Ed Seykota – Wisdom And Quotes

Last Updated on March 26, 2021 by Oddmund Groette

Anyone reasonably interested in trading and speculating has probably heard about Ed Seykota. He was first featured in Jack Schwager’s Market Wizards. It’s the most memorable interview in the whole series, in my opinion, not only because he’s very direct, but also because he is unique in his thinking and how he expresses the most important elements of trading.

I recently reread the interview in Market Wizards and Micheal Covel’s Trend Following. In the latter book, Covel has covered Seykota extensively and is mentioned throughout the whole book. Seykota might be a very good trader and investor, according to Covel he made 60% annually from 1990 to 2001, but Seykota has the knack of expressing the vital part of trading into very amusing metaphors. Moreover, Seykota is also multitalented -just look at this video.

Who is Ed Seykota?

Ed Seykota. Source: Webpage of Micheal Covel.

Ed Seykota was born in 1946 and got his degree from MIT. He was one of the pioneers in mechanical trading, and developed his trend-following systems in the 1970s. Throughout his career, he has kept a low profile and only occasionally managed money for other people. He’s a proponent of process over outcome, as you’ll see from the quotes below.

The excerpts below are what I considered the most interesting quotes made by Ed Seykota in those two books.

Quotes by Ed Seykota:

——————-

If you can’t measure it, you probably can’t manage it… Things you measure tend to improve.

——————-

I feel my success comes from my love of the markets. I’m not a casual trader. It’s my life. I have a passion for trading. It’s not merely a hobby or even a career choice for me. There is no question that this is what I am supposed to do with my life.

——————-

In general, higher-frequency trading succumbs to declining profit potential against non-declining transaction costs.

——————-

I’m a self-taught trader who is continually studying both myself and other traders.

——————-

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. If it persists, then it might be a valuable subconscious analysis of some subtle information.

——————-

The average trader should find a superior trader to do his trading for him, and then go find something he really loves to do.

——————-

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

——————-

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

——————-

About having a bigger account:

It becomes more difficult because it is harder to move large positions without moving the market. It becomes easier because you have more access to competent people to support you.

——————-

I keep track of a lot of outside advisers, mostly by reading the business press or hearing from my brokers. The services usually break even, except when they start to gloat, then they are likely headed for trouble.

——————-

I usually ignore advice from other traders, especially the ones who believe they are on to a “sure thing”. The old-timers, who talk about “maybe there is a chance of so and so”, are often right and early.

——————-

I sometimes get most confident of my ability just before a major losing streak.

——————-

The stock market behaves differently from all other markets and it also behaves differently from the stock market. If this si hard to understand, it is because trying to understand the markets is a bit futile….A lot of people would rather understand the market than make money.

——————-

Great traders are ones who are absorbed by the talent. They don’t have the talent – the talent has them.

——————-

I think most good traders have a little extra spark about trading.

——————-

My personal life is integrated with my trading life.

——————-

Having a quote machine is like having a slot machine on your desk – you end up feeding it all day long. I get my price data after the close each day.

——————-

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.

——————-

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 success has to do with finding and following one’s calling regardless of financial gain.

——————-

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

——————-

I still go through periods of thinking I can outperform my own system, but such excursions are often self-correcting through the process of losing money.

——————-

My biggest slip-ups occurred shortly after I got emotionally involved with positions.

——————-

When you stop trying to please others and concentrate on pleasing yourself, you gradually become aware of what you are passionate about in life.

——————-

The biggest secret about success is that there isn’t any big secret about it, or if there is, then it’s a secret from me, too. The idea of searching for some secret for trading success misses the point.

——————-

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.

——————-

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

——————-

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

——————-

Life is too dynamic to remain static.

——————-

Curiosity is the answer, not degrees.

——————-

Losing a position is aggravating, whereas losing your nerve is devastating.

——————-

The positive intention of fear is risk control.

——————-

Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions.

——————-

I don’t judge success, I celebrate it. I think success has to do with finding and following one’s calling regardless of financial gain.

——————-

Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”. However, if you catch on early, before others believe, you might have valuable “surprise-a-mentals.

——————-

Trading requires skill at reading the markets and at managing your own anxieties.