Background
Ed Seykota is one of the original computerised traders and arguably the greatest trend follower ever. He turned $5,000 into $15 million over 12 years (a 250,000% return) — one of the highest verified returns in trading history. He pioneered the use of computers for systematic trading in the 1970s and is featured prominently in Market Wizards.
Core Methodology
Seykota's approach is purely systematic trend following: he uses exponential moving averages and channel breakouts to identify trends, then rides them until they end. His edge comes from risk management — cutting losses quickly and letting winners run indefinitely. He treats trading as a mathematical exercise in probability.
Key Trading Rules
- Follow the trend — the trend is your friend until it ends
- Cut losses short — accept small losses as the cost of doing business
- Let profits run — never cap a winning trade with arbitrary profit targets
- Risk a small, fixed percentage per trade — typically 0.5-2% of account
- Diversify across uncorrelated markets — trade 20+ futures markets simultaneously
- Keep the system simple — complexity is the enemy of consistency
Key Concepts
Books & Resources
Market Wizards interview by Jack Schwager. The Trading Tribe by Ed Seykota. Ed Seykota's website (seykota.com). Trading Tribe meetings.