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Ed Seykota: Trend Following Market Wizard

My training and teachings are distilled from the great trend traders of past and present. Ed Seykota is one of the greats:

After you enter the world of markets and investing, you will eventually run across the book Market Wizards by Jack Schwager. Of all the trader interviews in Market Wizards, the most memorable is the one with Ed Seykota. While some may perceive Seykota’s manner as extremely direct, most will agree Seykota is unique in the way he thinks. One profound and now famous statement of his is, “Everybody gets what they want out of the market.” This was a response to a question about trading, but I feel certain that Seykota would say it also applies to life. Although almost completely unknown to both traders and laymen alike, Seykota’s achievements rank him as one of the best trend followers (and traders) of our time. I first met Seykota at a small beachside cafe.

I had received an invitation from Seykota to get together to discuss the outreach possibilities of the Internet. During our first meeting, he asked me what I thought Richard Dennis was looking for when he hired his student traders the Turtles (Seykota knew I had a website called TurtleTrader.com). My reply was to say I thought Dennis was looking for students who could think in terms of odds. Seykota’s response was to ask me if my reply was my own thinking or something I was told by someone else. This was my first indoctrination to Seykota’s “direct nature.” The following story passed along from an associate is “pure Seykota”:

“I attended a day-long seminar in February 1995 in Toronto, Canada where Seykota was one of the guest speakers. The WHOLE audience peppered Seykota with questions like: Do you like gold, where do you think the Canadian $ is headed, how do you know when there is a top, how do you know when the trend is up etc.? To each of these, he replied: ‘I like gold—it’s shiny, pretty—makes nice jewelry’ or ‘I have no idea where the Canadian dollar is headed or the trend is up when price is moving up, etc.’ His replies were simple, straight-forward answers to the questions asked of him. Later, I learned through the event organizer that a large majority of the audience (who paid good money, presumably to learn the ‘secrets’ of trading from a market wizard) were not impressed. Many felt they had wasted their time and money listening to Seykota. Seykota’s message couldn’t be clearer to anyone who cared to listen. The answers were found in the very questions each person asked. Don’t ask, ‘How do you know the trend is moving up?’ Instead, ask, ‘What is going to tell me the trend is up?’ Not, ‘What do you think of gold?’ Instead, ask, ‘Am I correctly trading gold?’ Seykota’s answers effectively placed everyone in front of a huge mirror, reflecting their trading self back at them. If you don’t even know the question to ask about trading, much less the answers, get out of the business and spend your life doing something you enjoy.”

How would you have reacted to Seykota’s speech? Walk out or be curious? Think about it.

Excerpt taken from my first best selling book Trend Following: Learn to Make Millions in Up or Down Markets.

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Posted in Trading 101, Trend Following
2 comments on “Ed Seykota: Trend Following Market Wizard
  1. Jim Eaton says:

    Great reminder of what is important. Even though I have read Trendfollowing, and this story a number of times. It is always an enlightening kick in the butt. Thanks!

  2. martin delaney says:

    i would be feel very greatfull to be in the same room as ed and even as a very novice trend trader i can see his wisdon in such answer. i only hope that most who paid or were there remembered the answers and had time to reflect.

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