleep a couple of times to let the new resources affirm.


Conclusion: I sleep three times since the hot seat. I feel that the issue is resolved. I like the feeling in my stomach. It informs me about danger; it prevents me from taking unnecessary risk. Today there are no new emails from A or B in my mailbox. In the night there will be no monsters under my bed also.


It was a complex issue, taking three hot seats to resolve. I see that “fear”, “anger” and “loneliness” were intertwined. This is likely the reason for the limited success of the first rock process. But cutting the first knot with the IV Tribe opened the way for further resolutions. I still need a fourth hot seat to work on loneliness.


I thank my Tribe and the IV Tribe for their unceasing support. I cannot express my gratitude in words.


Warmly yours,

Thank you for sharing your process.



Perceiving Monsters Under the Bed ...




... May be a Way to Express Desire


for closeness and nurture.











Saturday, January 24, 2009


Hello Ed,

I would like to participate in the workshops that combine the Tribe format with the preparation of a plan for accomplishing a goal as mentioned on the TT website.


Additionally I am interested in the next TTP workshop when offered. I would like to get that on my calendar to avoid schedule conflicts. Have you set a date yet for the workshop?

Thank you and best regards,

I am sensing interest in having another Workshop.


Friday, January 23, 2009


Wants Advice About Advice

Hello Ed,

Happy New Year!

I'm updating about the tribe in [City] after quite some time. We are now 5 regular members and meet once every 3 weeks for TTP and the snapshot / hardball processes. Members also recommend fellow tribe members books on spirituality, trading/business, motivational etc.

In our recent meeting, during the check out of a hot seat session, one of the receivers suggests "remedies" to the hot seat member about his "issues" that he takes to the hot seat.


I feel that during the check out, although, the hot seat ("sender") is at a zero point, he seems to be still deep in his almost meditative state. The receiver by talking remedies seem to have pulled the sender into his conscious mind.

I feel that the receivers need only focus on expressing what they observe and experience from the sender's hot seat experience.

I'd appreciate your thoughts and comments.

Thank you for sharing your process.


In the TTP rocks process, we typically offer "advice" during a specific window in the process.


The conditions for offering advice are:

- Hot seat makes a conscious decision to  abandon his current rock and to consider resources of a new rock.


- Advice appears as suggestions for resources in the new rock.


- Hot Seat practices situational implementation of the resource.


- Hot Seat considers the resource and decides whether or not to include it in the rock.

Offering advice at the end of a process is likely to have little effect on Hot Seat, except to irritate him and to pull him out of process.


I can take the issue of <offering advice without solicitation> to Tribe as an entry point.





Friday, January 23, 2009


Forgetting / Losing Something
Hey Ed,

i have this problem with forgetting or losing something. it happens, that i just get out of my door and i open my bag again to check if i took some particular item with me.


i remember working on this with my tribe two months ago. but i think this repeated checking if i have everything with me is becoming more and more.


i am wondering if this means, that my process wasn't done properly or that there is some other underlying issue. i'd be glad if you could share some insight.

Thank you for sharing your process..


You seem to demonstrate mastery in using the resource [periodically check your inventory] to remember things.


You might consider taking your feelings about <wondering if its working> to Tribe.


Thursday, January 22, 2009


Risk Management - By the Book


Is there a book / course or method that you would suggest to improve risk-management as a trader?

Is it really more about knowledge, or it is about knowing yourself?


You might consider trying this:


1. Get a couple dozen books together.


2. Guess the maximum number of books you can safely carry up and down a flight of stairs with your eyes shut.


3. Try it out and see what happens.


4. Repeat from step 2, until risk management mastery appears.



Risk Management Theory


appears in books.


Risk Management


appears in the gut.




Clip: http://www.hofstra.edu/images/


Thursday, January 22, 2009


Checking In

Hi Ed,

I am pleased to be in touch again. I see your son is doing great and already a young man. I have a girl, , and a boy, and they are just a few years younger than yours were when I first met them. Time flies. I am still in [City], trading away, always trying to balance between embracing change and remaining constant, like the proverbial willow.


Somehow, age has helped me in this pursuit, at least I humbly hope so. I often think of you and miss you and your wisdom - over they years much of what I did not recognize at the time as a lesson comes back to echo in my ears! I am interested to learn about you and what you have been up to.


Great to hear from you. I am glad you are doing well and are busy about the important work of raising kids.

Thursday, January 22, 2009


Potholes on Steroids - Video




We have it easy. Watch this power point presentation about the situation in the USSR.


Russian Roads.pps (1679KB)

And we complain about a pothole!

Thank you for the video.

Wednesday, January 21, 2009


Pain In The Neck


Sometimes TTP has delayed effects on me. The morning after our last Tribe meeting, I wake up with a stiff neck. Something about the expression, "stiff-necked," bothers me. I look it up and read a story about early Israeli traders whose chief breaks off communication for forty days. The traders reach an uncle point, jump their system and go long gold and cattle -- with near-disastrous results. I find the story deep and instructive on many levels. The pain in my neck continues.

Over the next days, I read more about Moses. His parents abandon him as a baby. He has a k-not around attachment and spends his life running away, first from Egypt to Midian, then back to Egypt, then from Egypt. Moses returns to Egypt when the old Pharaoh dies. The young Pharaoh can't grieve for his late father. Pharaoh has k-nots around sadness, grief and letting people go. He engages Fred, Moses and Aaron to help him experience these feelings in a drama of such epic proportions that 3500 years later billions of people know about it. My neck still hurts.

I find a video clip of Jesse Brooks singing "Go Down Moses" in the movie Sullivan's Travels. As he sings, wardens march a chain gang into his church. I break down and start crying. I see myself at age 12, a refugee from <country>, a modern-day house of bondage.


I keep crying. I see myself at age 5 when my father abandons me. I keep crying. I see myself growing up with a mother to whom I am a burden, a tax on her well-being. She treats me like a receptacle for feelings she doesn't like. I must take her feelings locked up so she doesn't have to experience them. If I let them out, or if I let my own feelings out, terrible things happen.


I keep crying. A wave comes over me and I go under. I see myself as a prisoner and slave. Someone who is worthless. Someone who deserves nothing. I keep crying. I feel sadness so strong I cannot describe it. I keep crying. I let go of my myth of a happy childhood. I let go of a myth that I had a childhood.


My crying subsides. I feel emptiness. I feel exhaustion. I notice that the pain in my neck is gone.

The next morning I wake up to find that my account has gone from a drawdown to a new high. I read the last paragraph again and notice no coherent train of thought or logic in it. I wonder if it is an indication that Fred drives in this paragraph and not CM.

Clip: http://www.youtube.com/watch?v=u0CRAavN4EI

Thank you for sharing your process and for being willing to work through your issues.




Resisting Feelings ==> Pain


Experiencing Feelings ==> Growth




Clip: http://drreeves.com/Neck%20


Wednesday, January 21, 2009





Here is a riddle for you.



I Hope all is good, you're riding trends (especially market ones) and keeping healthy

Thank you for your well wishes.


I like this exercise in dynamic relationship management.

Monday, January 19, 2009

Marathon Goal Achieved


I am pleased to say that I did finish the marathon yesterday. Thank you to everyone who supported me in achieving my goal; I really do not think I would have finished without the support that I received.

Thank you for sharing your process and your success.

Sunday, January 18, 2009



Good morning Mr. Seykota,

I know you are a busy man and I do not want to take too much of your time. I myself am a 26 year old guy from [City]. I have been teaching myself about every different type of market since I was about 16. For awhile now I have been really researching and learning about the currency markets.


I am so interested in the flow of opportunities it presents on a daily basis. I have already begun to trade and have already had great success. The thing that I am struggling with is trying to make myself believe that I am actually doing this and I’m actually good at it. My mind just keeps telling me that the thing’s I’m doing to get these winning trades are just too simple to be true. My personal account I have started with $6,000 and my goal is to make continually make 20 pips per day, risking %5 on each trade to reach my goal of turning this $6,000 into $1 Million.

I guess I am writing to you for some encouragement as you were also once teaching yourself to trade. It’s a big world to be involved in with majority of the trader’s having high education and training. Sometime’s that can make you feel very small.

I believe I can do this and will see that these beliefs come to pass. I wanted to also share a quote that I read on a daily basis.

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat.”

Thank you for your time and I look forward to hearing from you,

 - Future Billionaire

Thank you for sharing your process.


You might consider interviewing some successful long-standing traders to find out how many go for strings of 20 pips per day vs. 5% of equity.


You might find that they realize an adverse price move of 100 pips (perhaps a gap on news) can create a 100% drawdown.


You might find the easiest way to become a millionaire might be to do nothing and let the impending currency inflation propel you into the six-figure-and-beyond club.




An Honest Day's Pay


for an honest day's work.



Clip: http://balabeach.com/balabeachblog/


Saturday, January 17, 2009



Hi Ed,

I would like to thank you for the opportunity to meet you and to participate in the meeting. I tried the new way of communicating yesterday, and I just sat down to a table of two stranger girls, and started to talk with them.

They ended up inviting me for their party later that night, but I guess I just have to get used to deal with success, because I did not show up.

Anyway, I hope you are doing well, and I hope that I will be invited to the next tribe meeting: I will prepare with reading the book again.


Thank you for sharing your process and on your breakthrough success with making contact.



Some Fishermen


are in it for the sport

and typically throw back the catch.


If you wish to extend your experience

past the catch and release stage,


you might consider taking your catch home

and collaborating to cook up

something delicious.



Clip: http://www.fishheadquarters.com/albums/


Saturday, January 17, 2009

Right Feeling in the Right Place


does feeling always precede conscious mind?? Or does Fred always go before Conscious Mind?

I notice you still say "Fred" (firstly) and "Conscious Mind" (secondly). So, can we also manufacture Wisdom by using "Conscious mind" (firstly)with "Fred" (Secondly)??? CM and Fred still work together but not in the same time.

In other words, can I use my Conscious Mind to provoke the right feeling at the right place (I now totally agree that all feelings have positive intention)??

For example, if I feel too much trust on myself, can I then use my Conscious Mind to provoke or set off FEAR in order to control my risk??


Because when I feel invulnerable, I think that I don't need to control risk!! So in that case, the best way to act Wisdomly is to feel FEAR even though I may don't feel it instantaneously. So I have to set off FEAR thank to conscious mind.

Yours faithfully.

In the TTP model, emotions arise automatically in response to situations; emotions go on to trigger automatic responses according to resources.  We call a bundle of emotion-specific response resources a rock.


Feelings are our conscious awareness of our emotions.  Experiencing is the act of consciously processing feelings and generating wisdom.


Yes, you can change your feelings by conscious thought. You can also change them with drugs, alcohol and distractive drama.


We call the practice of changing feelings without addressing the underlying situation "medication." 


In TTP we aim to celebrate the positive intentions of our feelings and to generate wisdom and resources to deal effectively with underlying situations.

Friday, January 16, 2009


Inflation Concerns

Dear Ed,

I hope you are well.

When will your book ready?

Housing (in the main) got us into the mess we are now in?

If only Mr. Greenspan,  and some of the other central bankers had acted sooner and put interest rates up earlier house price inflation could have been curbed to some extent.

If this had happened many people would not have been able to borrow money on the basis that the house they were buying (but couldn't really afford to buy) would continuously increase in value.

Sub-prime could have been a much smaller problem.

That interest rates were too low for too long(previously) is an ongoing topic.

The time of low interest rates and cheap airline travel 'were gone forever' are yet two more fallacies.
Interest rates are low and oil is cheap.

If only.

While you are engaging your "if only" imaginings, you  might consider the pre-1913 (Federal Reserve Act) situation in which we have no central banking authority; a system of competing local banks carries out the business of regulating credit.