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Tharp's Thoughts Weekly Newsletter (View On-Line)

March 18, 2009 — Issue #415
  
Workshops

What People Are Saying About Blueprint and Peak 101

Article

YOU are the Holy Grail, Part III by Libby Adams

Sale

Peak Performance Home Study Course

Trading Tip

Housing Starts and Other Media Mongering: The Art of Spin by D.R. Barton

Mailbag

What Should I Do When My Goal Has Been Reached? 

Blueprint for Trading Success

What People Are Saying About Blueprint and Peak 101

"Well structured and put together expertly. Van is clearly highly experienced and knowledgeable and presents his material with enthusiasm. The fact that he speaks from experience makes the learning experience that much richer." —Michael Tan, Australia.

"The best workshop I have attended, trading or otherwise. Would encourage anyone to do this course who wants to really get in touch with who they are and why they act the way they do. And more importantly how to change themselves to achieve the goals they want." —Jonathan Gould, Australia

More Comments About These Two Workshops...

 

April 24-26  Blueprint for Trading Success

This course is a complete structured program that will launch you to a more advanced skill level in your trading.  You’ll learn strategic, focused steps that will serve you throughout your entire trading career.

April 26  Dinner at Dr. Tharp's Home
April 28-30  Peak Performance 101

You’ll leave this investment "Boot Camp" knowing, for the first time in your life, why some people consistently make profits over and over again, while other investors and traders are erratic and unsuccessful.

Learn More...

 

Feature

YOU are the Holy Grail, Part III

by
Libby Adams

Recently, I returned from co-teaching Peak 202 in Sydney, Australia with Van.  It was an extraordinary group of people and we witnessed a tremendous amount of transformation in the participants during the workshop.  I really want to thank them for their Aussie hospitality as well  as to acknowledge our dear Melita for setting that event up and for her enthusiasm about it.  She is greatly missed.

Have you noticed that there is a common thread that runs throughout the IITM educational courses?  That thread is clearly outlined as a key concept of the Blueprint workshop: you need to assess your beliefs about trading and yourself.

WHY?  What does that have to do with trading?  Why not get some more good trading techniques?  Isn’t that what people want and need?

In order to start answering that question, I’m actually going to take the liberty of quoting from the Q and A section of the information you would find when you are reading about the Peak 101 workshop.  This information is something every trader has to seriously ponder:

“There are possibly more trading techniques available than can be counted. One technique may earn one trader a fortune but cause another to go bankrupt. The difference in the results lies within the trader; how the person processes information, inner conflicts that can cause confusion, or the lack of discipline to follow their trading plan. Showing traders and investors how to develop skills and awareness on the issues from within are at the core of this highly effective course.”

In Part I of the series YOU are the Holy Grail (April 23, 2008), I asked how we could account for the discrepancy in outcomes among traders using the same technique. I concluded that there were three aspects of yourself that needed to work in alignment.

In Part II (October 22, 2008), I discussed the importance of personality type and its effects on trading results.  I went on to say that if the Holy Grail is YOU, then it’s imperative that you “Know Yourself!”  That phrase is the inscription that was written on the Oracle of Apollo of Delphi, Greece, 6th century B.C., so the notion has been around for a long time.

So, why is it so important to know yourself?  That’s a fair question. Your clarity comes from within, from an inner self that is powerful and wise.  You must learn to use your strengths more effectively and at the same time develop an awareness of your weaknesses and learn how to overcome them.

Interestingly enough, you might automatically assume that you know yourself, but that definitely is not the case.  You actually have to study yourself! This is why there is such an emphasis on trading psychology at the Van Tharp Institute.

In this article, Part III, in addition to beliefs about yourself and the market, I would like to ask you if you have ever stopped to consider and examine your SPIRITUAL BELIEFS. What work are you doing with the Spiritual aspect of yourself, or what I call the "Big I"?

Wayne Dyer, Ph.D. states, “We are Spiritual Beings having a human experience.”  Do you believe that is true?  That is his spiritual belief. What are yours?  Do your SPIRITUAL beliefs impact your trading results?   You tell me.  If you have a belief in a benevolent Higher Power that you trust to guide you and always support you non-judgmentally, might that be a calming influence when you are trading?   For example, let’s say you are in a trade that is going against you, might you think, “Well, this isn’t looking so good at the moment, but I know that everything will be okay, regardless of the outcome.  I’ll just keep following my system.”  Because of your calm state, you remember that every system is going to have losers, and this just might be one of them, which means you are that much closer to your next winner.

If you had a belief in a wrathful, critical and judgmental type of “God”, could that belief bleed into your thoughts when you are trading?   Again, let’s take the scenario of a trader in a position that is going against him/her.   Having a belief in this type of wrathful “God” could create an extreme fear of criticism and failure.  As a result,  the trader might get out of the trade before the stop is even hit to avoid making a mistake, only to see the trade turn around and hit the target.  That, by the way, is a scenario I affectionately call “Trader’s Hell.”

When I’m working with traders in my consulting course, we examine the individual spiritual beliefs and allow each student to create what I call, “The Gospel according to Fred” or “The Gospel according to Stacey.”   Doesn’t it make sense to have spiritual beliefs that empower you?  Where did you get those beliefs, anyway?  Must you keep them, or can they be changed?   Of course they can, and, in fact, MUST be changed if they are not empowering you to get the results you want, not only in trading, but in life. 

I call the process of this self-examination “Transformational Education.”  This type of learning is designed to change you as a person. Traditional education provides us with knowledge, but most often is not life-changing. For example, when a person takes a course in geography, upon completion he/she is basically the same person. They have simply increased the amount of data in their possession.

On the other hand, when a person completes a course in Transformational Education, they are not the same. They have expanded their consciousness, changed their limiting beliefs, and are a different, more evolved person. These changes enable them to live more satisfying, fulfilling and successful lives. They can live to their full potential.

Transformational Education is an integrated approach to the study and transformation of the self into the SELF. It uses a combination of mental, physical, emotional, and spiritual processes to accomplish change. One of the core tools I have developed is Transformational Meditation.  This exercise allows students to eliminate the barriers that are preventing them from expressing the wholeness of the SELF. Since Transformational Meditation creates new, positive, unconscious beliefs, current limiting beliefs are eliminated, along with the accompanying negative emotions and unwanted or destructive behaviors. This technique allows students to tap into their inner awareness, that place where their own answers are found: the SELF, the Holy Grail.

When Van and I were teaching Peak 202 in Australia, we spoke about the importance of spiritual beliefs with the participants and we specifically discussed some of the ideas put forth by noted authors Neale Donald Walsch and Gary Renard on the topic. 

And as synchronicity would have it,  I am being interviewed on March 31st  in a teleseminar series called "Healing with the Masters", hosted by acclaimed author, healer and speaker, Jennifer McLean.  In addition to myself, renowned leaders such as the afore-mentioned Neale Donald Walsch and Gary Renard will be interviewed, along with Jack Canfield, Gregg Braden, and Eric Pearl, plus 18 more.

What’s great is that this12-week interview series is free of charge!  It provides you access  to 24 of the world's leading experts in spirituality, wellness and healing.  They are providing an intimate portrait of how they achieved success in their respective fields as well as giving you personal insights on how you can easily accelerate your own consciousness and evolution. I want to re-emphasize the correlation between consciousness and masterful trading, so this is a great opportunity to focus in on this area.  You can enroll at www.healingrelease.com.

About Libby Adams: Carol "Libby" Adams, Ph.D., D.D., author of Voices of Selves, is the Executive Director of the Academy of Self-Knowledge . She is a Master Practitioner of NLP (Neuro-Linguistic Programming) and specializes in Transformational Meditation™, a process she has developed and used successfully with hundreds of students over the past fifteen years. To learn more, visit, www.transformationaltrading.com.

 IITM Third Party Clause

Sale

Peak Performance Home Study

This spring, Dr. Tharp will be releasing an updated edition of his masterpiece, the Peak Performance Home Study Course. But this second edition will not be available for a couple of months.

Trading Tip

Housing Starts and Other Media Mongering:  
The Art of Spin

by
D.R. Barton

“Spin (verb): To twist and turn so as to give an intended interpretation.”Princeton Wordnet definition

We had a wonderful E-Mini trading workshop over the weekend.  Once again, such a high quality group of folks in terms of intellect, commitment and graciousness.  I hope it was as much fun for you as it was for Christopher and me!

One of the subjects that we discussed was news—what to do with it, whether or not we can use it, and, if so, how.  The bottom line was this: anticipating the market’s reaction to news is an almost impossible game.  Even highly paid top analysts at research firms have a spotty record with this endeavor.

But what IS useful is an understanding of the market’s response to news (or the spin that is put on the news).  On Tuesday, March 17, we had an economic report on housing starts. The spin on the news was quite amazing.

The talking heads on TV and the headlines in the papers trumpeted that housing starts were up 22%!!! Of course, this was a gain off of the rate that was the lowest since they started reporting this number almost six decades ago!  It’s like a stock that drops from $100 to $1, then has a day where it gains back 22 cents and everyone tries to get happy because the stock is 22% up.

One up month is not cause for celebration.  There are many reasons to believe that this is just a sunny few minutes in a long and stormy day for the real estate market.  Let’s look at a chart that tracks the housing start and put last month’s (very minor) rise in perspective:

This chart from Briefing.com clearly shows that the much trumpeted gain in February housing start is barely discernable from a historical perspective!  (For those of you wondering, the SAAR acronym stands for “seasonally adjusted annual rate” and just means that they take the monthly number and project them to an annual number with some allowances for seasonal tendencies.)

That’s the first reason that we should be suspicious of the optimism surrounding this number; it’s a big percentage on improvement on a number that's minuscule from a historical basis.  As a side note, practically all of the gains in housing starts reported for February were for multifamily dwellings (apartments); so the number of single family homes started is STILL at an all time low.

The second reason to be skeptical is that this is the first up month in ages.  )ne uptick after a monstrous decline (over a number of years) doesn’t even qualify as a dead feline bounce!  As they say, one point does not a trend make.  If we get three or more up months, THEN we can start talking about recovery!

The last and most important indication that the housing starts number is not big news was that the housing stocks were barely affected by the news.  The real estate ETFs were up slightly and individual stocks like Hovnanian and D.R. Horton were mixed (the first was down, the second was up).  So the real estate market was not acting like salvation had come…

The bottom line is that the markets, in this leg up move off the recent bottom, are looking for ANYTHING to paint as good news.  And we were SO oversold that a continuation in the broader market will be no surprise at all.  But I think it’s very premature to dust off your copy of How to Flip Condos with No Money Down just yet…

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”.  

Mailbag

What Should I Do When My Goal Has Been Reached? 

by
Van K. Tharp, Ph.D.

Reader Question: I really appreciate your work and your email letters. I have a question that perhaps others would also like to have answered.

As background information, I see the big picture on markets and the economy much as you do. I am an intuitive trader as opposed to a system trader and I mainly trade ETFs, both long and short. My goal is to attain a certain percentage gain each month.

What should I do when my goal has been reached? Should I stop trading until the beginning of the next month, cut my risk and just trade smaller or go for even bigger gains? 

It seems a shame to risk losing when I have already hit my target but it seems a shame as well to just skip other trading opportunities.

I have been an "investor" for many years but a "trader" for only a few months. Thanks. 
— Gary H.

Van's Answer:  I don't see any statement about your objectives. You need to really dig into your objectives and then you can answer the question yourself.

How painful would it be to give back some of those profits? Say 10%? Or 25%?

How painful would it be to give back all of those profits?

You must weigh that against the joy of making bigger profits...say making double your monthly goal.

When you understand your objectives, then you'll have the answer for yourself.

For example, if the pain of giving back any profits is immense... then stop trading when you meet your goal

If you are willing to give back a certain percentage of them, then trade at a risk level that makes it nearly impossible to give back more than that level of profits.

All of this is in the Definitive Guide to Position Sizing, but thanks for the question because once again it allows me to emphasize the importance of knowing your objectives.

Van

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Copyright 2009 the International Institute of Trading Mastery, Inc.

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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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Handbook for Traders and Investors

 

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A computerized version of Van's famous "marble game."

It is designed to teach you the important principles of proper position sizing.

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