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Tharp's Thoughts Weekly Newsletter

June 26, 2008 — Issue #378  
  
Trading Education

20 Percent Off Sale 

Article

What Happens When You Wake Up? 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 VI by D.R. Barton

Melita's Corner

Attachment by Melita Hunt

Trading Education

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Feature

Tharp’s Thoughts Classic

What Happens When You Wake Up?

By Van K. Tharp, Ph.D.

A lot of things are happening these days that suggest that something major is happening in the world.  The US has our first ever black man as a presidential nominee.  And it was to be either the first woman or the first black man.  When I graduated from high school, I would have guessed that the possibility of the US having a black president in my lifetime was zero.  However, I would have also said that the possibility of me being married to a dark- skinned woman, living in the South, was also zero and that happened 16 years ago.

I also think that there is a possibility of a major change in the world economic system soon.  If that happens, it will change everything.  Most people will find these changes very uncomfortable because major change usually is uncomfortable.  In fact, some people have thought that I was being quite negative in my market updates and my view of what was going on.  Well, you could make that assumption.  But I’m actually quite positive because I think major change is happening that will, in the long run, help the human race. 

So let me describe a little more about what I’m talking about.  I have a great little book in my personal library by Jeffrey Moses (with an introduction by Mother Teresa) that is entitled Oneness: Great Principles Shared by All Religions.  And by the way, as a modeler, I tend to believe that the shared principles are the key principles.

Well one of the key principles, one I’ve been telling people for years, is that “IT IS BETTER TO EXAMINE THE SELF.”  Here is what Moses says:

Our activities and successes are based on our inner strength and wholeness.  To grow, it is necessary for us to recognize and correct our own faults.  Yet, it is difficult to do this since we hide our shortcomings not only from others but from ourselves. 

When we gain the ability to recognize and correct our own bad habits, we begin to make rapid strides toward greater happiness and success in all spheres of life.  Only by learning to admit our own faults can we become more tolerant and loving to our fellow man and to his shortcomings.  p. 51.

Why Knowing Yourself Is Important to Trading Success

  • You don’t trade the markets, you trade your beliefs about the markets.  Thus, it is important to recognize the beliefs you are trading and determine whether or not they are useful.

  • There are optimal mental states for trading and there are very detrimental states for trading.  The first step is to recognize your mental state so that you can determine whether or not it supports you.  Most people just identify with their mental state and thus don’t even recognize that they are being run by it.

  • In order to trade, you must know who you are.  And when you know who you are, then you can develop or adopt a trading system that fits you.

  • You must know yourself before you begin trading.  And when you know yourself, you can develop objectives that fit you and you can then use position sizing to meet those objectives (and it is position sizing, not your system, that you use to meet your objectives).  The quality of your system only indicates how easy it is to use position sizing to meet your objectives.

Lately, however, I’m beginning to realize that there is a lot more.  If you’ve been working on the Peak Performance Course, much of what you’ve been learning is the structure of the ego and how to reprogram yourself to function at a super level.  It’s like Neo (from the movie The Matrix) taking the red pill instead of the blue pill.  Once you’ve taken the red pill, you can start reprogramming yourself to do all sorts of super things.

Object Consciousness

But there is a level beyond the red pill. That's what Neo realizes at the end of the original Matrix movie.  He’s not part of the matrix at all.  He’s beyond the matrix.  And when he realizes that, his power becomes much greater than anything in the matrix.  Although I’ve seen the answer for many years, I’m now beginning to understand it from an experiential level.  I recently heard Eckhart Tolle say that there are two types of consciousness, “object consciousness” and “space consciousness.”  Object consciousness identifies with the objects in consciousness.  A thought or belief comes to you, and you believe that you are that thought or belief or emotion.  For example, someone might say:

·         I am very sick.

·         I am angry.

·         I am trading well today.

Those are all examples of object consciousness.  Information flows through you and you think that you are that information.  You are your beliefs.  You are your emotions.  You are the subpersonality that seems to be in control of you at this time.  When someone is in total objective consciousness, they are very "asleep."  If your head is full of meaningless random thoughts and energies, and if you think that’s who you are, then you are in for a lot of pain and suffering.

Suppose you keep losing in the markets, and you suddenly adopt the belief that your system is not good.  If you have that belief, then you’ll probably stop trading it.  And you might become quite emotional about the belief, since it might be charged by your reactions to the losses you incurred while trading it.  Think of the pain that comes from saying to yourself, “My system no longer works – I’ve lost a lot of money.  I’m a big fool and I’ve lost a lot of money.  Oh, poor me!”

But let’s look at that belief without the emotion. Your belief is that your system no longer works.  If you’ve been trading a long term trend following system in today’s market, you might have such a belief.  But wouldn’t a more useful belief be “I have a great trend following system but it doesn’t work well in volatile sideways and volatile downward markets”?  However, until you thoroughly examine the belief to determine if it is useful, you will probably think it is a fact.  And if you think you are the belief, you will suffer a lot.

Going to a New Level – Space Consciousness

Remember that beliefs are your filters to reality.  They shape your reality.  So it is important to continually look at your beliefs to see if they support you.  In fact, most of the work I’ve been doing with traders over many, many years, has been to simply have them look at their beliefs and emotions so that they can reprogram themselves.  But such reprogramming is hard to do 1) if you think your beliefs are facts (meaning they are real) and 2) if they are highly charged.  I’ve usually had to get rid of a lot of charge to help people with important belief changes.  However, I suspect that I’m going to be taking things to a new level shortly by moving beyond such beliefs.

And what do I mean by that?  Let’s take one more step now and look at what Eckhart Tolle calls “space consciousness.”  By space consciousness, Tolle implies that you are not the objects flowing though your consciousness at all.  You are the AWARENESS of those objects.  But you are so powerful at creating your life, that if you decide that those objects (beliefs and emotions) are you, then you will create that reality for yourself.  But if you decide that you are just the awareness of your beliefs and emotions, then they are just things moving through you.

I’ve meditated for many years.  I’ve heard the statement that you are not your beliefs and you are not your emotions.  But when you suddenly understand that from an experiential viewpoint, it changes everything. 

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 VI

by
D.R. Barton

Crude oil prices are entering a crossroads, technically.

We’ve been talking for weeks in this space about this fascinating market. Last week, we talked about some sentiment analysis that irrational thought is starting to seep into legislative minds. And this week both presidential candidates have weighed in on what to do about high gas prices – a topic that is sure to be a hot button right up to election time.

Candidates from both parties are calling for either investigations or more regulation for “speculation in the oil and energy markets”.

On a hot button issue, it’s best if a candidate can have villains. So it looks like “big oil” and those evil speculators are at the top of the list. This is of interest because this type of attention can be one of the contributors to a market top.

And oil prices are technically at a place where a breakdown or big bounce are both equally plausible. While writing this article, (Wednesday, June 25th), oil inventory numbers are way up, opening the possibility that higher prices have finally slowed down demand.

And with this news, crude oil prices have dropped $4 in morning trading. After the huge Friday up a little over two weeks ago (when oil prices jumped $16 per barrel in just two days), prices have been consolidating. And today’s action takes us to the bottom of that range. Let’s look at the chart:


As we test the bottom of the range on this chart, it’s clear that two important numbers are the 6/10 low (130.98) and the 6/5 pullback low (121.61). Breaking below this first number will bring the second into play, and breaking below the June 5th low will certainly be very ominous technically.

On the other hand (as the two-handed economists like to say), a bounce off of the bottom of the channel shown on the chart will add fuel to the bullish arguments, and make this consolidation time look a bit like a bullish continuation pattern.

Geopolitical issues will continue to dominate, of course, as the Nigerian instability is clearly a major issue for anyone watching the crude oil picture.

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

Attachment

by
Melita Hunt

As I sit here twirling my hair and it is falling out in chunks in my hands, I am wondering what inspirational voice will show up today and give me something to write about.

Well it didn’t take long for the voice of “attachment” to show up and show me all of the things that I take for granted and those things that I feel attached to. As I walk past the mirror I am well aware that what I am looking at today is going to be very different to what I will see in the next few months. I wouldn’t call myself vain, but I definitely take pride in my appearance and I know that the loss of my hair is going to be a challenge for me. I guess I’m just attached to having hair to brush, and I didn’t realize how much that was the case until I faced the fact that there isn’t going to be any on my head in the next few weeks.

I am not sure whether it is how I look at myself or how others will see me that matters the most to me. It is just an experience that I am about to face, and I’ll deal with it as it happens because I really have no idea what the feelings, thoughts and outcomes are going be. I guess it is going to be a big lesson for me. Will I walk around with a bald head, or will I wear scarves and wigs? I truly don’t know yet, and I am fascinated watching my own process of dealing with this.

And this got me thinking about the other things that I am attached to because the truth is everything is transient and can be taken from us at any minute.

Over the years I have managed to become very unattached to “things” and I have in fact, given away two entire households and everything in them other than photos and personal items. As I moved from England back to Australia and then ten years later as I moved from Australia to America, I just gave all of my belongings and household items away. I didn’t join an ashram or run off backpacking, I just knew that everything that I owned or needed could be re-purchased if I really wanted it and I was ready to start anew. I didn’t want to drag my entire life around the world with me. It wasn’t important enough for me to hoard “things.”

For some people this may be hard to fathom, but it really depends on what a household of items represents to the individual. Does it represent a lifetime of hard work and achievement? Or are “things” in our house just items that we use on a day-to-day basis and mean nothing more? Or perhaps it is a combination of both. How hard would it be to let many of our “things” go? I have written about this before when I wrote about hoarders and chuckers and how difficult it was for my mother to part with things that she has owned for many years, even though she wasn’t using them and had no idea what they represent or why she had them. But I guess that everyone has their reasons.

I believe that we quite often create circumstances whereby we lose things that we put too much emphasis on and have a fear of losing. In some people’s case it may be money, for others it may be a loved one or a spouse that leaves. My new lesson is going to be something that I deem to be a part of me, my hair. And I am only starting to realize how attached I am to it, so in the ensuing weeks I am going to learn a few profound lessons about myself and how to become “unattached” from something that I believe represents me. It’s both scary and exciting at the same time.

So what item or thing are you scared or fearful of losing? How attached are you to certain things in your life and why? Perhaps it is time to look at what it represents to you and whether the loss of it would be such a curse or could it be a blessing? I’ll certainly let you know how I go! And as an added lesson for me, there may even be a photo of me with my bald head. Now that’s really pushing the envelope! So let’s just take one day at a time and see how I progress.

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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