Trading Beyond the Matrix E-Book

Van Tharp

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 670

Veröffentlichungsjahr: 2013

Beschreibung

How to transform your trading results by transforming yourself In the unique arena of professional trading coaches and consultants, Van K. Tharp is an internationally recognized expert at helping others become the best traders they can be. In Trading Beyond the Matrix: The Red Pill for Traders and Investors, Tharp leads readers to dramatically improve their trading results and financial life by looking within. He takes the reader by the hand through the steps of self-transformation, from incorporating "Tharp Think"--ideas drawn from his modeling work with great traders--making changes in yourself so that you can adopt the beliefs and attitudes necessary to win when you stop making mistakes and avoid methods that don't work. You'll change your level of consciousness so that you can avoiding trading out of fear and greed and move toward higher levels such as acceptance or joy. * A leading trader offers unique learning strategies for turning yourself into a great trader * Goes beyond trading systems to help readers develop more effective trading psychology * Trains the reader to overcome self-sabotage that obstructs trading success * Presented through real transformations made by other traders Advocating an unconventional approach to evaluating trading systems and beliefs, trading expert Van K. Tharp has produced a powerful manual every trader can use to make the best trades and optimize their success.

Leseprobe

Contents

Acknowledgments

Foreword

Preface

Section I: Transformation of the Trading Game: Understanding the Basics

Chapter 1: I Just Made 130 Percent—and That Was Just the Beginning

Learning to Trade

Tharp Think 101

Not All Lessons Are Equal

Finally, Some Winning Marbles

Chapter 2: The Automation of Tharp Think

My Journey into Doing the Trading Myself

Training Someone Else

Why This Is Possible

Addendum

Chapter 3: From Commercial Loan Officer to Financially Free Trader Investor

My Initial Psychological Changes

What I’ve Learned about the Trading Game

Getting a System That Works

Trading Psychology

How My Life Has Changed

Chapter 4: From Army Major to Systems Expert

What I Have Learned and How I Have Changed

Transformations

Performance

Chapter 5: Using Tharp Think to Go from Full-Time Broker to Full-Time Trader

My New Venture

Where I Am Now

Chapter 6: Adapting Tharp Think to Your Trading

Area One: Thoroughly Understand the Principles of Successful Trading

Part 1: Learning to Trade Is Hard Work, But It Can Be Taught

Part 2: Knowing Yourself

Part 3: Mistakes

Part 4: Objectives and Position Sizing Strategies

Part 5: Probability and Reward-to-Risk Assessment

Part 6: Systems and Market Type

Steps to Learning Tharp Think

Section II: Psychological Transformations to Help You Function at a Superior Level within the Matrix

Chapter 7: Beliefs: The Basis for the Matrix

Understanding the Impact of Beliefs Will Change Your Life

How I Create My Experience

You Are the Awareness of Thoughts that Flow through You

Belief Hierarchy

Changing Your Beliefs

Everything Has the Meaning You Give It

Chapter 8: A Journey through the Stunning World of Feelings and Trapped Emotions

The Turning Point

Self-Sabotage Models

Accepting My Feelings

Where I Am Now

Note from Editor: Feeling Release as a Metric for Awakening

Chapter 9: You Are a Crowd of Conflicting Parts Inside

Exercise: Have a Parts Party

Interview with a CBOE Floor Trader

Working with Dr. Van Tharp

Dealing with Conflicting Parts

What’s Changed Since Then

Where I Am Now (Several Years Later)

Chapter 10: My Inner Guidance: A Personal Journey of Miracles

My Personal Journey

Conversations with God

Deeksha or the Oneness Blessing

My Relationship with Mitzi

My Current Inner Guidance

Revisiting the Transformed Engineering Professor

My Relationship with Durga Grows

Oneness with God

Bond with the Divine

The Nature of the Relationship Is Critical

What Does this Mean for You and for Your Trading?

Some Recent Updates

Chapter 11: My Experiences Using Transformational Meditation

“I” Have a Problem Using and Relating to the Word “God”

Five Transformations

Some More “Little i’s” That Didn’t Get the Message

Dealing with Mistakes

Closing Reflections

An Addendum

Chapter 12: Creating Your Own World

Nine Steps to Mastering Yourself

Section III: Moving Beyond the Matrix by Transforming Your Level of Consciousness

Chapter 13: How I Turbocharged My Transformational Journey

Discovering the Linchpin

Transformations Turbocharged!

Taming My Unconscious Fear of Becoming a Millionaire

A Snapshot of Before and After

The Turbocharged Transformational Model

Conclusion

Chapter 14: From Engineer to Spiritual Warrior: A Trading Journey

Timeline 1: Downhill Accelerating

Timeline 2: Crawling out of the Pit

Transformation 1: Dropping the Pain of Past Projections

Transformation 2: Firsthand Experience of a Benign Universe

Transformation 3: Realizing My Purpose

Transformation 4: Finding a Vehicle That Suits Me

Transformation 5: Become an Active Manager of Emotional States

Bottom Line: Net Winner in Life

Chapter 15: A Professional Trader’s Journey beyond the Matrix

My Early Trading Experiences

Stumbling on the Van Tharp Institute

Key Lesson 1: Taking Personal Responsibility

Key Lesson 2: Able to Deal with Thoughts, Emotions, and Actions

Key Lesson 3: Knowing My Thoughts Are Not Mine

Key Lesson 4: Trusting My Inner Guidance

Key Lesson 5: Understanding That the World Is Perfect

Key Lesson 6: Knowing My Purpose

Key Lesson 7: Reinventing Myself

So Where Am I Now?

Chapter 16: My Journey to Trading in the Now

My Transformation Journey

How It Happened

Where Am I Now?

Editor’s Note

Chapter 17: Thoughts on Raising Your Level of Consciousness

Some Exercises for Trading in the Now

Trading in the Now

Level IV Transformation

Questions on Raising Your Level of Consciousness

Chapter 18: Continuing the Journey

Area Three: Develop a Personal Business Handbook for Trading/Investing

Area Four: Assessing Your Preparation for Trading

Area Five: Understand Your Trading Mistakes

Appendix: Recommended Readings

Appendix: Key Words Defined

About the Author

A Personal Invitation from Dr. Van K. Tharp

Index

Cover image: Financial Chart © Henrikjonsson/iStockphoto

Cover design: John Wiley & Sons, Inc.

Copyright © 2013 by Lake Lucerne LP. All rights reserved.

Illustrations by Jillian Ellis

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at [phone], outside the United States at [phone] or fax [phone].

Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Tharp, Van K.

Trading beyond the matrix : the red pill for traders and investors/Van K. Tharp, Ph.D.

p. cm.

Includes bibliographical references and index.

ISBN 978-1-118-52566-1 (cloth); ISBN 978-1-118-54201-9 (ebk);

ISBN 978-1-118-54202-6 (ebk); ISBN 978-1-118-54211-8 (ebk)

1. Speculation. 2. Stocks. 3. Investments. 4. Investments—Psychological aspects. I. Title.

HG6041.T44 2013

332.64—dc23

2012046817

This book is dedicated to

She who constantly whispers,

“Remember Who You Are!”

and displays a universe filled with light.

Acknowledgments

I’ve been working with traders and investors for about 30 years. Over that time, numerous people have helped shape the thinking that has gone into this book. Tharp Think, as I call it, is a product of the knowledge of my modeling work with many, many successful traders and investors. I can acknowledge only a few of those people by name. However, everyone who contributed in any way has my deepest thanks and appreciation.

I’d like to thank Jack Schwager for allowing me to be part of the original Market Wizards book and helping me meet some great people. I’d like to acknowledge Ed Seykota, Bill Eckhardt, and Tom Basso for helping me understand position sizing strategies and their overall importance to meeting your objectives.

I’d like to thank all of the people with whom I’ve done one-on-one consulting and those who have been part of my Super Trader program. You’ve shaped the thinking in this book far more than you know. You’re an incredible group of people, and I hope I’ve transformed your lives as much as you have mine.

I’ve personally taken many transformational journeys over the past 30 years, and I’d like to acknowledge my teachers. Some of you were great teachers simply because you pushed my buttons and helped me look at issues that needed work. Thank you all.

Others were teachers because you were a model or you showed me how to look at the issues. Some of those people include: Sri Amma-Bhagavan, Mother Meera, Narasimha Kumarji, Doug Bentley, my guides at Oneness University and in Fiji, Emile Webb, Vijay Thakur, Leo Fishbeck, Wendell Will, John Grinder and his team of NLP trainers, Robert Dilts, Wyatt Woodsmall, Lee Coit, Rajinder Loomba, Enid Vien, Bruce DuVe, Harry Palmer, Byron Katie, David Hawkins, Frank Kinslow, Tad James, Eckhard Tolle, Libby Adams, Diadra Price, Michael Milner, Stuart Mooney, Matthew Ottenberg, and many, many others.

Next, I’d like to mention those who made contributions to this book. The techniques in this book wouldn’t mean much without the stories of those whose lives have been transformed by them. To that end, I’d like to acknowledge David Witkin, Laurens Bensdorp, Rick Freeman, Ken Long, Martin Horsey, Peter Wechter, Kim Andersson, Curtis Wee, Thanh Nguyen, and the three people who made anonymous contributions. Sharing your insights and your breakthroughs with the world takes great courage, and I salute you for it.

I’d like to thank my staff at the Van Tharp Institute for their support while completing this book. Becky McKay and Shannon Mante have been invaluable with proofing and edits. Cathy Hasty, R. J. Hixson, Frank Eaves, and Revathi Ramaswami continually support me in the day-to-day operation of the company; without you, this book wouldn’t have been possible. Last, but not least, I’d like to acknowledge Jillian Ellis. Jillian has not only been a great source of support, she also drew all the cartoons, which brighten up the book and bring humor to a serious subject.

I’d also like to acknowledge all of the great traders I’ve had the privilege of working with over the years. Many of you have made millions of dollars in profits in your trading career by following the concepts contained in this book. Whether you helped me understand the concepts better or helped me prove to others that these concepts work, I extend to you my deepest gratitude.

I’d like to acknowledge my attorney and agent for this book, Lloyd Jassin. Lloyd has been a source of support who encouraged me to do the right thing with this book. Without Lloyd, I probably wouldn’t have found the great support team I now have at John Wiley & Sons.

I’d like to thank Debra Englander, my editor at John Wiley & Sons, for seeing the potential in this book. It’s not an “average” trading book, but she was able to see beyond its uniqueness to the potential impact it could have, and I hope, will have. She was able to get me everything I wanted through my new arrangement with Wiley. In addition, I’d like to thank my entire support staff at Wiley.

Last, I’d like to thank the three people to whom I feel closest—my wife Kalavathi, my son Robert, and my niece/daughter Nanthini. I love you. You are my inspiration. Thank you for being there.

My deepest thanks go to all of you and to the many other people who also contributed but were too numerous to mention or that I may have inadvertently forgotten.

V.T.

Foreword

Doug Bentley

Oneness Guide for North America

To become financially prosperous and successful is a real accomplishment in one’s life. It’s worth the time and effort to achieve for anyone living in our modern society. We study hard in schools and work hard in our jobs and careers just to make the advances necessary to grow in our financial success. Our western world offers countless ways to grow and prosper. However, throughout all of this, why is it that some people seem to have luck and ease on their side where as others seem to struggle in any direction they head in? What is that missing piece that lies beyond one’s own physical effort that is the difference between success and failure?

As humanity grows, we are becoming more and more aware of the correlation between one’s external life and one’s internal state of being. We are seeing how a person’s body becomes unhealthy when suffering from stress, fear, sadness, or hurt. Furthermore, as we look closer we see that the external world is a reflection of our internal world. It seems to be mirroring and playing out our beliefs on how life should unfold for us. Do we deserve success? Do we deserve love? Will it work out for us? Will it fail? We actually take a stand on these things, and so all these ideas that we have about ourselves will impact what happens in our everyday lives. They impact our relationships. They impact our prosperity. They impact our happiness. Indeed, they impact every sphere of our lives.

Take two people, with the same passion, drive, and intelligence. One person feels that everything she does will be successful because she deserves it, while the other believes that he will always fail because he doesn’t deserve it. What happens is that they get what they believe about themselves. One will succeed, while the other will fail. And yet they are unaware of what they are doing to themselves.

So what is the solution to this? What can help us become aware of this internal world so we can start seeing our unconscious belief patterns? What can heal all of this? It’s simple—Awakening! And it starts with a simple awareness of what is going on inside of you.

There is a journey as ancient as humanity itself. It is a process of flowering in consciousness that brings a person into alignment with who she really is. It gifts the experience of deep inner awareness and knowingness into one’s truth. And from this place of internal seeing and experience, one flowers naturally into becoming authentic and starts operating from a place of inner integrity.

So, you might be asking, how does this help me in making money and in becoming successful? It’s simple. When you are clear and aware of your own self each moment, you are in tune with others and the situations you find yourself in. This place of being gives you access to a type of intelligence that arises beyond the mind and is spontaneous. You can call it your gut feeling. Dr. Tharp calls it the ability to trade in the now. Others call it being in the zone. But it is so much more. This inner wisdom is the genius of all the great beings who have been on our planet, from Lord Buddha to Steve Jobs.

People with access to this deep inner world were creative and intelligent. What they put their focus on was achieved with success. Each day was a discovery of growing beyond their limiting beliefs, as they would become aware of them in each new situation they encountered. This process was automatic and effortless; it was just a happening for them. They could achieve great things because of this internal flowering and grace surrounded them in their efforts.

Are you sold yet? Do you want this? And if so, where do you sign up?

Try as you may, what is being spoken of isn’t something you can do on your own easily. It isn’t a simple practice that you perform each day and you are there. It is something that has to be given to you.

The ancients all understood the secret to true success lies within the consciousness of all persons. If they are a flowered human being, they will have great success; if they are not, then they struggle. The flowering of a human being is a neurobiological change that needs to take place. There is a dormant spiritual energy in your body that must awaken. Once it is awakened, however, it starts flowing naturally, pushing you into higher states of awareness and consciousness.

In the ancient times, when people were passionate about awakening, they would have to travel long distances to seek out an Awakened Being who could then transfer the Awakened state into the seeker.

This transference was historically called Deeksha, and was considered the rarest and most priceless blessing a person could receive. Often the initiate must study for a long time under the guidance of the master before it was offered.

Deeksha is not something that you could just go and find in the past, and hasn’t been publicly known in our modern world until very recently. However, the good news is that Deeksha is back. It is accessible to anyone who has a passion to grow and awaken.

Deeksha is grace, nevertheless outside of any religious framework. It is a very sacred and divine energy transfer that awakens the spiritual energies within you and causes changes to your brain by balancing it out and activating the less active regions, in turn making a person more aware and intelligent. It activates the automatic process of awakening, which is an endless journey of growth and expansion throughout your daily life.

Yes, you can start looking at yourself and finding your own limitations. But without assistance in starting this journey, it is very slow and full of obstacles that can stop you in your tracks. However, once grace starts flowing the journey really starts, and a really deep healing naturally happens within one’s self. This healing is a natural releasing of all of the stored hurts and charges that lock our hindering belief systems in place and stop us from having the success we work so hard towards. The process is beautifully described in Section II of Trading Beyond the Matrix.

As people flower in awakening they grow deeply and naturally in touch with their divine. They begin to experience whatever they ask for or intend to happen in their life. It all unfolds with tremendous ease and grace. They feel that life is now working with them. You are going with the flow or trading in the now. Suddenly, achievement becomes a fun journey as opposed to a struggle.

Life is to be enjoyed, and life should be an abundant experience for each person. However, for one to have this kind of reality, one would need to flower and grow in consciousness. There are millions of people who are becoming awakened across the planet right now because of Deeksha, and they are moving into a reality where life is an amazing and empowering experience of growth and joy.

One such person is Van Tharp, who is not only in an awakened state but also helping others awaken as well. He is an amazing person who is helping business people discover greater success in their external lives by helping them grow in their internal lives.

Within these pages you will read some amazing journeys, Super Trader Journeys. You’ll receive many great insights and teachings to help you achieve the success you are after. I hope you accomplish what you are passionate about in life and that the journey to your goals is joyful and filled with grace and ease.

Preface

UNDERSTANDING TRANSFORMATION

Van K. Tharp, PhD

I’ve been coaching traders for nearly three decades. Occasionally, someone asks, “If Van Tharp is such a good trading coach, why doesn’t he just trade?” That statement makes a big presupposition: namely, that the money one gets from trading or even trading success is the be-all and end-all of life, which certainly is not the case for me. My mission has always been to help people transform for the better; I just happen to do it through a trading metaphor. I thrive on the comments I get about how I’ve changed peoples’ lives. For example, here are a few of the comments I’ve gotten recently:

Your program is not only helping me in my trading, but also in my business. I’ve been much more peaceful and open ever since I starting working with you. It’s helped me with everything I do in my daily life.

— H.T., Atlanta, GA

Before taking your workshop, my life was filled with wants. After the class, I am more in line with my inner Self, and I just want to be. In addition, prior to the workshop, I scored 20 on the Happiness Test. After taking two classes, my score increased by 63 points to a nearly perfect 83. Thank you.

— T.H., Franklin, VA

It’s difficult to say how big an impact you’ve had on my life because you made the change so deep that everything has changed. This is a beautiful gift, and I want to thank you very much for everything you have done for me! . . . I’m not alone anymore, and I’ve found the path of true happiness. I know what my life’s mission is and what I have to do to follow my bliss. I feel like I’m starting a new life again.

—D.M., Quebec City, Canada

After attending your workshop, I came back feeling like any dream was possible. When I started applying the techniques to my sales job, I had my biggest commission month in my 27-year sales career. I made $200,000 for a month’s work—more than triple my prior career high. Now I can’t wait to start manifesting in my new trading career.

—E.M., Washington, DC

To make a long story short, my life changed from a chance meeting with a soft-spoken teddy bear named Van Tharp. I jumped from the life path of financial fear to a life path of fun and adventure. The changes I have gone through have improved both my marriage and my ability to think.

—J.G., VA

Such comments about transformation are the engine that makes The Van Tharp Institute (VTI) run, because, as I’ve said, our mission is one of transformation through a trading metaphor. I thrive on it and my staff thrives on it.

Recently, I realized that we actually take people through three levels of transformation: (1) transformation of the trading game; (2) psychological transformation around beliefs, stuck feelings and conflicting parts; and (3) what I call Level III transformations, which occur when you make enough transformations that you actually produce a major change in your consciousness.

After the three levels of transformation became clear to me, I better understood what people need most to succeed. This book is designed to convey that information, with a number of chapters written about each level of transformation.

But let’s talk about the title of this book, Trading Beyond the Matrix: The Red Pill for Traders and Investors. When I first saw the movie, The Matrix, I loved it, not for the action but for the metaphor. In fact, I recently watched it again and discovered that I didn’t remember a lot of the details, just the metaphor.

The metaphor suggests that we are all programmed. We live in a world of illusion shaped by our programming. And at some level, we seem to know that, and we seem to know that there is something better. At this point, you have a choice. You can take the blue pill and go back into a comfortable sleep where nothing changes. In this case, it means put the book back on the shelf and do nothing. Or you take the red pill and, as Morpheus says in the movie, “see how deep the rabbit hole goes.” Read this book, do what it suggests, and your life will change forever.

We really are so programmed by our beliefs, which we get from our parents, our churches, our schooling, our friends, and the media. We believe what we believe, and that tends to shape our reality. We’ll explore that extensively in Chapter 7 of this book. However, once you take the red pill (hopefully this book, for you), you can begin to explore whether or not those beliefs are useful for functioning at a high level within the Matrix.

In the Matrix movie, Neo actually gets reprogrammed like a computer, but you can do the same thing by becoming aware of how your beliefs program you and whether or not that programming suits you. And as you start to do so, you begin to function as at a very high level within the Matrix.

So now, let’s look a little more closely at the three levels of transformation.

Level I: Transformation of the Trading Game

The first level we offer is transformation of the trading game—from rules that assure big money wins to rules that give the astute trader a huge edge. These new rules consist of the Tharp Think concepts I require everyone in my Super Trader program to know and understand as the cornerstone of their training. These rules are given in Chapter 6, the summary of Section I of this book. Most of them are not my rules; they come from my modeling work with great traders. But I don’t know of anyone else with a program that emphasizes all of them.

In one of my advanced workshops, I teach the concept that we all play “games” in life. A game can be defined as any interaction consisting of two or more players with a set of rules that generally define how the game is won or lost. I’m using the concept of the “trading game” to symbolize a big-picture description of all aspects of trading.

I believe the financial markets are part of a huge game, and at the top level—where the rules get set, made and changed—there is Big Money. Big Money makes its own rules and profits no matter what you or any individual trader does; they are much bigger than that. Big Money controls the U.S. government. You might have noticed, for example, where U.S. Treasury leaders so often come from and where they go afterwards. The last six secretaries of the treasury have included two people with strong ties to Goldman Sachs, a former president of the New York Federal Reserve, and a chief economist at the World Bank. The other two were both former company CEOs. Much controversy has been associated with these men, but it is generally ignored by the public.

We all play games in life.

In addition, the Federal Reserve, which prints dollars, is not government owned or controlled. Instead, it is privately owned by some of the richest people in the world.1 It’s interesting to note that the U.S. income tax and the Federal Reserve were created almost simultaneously. And right now the Federal Reserve is stimulating the economy by giving money to the very people who own it— the big banks.

Big Money has also created a two-party political system in which people argue over everything except what is really going on and what is really important to the future of the United States—something that might be true of almost every country in the world. The real issue today, for example, is government spending. But the political parties tend to argue over whether or not it is fair for the rich to pay hefty taxes.

This game is a little like the programming in the Matrix movie. We’re all programmed by our beliefs and our beliefs all say that we should play this game. And that means that you need to fight the crowd in order to function at a super human level within the Matrix. Everyone is a part of the system because they adopt the beliefs of the system and thus support it even if those beliefs do not support them.

As Morpheus says, “most people are so inured, so hopelessly dependent on the system that they will fight to protect it.” Does that sound familiar?

Trading is not easy to do, but becoming a trader is easy. There are no obstacles whatsoever to anyone opening a trading account. My wife, for example, currently has a trading account with less than $100 in it.

I’ve said for a long time that if trading were easy, Big Money would monopolize it. They’d do so by making the entry requirements so steep that it would be impossible for an average person to trade, perhaps through an education and exam system that would weed out most people. Today, for example, brokers have to take a Series 7 exam even though passing this exam has absolutely nothing to do with success in the market.

If you want to know Big Money’s rule, just watch the financial media for a week or so. They’ll imply that:

Selecting the right investment (i.e., picking the right stock) is everything.

When you find the right investment, buy it and hold it for the long term.

You must spend a lot of time analyzing the market to find the right investment.

You should listen to experts for advice, including newsletter writers, brokers, and investment gurus on television.

My experience indicates that those old rules are what cause most people to be net losers in the markets. Through my modeling work with top traders and investors, looking at what they do and how they think, I’ve come up with a new set of rules. We call these rules Tharp Think. Let me repeat: they are called Tharp Think, not because I invented them, but because we are the only organization I know of that emphasizes all of them collectively.

The new rules consist of four primary rules, but we’ve broken them down into numerous technical and psychological rules. Level I transformation is probably the most basic transformation you must make as a trader/investor. We will be exploring many of the new rules and concepts in Section I of this book.

Level II: Understanding the Matrix and Reprogramming Yourself

I love the premise for the movie The Matrix because “the Matrix” is much more real than most people realize. When you name something and assign adjectives and phrases to that name, you give meaning to the world (e.g., dog, small dog, hyperactive dog, dog that would be a good pet, dog that needs discipline-training classes). We shape our entire world by our words, thoughts, and beliefs. This is the Matrix.

And to change it, you have to take the red pill.

You take the blue pill, the story ends; you wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.

When you take the metaphorical red pill, you learn that the whole world is shaped by your beliefs and open up to an amazing world of possibility. You’re free to transform yourself by releasing nonuseful beliefs and adopting useful ones.

My intention for this book is that it be a red pill for traders and investors. You can put it on the shelf, go back to sleep, and believe whatever you want to believe about what it takes to be successful in the market, or you can read it and find out just how deep the rabbit hole goes for you. It’s your choice.

There are several things you must do as you go down the rabbit hole. First, you must examine your beliefs. You don’t trade the markets, you trade your beliefs about the markets; and if your beliefs are not useful, you’re in big trouble. Everyone has beliefs about the market, including nontraders and noninvestors, and if you really examine them, you’ll find that most are not that useful.

Examine your own beliefs. What does each belief get you into? What does it get you out of? What happens, for example, when you believe that the secret to market success is to be a good stock picker? Who would you be if you didn’t have your beliefs? Are your beliefs useful? Do they serve you?

If one of your beliefs is not useful, you can always replace it with another, more useful belief. This is easy to do—unless the old belief is charged with emotion. Emotional charge will hold a belief in place, and you cannot release it until you release the charge. Consequently, another part of the journey down the rabbit hole is examining the charge stored inside you that holds many of your nonuseful beliefs in place and releasing it.

As you travel down the rabbit hole, you meet a lot of parts or different aspects of who you think you are. For example, you might have the following parts:

A

perfectionist

part that won’t let you do anything until you’re sure things are perfect. This part’s definition of

perfect

might be making money on every trade. Not very useful, but people do have parts like this.

The

risk manager

who cannot stand to lose money and who is always afraid to do anything that might cause him to lose money.

The

researcher

who is always trying something new. This can be useful to a trader, but it can also be distracting.

The

excitement-seeking part

that wants to do things in the market that provide you with big thrills. Good trading is usually boring, so a part like this is probably not helpful at all.

You could have

a part like your dad

that criticizes you whenever you do anything wrong. If that sort of dad is in there, you probably feel put down and often criticize yourself in order to protect yourself from your dad’s criticism.

Perhaps

your mom

is in there, and she’s always saying, “Please get a real job.”

You probably have thousands of parts like these. Each part has its own set of beliefs. Each part has a positive intention for you. But you can probably see that parts could become very conflicted and lead you to the point where you cannot do anything. Thus, one of your jobs as a potential Super Trader is to clear out the crowd and bring your mind toward oneness and serenity.

Much of our education for traders involves this sort of work. Imagine looking at all of your trading beliefs and eliminating those that don’t help you win. On top of that, imagine eliminating all the beliefs that limit you. Now imagine eliminating all the beliefs about the universe that seem to indicate that you can’t win because the universe (or God) is against you. Lastly, imagine getting all of your parts unified so there is no conflict inside. This is how powerful personal transformation can be. In Section II of this book, you’ll see the impact of various types of transformation at Level II.

Level III: Trading Beyond the Matrix

There is one other aspect of The Matrix that is really fascinating. Toward the end of the movie, Neo is able to step beyond his programming. He is able to do things that you shouldn’t be able to do within the Matrix. And that brings us to the final level of transformation: trading beyond the Matrix by changing your level of consciousness. Here consciousness refers to your level of awareness. And you might raise it if you actually transform or eliminate 1,000 beliefs. It might happen if you transform 50 to 100 parts of yourself to move toward unity.

However, for some people it might be even easier than that. Transform five significant issues that have dominated your life, and you understand the process and can go on to accomplish anything. But let’s look a little deeper into what raising your level of consciousness might mean.

The late David Hawkins was one of the most successful psychiatrists in the world. He had a very high level of consciousness and performed miracle cures on his patients. He eventually closed his practice to pursue a Ph.D. in psychology, his thesis on measuring the levels of human consciousness. Much of his thesis was then turned into a popular book entitled Power vs. Force.

In Power vs. Force, Hawkins describes human consciousness using a log scale from 1 to 1,000, with 1,000 being the highest level of consciousness achievable by a human being. Hawkins postulated that only a few (e.g., Jesus, Buddha, Krishna, etc.) ever achieved the 1,000 level. He goes on to say that, for much of the past 5,000 years, human consciousness as a whole has been just below 200—the level that separates the positive from the negative. According to Hawkins, Gandhi2 had a consciousness of 700 and was able to defeat the British Army, whose collective consciousness was 175. That’s the power of the log scale difference between power (high consciousness) and force.

Raising your level of consciousness doesn’t just help Gandhi, it can help you as a trader. If you are trading at a low level of consciousness, you are probably trading out of fear, greed, or desperation. Now imagine how that would change if you were to trade from a level of acceptance or peacefulness. The difference would be enormous.

One of our goals at the Van Tharp Institute is to help traders take large leaps forward in consciousness. Imagine again the impact of getting rid of around 1,000 to 5,000 nonuseful beliefs in a year. That probably would raise your consciousness several hundred points. A number of my Super Trader candidates have had such increases in their consciousness, and in Section III of this book, I’ll share some of their stories.

Your Personal Application of This Material

Some people might read this book with the idea that it constantly talks about our various workshops and programs. That’s inevitable, because these Super Trader journeys were all taken by people I’ve worked closely with during the past five years. They are mostly Super Trader candidates (meaning they are still in the Super Trader program at the Van Tharp Institute) or graduates of the program, which means they’re going to talk a lot about what they’ve done.

However, this book is mostly about psychological transformation, and every technique we use is clearly described in this book. Consequently, there is nothing we do, at least in the Super Trader program, that you couldn’t do on your own.

You might have beliefs that suggest that key information is missing, or that it isn’t for you, or that it doesn’t fit you. This book will probably stimulate a lot of other beliefs for some of you. As you read, you may say to yourself, I don’t believe that, in which case you’ll be right—because that particular belief actually shapes your reality. However, you should make sure you at least run such beliefs through the belief examination paradigm given in this book before deciding to hold onto them. You’ll probably find that most of them limit you, stop you from action, and block you from true happiness.

First, you will learn the technical basis of Tharp Think. Those principles are clearly listed in the introduction to Section I. In fact, the principles in Section I are clear enough that you should be able to design a great system that fits you for one particular market type with no problem at all, unless you have psychological issues blocking you. For those of you who don’t think you can do it, the psychological principles are given in the introduction to Section II.

Second, you’ll learn how to determine what parts you have in Chapter 9. Exercises are given for doing that in the chapter. Once you understand which parts of you control your trading, it’s a fairly simple exercise to get each part to give you 20 beliefs that you can run through the Belief Examination Paradigm. See Chapter 7 for a description of the Belief Examination Paradigm.

When you’ve run 200+ beliefs through that paradigm, it should be easy for you to determine which ones are useful and should be kept and which ones are not useful and should be eliminated. And you’ll be able to easily change any nonuseful beliefs—unless they have a lot of charge stored in them.

If you have a lot of beliefs with charge in them, the feeling release methods in Chapter 8 are very clear. You should be able to apply them immediately to your charged beliefs.

My chapter about following Internal Guidance also has step-by-step instructions. To develop a strong Internal Guidance, you need to eliminate any parts that do not trust your Internal Guidance—something you can do using the Transformational Meditation Technique illustrated in Chapter 11. In addition, steps are given for deepening the bond you have with your Internal Guidance in Chapter 10.

Section III contains a number of chapters in which some of my students describe their transformational journeys. These should help you understand how important it is to take this kind of journey and what could happen to you after you take the journey.

Finally, each section ends with a practical application chapter. You will get specific Tharp Think concepts that apply to that section, specific steps you can follow, and even a question-and-answer section pertaining to the material in that section. These checklists are the same checklists I give my Super Traders, and I seriously debated whether or not to include them. However, my mission is about transformation, and my expectation is that it will have some sort of transformational effect on the reader. If it does, then I’ve accomplished a lot.

Notes

1. For a detailed study of the formation of the Federal Reserve, see G. Edward Griffin, The Creature from Jekyll Island: A Second Look at the Federal Reserve, 4th ed. (Westlake Village, CA: American Media, 2002).

2. Gandhi, for example, would go on a hunger strike. Normally, if an Indian prisoner went on a hunger strike, the British let him starve. But there was something about Gandhi (his consciousness) that would not enable the British to let him starve and would cause him to have a massive impact on the entire Indian population.

SECTION I

TRANSFORMATION OF THE TRADING GAME

UNDERSTANDING THE BASICS

Van K. Tharp, PhD

The first level we offer is transformation of the trading game—from rules that assure big money wins to rules that give the astute trader a huge edge. These new rules consist of the Tharp Think concepts I require everyone in my Super Trader program to know and understand as the cornerstone of their training.

Two Sets of Rules

So what happens if you read a few books on how to trade/invest and watch the financial media talk about investing for a significant period of time? What happens is that you would come to believe certain rules.

Selecting the right investment (i.e., picking the right stock) is everything, and when you find the right investment, you should buy and hold if for a long time.

There is some Holy Grail method out there for selecting the right investment, and that might involve spending a lot of time analyzing the market to find the right investment. Warren Buffett, for example, is quoted as saying “you should know every detail of every listed stock,” as if that were the key. If it seems like a lot of work, it is. But don’t worry; that’s not the key to success in the markets.

Other rules might include:

The market will determine whether you make money. You are at the mercy of the market in the short term, but if you hold on, you will prevail. The market eventually goes up.

If you do lose money, it’s not your fault. Find someone to blame and a good lawyer to help you sue them.

The market is efficient.

Asset allocation is very important (even though most people aren’t even sure of what that really means).

My experience indicates that these rules are what cause most people to be net losers in the markets. Through my modeling work with top traders and investors—looking at what they do and how they think—I’ve come up with a new set of rules. We call these rules Tharp Think.

Let’s look at these rules. First, you must understand that trading profitably and consistently is not easy. Sure, you can go into a brokerage company and open an account; that part is certainly pretty easy. As the e-trade baby says, “See, I just bought stock.” And the industry wants you to think it really is that easy—that even a baby can do it with the right trading platform.

Can you imagine being allowed to perform open-heart surgery simply by strolling into an operating room and declaring that you want to do so? Of course not. It doesn’t work that way. Similarly, can you imagine building a bridge just by reading a book and then being put in charge of a construction team? Or, worse yet, giving a few orders to the construction team and then going along on your merry way? Again, it doesn’t work that way.

Big Money wants you to think otherwise. They want you to believe that you need only turn on some financial program and listen to the stock picks. But trading with no preparation can be as fatal to your account as an untrained surgeon would be to a patient or a bridge built by someone with no understanding of engineering would be to anyone with plans of crossing it.

Thus, the first new rule is that trading is as much a profession as any other. It takes significant time (several years) and a deep commitment to become a successful trader. I hold a similar belief to author Malcolm Gladwell, who says that the best people in every field usually excel because they have successfully practiced their craft for well over 10,000 hours. And when it comes to trading, it’s not just 10,000 hours of practice, because I’ve definitely seen people who have put in 10,000 and learned very little. I think that it’s probably 10,000 hours of practice at doing it well.

The first new rule is that trading is as much a profession as any other.

The second new rule is that trading reflects human performance just as much as any top athletic endeavor. You must understand that you are responsible for the results you get. Thus, you should devote significant time to working on yourself in order to be successful.

The second new rule is that trading reflects human performance just as much as any top athletic endeavor. You must understand that you are responsible for the results you get.

The third new rule is that objectives are important. Further-more, you achieve your objectives through position sizing™ strategies. The quality of your system just tells you how easy it will be to use position sizing strategies to achieve your objectives. Most people don’t even think about objectives, except that they’d like to make a lot of money and avoid losing, and they don’t have a clue about position sizing strategies. They learn that asset allocation is important, but they never understand that what makes it so important is the “how much” factor, which is what position sizing strategies are all about.

The third new rule is that objectives are important. Furthermore, you achieve your objectives through position sizing strategies.

The fourth new rule is that trading/investing is all about probability and reward-to-risk ratios under specific market conditions. When you understand these rules and the market conditions at any given time, you can use statistics to predict some boundaries for your performance. While you cannot predict the future, you can get a good idea what your performance will be through statistics and proper sampling under the different possible market conditions. As you begin to understand this, you’ll be amazed at the changes that occur.

The fourth new rule is that trading/investing is all about probability and reward-to-risk ratios under specific market conditions. When you understand these rules and the market conditions, you can use statistics to predict what your performance will be under similar market conditions in the future.

The four primary rules above have many parts and other rules that are required to implement them. Together, they form what I’ve been calling Tharp Think. When traders join my Super Trader program, the first thing I require is that they thoroughly understand all of the Tharp Think rules. That checklist is given in Chapters 6 and 12.

How much should I risk?

What the rules seem to have in common is (1) a statistical approach to markets that (2) relies on thinking about reward-to-risk rather than being right. They also emphasize that great performance is a function of what the market gives you, your system, and you, as shown in the diagram below where the three circles intersect.

Can you see how the “old rules” that everyone seems to learn can lead to disaster, while the second set of rules is a major transformation of the trading game and can lead to success?

Stay Aligned

Section I Contents

In Section I of this book, I present three chapters written by my Super Trader candidates to show the effect of a Level I transformation on their trading.

Chapter 1 is by a new candidate who talks about his growth as a result of adopting Tharp Think and how, at one point, he was able to make 130 percent on his capital as a result of doing so. He also discovered that he was very inefficient in his trading, which is why he joined the Super Trader program in the first place. While he was up 130 percent, his mistakes probably cost him another 50 percent. In other words, without mistakes, he would have been up about 180 percent instead of 130 percent. Now he’s in the Super Trader program working on making Level II transformations.

Chapter 2 is by someone who did an amazing job of applying the Tharp Think rules. First, he figured out how important Tharp Think was. Then he found someone to help him program various systems he’d developed in an automated trading platform. Finally, he hired someone else to trade the system. Because this other person had no psychological investment in the trades and was being paid for mistake-free performance, they could trade it with nearly 100 percent efficiency.

My first Super Trader graduate wrote Chapter 3. In it, he talks about his personal journey to success. He started out as a bank loan officer who wanted to trade and, as a result of going through the Super Trader program, he found some unique ways of applying Tharp Think to alternative forms of investment, such as real estate. Within a year of joining the program, he was able to give up his well-paid job as a bank loan officer and become a full-time investor/trader. And because his passive income far exceeded his expenses, he was financially free—something he’d never been able to accomplish back when he was still “working” for a living.

In Chapter 4, one of our instructors, Ken Long, shares his journey. Ken has a master’s degree in systems design and a doctorate in decision making under uncertain conditions. He’s constantly developing great systems and teaches them in our courses. Ken regularly publishes the monthly performance of these systems as well as the performance of his students when he conducts live trading classes at the Van Tharp Institute.

Finally, Chapter 5 is by a former institutional broker who used to make huge six-figure salaries executing the orders of institutional traders. He knew many of the London-based institutional traders and says that there were very few who really knew what they were doing. Of course, after 20 years of watching the behavior of most traders, he thought he knew what he was doing. It took a journey into Tharp Think for him to start making the kind of progress that transformed his trading.

Chapter 1