Ep. 355: Ed Seykota Interview #2 with Michael Covel on Trend Following Radio http://www.michaelcovel.com/2015/06...-with-michael-covel-on-trend-following-radio/ Synopsis: Michael Covel speaks with Ed Seykota on his second visit to the podcast. Originally profiled in the classic book ‘The Market Wizards’, Seykota has played a pivotal role in the growth of trend following trading for 40 years. This conversation breaks down into three parts: Govopoly, the Trading Tribe and trend following. Govopoly is Seykota’s most recent book. In it he sees the economy transforming from a free and open societal structure to a controlled structure. The Govopoly system is taking over. It’s not about another election to solve this, or to try and fix it. It is what it is and best we can all do is to cope with it. Seykota sees the Trading Tribe as one means of coping. The Trading Tribe is an association of people who commit to excellence, personal growth and supporting and receiving support from each other. The members of the Trading Tribe trade roles, becoming in turn senders and receivers for each other. Lastly, Seykota and Covel discuss trend following. Specifically, Seykota shares early experiences with Richard Donchian and his solo time with mainframes testing some of the first trend systems via computer. Finally, Seykota shares his motivation for his life (and some insights about puzzles).
Ed Seykota offers this about day trading: The excitement and anxiety generally serve to medicate deeper issues. Pithy? Yes. Depth behind it? Yes. Seykota was also asked: “I am new to trend following and wish to ask you what your favorite chart is for determining a given market’s trend? Daily, weekly, yearly, hourly?” Seykota responded: “Hmmm…your list seems to lack scaling options for minute, second, and millisecond. If you want to go for the really high-frequency stuff, you might try trading visible light, in the range of one cycle per 10-15 seconds. Trading gamma rays, at around one cycle per 10-20 seconds, requires a lot of expensive instrumentation, whereas you can trade visible light ‘by eye.’ I don’t know of even one short-term trader, however, who claims to show a profit at these frequencies. In general, higher-frequency trading succumbs to declining profit potential against nondeclining transaction costs. You might consider trading a chart with a long enough time scale that transaction costs are a minor factor — something like a daily price chart, going back a year or two.”
MC, I am a fan of Seykota. The show starts off odd enough that I tuned it out. The new book seems pure old guy bat shit craziness. Perhaps I should join a tribe and talk to them about how I feel about this?
He offers a straightforward economic view with trend following as a means to cope. What did you not like?