Who Is Ed Seykota?
While not as prolific as other top financial investors such as Bill Ackman and George Seros, Ed Seykota has had quite the trading career with a net worth of $4-5 billion and has made an impact on the industry.
Seykota's Road To Success
Background
Born in 1946, Ed Seykota is a graduate of MIT with a Electrical Engineering degree. Although it was the financial industry that drew his attention which he grew to have a passion for instead.
Silver Markets
The Silver commodity market was what sparked his interest. Believing that in the early 1960s when the US treasury would stop selling silver would cause a rise in that market, he set up a commodity margin account to hopefully take advantage of the situation. However, his broker suggested that a short position on copper would be a good idea. This turned out not to be the case causing a failed trade. Quickly moving on from this failure, he went back to focus on silver hoping for his bull market prediction to come true. Unfortunately when the day came that the US treasury stopped silver selling, the silver market went down and not up as he predicted. He had to exit his position. This circumstance heavily impacted Seykota in his trading career and he looked for other opportunities to beat the market. He soon discovered mechanical trend-following systems through reading a letter by Richard Doncian, inventor of Donchian Channels. This fascinated Seykota of their potential effectiveness in the markets.
Mechanical Trading Systems Testing
The early 1970s was when Ed Seykota landed his first job at a brokerage firm. He started as an analyst and hoped to use his new-found knowledge of mechanical systems to use. However, when he was not allowed to test it, he left that job after only one month. The next job again did not allow him to test the mechanical systems as he was stuck being the office’s gofer. Though when the company was faced with reorganization, the reduced supervision allowed Seykota to test the systems with the company’s computers. In the next six months, the potential of computerised and mechanical systems of trading became apparent when he tested hundreds of variants across different trading systems. This led him to develop his first trading system based on exponential moving averages. Even after leaving the company, he continued to fine tune his system through market stimuli and response indicators.
Ed Seykota Quotes
His quotes have become quite influential in the industry. These include..
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