Today’s audio sent out in the TurtleTrader newsletter was profound. I attended a day long seminar in Feb 1995 in Toronto, Canada where Seykota was one of the guest speakers. The WHOLE audience peppered Seykota with questions like: Do you like gold?, Where do you think the Canadian $ is headed?, How do you know when there is a top?, How do you know when the trend is up?, etc.
To each of these he replied:
I like gold — it’s shiny, pretty — makes nice jewelry.
I have no idea where the Canadian $ is headed.
The trend is up when price is moving up.
His replies were simple, straight forward answers to the questions asked of him.
Later I learned through the event organizer that a large majority of the audience (who paid good money, presumably to learn the “secrets” of trading from a Market Wizard) was not impressed. Many felt they had wasted their time and money listening to Seykota.
Seykota’s message couldn’t be clearer to anyone who cared to listen. The answers were found in the very questions each person asked. Don’t ask how do you know the trend is moving up?, instead ask what is going to tell me the trend is up?. Not what do you think of gold?, instead ask am I correctly trading gold with a robust approach centered on profit protection and accumulation?
Frank M. from Canada wrote this into TurtleTrader:
Your audio asks — did the reader even get the message? I would bet money the reader did not. Seykota’s answers effectively placed everyone in front of a huge mirror, reflecting their trading self back at them. If you can’t answer the questions necessary for success, get out of the business and enjoy your life doing something else. Thanks for the excellent [TurtleTrader] website.
What Seykota Was Actually Saying
The audience paid to hear trading secrets from a Market Wizard and received something more valuable: the complete demonstration that the questions they were asking were the wrong questions. Every question asked of Seykota assumed the existence of information he could provide that would tell the audience what to trade, when to trade it, and in which direction. His answers demonstrated that this information does not exist in the form they were seeking it.
“Where do you think the Canadian dollar is headed?” is a request for a forecast. Seykota’s “I have no idea” is not evasion. It is the honest statement of a trader who has built a career on not forecasting and on following price instead. A market wizard who makes money consistently by reacting to price has genuinely no idea where any market is headed. He knows what he will do if it goes up and what he will do if it goes down. He does not know which will happen first.
“The trend is up when price is moving up” is the complete answer to the question of how to know the trend direction. It contains no hidden insight. It is the definition. The audience found this unsatisfying because they were looking for a filter, a specific indicator or condition that would confirm the trend so they could feel confident. Seykota is saying that price movement is the filter. Price moving up is the trend being up. The search for something more sophisticated than that is the search for a way to be more confident before acting, which is the search for certainty in an uncertain system.
Frank M.’s observation about the mirror is the correct reading. Seykota placed the audience in front of their own questions and let them see what the questions revealed about their trading psychology. Every question was a request for someone else to take responsibility for a decision the trader should be making themselves. Where is gold going? What is the trend? Where is the top? Each question is asking Seykota to make a prediction so the questioner can follow it. Seykota’s refusal to provide those predictions is the lesson. The lesson is that the predictions do not exist, and that waiting for them before acting is what keeps traders from developing the self-reliant systematic approach that actually produces results.
Frequently Asked Questions
Why did the Toronto audience feel they wasted their time with Seykota?
Because they came expecting market opinions, predictions, and inside knowledge from a famous successful trader, and received instead simple definitional answers that reflected their questions back at them. They were looking for an oracle and encountered someone who genuinely does not operate as one. The gap between what they expected and what they received felt like a waste. What they received was more valuable than what they expected, but only recognizable as such to someone who already understood why prediction-seeking is the wrong frame.
What is the difference between “how do you know the trend is up” and “what will tell me the trend is up”?
The first question assumes there is some expert knowledge about how to identify trends that Seykota possesses and can share. The second question asks for the operational definition: what observable condition constitutes an uptrend? Seykota’s answer — price is moving up — is the operational definition. It is not the profound secret the first framing implies. It is the complete, correct, and actionable answer to the second framing.
What should attendees have asked Seykota instead?
How do you size your positions relative to your account equity and market volatility? What does your exit look like when a trend reverses? How do you handle a system that produces a six-month losing streak? These questions address the components of a complete systematic approach that are genuinely difficult to execute. The questions actually asked were requests for opinions about market direction, which is the one thing a systematic trend follower deliberately does not form.
Trend Following Systems
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