September 20, 2015

Ed Seykota quotes

Edward Arthur Seykota is a commodities trader. He holds a degree in Electrical Engineering from MIT and Management from the MIT Sloan School of Management, both in 1969.

In 1970 he pioneered systems trading by using early punched card computers to test ideas on trading the markets. Much of Seykota's success was attributed to his development and utilization of computerized trading systems to which he first tested on a mainframe IBM computer.

His interest in creating a computerized system was spawned after he read a letter by Richard Donchian (founder of turtles) on utilizing mechanical trend following systems for trading and also Donchian's 5 and 20 day moving average system.

These are some of his popular quotes:

  • “If I am bullish, I neither buy on a reaction, nor wait for strength; I am already in. I turn bullish at the instant my buy stop is hit, and stay bullish until my sell stop is hit. Being bullish and not being long is illogical.”
  • “Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible”
  • “It can be very expensive to try to convince the markets you are right.”
  • “There are old traders and there are bold traders, but there are very few old, bold traders.”
  • “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.”
  • “The markets are the same now as they were five to ten years ago because they keep changing – just like they did then.”
  • “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.”
  • “If you can’t take a small loss, sooner or later you will take the mother of all losses.”
  • “Risk no more that you can afford to lose, and also risk enough so that a win is meaningful.”
  • “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.”
  • “If you can’t measure it, you probably can’t manage it… Things you measure tend to improve.”
  • “The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system.”
  • “To avoid whipsaw losses, stop trading”
  • “Before I enter a trade, I set stops at a point at which the chart sours.”
  • “Speculate with less than 10% of your liquid net worth. Risk less than 1% of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. This is essential as large fluctuations can engage {emotions} and lead to feeling-justifying drama.”

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