Born 1946 · Futures · Systematic trend follower
Ed Seykota: Trend Following Rules and Lessons
A pioneer of computerised trend following: cut losses, ride winners, keep bets small and follow the rules.
Who they were
Ed Seykota, an MIT graduate, was one of the first traders to use computers to test and run trend-following systems in the early 1970s. He became widely known through Jack Schwager's "Market Wizards" (1989), where his returns over many years were described as exceptional.
Later he focused on trading psychology and created the Trading Tribe, a group process about the feelings behind trading decisions.
Principles and rules
1. Follow the trend
The trend is your friend until it ends. Systems that follow trends, rather than predict them, do the heavy lifting.
2. Cut losses
The elements of good trading are cutting losses, cutting losses and cutting losses.
3. Ride winners
Let profits run as long as the trend continues.
4. Keep bets small
Risk small amounts per trade so that no losing streak can knock you out.
5. Follow the rules without question
The system only works if you take every signal; most failures are failures of discipline.
Key lessons
- Systematic rules reduce emotional mistakes.
- Small risk per trade makes long careers possible.
- Knowing why you break rules matters as much as the rules.
Strategies from this method
How to practise it
Use the Turtle Trading and 200-day average strategies in Candlemind with a fixed 1% risk and log every trade. Notice when you are tempted to skip one: that is the moment Seykota talks about.
Frequently asked questions
Who is Ed Seykota?
An early systematic trend follower featured in "Market Wizards", known for his computerised trading systems and his work on trading psychology.
What is the Trading Tribe?
A process created by Seykota to help traders explore the feelings that drive their decisions.
Summaries and paraphrases of public books and interviews, for education. Not investment advice.