10.1. ED SEYKOTA: TEACHING A TECHNIQUE THAT HAS HELPED TRADERS AROUND THE WORLD

Ed Seykota has made a lifelong study of how personal psychology affects one's trading. His interview in Jack Schwager's Market Wizards is still considered to be one of the best interviews ever given by a top trader. Seykota says that trading amplifies everything that is going on within a person. One of the first questions that Seykota has been known to ask traders who seek his coaching is: Do you ever cheat on your significant other? Seykota considers it important to know whether traders are willing to compromise their ethics since behavior and other tendencies in daily life outside of trading can bleed into one's trading and have an effect thereby. The two are inextricably, psychologically linked. Thus, the beauty about trading, and the beauty about life as well, is that there is no cheating. Or, as free-market economist Milton Friedman said, "There is no such thing as a free lunch." When people cheat others, they effectively cheat themselves; it will show up in their trading and performance will suffer.

For well over a quarter century, Seykota has been known to take on one student at a time to teach how to be an effective investor. He screens applicants by psychoanalyzing them to see if they have the character traits that will enable them to succeed. While Seykota might not take on a student who lacked the necessary character traits, he created a practice called the Trading Tribe Process (TTP), which teaches traders to overcome any weakness by optimizing their own psychology. Not surprisingly, Seykota's TTP (www.tradingtribe.com) has become hugely popular worldwide as trading tribes across the world have sprung up like mushrooms among traders who meet regularly to practice Seykota's philosophy. This philosophy can be summed up in two words: Right livelihood. This parallels Wallace D. Wattles' book The Science of Getting Rich (Top of the Mountain Publishing, 2002) where Wattles gives the reader the road map to developing the right mind-set so they can live a rich life. The term "rich," of course, does not just mean financial wealth but a wealth of beautiful friendships and relationships, strong family bonds, and worthwhile accomplishments.

TTP (explained in detail at www.seykota.com/tribe/TT_Process/index.htm) can be broken down into three phases:

Phase 1: A person gets upset and identifies why. Even though the person may understand why, he may resist the why in the form of denial by the conscious mind (CM). This can take many forms such as making excuses, or shifting blame onto others, since the ego will do what it takes to protect itself. The person will feel a general discomfort as a consequence. Over time, this general discomfort may grow if the matter is not dealt with effectively as the ego continues to mask the problem.

Phase 2: The subconscious mind (what Seykota calls "Fred") communicates with the conscious mind (CM). In a healthy person, Fred sends signals to the CM that are fully acknowledged. Wisdom is the final result. Those who resist the signals Fred is sending from one's unconscious mind to one's conscious mind end up repeating the same negative patterns and making the same mistakes. This is known as drama. And we all know certain people who nicely fit the label "drama-queen." They seem to attract drama wherever they go.

The trouble stems from suppressing, masking, or hiding one's feelings. Maybe one was told long ago by a parent, peer, or teacher that having such feelings is wrong or bad. Or perhaps one's CM may see the feeling as dangerous and block it out. Knots can then form within one's subconscious mind. Fred will raise the intensity as it attempts to get its message to the CM. Similar dramas can thus be repeated at higher and higher levels. Certain images and nightmares may reoccur as Fred attempts to get its message to the CM.

Ultimately, Fred will continue to send its message by reenacting the experience; thus the person will repeat the same drama over and over again. Further, the behavior is reinforced by neural pathways that are strengthened in the brain each time this behavior is repeated. Strong neural pathways lead to repeat behavior as the brain is comfortable travelling on a well-paved neural track. However, once one's CM fully acknowledges Fred's message, this is often experienced as an "Aha!" moment within the person, which is accompanied by the great feeling where things suddenly make sense. Some have said this wonderful moment is akin to the feeling of things just clicking into place. This feeling is usually accompanied by a physical release of tension and an outpouring of pent-up emotion.

Seykota's TTP facilitates the flow of experience between Fred and the CM. It is essential that one does not try to go it alone as the process requires a group effort to be fully effective. The problem is that many people, especially traders, tend to be fiercely self-reliant. The do-it-yourself culture can prevent one from realizing your fullest potential by not interacting in a group or a "tribe," but group participation can still mean being self-reliant. If one wishes to get the most out of TTP, then group participation will provide the highest quality experience as opposed to going it alone. No entrepreneur ever built an empire without the help of others.

The philosophy of the TTP is akin to other teachings discussed in this chapter in that we are all interconnected and we are all one. There are no boundaries, and acknowledgment of this beautiful and deep interconnectedness is the first step toward self-actualization and enlightenment. This state of enlightenment is what Seykota calls "Getting to the Zero Point." The Zero Point is the state of being in the now, of being in the present, of being "in the zone," a state the writer and philosopher Eckhart Tolle discusses fully in his seminal works The Power of Now (New World Library, 2004) and A New Earth (Penguin, 2005). As Ed Seykota writes, "It is dancing joyously, with abandon. It is splashing your hand in a mud puddle and just being there with the experience. It is putting on a trade and succumbing to the enchantment of the whole process including the market, yourself, the prices, the plusses and minuses and the pretty colors on the monitor screen" (www.seykota.com/tribe/TT_Process/index.htm).

Phase 3: As individuals continue to untie their psychological knots, long-standing, recurring, and destructive dramas disappear. One will notice a decrease in obsessive defensive anxiety, and an increase in a healthy anticipatory expectation of the future. A feeling of balance between emotion and logic, of being in the zone, an increase in creativity, an increase in physical health, improvement in friendships and relationships, and successful trading are the result.