Mr. Ed Seykota

Biography

Edward Arthur Seykota is an American commodities trader recognized as one of the early pioneers of computerized trading systems. After studying electrical engineering at MIT, he began developing computer-based trading methods in the 1970s. He became widely known through Jack Schwager's book Market Wizards, which explored the experiences and philosophies of successful traders.

Trading Methods

Seykota uses systematic trend-following strategies that seek to participate in sustained market movements. His methods emphasize price trends, predefined entry and exit rules, position sizing, and strict risk management. He believes trading psychology is essential because even a well-designed system can fail when traders cannot follow its rules consistently. He is particularly associated with cutting losses and allowing profitable trends to continue.

Greatest Successes

Seykota became famous for producing extraordinary historical returns in accounts he managed during the 1970s and 1980s. In Market Wizards, Jack Schwager described one account that reportedly grew from approximately $5,000 to more than $15 million over about twelve years, before accounting for withdrawals. This frequently cited example helped establish Seykota's reputation as a pioneer of systematic trading.

Failures and Setbacks

Like other trend-following traders, Seykota has faced periods when markets produced false signals or failed to establish sustained trends. His philosophy recognizes that losses are unavoidable and that trading systems must be designed to survive unfavorable conditions. Detailed records of his personal trading losses are not publicly available, so specific unverified failures should not be presented as established facts.

Lessons for Modern Traders

• Follow a clearly defined trading system.
• Cut losses before they become financially destructive.
• Allow profitable positions room to develop.
• Use position sizing to manage risk.
• Recognize that emotions can undermine good trading rules.
• Accept that losses are a normal part of trading.