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


ken$700 Discount Expires Next Week

on Ken Long's Swing Trading Workshop

November 8-10, Ken will be teaching his Swing Trading Systems workshop from 8am to 4:30pm, followed by the new add-on Turbo Trading Systems workshop in the evenings, 6pm-9pm.

Plus, you have the opportunity to live trade the systems you have learned, side-by-side with Ken for two days of live trading Monday and Tuesday. See below for a video of one of Ken's recent trades.

For more information or to see the full workshop schedule, click here.

 


ArticleRJ

The Real Secret

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Do you have about 4 minutes, a pen handy, and a piece of paper?

Do yourself a favor and follow these instructions:

  • Observe your current mental state or energy level and just make a quick note of it.
  • Think of seven things in or about your life that you can be grateful for right now.  Write down what you are grateful for as well as why you are grateful for it.
  • After writing each item, say, “Thank you.” Say it sincerely and feel the gratitude.
  • After you are finished writing, notice your mental state or energy level.  How does it compare with a few minutes ago?

I remember when D. R. Barton did a version of that exercise in the middle of the afternoon at a workshop a number of years ago.  The room took on a noticeably different quality as we were writing and after we finished the exercise.  D. R. talked a bit about gratitude and how it tended to have an under-appreciated power to shift your attitude.  I remember many other aspects of the trading topics taught at that seminar but I remember that exercise with more clarity than anything else. 

The 2013 Australian Connection

While Van was in Sydney this past Spring, he heard about the book The Magic by Rhonda Byrne of The Secret fame.  He read The Magic between workshops while he was there and was so impressed, he adjusted the Peak Performance 203 workshop to incorporate an exercise based on the core topic of the book. 

Not long after he returned from Australia, Van handed out a copy of the book to each of the staff members here and called it “the real secret”.   By that, I took that he meant Byrne had written about a powerful topic which was behind her earlier work.  Van may have intended a double entendre referencing The Magic getting less publicity than her previous movie project.  Either way, he intrigued the staff and also told the story of how the Peak 203 exercise he created after reading the book had positively affected hundreds of people in one day in Sydney. 

The Magic explains the magic power of gratitude.  Simple and often overlooked, being grateful makes a material, positive difference in your mental state, your current circumstances and your life.  Byrne helps her readers find countless ways to be grateful and experience the difference gratitude makes. 

When Van handed out The Magic books to the VTI staff, he also handed each of us a gratitude journal.  This basic blank notebook was where we could record all of the things we were grateful for as a result of doing the exercises in The Magic.  I could not imagine filling up a notebook with what I was grateful for in just a few weeks but now have a notebook’s worth of gratitude.  I’m amazed, and no kidding, very, very grateful.

Magic for Traders

The importance of gratitude for traders is really not so new.  There are a number of articles on the topic in older copies of our newsletter that have traditionally come out around the Thanksgiving holiday here in the US.  Also, a number of years ago, Van wrote about spending a minute in gratitude as one of his daily top tasks of trading.  For this end-of-day task, you simply think of what you did right that day, even small items, and all the little things that worked in your favor during the trading day.  Acknowledge each item and feel your sense of gratitude for it. The task helps reinforce positive behaviors and facilitates the law of attraction.  If you aren’t taking this step, start and see what difference it makes. 

Magic at the Van Tharp Institute

On about a weekly basis, we receive customer emails that we label “love letters”.  These express appreciation for the effect a particular course or workshop has had on someone’s life and they can be quite moving.  The effects people have noticed have included things like improved trading results of course, but also better health, more happiness, less stress, and perhaps not so strangely, better golf scores.  These letters of gratitude and appreciation are very motivating for us and fuel our mission in ways that money or other tangible rewards simply cannot. 

Your Turn

What are you or could you be grateful for?  The true list is near infinite, but here are just a few ideas of people to thank or things to be thankful for —  

  • Thank your spouse for being wonderful in the ways that he or she is. 
  • Thank your kids for being the ways that you admire.
  • Thank your boss or team members or staff for what they do well.
  • Thank a company or service provider for some great product or service you from which have recently benefited. 
  • Thank whoever you talk with about trading for their views and ideas.
  • Be thankful for capital markets to trade.
  • Be thankful for the health you have.
  • Be thankful for the freedoms you enjoy.
  • And of course, you might thank God for any multitude of blessings in your life. 

Learning A Lesson

In the past, the quote “what you appreciate appreciates” sounded a little schmaltzy to me — but no longer after my recent personal experience.  When you start looking for what to be grateful for, you may find amazing how much appears and how totally encompassing gratitude can be.  I filled a notebook’s worth of pages with what I have to be grateful for and I’m not close to being done.  Eventually, I could see myself being grateful for everything —   

“Gratitude is what we are without a story.” 
—Byron Katie

See what a difference being sincerely grateful makes in your world. 

Oh, and  — Thank you for your readership. 

About the Author: R.J. Hixson is a devoted husband and active father. At the Van Tharp Institute, he researches and develops new products and services that help traders trade better. Among other things, he is grateful for the fascinating and inspiring clients that Van Tharp attracts. He can be contacted at “rj” at “vantharp.com”.

 

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Trading Education

November brings the last Oneness Event this year. And thus far none have been scheduled for early 2014. If you'd like to attend soon, try to get into this one.

November 8-10

Swing Trading Systems Workshop
with Ken Long

8:00am-4:30pm

November 8-10

NEW! Turbo Charge these Swing Systems
with Ken Long

6:00pm-9:00pm
Stay late and Ken will show you how to use swing trading systems to catch intra-day moves.

November 11-12

NEW! Live Trading for Turbo Systems
with Ken Long

2 days of live trading alongside Ken Long

 

November 16-17

 Oneness Awakening Weekend
with Van Tharp and Janie Guill

 

Early 2014 Workshop Schedule Confirmed!

January
January 16-18

Peak Performance 101

with Van Tharp

January 20-23

Peak Performance 202

with Van Tharp and Libby Adams

January 25-27

Peak Performance 203

with Van Tharp

February
February 7-9

Day Trading Systems

with Ken Long

February 10-11

Live Day Trading

with Ken Long

March: Sydney, Australia
March 7-9

Peak Performance 101

with Van Tharp and RJ Hixson

March 11-13

Blueprint for Trading Success

with Van Tharp and RJ Hixson

March 15-17

How to Develop a Winning Trading System That Fits You

with Van Tharp and RJ Hixson

March: Cary, North Carolina
March 28-30

Forex Trading

with Gabriel Grammatidis

March 31-April 1

New! Live Forex Trading

with Gabriel Grammatidis

 

If you are in South Africa and would like have Van host a workshop there, please contact us at van@vantharp.com. There is a possibility he will be visiting South Africa in early to mid 2014.

Click here to see the full workshop schedule or to register.

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Trading TipDR

Where Does the Fed’s Stimulus Money Go?

Part IV – The Exit Plan

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During the past few weeks, we’ve dug into some interesting topics surrounding the Fed’s stimulus.  While many questions remain unanswered, one will have the most impact on traders and investors: How will central banks exit the “extraordinary measures” phase and head back toward normalcy?  (The other market impact question is “when?” — but the answer to that question is likely to have more short-term effects.)

In May this year, the Geneva Conference on the World Economy focused on the topic of how central banks will unwind.  A few presentations from that conference may provide us with some answers about the upcoming process. Once again, we’ll dig into the rich deposits of information that came from IMF consultants Singh and Stella in their white papers that we have referenced before.  While the concepts apply broadly to central bank stimulus programs, we’ll simplify the explanation by talking about the exit plan for just the U.S. Federal Reserve.

A legitimate question that one might ask is why would the purchases made through the stimulus program have to be unwound at all?  While a comprehensive answer is a little more complicated, the simple way to look at this is as follows:  The Fed has lowered interest rates through securities purchases that manipulate the yield curve (and of course by changing interbank borrowing rates).  As interest rates approached their lower bound of zero, stimulus efforts took the form of a massive expansion of liquidity.  If things were just left “as is” — with the $2.2 TRILLION of added reserves sloshing around on the books, that added liquidity would pose of threat of sending inflation rates to unacceptably high levels, given a period of sustained economic recovery and even a bit prosperity.

To avoid this eventuality (or, in some peoples’ minds, to keep it from happening), the Fed will have to unwind a large portion of this massive liquidity.  The Fed will do this by raising interest rates but not by directly reducing its balance sheet and the balance sheets of the commercial banks who have been the willing parties to the multiple QE phases.  So then how to unwind trillions of dollars of stimulus?  That subject has been debated and now a likely path seems pretty clear.

The Repo Man’s Mirror Image

Peter Stella outlines three ways that the Fed can raise rates: by declaration (or fiat, as he calls it), by raising rates on borrowed bank reserves, or by raising the rates of reverse repurchases.

The first option — raising rates by fiat — has little else going for it beyond simplicity of execution.  Divorced from market forces, such changes could lead to significant unintended consequences and may not adequately move longer term rates, which are most important in the real world.

Raising the rates paid on term deposits would have the desired effect of incentivizing banks to reduce their reserve levels, but does little to help banks build back their stocks of tradable securities.

The last option, which most signs point toward as the logical conclusion, is the use of reverse repurchase transactions.

In last week’s article, we talked about the role that repurchase agreements play in providing liquidity to institutions.  In essence, as Stella describes it, the Fed would sell Treasury bonds to financial players and agree to buy them back at a set time in the future for a set fee.  This fee agreement would allow the Fed to effectively pay interest like it would with term deposits while offering the double benefits of putting more high-quality collateral (namely treasuries) back into play and also being able to include nonbanks in the loop.

Again, Stella emphasizes that the Fed has already spent time and effort to put the infrastructure in place to facilitate these reverse repos including expanding the list of approved (nonbank) counterparties who could buy and then re-sell the reverse repos.

So What?

That’s a fairly quick but head-spinning dive into the minutiae of stimulus unwinding. Still, we can glean a couple of key points from this.  First, central banks do have a chance of creating a soft landing coming out of this unprecedentedly massive monetary policy experiment.  The mechanisms exist for prudent exit strategies.  But — and this is a big but — the global economy is going to have to cooperate.  A mild recovery will not produce the financial cover to unwind this gently and any hiccups in the system could lead to 2008-stlyle market plunges.

The size and scope of central bank interventions over the last five years have created a financial compression that may only be relieved by an explosion rather than a process of letting the air out bit-by-bit.   And many questions remain unanswered — for example, as interest rates necessarily rise and bond prices drop, who will absorb the losses in those securities as they pass through the repo cycles?  More public sector burdens?  Will private parties have exposure to some of this risk?  We’ll dig into these tough questions next week.

Until then, your thoughts and comments are welcome — please send them to drbarton “at” vantharp.com

Great Trading,
D. R.

About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on SmartMoney.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at "vantharp.com".

Disclaimer

 


Ken's VideoKen's Class

In this five minute video, Ken talks through a pair of intraday regression line crossover (RLCO) trades on October 22 taken by a student who attended his last workshop.  This was the first stop and reverse set of trades executed by the student and Ken describes the rational and execution.

 

Click here to watch the video.


MatrixTrading Beyond the Matrix

Matrix Insight Entry

How one does something is how that person does everything. Trading is just one of the many microcosms of life, where the mechanics of the human mind are under a microscope. Thought patterns of fear and greed are exploited, giving traders the opportunity the transform into not only a more wholesome trader, but a wholesome human being.

In Trading Beyond the Matrix, page 321 states,

"Whatever occurs in my life is part of my path. If I fully understand that, I can live effortlessly. I can be at peace with everything that happens because everything that happens moves me on my path. Trading is a spiritual practice for me; through it, I learn about my inner voice an practice being in the awareness of my Self. It isn't the only spiritual exercise possible; it is simply a metaphor for my path... What I do doesn't really matter; the important part is 'being' while I do anything."

My trading habits, including the process in which I research, prepare, plan and execute without mistakes boils down to my wholesomeness in the present moment. Because I want to trade at a more successful level, I first need to look deeper within myself to determine and fix subconscious beliefs that conflict with successful trading. Because these beliefs reside deep with me, near my core, by fixing them I return to my natural wholesome human being, and realign with my core and the universe. Then not only is my trading more successful, but everything I give my attention to is energized with the frequency of a higher intelligence. Not my intelligence, but the intelligence of the source that created human beings. Thank you trading for helping me discover so much more than just positive PnL.

Brayton B.

New York, NY

 

Editor's Note: We want to hear about the one most profound insight that you got from reading Van's new book, Trading Beyond the Matrix, and how it has impacted your life. If you haven't purchased Trading Beyond the Matrix yet, you can do so here. When you are ready to tell us about your insight, send an email to van@vantharp.com. We are looking forward to hearing from you. If we pick your submission we will share it this newsletter. Learn about this contest.

 

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Learn how you think when you make and lose money, how to reduce stress,

how to avoid repeating mistakes, and how to eliminate emotions from trading.

Watch the video below for more information on this revolutionary product.

Peak Home Study

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October 23, 2013 #652

VTI

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