Ed Seykota Quotes

March 4, 2010

Markets

The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.

Short-Term Trading

The elements of good trading are cutting losses, cutting losses, and cutting losses.

Outcomes

Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money.

I think that if people look deeply enough into their trading patterns, they find that, on balance, including all their goals, they are really getting what they want, even though they may not understand it or want to admit it.

Market Trends

The trend is your friend except at the end where it bends.

Charles Faulkner tells a story about Seykota’s finely honed intuition when it comes to trading: I am reminded of an experience that Ed Seykota shared with a group. He said that when he looks at a market, that everyone else thinks has exhausted its up trend, that is often when he likes to get in. When I asked him how he made this determination, he said he just puts the chart on the other side of the room and if it looked like it was going up, then he would buy it… Of course this trade was seen through the eyes of someone with deep insight into the market behavior.

Predicting the Future

If you want to know everything about the market, go to the beach. Push and pull your hands with the waves. Some are bigger waves, some are smaller. But if you try to push the wave out when it’s coming in, it’ll never happen. The market is always right.

Trading

To avoid whipsaw losses, stop trading.

Here’s the essence of risk management: Risk no more than you can afford to lose, and also risk enough so that a win is meaningful. If there is no such amount, don’t play.

Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.

Markets are fundamentally volatile. No way around it. Your prolem is not in the math. There is no math to ge you out of having to experience uncertainty.

It can be very expensive to try to convince the markets you are right.

System Trading

Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.

I don’t think traders can follow rules for very long unless they reflect their own trading style. Eventually, a breaking point is reached and the trader has to quit or change, or find a new set of rules he can follow. This seems to be part of the process of evolution and growth of a trader.

Feelings

Our work is not so much to treat or to cure feelings, as to accept and celebrate them. This is a critical difference.

Fundamentalists figure things out and anticipate change. Trend followers join the trend of the moment. Fundamentalists try to solve their feelings. Trend followers join their feelings and observe them evolve and dis-solve. The feelings we accept and enjoy rarely interfere with trading. Trying to treat or cure feelings adds mass.

When a feeling dissolves, it ceases to be your enemy and begins to be one of your allies.

Technology and Uncertainty

Advanced technology for analyzing the markets is interesting, entertaining, distracting, and even counter-productive to coming to terms with emotional reactions to uncertainty and volatility.

By the way, if you want something certain about the markets, uncertainty itself almost certainly happens to be one of the most certain things about the markets.

Experience Feelings

Feelings naturally appear during trading. The feelings we don’t like seem to have roots deep in our unresolved issues. Somehow they get stuck and do not finish passing through, and can cloud the judgment and interfere with trading. The feelings we do like seem to pass through quickly without much trace.

I suggest getting to know your feelings, by experiencing them, expressing them, letting them pass through and finding out they are pretty much all good ones.

Jet engines work best when they are open at both ends.

Feeling Stuck

The feelings you don’t like don’t pass through. Feelings you do like pass through. To get feelings to flow through, and not interfere with your trading, learn to like them. Part of that comes from experience, part with identifying their positive intentions. For example, consider the feeling of being lonely and having others tell you are wrong. When the market is trending nicely, it’s a feeling traders might especially enjoy, even use as a signal to add to a position.

The feeling of everyone telling you that you are right, might actually be the scary one.

Knowledge

There is nothing quite like admitting you don’t know anything to make people think you know something.

Success

In your recipe for success, don’t forget commitment – and a deep belief in the inevitability of your success.

Tools

Define your project and the right tool appears. Questions about the tools indicate uncertainty about the project.

Avoiding Pain

Embracing the moment, celebrating the pain, and finding the positive intention, tends to transform pain into wisdom. Trying to avoid the bad stuff only tends to institutionalize it, and miss it’s positive intention.

If running out of gas is a bad feeling, you might be tempted to put masking tape over your fuel gauge … and miss out on the positive intention of that information.
Trading

Trends are markets having aha moments.

What you believe is true for you.

In futures trading, the short and long positions define each other.

A fish at one with the water sees nothing between himself and his prey. A trader at one with his feelings feels nothing between himself and executing his method.

Traders and Surfers

It’s all about sticking to your plan and experiencing feelings as they arise. If you are unwilling to feel your feelings, the temptation is to avoid them by jumping off your system.

Traders and Surfers both have to deal with feelings of missing out on the small ones, until the big one comes along. They also have to deal with feelings of staying with the big one.

Feelings you Dislike

Feelings you dislike, grow stronger; the feelings you like disappear, leaving you wiser.

The turning point in the Process occurs when you become willing to feel a historically unpleasant feeling.

Positive Intention

You might consider the positive intention of anger – hint: the positive intention of thirst is to make sure you have enough water in your body.

Children

Children seem open to feel whatever they feel. Their moods change from moment to moment as they keep experiencing their feelings. As we mature, we learn to contain our feelings.

Emotions

Thinking about emotions, trying to control emotions, talking about emotions … are all different from experiencing emotions.

Losses

Lungs Lose Air about Half the Time.

Fear

The experience of fear varies from person to person. The positive intention of fear is risk control.

Fred(Your subconscious mind) finds ways to get the fearless to feel fear.

Hard Work

Hard Work does not Guarantee Profit and one man’s hard work might be another man’s recreation

Finding your calling

Finding your calling is a continuation of the process of unifying Fred(unconcious mind) and CM(concious mind).

As we clear out our personal pains and dramas, our issues and feelings tend to turn outward, toward others, toward building community, being of service, locating and expressing our talents and gifts …

Things you Measure Tend to Improve.

Communication

Becoming a better trader and becoming a better person seem to go together.

The Most Direct Communications require no words. They require only a good receiver.

Most people are really pretty agreeable, until you try to change them.

Your Experience of Others may depend on the degree to which you support or resist their mission, as they see it.

Responsibility

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

World Peace

We are all here on this planet, temporarily, sharing some room with each other. Some chop wood and some carry water.

How about we help each other a bit more, fight a bit less.

Partner

When you are willing to experience your mate just the way she is, she loses her power to control you and she becomes your ally.

Your judgment of her judgment empowers it.

Sticking with System

John (Bollinger) tells me audiences can sit for hours and listen to him describe his famous, and simple, equation. They cannot, however, stand to listen to advice about risk management or sticking with a system.

This post has special permission to reprint  from ED SEYKOTA – for more please visit ED’s site http://www.seykota.com

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