Friday, February 11, 2011

Ed Seykota And Systems Trading

"Ed Seykota, or his full name Edward Arthur Seykota, is a well known commodities trader who was born on the 7th August 1946. He lives in Incline Village, Crystal Bay in Nevada. When Ed Seykota, trading expert, was young the high school he attended was near The Hague in Netherlands and he also resided in Voorburg at one stage. He earned himself BSc degrees in two different departments, management as well as Electrical Engineering during the year of 1969. It was in 1970 that Ed Seykota found what we know today as “Systems” trading. He did so by using the very old punch card computers when he needed to test his brilliant ideas on trading certain markets.

In the beginning, when Ed created “Systems”, he did so for the brokerage place that he and his friend Michael Marcus worked for. After a few years of partnership, Ed decided that it would be better to go his own way. He did so and went on to take care of some clients accounts on his own. The main reason he become so successful was due to his development and his making use of mechanized trading systems, which he tested firstly on a quiet mainframe IBM PC. After he had achieved this, the brokerage house he used to work for took on his system for their own trades and personal use.

Ed Seykota was always interested in developing a computerized system, and when he finally read the letter written by Richard Donchian, his ideas just spawned. The letter included information on making use of mechanical trend subsequent systems for certain types of trading. What also inspired Ed Seykota, trading expert, was the book called “Reminiscences of a Stock Operator”. After reading this book he was a lot more confident about what he had to do and how he should go about it. It wasn’t long after that when Ed’s first trading system was created solely on exponential moving averages. He of course was very proud of his achievement; he did so well, he had every right to be.

Many people find inspiration in this man and what he says. For example, many people refer to his quote “Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible”. Many people take that saying and use it for their own personal issues, just changing the words and making it fit their own life style. After some time, Ed had improved his system by becoming accustomed to fit his own favorites and his own style of trading. The original version of his system was rather rigid, but over a short period of time he brought in more regulations into the system as well as new funds management algorithms and pattern triggers.

Another reason Ed Seykota, trading expert became so successful was because he genuinely loved trading as well as his hopeful manner. He never changed any of his reply indicators. He rather kept it all the same and instead he paid more attention to market stimuli."

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