Ed Seykota’s Trading Style Part-IV

In Continuation with previous 2 article

Ed Seykota’s Trading Style Part-I

Ed Seykota’s Trading Style Part-II

Ed Seykota’s Trading Style Part-III

 

Embrace Whipsaws

• Trading Systems don’t eliminate whipsaws. They just include them as part of the process.

Do Not Predict Or Anticipate

• A computer can follow a system and place orders without making predictions or feeling anticipation. Predictions and anticipations are objects you create. These objects may interfere with sticking to your system.

Take Care of Your Emotions

• Sometimes I trade entirely off the mechanical part, sometimes I override the signals based on strong feelings, and sometimes I just quit altogether. The immediate trading result of this jumping around is probably breakeven to somewhat negative.
• However, if I didn’t allow myself the freedom to discharge my creative side, it might build up to some kind of blowout. Striking a workable ecology seems to promote trading longevity, which is one key to success.
• Gut feel is important. If ignored, it may come out in subtle ways by coloring your logic. It can be dealt with
  through meditation and reflection to determine what’s behind it.
• One of the best ways to increase profits is to do goal setting and visualizations in order to align the conscious and subconscious with making profits. I have worked with a number of traders in order to examine their priorities and align their goals. I use a combination of hypnosis, breathing, pacing, visualization, gestalt, massage, and so forth. The traders usually either (1) get much more successful, or (2) realize they didn’t really want to be traders in the first place.
• 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.

Cut Your Losses

• The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can
  follow these three rules, you may have a chance.

Don’t Play “Catch Up” After a Losing Streak

• I handle losing streaks by trimming down my activity. I just wait it out. Trying to trade during a losing streak
  is emotionally devastating. Trying to play “catch up” is lethal.

Take a Break If Necessary

• Sometimes I get to a personal breakpoint. When that happens, I just get out of the markets altogether and take a vacation until I feel that I am ready to follow the rules again.

A Winning Mindset is Required To Succeed

• A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to
  transform himself. That’s the kind of thing winning traders do.
• The winning traders have usually been winning at whatever field they are in for years.
• It is a happy circumstance that when nature gives us true burning desires, she also gives us the means to
  satisfy them. Those who want to win and lack skill can get someone with skill to help them.
• The “doing” part of trading is simple. You just pick up the phone and place orders. The “being” part is a bit more subtle. It’s like being an athlete. It’s commitment arid mission. To the committed, a world of support appears. All manner of unforeseen assistance materializes to support and propel the committed to meet grand destiny.
• In your recipe for success, don’t forget commitment – and a deep belief in the inevitability of your success.