It was 1972, and a young Ed Seykota was sitting inside a brokerage firm, staring at a mechanical computer system he had helped build to generate trading signals. The machine said sell. His manager overrode it and bought instead. The trade lost money. Seykota didn't rage — he quietly noted something more important than the loss: that the system worked, but humans kept breaking it.
That moment crystallised what would become Seykota's defining obsession. Not finding better signals. Not more sophisticated maths. The real enemy, he concluded, was the trader sitting in the chair. Emotion, ego, and the desperate need to be right were costing people fortunes — including, early on, himself. He had blown up accounts before he built a disciplined process around trend following that removed as much human interference as possible.
What Market Wizards revealed — and what surprised even seasoned traders reading it — was how little Seykota cared about being intellectually right on a trade. He cut losers without ceremony, let winners run with almost stubborn patience, and kept position sizes small enough that no single trade could destroy him. He called it "riding the trend and not getting thrown." Simple. Brutally hard to actually do.
The lesson Seykota left behind isn't about computer systems or commodities markets. It's about psychology — specifically, the uncomfortable idea that traders often self-sabotage in ways they don't consciously recognise. He explored this deeply, drawing on concepts now well-documented in behavioural economics. His framework for money management — small risk per trade, systematic rules, ruthless loss-cutting — remains as applicable to a retail trader in Melbourne today as it was to him in New York in 1972.
Seykota once said, "Win or lose, everybody gets what they want out of the market." It sounds like a riddle. It's actually a mirror.
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