Seykota's approach is elegantly simple — he believes complexity is the enemy of good trading. His system is built on three core components: 1. Trend Detection — Exponential Moving Averages: Seykota uses a combination of short-term (10-day), medium-term (20-day), and long-term (50-day) EMAs to determine trend direction. He only trades in the direction of the dominant trend — if the 50 EMA slopes up, he only takes long trades. 2. Progressive Position Building: Seykota's hallmark is adding to winners in waves. He enters with a small initial position (typically 0.5-1% risk), then adds equal-sized positions as the trend proves itself. He adds at each new swing high (for longs) rather than at fixed intervals, ensuring the trend is actively making higher highs. 3. Psychological Discipline — "The Whipsaw Song": Seykota famously wrote a song called "The Whipsaw Song" about accepting small losses. He teaches that traders must embrace the emotional pain of frequent small losses (whipsaws) because those same entry signals will occasionally catch a massive trend that pays for all the losses many times over. His saying: "One good trend pays for 25 whipsaws." Position Sizing Method: Seykota uses a fixed-fractional approach where each position risks exactly the same percentage of current equity. As the account grows, positions grow proportionally, creating natural compounding.