Jack Schwager, in his book Market Wizards, says that Ed Seykota was responsible for turning one client’s account from a mere $5,000 to $15,000,000. He did this in just 12 years! This is as great an achievement as any trader can hope to have, and it definitely puts Ed Seykota among some of the most legendary traders to ever walk this earth.
While Market Wizards may be the reason why Ed Seykota became a somewhat known figure in the trading world, it was not written by him. Jack Schwager did well to squeeze as much out of Ed as he could, but you also have access to two of Ed’s own books to understand his philosophy.
Ed’s first book, The Trading Tribe, was published in 2005 and focuses on how Ed runs his Trading Tribe. On top of that, the book also delves into the psychology of the trader and the process of aligning your conscious and subconscious to work for the greater good.
Ed’s second book deviates from the norm by getting into modern government. Govopoly in the 39th day was published in 2013 and is a fascinating look into how modern governments are spending money that they do not have. Ed predicts numerous problems arising from the ‘irrational’ behavior of the governments in the near future. He also believes that the public should be much more worried than it is about a situation which is very much ‘appalling’ in nature.
What Were Ed Seykota’s Trading Strategies?
While it is possible to write an entire essay on Ed’s trading strategies, it is also possible to condense his strategies into a few paragraphs, albeit extremely broadly.
Ed trades trend following strategies that are mostly mechanical. This means that he typically doesn’t spend too much time on the execution part of his trading. Typically his trading is confined to the few minutes it takes to load in the charts and place order for the next day.
Importance of Money Management
In his interview in the market wizards book, he emphasizes the role his money management rules have played in his success! Ed places stops to make sure he does not lose out massively on every single trade, and try to keep his losses at a maximum of around 5% of his capital. On top of that, he also makes sure to make bets which are small, but big enough that a profit would mean something to him. If the trade is too small for you to care about it, your trading will suffer. However, it’s just as important to not go too big in order to keep emotions in check, something that we further explain later on.
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