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Tharp's Thoughts Weekly Newsletter

June 18, 2008 — Issue #377  
  
Trading Education

It's 20 Percent Off Time. Save on all of Van Tharp's Core Material

Article

Enjoy Bumping Into Walls by Van K. Tharp, PhD

Notification

Important Tax Information for our German Clients...New Laws Coming in 2009.

Trading Tip

Oil and Gas – Crudely Speaking Part V by D.R. Barton

Melita's Corner

There Is Always Something to _________ About by Melita Hunt

Trading Education

Our Mid-Year 20% Off Sale Is Back!

Don't miss your chance to save on Van's famous home study programs. 

Here are some of the items on sale:

Peak Performance Home Study  How to Develop a Winning Trading System Home Study Position Sizing DVDs
Business Planning for Traders CDs Van Tharp's Books Trading Simulation Game Upgrade

 

Feature

Tharp’s Thoughts Classic

Enjoy Bumping Into Walls

By Van K. Tharp

In any endeavor in life, you have up and down periods. Dealing with the market has many such up and down periods. In order to profit from the up periods, you have to tolerate or even “enjoy” the down periods.

I’m an NLP modeler. That means if someone does something well, I can figure out the essence of what they are doing by understanding their thinking. Thus, when such a person goes from A to B easily and effortlessly, I can determine how they do it and teach that skill to other people.

It turns out that one of the major problems people have in going from their current location to their desired goal is all of the walls or obstacles they continually run into each day. There is a common solution to these obstacles — make them okay. Don’t worry about getting from point A to B, just enjoy bumping into the walls.

If you’re in the market, one of biggest obstacles you’ll face is the wall of losses. It’s fairly difficult to deal with the markets if you are not willing to lose. It’s almost impossible. It’s like wanting to be alive, but only wanting to breathe in and not breathe out.

When you want to be right, you’re not dealing with the obstacles. Instead, you’re forcing things. When you want to make a profit out of today’s trade, even though it’s a big loser, then you’re not dealing with today’s obstacle. Enjoy the obstacle, embrace it, and be willing to accept it. If the market tells you it’s time to get out at a loss, then do so.

Quite often traders take the relationship they are having with the market, and transmute it by developing a different system or trading with a professional money manager. Now, the old struggle they used to have with the market—of not accepting what the market gives them—becomes a similar struggle they are having with their system or with their new advisor. Instead of giving up on the market after a string of losses, just in time to miss the really big move, they avoid their system until it is doing really well. When it is showing tremendous profits, they jump on board — only to be blown away by the market. And the same thing happens when they invest with money managers. This desire to be “right” motivates them to jump to the top money manager when he’s hot, only to go through a big string of losses. It’s all the same thing.

Psychologically, if you don’t come to grips with your obstacles and embrace them, you will simply find another way to repeat them. Realize that the walls occur because they are there for you to bump into. When you accept this fact and embrace it, you’ll accept bumping into walls. And strangely enough, you hardly even notice that the walls are there. The result will be a new level of success in the markets. 

About Van Tharp: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling book Trade Your Way to Financial Freedom and his outstanding Peak Performance Home Study program - a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at www.iitm.com.

 

Coming Soon

Attention German Tax Payers!!

 

Did you know that the laws are changing in 2009 (Abgeltungsteuer) and you will no longer be able to deduct as much of your trading education costs?

 

That’s why Van Tharp has worked out his busy workshop schedule to include Germany this summer. 

 

Attend both workshops for $3,500 while you can still claim 100% of the expenses as tax write-offs. By January 2009 you will no longer be able to take this deduction.

 

For information in German, click here.

Blueprint for Trading Success August  4-6 Germany
Peak Performance 101 August 8-10 Germany

Click here for workshop information, pricing and hotel information

 

Trading Tip

Oil and Gas – Crudely Speaking Part V

by
D.R. Barton

I’ve heard some interesting discussions on oil prices lately, not the least of which has come from the biggest land of make-believe: Washington D.C.

Regardless of your political party preference, you have to be amazed when a major party candidate promises to re-instate a windfall profit tax on the oil companies – as a way to reduce energy costs to American families! I have a group of third grade students who just competed in the state-wide economics competition who could see right through the absolute lunacy of such an absurd statement.

We’ve certainly arrived at the point of irrational thought when it comes to oil and gas prices. From a sentiment analysis perspective, that usually means that a correction is on the way. But lest we – as traders and investors — forget, markets can remain irrational much longer than we can stay solvent.

I keep tossing in my sleep trying to get a handle on the real value of oil in today’s economy. We’ve seen in past articles how money supply and the weakening dollar have contributed to the rise in oil prices. And this week, I went back to the basics and asked myself what the bartered price of oil might look like.

So how many barrels of oil will an ounce of gold buy? Here’s a look at that ratio since 1990:

In late 1993, an ounce of gold would buy you 27 barrels of oil. Today, that same ounce of yellow metal will only bring home 7 barrels! This is all the more impressive when you consider that gold has been on an incredible bull run itself. 

While an ounce of gold will buy less oil today than at any time in recent memory, the inflationary bad news doesn’t stop there. At the end of 2004, a barrel of oil would buy 21.3 bushels of corn. Since then oil prices have more than tripled. But today, a barrel of oil will only buy 17.8 bushels of corn. Corn prices have gone up 3.5x over the last 3.5 years. 

So, when the government agencies tell us that inflation is still under control, I have to respectfully ask what they’re smoking in their corncob pipes…

Until next week…

Great Trading!

D. R.

About D.R. Barton:  A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena.  He is a regularly featured guest on both Report on Business TV,  and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio.  His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at  “drbarton” at “iitm.com”. 

 

Melita's Inspirational Corner

There Is Always Something to _______ About

by
Melita Hunt

When I awoke this morning, I wasn’t feeling particularly well, but as I looked out of the window at the trees on this lovely spring day, the following sentence popped into my mind: “There is always something to be happy about.”

But how would you have filled in the blank?

There is always something to ________about.

Smile?

Worry?

Moan?

Laugh?

Stress?

No matter which thought came to mind for you or how you filled in the “blank,” it is just as easy to change it as it was to think it in the first place. It is simply an indicator of how we are feeling in any given moment. So what are you choosing to think or feel?

There are no right or wrong answers; it is just a simple sentence to gauge where your head is at. If “stress,” “moan” or “worry” are the key words that showed up for you, then maybe it is time to take a look at why. Is life really that bad or are you just feeling stuck?

Sometimes when we are stuck in a certain state, we don’t feel like smiling or enjoying our day and that is okay too. But if you DO want to become “unstuck” then the easiest way to do it is to focus out on others and do something kind for another person. Just try it out:  buy coffee for your colleagues, smile and say "HI" to a stranger, take flowers home for your spouse. I guarantee that you’ll notice as you lift the mood of others, you can’t help but feel better yourself.    

Now I can’t say that I have been doing the happy dance every day over the last year, but it was certainly a nice way to re-direct my morning, and sometimes I think we just need a simple reminder to smile and enjoy our day. So here is your reminder.

Have a Wonderful Day

Melita Hunt is the CEO of the Van Tharp Institute. If you would like to keep up with Melita’s progress regarding her recently diagnosed lung cancer (she is a never-smoker). Please feel free to read her blog at www.myleftlung.com. You can contact Melita at mel@iitm.com

 

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Copyright 2008 the International Institute of Trading Mastery, Inc.

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Quote:

“Win as if you were used to it, lose as if you enjoyed it for a change.”

Ralph Waldo Emerson

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Tharp Concepts Explained...

 

- Psychology of Trading

- System Development

- Risk and R-Multiples

- Position Sizing

- Expectancy

- Business Planning

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