Tharp's Thoughts Weekly Newsletter (View On-Line)
Guidelines for Inner Listening and Intuitive Access by Lee Coit
Stocks in Your Pocket or Purse: The Market Goes Mobile, Part 2 by D.R. Barton, Jr.
Calculating R for Credit Option Spreads
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Guidelines for Inner Listening and Intuitive Access
Lee is an author and lecturer on the topic of spirituality and awareness. Van has been friends with Lee for decades and in the early 90s, Lee taught the Mental Strategies Workshop with Van. While the content of this article should be familiar to long-term Van Tharp readers, it comes from another messenger and is always worth repeating.
Intuition is knowledge that you can access; however, it is not contained in the logical part of your mind. The logical part of your mind has been over-trained while the other valuable part of your mind where intuition resides most likely has been overlooked. I believe all aspects of your mind have valuable and unique functions, so I’d like to share with you some ways you can increase access to your intuitive abilities.
Quiet your logical mind. Your mind’s intuitive aspect will not overpower the logical side because you currently give more credence to logical thinking and the feeling of being in control. You can encourage access to the intuitive side, however, by creating a tranquil atmosphere in which you remove stimuli for the logical part of your mind. In the process, however, be sure that your logical mind does not become involved analyzing the beauty or activity that is happening around you.
Sit in a comfortable position: one in which you can relax but won’t fall asleep. There is no mystery in meditation; you simply create a neutral situation which does not stimulate your logical brain. If you find it difficult to sit and meditate, try doing something you love such as gardening or walking. When faced with very difficult situations, I find it helpful to do something with enough physical effort involved to keep my mind busy. If this does not work, I increase my physical activity until I get tired. Then I sit down to meditate. One sure way to access your intuitive mind to place yourself in a situation in which there is no seeming logical solution. An example would be one of imminent danger. In such situations the logical mind gives up after running out of solutions, now the intuitive mind can be heard. As effective as it is, I do not recommend people pursue imminently dangerous situations as a meditation method.
Watch your thoughts as you meditate. Do not try to consciously stop thinking or try to block out thoughts. This will only raise your anxiety level. Close your eyes and watch your thoughts but do not hold on to them. See your thoughts as a moving billboard, observe them and let them move on. As you do this, you will eventually come to a place where you are not aware of thinking. A helpful adjunct to this practice is to watch your breathing. Inhale deeply and then let the breath out slowly. Repeat this procedure for several minutes remaining aware of the inflow and outflow of air in your body. If you get to the place where you see colors, hear sounds or buzzing in your ears, or are startled by the realization that you have not had a conscious thought for some time, you are doing very well.
Create a routine for your meditation. It is best to meditate early in the morning before the "busy-ness" of the day intrudes on you. You can start by meditating for just a few minutes and then extend your time to 10, 15, or even 30 minutes. It is good to keep a note pad beside you for both interrupting thoughts and insights. If thoughts occur to you as you meditate, write them down so your mind can let them go. You may want to follow up this meditation time with a few moments of writing in a daily diary. This can create a nice stream of consciousness for future reference. Read what you have written down the following day.
Read from a spiritual or personally meaningful book before you enter mediation. This helps to set your mind in a good place and to create a theme for your meditation that day.
Write down insights that you receive during mediation or later during the day. This gives the insights more validity in your mind. Whenever possible, act on these intuitive thoughts or at least take steps that will lead to their incorporation in to your life. Meditation will always be a game if you treat it as such. If you have questions that you want answered, write the questions down before the meditation and ask to have clarity concerning them. Do not let them become the only reason for your meditation as this can focus your logical mind on problem-solving. Your logical mind would love nothing more than to interrupt your meditation as it struggles to solve the problem.
Don’t problem solve while mediating. Meditation is for quieting your mind and creating a clean slate on which you can receive new information. The answers will come in their own time and in their own form. They may or may not come in meditation and you may or may not recognize them when they arrive. Have faith that intuition works and that solutions will come. Often it has been my experience that I receive an answer in a very different form than what I expected. For example, I often find that the problem for which I am seeking a solution is not a problem after all. I can assure you that intuition works very well. Most of the great discoveries and technical breakthroughs are the result of intuition and not logic or formal experimentation. As Einstein said, "You cannot solve a problem at the level of the problem." Intuition and creativity are ways of rising above the problem so it can be seen in a new light and from a different viewpoint.
Intuitive solutions are different from logical solutions. As I said before, intuitive solutions come in their own time and cannot be rushed. You may think you need to have an answer but intuition does not provide the solution until all aspects of the "problem" are ready. Intuition taps into universal knowledge and universal timing.
The intuitive solution is inclusive and universal—the information you receive includes everyone and everything involved. If you prefer, it is a cosmic or macro viewpoint. Logical thinking tends to look at the "problem" from your individual or micro point of view. Creativity looks at all aspects and all viewpoints and tends to see the total picture and not just one viewpoint. Logical thinking can seem much more appealing because it gives us the feeling of control while the opposite is true of intuitive thinking. Since intuition includes everyone and everything in the situation, you may feel like you are involved in something larger—something knowable but not controllable. The intuitive solution is quite different in form; it takes practice to recognize and utilize it.
Use your intuitive senses in small ways. As you put intuition to use in your life, you will begin to see the benefits it brings to you in terms of abundance and happiness. These benefits will increase your confidence in your intuitive ability. As you use and learn to trust this ability, it will become more natural for you to use it in more complicated situations. Again I caution you to not make this a game, a way of showing off, or a new form of behavior justification. Keep your intuitive sense to yourself and nurture it through application and commitment.
Be alert for intuitive information from all sources, all the time. I call this inner "listening" because all the time I am "listening" for messages, clarity, and insights. Discerning when you get these insights can be quite a challenge. The audio example I use is of an "Aha!" and the visual example is that of a light bulb going on. These are positive experiences as if one is suddenly aware of a new twist or dimension. They come as clarity or as all the pieces falling together in your mind. The information may be in a stream of meaningless material of which one part sticks in your mind or carries a very definite image. The source can be from what you may consider positive, but it also can arrive in a negative form. Inner "listening" is not the same as a fearful or cautious thought, though it may be in the form of taking care and not proceeding with a project. The hardest part is to differentiate between fearful or limited thinking and real intuition and insights. The first is based on past experiences; the source is your limited mind reminding you of potential pitfalls. Insights and intuition come from your contact with the unlimited source and leave you with a feeling of clarity and awareness. When I say be alert all the time, I mean while you are awake. Do not forego your sleeping time. If you have a strong or reoccurring dream, "listen" to its message. Make an effort to recall dreams in the morning and during meditation to ask if they held any messages.
Awareness is the key to inner "listening." Honesty is required of all who choose to follow the intuitive path because most problems, while seeming to be outside of us, come from our own blocks to receiving the unlimited potential awaiting us. It is very easy to blame our problems on others or the current economic situation. If we do this, we will never hear the answers that come to help us change our thinking. We must also realize that we have the power to change our thinking and thereby our experience of any situation. Intuition and inner "listening" show us the mis-thinking that caused our problem, but only if we are willing to honestly assess how we created the results we have.
"Accepting" is an important step towards happiness and abundance.
Lee's books are available on Amazon.
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Stocks in Your Pocket or Purse:
The Market Goes Mobile, Part 2
Last week, we took a stroll down memory lane and saw how market data availability for retail investors and traders has made huge leaps. Not so long ago, traders used pencil, paper, and day old prices. Today, we have real time data literally right at our fingertips wherever we are—in our pocket or purse on smart phones.
In the coming weeks, we will dig into the inner workings of half a dozen or more stock market apps that are available for the iPhone/iPad/iTouch. With a user base of over 100,000,000, the iPhone is the logical place to start our smart phone app review. We’ll cover the Android platform in a subsequent series of reviews.
Now that market data is generally available to everyone, everywhere, smart phone stock market apps have to raise the bar to grab our attention. It’s commonplace now for apps to provide market data for stocks, indexes and Exchanges Traded Funds (ETFs) and keep track of portfolios or a list of favorite stocks. Instead of merely finding new ways to present a stock’s current price and the relevant news on that stock, the next generation of apps will actually do something with the massive amounts of stock market data out there.
Over the next few weeks, we’ll look apps that offer a unique or useful twist to the standard quote list or portfolio tracking function. We’ll start our examination with a handful of apps that do much more than just keep stock quotes up to date.
Let’s jump right to what I believe is the first true breakthrough cell phone app: a “next generation” app that offers true professional-level analysis on a smart phone. Better than just raw data, this app actually provides a buy, sell or hold conclusion. And here’s the best part: since the app is brand new (it’s only been out 8 days), you can still get it for free, no strings attached.
Like Having a Hedge Fund in Your Pocket
Imagine having lunch with an old friend from school. She mentions that her broker recommended a stock (let’s say it was Amazon, symbol AMZN). You open an app on your phone and in literally less than 5 seconds, show her a 20-factor model rates that AMZN as “very bearish.” You say that it’s not the best time to get in. Then, you show her a visual gauge that quickly and easily shows the stock’s rating and the underlying reasons for the rating.
With a single tap you can drill down into each of the four rating areas shown above (Financial Metrics, Earnings Performance, Price/Volume Activity and Expert Opinion) and see the five sub-factors that drive the rating in each area.
Like all top-notch stock apps, you can instantly show your former classmate charts of the stock (which show Amazon underperforming the S&P 500, by the way) and relevant real-time news feeds. It also has a built in trading link—if you find an idea you’d like to act on, you can do so on the spot.
Clearly impressed, she asks where she can buy this app. You tell her that she can’t buy it, but she can download it for free from the iPhone App Store.
The App Revealed: Chaikin Power Tools
Essentially, all of the apps out there provide data: news feeds, price charts and snapshots of fundamentals. In researching this series, the biggest missing component on almost all of the apps that I looked at was any sort of analytical tools to complement raw data.
Standing alone as the positive exception to this paucity of analytics is a groundbreaking app called Chaikin Power Tools. In previous articles, I have written about Marc Chaikin whom I consider a genius in the field of technical analysis. He has developed well-known technical indicators like the Chaikin Money Flow and the Chaikin Oscillator.
What Marc and his team have done with this app is nothing short of remarkable. I’ve been gushing about this app. In the palm of your hand at any moment it provides a depth of real-time stock analysis that has been almost impossible to find at any price. This product is basically Marc’s magnum opus—his legacy from 40 years on Wall Street. The app uses a 20-factor model that Marc developed to provide real, actionable analysis for almost any individual stock. By actionable, I mean that the Chaikin Power Tools app rates almost any stock you enter on a five point scale:
- “Very Bearish” (lowest rating)
- “Neutral” (medium)
- “Very Bullish” (highest rating)
In a future article, we will research the 20-factor model. Studying this model is, in my opinion, the equivalent of taking a graduate level course in stock analysis. It is really that comprehensive. As I researched this article, it occurred to me that the Chaikin Power Tool app is like having a hedge fund in your pocket; the analytics are that strong.
Marc tested the app’s analytical model for statistical significance in outperforming the market and it has passed all tests with flying colors. I’ll discuss this testing effort more when we review the 20-factor model in detail in a subsequent article.
Again, since it is brand new, the app doesn’t cost anything during the initial launch phase. Get it for free while you can! If you have an iPhone, an iPad or an iTouch, go to the Apple App Store and search for “Chaikin.” The app has only been available for eight days, so you’ll be one of the first to try it out. The app was featured in Barron’s “Electronic Investor” section this past weekend so the readers of Tharp’s Thoughts are, as usual, on the leading edge of the trading world.
I’m anxious to hear what you think about the app as an analysis tool. Knowing the quality of the researchers that read this newsletter, I’m sure you’ll be finding more ways to use this rich tool than I can imagine.
For all of the app reviews over the next few weeks, I'll include a few comments about the apps’ business model because that affects what you see and how it’s paid for.
On Chaikin Power Tools, there are no banner ads or other advertisements, which make it clean visually. When you download the app and start it for the first time, it presents the option to sign up for “investment ideas, product updates and information on mobile trading.” However, this is completely optional and can be skipped. To this app’s credit, there are also no “nag screens” in the future. Secondly, the app has full trading functionality tied in as an option. Many people will find it very useful to be able to research a stock and trade it inside the same app. Currently the app integrates directly with one brokerage partner and others are sure to follow.
I’ve known Marc for over a decade and some time back, he asked me to look at an early prototype of the app. It simply blew me away. Even in preliminary testing, I was completely impressed with what it offered traders.
In full disclosure, I am an early and very minor investor in the project. To paraphrase famed Remington razor company owner Victor Kiam from his TV commercials, “I liked it so much I invested in the company.”
I’d love to hear your thoughts and feedback on this article or about other stock market apps that you’ve found useful. Please email me at drbarton “at” iitm.com. Until next week…
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Calculating R for Credit Options Spreads
Q: I have started your Peak Performance Home Study Course and I am elated as to what I'm learning, even though I've been trading for 3 years! I understand how to find the R in my futures trading, but in my other strategy, Credit Options Spreads, where do I begin? I have a fail-safe stop with the spread itself, but I also set a hard stop at $1.00 from the strike price. Also, I close out a spread if it gets to 20 cents or less. This is all in my trading plan. How do I calculate 1R?
A: We don't have anyone on staff that's an expert in options and we occasionally get questions about position sizing strategies and R-multiple measurement for options strategies. While I can't tell you what your 1R should be exactly, I can give you some ways to think about it in hopes that you can figure out what's best for you.
When you initially enter a spread trade, what do you say is the amount that you have at risk as you enter the trade? What amount are you willing to lose at the start of the trade? That's your risk or 1R.
If you actively manage spread trade legs and stops as the trade evolves, you could do one of two things to calculate your R-multiple. First, you could regard every evolution as a new trade. While that may seem tedious, it also gives you a clean picture of the risk and reward for each phase of the trade. The alternative is to use your initial R and measure the end results for the entire evolution of the trade.
Here are some other factors you might consider:
- Which of the two stops you use is larger at the start of the trade?
- Which of the two stops tends to get hit more often?
- If it is practical, you might average your losses and use that as your 1R.
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