Ed Seykota Wisdom
Words
Ed Seykota is one
of our times top known stock market or trading legend. Here are best quotes on various topics from
many books, and his interviews.
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
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.
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