I believe that the engine that makes The Van Tharp Institute work is our mission of transformation through a trading metaphor.  Recently, I began to look more closely at our mission statement and realized that we actually take people through three levels of transformation. I will go through these three levels below.

Van Tharp

Our Mission at the Van Tharp Institute



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 that I require all Super Traders to know and understand as the first part of their program.

 

In one of my advanced workshops I teach the concept that we all play "games" in life. A game can be defined as any dynamic 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 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 so much bigger than that.  Big money controls the US government—notice where US Treasury leadership comes from so often and where they go afterwards. Big money also has created a two party political system in which people argue over everything except what is really going on. 

 

Trading is not easy; however, becoming a trader is very easy.  There are no obstacles whatsoever to anyone opening a trading account. I have long said that if trading were easy, big money would make the entry requirements so steep that it would be impossible for an average person to trade.  Big money might do this through an education and exam system that would weed out most people.  Even today, brokers have to take a Series 7 exam; however, passing this exam has nothing to do with success in the market.

 

Big Money’s Rules 

 

Generally, big money believes the more people that play the trading game, the easier it is for them to make money.  And, as I said before, big money has a set of rules for how it makes money, which has little to do with you making money. I’ve listed some of the rules created by big money here.

    They profit on commissions, which they take whenever you make a trade, whether or not you make a profit. In fact, the industry considers it unethical for a broker to take fees based on the profitability of his clients. They make markets and get the bid/ask spread on every transaction.

     

    They continually invent new products for you to buy and they profit when you do so.

     

    They get paid a fixed fee based upon the amount of assets that they are managing without respect to their performance.

     

    They also get you to believe that you have to follow a certain set of rules for success in the market.

     

    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.

    Spend a lot of time analyzing the market to find the right investment.

     

    Listen to experts for advice, including newsletter writers, brokers, and the investment gurus on television.

     

    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.

     

    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 are not sure what that means).

The New Rules

 

The new rules are born out of the idea that trading is as much a profession as is any other profession.  Most people spend many years learning their profession, but anyone can start trading today.  Can you imagine walking into a hospital and saying, “I think I’ll try some brain surgery today.”?  It just won’t work.  Yet you can open an online brokerage account, transfer in $100,000 and, suddenly, you are a trader.  Trading with no preparation, however, could be as fatal to your account as performing brain surgery would be on that unlucky patient in the hospital.   


It takes significant time (several years) and a deep commitment to become a successful trader.  I hold a similar belief to author Malcolm Gladwell that the best people in every field usually excel because they have successfully practiced their craft for 10,000 hours.  That means they know enough about their field to produce success.  By working on your personal psychology (which we’ll cover in the second level of transformation), you learn how you produce your own trading results and how you have tended to make everything much more difficult than it need be.


Learning the key rules is an essential part of this process.  Here are some of the new rules that make up the first level of transformation:

You are totally responsible for your performance as a trader; therefore, you should devote significant time to working on yourself in order to be successful.

 

It’s important to know your initial risk in a trade before you enter a position—this allows you to ensure that your trade has a favorable probability for a sufficient reward-to-risk ratio.  In other words, it will help you cut your losses short and let your profits run.

 

Calculate the R-multiples of all your trades; this allows you to think of a trading system by the distribution of R-multiples it generates.

 

Measure the quality of a trading system by its SQN® score.  The SQN score tells you how easily you can meet your objectives through position sizing™ strategies.

 

Position sizing strategies help you meet your trading objectives.

 

There are as many objectives as there are traders.

 

You can easily develop a Holy Grail trading system for any one market type; however, it is impossible to develop a system that will perform well in all market types.

 

Your trading system must fit you.  In fact, trading a good SQN system that fits you is probably better than a great SQN system that doesn’t fit you.  Trying to trade a system that doesn’t fit you will likely cause you to make a lot of mistakes and see poor results—regardless of the system’s SQN score. 

 

Great performance is a function of the market, your system, and you as shown in the diagram below where the three circles intersect.

aligned

 

Minimize your mistakes and trade at 95% efficiency or better.  You make a mistake when you don’t follow your rules.  If you don’t have rules, everything you do is a mistake.  When traders do have rules, most of them have trouble trading above 70% efficiency (3 mistakes every 10 trades) simply because they haven’t worked on themselves.  Trading at 70% efficiency will destroy the results from a good trading system.

 

Trading is a process that can be statistically measured and described if you understand probability and sampling theory.  Within one market type, the mean and standard deviation of your system’s R-multiples will give you a good idea about the future performance of that system under those same market conditions. 

 

Winning is a function of planning, so write a business plan to guide your performance and keep working on that document as you evolve as a person and trader.

 

Can you see how the first set of rules can lead to disaster while the second set of rules are a major transformation of the trading game and can lead to success?

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Level II: Understanding and Using the Techniques for Transformation

“Believe in yourself and all that you are. Know that there is something inside you that is greater than any obstacle.” –Christian D. Larson

You create how you experience life through your beliefs.  Once you understand this, you can recreate yourself through your beliefs to be a successful performer.  This is similar to Neo from the movie, The Matrix choosing to take the red pill.

 

The Matrix Model of Reality

 

I love the premise for the movie The Matrix because the matrix is much more real than most people assume. The film at its most basic description questions reality. Is reality that which is perceived by most humans? Or is our reality something that is being thrust upon us by outside forces? Is it something very individual?

 

There really is a matrix and we form it through our language and our common beliefs.  When you name something and then add 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 and the first step is to realize it.  Morpheus calls this "taking the red pill." But before we get into how our beliefs shape our experience, I'd like to share a few quotes from the movie that I found particularly relevant.

 

Quotes from The Matrix

 

Morpheus:  Let me tell you why you're here. You're here because you know something. What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad. It is this feeling that has brought you to me. Do you know what I'm talking about?

 

Neo: The Matrix.

 

Morpheus: Do you want to know what it is?

 

Neo: Yes.

 

Morpheus: The Matrix is everywhere. It is all around us. Even now, in this very room. You can see it when you look out your window or when you turn on your television. You can feel it when you go to work... when you go to church... when you pay your taxes. It is the world that has been pulled over your eyes to blind you from the truth.

 

Neo: What truth?

 

Morpheus: That you are a slave, Neo. Like everyone else you were born into bondage. Into a prison that you cannot taste or see or touch. A prison for your mind.


"What you know you can't explain, but you feel it. You've felt it your entire life, that there's something wrong with the world. You don't know what it is, but it's there, like a splinter in your mind, driving you mad."

 

"What is real? How do you define real? If you're talking about what you can feel, what you can smell, what you can taste and see, then real is simply electrical signals interpreted by your brain."

 

"The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system, and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it. Like everyone else you were born into bondage. Into a prison that you cannot taste or see or touch. A prison for your mind."

 

"I'm trying to free your mind, Neo. But I can only show you the door. You're the one that has to walk through it."

Taking 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.  You then open up to an amazing world of possibility.  You can transform by releasing non-useful beliefs and adopting more useful ones.  And it all starts by examining your beliefs.  What do you believe?  Are those beliefs true?  Can you absolutely know that they are true?  What happens when you believe these things?  What would you be like if you didn’t believe such things?  Suddenly, you see each belief’s limitations and part of the illusion falls away.  Perhaps it’s replaced by something more useful or perhaps it just disappears.


Some beliefs, however, have emotional charge attached to them which makes them difficult to change or release.  For example, perhaps you think at some level, “I’m worthless.”  Now it’s very easy to see that belief as being non-useful.  But until you can release any associated emotional charge, releasing that belief can be very difficult.  Perhaps anger, fear, or depression is associated with the belief and perhaps the charge has a history of many years.  How do you let go of something so powerful?  Well, there is a secret to releasing the charge: stop resisting it and start feeling it fully.  When you finally do, it can just flow out of your system.  We teach a number of feeling release techniques in the Peak Performance Home Study Course and in various workshops. They all release the charge and allow non-useful beliefs to fall away.

 

How do you know a belief is not useful?  Start by asking questions like the ones I listed previously:  Is it true?  What happens when I believe that thought?  What would I be like without that thought?  Does it have any emotional charge associated with it?  Ask those questions and you’ll know what’s hindering you.


Imagine the impact of changing 20 beliefs each day for five days a week.  That’s 100 beliefs each week—5,200 beliefs in a year.  Do you think there is a good chance that you might be a more effective trader if you spent a year getting rid of 5,200 non-useful beliefs?

 

This belief examination exercise, however, involves looking inward, which some people find painful.  It also involves dealing with fear. Unfortunately, as soon as most people feel any fear, they get stopped in their tracks.  Yet that fear signifies something they need to move through.  We spend years avoiding such experiences, literally running away, but now we’re asking you to really look at them and that takes courage.

 

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.  This gives you some hints at how powerful personal transformation can be.  When you are committed to doing the work, the Peak Performance Home Study Course and the Peak Performance workshops series will help you eliminate all of your limiting beliefs so you transform your Self—the second level of transformation.

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Level III: Raising Your Consciousness

Now we come to the final level of transformation: Changing Your Level of Consciousness. This kind of transformation is initiated during the Oneness Awakening Course, the Advanced Peak Performance 202 Workshop, and Peak Performance 203: The Happiness Workshop.  Transformation at this level allows people to move toward a level of consciousness in which happiness and abundance are the norm.


I think this third level happens in two stages, so I broke it down into two sub-levels:

    • Raising one’s consciousness dramatically, which I have seen already in some of my Super Traders.
    • Actual awakening, which I have yet to see.

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, Gandhi 2 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.


Our goal at the Van Tharp Institute is to help traders take large leaps forward in consciousness.  Think about the impact of getting rid of around 5,000 non-useful beliefs in a year.  That probably would raise your consciousness several hundred points. 


A few of my Super Traders have reached such levels. Without going into too much detail, I’d like to share some of their experiences.

 

Super Trader Transformations

 

I had one Super Trader—through an exercise in one of our workshops—reach a deep, profound state of mind.  When she told me about it, I suggested that she trade through that state.  Just by trading in that state, she was able to make 134R in the month of November 2010.  During that month, she made money on 86% of her trades and she made no mistakes.

Another Super Trader entered the program with a Ph.D. in engineering.  He completed the psychological portion of the program in less than a year and through his personal evolution his concepts of trading became simpler.  Furthermore, his purpose totally changed from making money as a full time trader to spiritual evolution with trading success being a metric for his spiritual advancement.

 

One of our Super Traders also became one of the first Oneness trainers and he was a co-trainer for the first Trading in the Now Workshop during the Super Trader Summit last year.  After becoming a trainer, he went from 70% efficiency in his trading to better than 95% efficiency.  He fulfilled his longtime desire to quit his job and trade full time. 

 

There are a number of others I could talk about, but I just selected these three as examples.

 

Level III B: Awakening

 

I once had dreams of forming a company with a few other like-minded people to change the world; however, those dreams faded quickly.  At some point, I realized that nothing would change until I changed; this is the basic idea of performing well in the matrix and going beyond it.

 

In the process of my personal transformations over much of my adult life, I have pursued many directions and methods of personal development.  Most recently, I became a Oneness Blessing giver and Oneness trainer a few years ago.  Nothing I’ve done in my 30 years of personal transformation has been as powerful as my experiences with the Oneness Process over the last few years. Now, most of my staff members are blessing givers and while all this has been happening, the business has grown in success.

 

I originally had no intention of making Oneness part of the VTI curriculum.  All this seemed very “far out” to me when I started, but for some reason I was drawn to it.  I’m constantly looking for what works and helps people.  And as I’ve watched the transformations that have occurred as a result of the process, I’ve been amazed. The few articles that I have written on the topic were among our best received articles ever.   In addition, most of our Oneness Awakening workshops have sold out and some traders are making it the first VTI workshop they have ever attended.   Moreover, people are reporting significant changes through the blessing and that’s why I offer it for those who are interested.

 

The final level of transformation is simply a state that I aspire to attain: awakening.  In this state, the following are true:

  • Thoughts occur but you do not identify with the thoughts at all.
  • Seeing and listening occur but there is no one there as the seer or the listener.
  • Doing occurs but it is automatic, there is no doer.
  • The body is there but you realize that it is not you. You are not your body.
  • The mind is there but you realize that it is not you.  You are not your mind.
  • Everything happens automatically.
  • You understand that you have (or had) many personalities (what Libby Adams calls little i’s) but none of them are you.  In fact, you now understand that there is no person there at all.
  • You are existence, consciousness, bliss.
  • The whole world is your family.
  • And when I say “you” in this statements, it is misleading because that is just who you formerly thought you were.  You no longer exist because you are one with everything.

If you want a perfect example of how an awakened being lives, read Byron Katie’s A Thousand Names for Joy


I am now a Oneness trainer and we offer the Oneness Awakening Course through VTI.  Through it people become Oneness Blessing givers—meaning they are channels for the energy (from the divine), which accelerates transformation.  Right now I know of about 20 people who have permanently awakened through this process, although I am sure there are many more.  I feel like I’ve seen glimpses of awakening in myself as well.   My internal guidance, which has become very strong and personal, assures me that I will be awakened through this process.


What’s important about this level of transformation is that anyone who achieves this (and it’s not so much an achievement as a realization) will be able to trade effortlessly and make money easily.  However, by then, money will no longer have any importance.

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How to Proceed
There is a lot of work do be done to to proceed through these three levels of transformations. But don't feel daunted. My students are doing this work everyday and you can too. If you have not yet completed my Peak Performance Home Study start with this program first. It includes the cornerstones of most of principles that I teach.
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