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Tharp's Thoughts Weekly Newsletter

August 27, 2008 — Issue #387  
  
Article

Personality Parts by Van K. Tharp, Ph.D.

Hot Off The Press

The Definitive Guide to Position Sizing is Here!!!

Trading Tip

Gold Prices at a Decision Point by D.R. Barton, Jr.

Melita's Corner

Out of Energy by Melita Hunt

 

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Feature

Personality Parts

by

Van K. Tharp

Most forms of psychotherapy assume we have a multitude of internal parts operating on a subconscious level. For example, Freud’s theory of personality assumed that we each have an Id, Ego, and Super ego—parts that certainly could be in conflict. Transactional Analysis assumes we have a parent, child and adult. I could go on listing theories all the way to Psychosynthesis, which assumes that we are all composed of thousands of parts and the primary job of therapy is to get the parts to work together as a unit. 

Who knows whether or not people are made up of parts? I certainly don’t! But at the same time it appears to be a useful fiction to assume that we are. For example you might have a trader part, a parent part, a fun-loving part, etc.

It is useful to assume we have some parts and that core behavioral problems often come from conflicting parts or from parts acting on their own without understanding the whole picture. Each part has a positive intention for you or you would not have created it in the first place, even parts that now cause negative side-effects (such as trading for excitement and not following your system). As a result, you can use some standard negotiation techniques to get the parts to work together. Those techniques are detailed in the third volume of the Peak Performance Home Study Course, and are much too involved to cover in the scope of this newsletter. However, I would like to provide you with this introductory information about what your parts may be,  their positive intentions, and how you can get to know them better. In particular, I want to explore the intentions of parts that might seem to function to lower your self-esteem by producing fear, anger, depression, or feelings of worthlessness.

In our Peak Performance 101 workshop, we expand on this work by incorporating exercises on an experiential level. And again this work can only be practiced in an interactive environment, such as a workshop, where student and teacher work on individual situations. But you can do the first step in the process, which is the first step our workshop students take. We ask people to do an exercise to determine what parts are in their heads. The exercise is called a “Parts Party.” I recommend you do it about half an hour before you go to sleep, while you are in bed. 

Parts Party

First, since everyone reading this is a trader or wants to be a trader, assume you have a trading part. Bring up that trading part and ask him/her/it the following questions:

1. What are you trying to do for me? What’s your positive intention for me?

2. Who are you in conflict with? What other parts give you the most trouble in your trading?

3. How does this part represent itself? If it is an image, what does it look like and how would someone else recognize it if it walked into the room? If it is a voice, whose voice is it? If it is a feeling, then describe the feeling. How heavy is it? How big is it? And so on.
Ask all your parts to come and let them know you are just giving them a chance to show up and play. But whenever you become aware of a new part, ask it the same questions.

The next morning, after everyone has done the exercise, we ask each participant about their parts. Often the discussion helps others discover additional parts that might not have shown up at the party. Here are some typical responses:

• “I had five parts show up. The trader, whose primary purpose is to make me the best possible trader I can be, and the banker, who is very conservative and in charge of risk management. The little boy, whose intention is to have fun and enjoy life. My family part, whose intention is to love and care for my family and give them lots of time; and my mother. I don’t know what my mother’s intention is, but she is always telling me what can go wrong and making me worry. I know it’s her because it is her voice I hear. The trader, at times, can be in conflict with all of the other parts.”

• “Well, I seem to have four trading-related parts. At least, that is all that showed up last night. One part, the trader whose job is to trade. The second part is the broker part of me whose job is to execute customer orders. However, he’s always giving the trader advice based on what I hear from my customers and that’s usually not productive. I also have a gambler part who really likes the action of playing the market. He is counterproductive. Then I have a part of me that is angry all the time—especially at the gambler part of losing so much money. He tends to disrupt my personal life as well.”

• “I have a skydiver part and a banker part. Neither of them gets along at all. The banker part is very business-like. It makes money by taking low-risk ideas. It manages money well. On the other hand, the skydiver part just loves fun. It loves the excitement. But what it does is very dangerous. It could kill me—both physically and financially.”

• “What I discovered is that I have thousands of parts. I have five advanced degrees and there are parts responsible for each. I’m involved in three different jobs and there are parts involved in each of those. A different part represents each family member—for example, there is not just a father part, but I have a part of me to look after each child. I could go on. And there are new parts being formed each time I want to learn something new. The problem I have is that none of these parts have enough time.”

Spend some time thinking about your parts.  It’s ok if you don’t completely grasp this concept. As I mentioned this is core material from both the Peak Performance Home Study Course and a very interactive exercise in the workshop. If you just start thinking about this concept and what your many parts may be, I believe it will be a very a positive and useful exercise in self understanding and moving closer to peak performance whether in trading or other aspects of your daily life. In Part Two we'll look at how to deal with conflicting parts. 

Excerpted from the Peak Performance Home Study Course.

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. 

 

Trading Tip

Gold Prices at a Decision Point

by
D. R. Barton, Jr. 

There are such interesting things happening in precious metals now.  Add the fact that we are at a technical decision point, and some quick thoughts on gold are in order.

Let’s talk about three things today:  gold mining stocks relative to the price of gold, a look at gold from a technical perspective, and some anecdotal physical commodity evidence of interest.

In the venerable Wall Street Journal this week, a Heard on the Street article attempts to explain why the gold miners have struggled despite high gold prices.  In summary, the inflationary pressures on transportation, fuel and capital equipment have actually collapsed the margins on metal producers.  This has made re-investing to upgrade productivity difficult and even when capital expenditures are made, the return on the investment has been below market rates.  

Add to this the problem that these producers have no ability to affect pricing on a commodity that is priced by a market (and one that is more driven by fear and greed cycles than most) and you have a group of companies that are in a weak position.  That is reflected in their stock price performance as you can see below.

This chart shows stock price activity over the last 200 days.  The major gold producers are clearly underperforming the price of the raw metal.

You may recall a chart that we looked at a couple of months ago showing a similar relationship between Exxon Mobil and crude oil prices, and we all know the big correction that we’ve seen in crude oil since then.

A Quick Technical Perspective

The chart below struck me with a couple of interesting features.

It’s not a stretch to see that a violation of the nested support levels could lead to significantly more downside, even down to test 650 or even 600.  (As an interesting note, somewhere between 600 and 650 is where most technicians would place a 50% retracement of the multi-year run up in gold.)

Gold, however, continues to capture the retail public’s imagination.  The folks over at Stansberry & Associates report that the U.S. Mint has run out of Gold Eagle coins, with sales in August up four-fold versus those in July.  Time will tell if this is an aberration or a trend…

Next week we’ll resume our discussion on trading platforms.  Keep those comments coming to drbarton “at” iitm.com; let me know your thoughts on your favorite trading platforms and why you like them (or the ones you tried that didn’t pan out)!

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

Out of Energy

by
Melita Hunt

A few weeks ago I went to speak to my therapist about my energy levels. I felt that I was losing my sense of self because I wasn’t living a “busy” life anymore. I have always been such a lively and energetic person, however, my current predicament means that I am dealing with a tremendous amount of fatigue and finding that I can’t do half as much as I used to do. What I soon realized was that I had attached “busyness” to success.

He explained to me that I was undergoing massive changes in my life and it was time to accept a new way of being.  I have to learn to accept that the dynamics have changed and in hindsight, the slowing down component is probably really good for me. I am not as eager to get things done and finished so that I can quickly move onto the next project or idea. Instead, I am learning to do what I can do and just accept that when my energy is flat or getting low, I actively stop and revitalize myself.  

But now I can see that for many years I was running on overload. Where was I trying to get to? When was I going to stop and smell the roses or appreciate my accomplishments when I was always ready to jump to the next one? And speaking of energy, I can now really feel where I get my energy from, and what depletes it. That means that I am conscious of the people, the activities and even the objects that I like to be around, and those that I avoid.

Where do you stand in the energy stakes? Do you find that you are depleted by the end of the day or do you feel revitalized by your job and daily activities? Are you on overload, just hoping to get through the day before the next day begins? Or do you take the time to slow down and appreciate your life and your family environment?

What about the people that surround you? Do they pump you up or do they suck your energy, pulling the life force out of you?

Do you wait until you are worn out or empty before you fill your energy tank? Or do you have a regular routine of good exercise, good friends and fulfillment keeping your fuel tank full?

It doesn’t take much effort to examine our lives if we are willing to slow down and take notice. We should all be working towards enhancing our life and feeling alive and full of energy. If we don’t, then something is definitely out of order. Take a look around and notice what people and activities make you feel good. Then make a conscious effort each day to incorporate more of those things into your daily routine.

I now have a new belief about energy. Being energetic doesn’t mean being super busy and over active anymore, able to leap tall buildings in one single bound or stay up until the wee hours of the morn. For me, it is feeding my life force and being fulfilled with the choices that I make and that revolves around being around people and situations that continually charge my batteries, rather than depleting them.

Melita Hunt is the CEO of the Van Tharp Institute. If you would like to keep up with Melita’s progress regarding her 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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