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Ed Seykota

American commodities trader
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Ed Seykota (born 7 August 1946) is a U.S. investor.

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

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Markets

  • The markets are the same now as they were five or ten years ago because they keep changing-just like they did then.
    • Source: Koppel, Robert The Intuitive Trader: Developing Your Inner Trading Wisdom, John Wiley & Sons Inc (May 1996), ISBN 0471130478 Read it here

Short-Term Trading

  • The elements of good trading are cutting losses, cutting losses, and cutting losses.
    • Source: Jenks, Philip, (Editor) 500 of the Most Witty, Acerbic and Erudite Things Ever Said About Money, Harriman House (December 2002), ISBN 1897597223 Read it here

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.
    • Source: Covel, Michael W., Trend Following: How Great Traders Make Millions in Up or Down Markets, FT Press (2007), pages 172-173, ISBN 0-13-613718-0

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.
    • Source: Covel, Michael W., Trend Following: How Great Traders Make Millions in Up or Down Markets, FT Press (2007), page 59, ISBN 0-13-613718-0
  • 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.
    • Source: Covel, Trend Following, page 59
  • Pyramiding instructions appear on dollar bills. Add smaller and smaller amounts on the way up. Keep your eye open at the top.
    • Source: Covel, Trend Following, page 55
  • Markets are fundamentally volatile. No way around it. Your prolem is not in the math. There is no math to get you out of having to experience uncertainty.
    • Source: Covel, Trend Following, page 59
  • It can be very expensive to try to convince the markets you are right.
    • Source: Covel, Trend Following, page 59

System Trading

  • Systems don't need to be changed. The trick is for a trader to develop a system with which he is compatible.
    • Source: Schwager, Jack D., Market Wizards, HarperCollins (1989), page 159, ISBN 0-88730-610-1
  • 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.
    • Source: Schwager, Market Wizards, page 166

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.
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