Tharp's Thoughts Weekly Newsletter
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Article:Transformation Through a Trading Metaphor, Part II by Van K. Tharp, Ph.D.
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Tip:The Roller Coaster Market by D. R. Barton, Jr.
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Feature Article
Transformation Through A Trading Metaphor, Part II
by Van K. Tharp, Ph.D.
Click here to resolve formatting problems
In last week’s article, we looked at Dr. David Hawkins’ ideas about the levels of human consciousness. We also covered the main theme in the Matrix movie and went over some of Dr. Korzybski’s presuppositions about being programmed by language, a poor representation of reality.
Korzybski says that in addition to language, we are programmed by one other main force — our beliefs. Beliefs might be described as sequences of verbal abstractions that are strung together and wired into our neurology. So what do you believe about yourself? For example, you might say:
- I am a trader.
- I am a losing trader.
- I am worthless because I keep losing.
So each of those beliefs is a high-level belief — an identity level belief. In addition, each of those statements is an abstraction at a high level. And most importantly, each of those statements is a confusion of identity because you are taking one level of abstraction (yourself) and confusing it with another level of abstraction (i.e., whatever you equate yourself to be). All of those beliefs are nonsense according to Korzybski.
Dr. Korzybski used to do an experiment with his student to help them understand typical outcomes resulting from language and belief processes. Korzybski would plant a female stooge in the class and at a certain point, ask her to come up to his desk to get a box of matches. She would come up, take the matches, and then drop them all over the floor. Korzybski and the woman would then get into an argument and he would slap her (a light, stage slap — she knew it was coming and it didn’t hurt). At this point, he would observe that about 90% of the students in the classroom would go into an uproar. Their thought process might go something like, “He just slapped her; he shouldn’t do that; he is being mean. He’s a bad person.” These are semantic misidentifications that produce judgments and then the judgments produce anger. Meanwhile, the remaining 10% of the class would sit back quietly and pause a little so they could understand what was going on. And what was going on was a demonstration to show how our words and our reactions to them (based on beliefs) can get us into a “self-constructed” hell.
According to the model I’ve been using, however, some beliefs still might apply (and be useful) in some limited context. None of them, however, are universally true. In fact, “unsanity,” as Korzybski would say, is believing all of your beliefs. So as a trading coach and a transformer, one of my goals is to help people become a little more sane.
To become saner, you must begin to recognize what you are doing to yourself with your beliefs. You are re-presenting the world to yourself in a particular way by the words you use — words with meanings which might be useful in certain contexts. If that’s so, then keep the beliefs for those contexts. Quite often, however, many of our beliefs are not useful at all in any context (i.e. “I’m not worthwhile as a person.”) and should be discarded or replaced by other beliefs. You can do so by using the belief examination process that is given in Trading Beyond the Matrix and in our psychological workshops.
If a belief has charge — a strong emotion that you have stored which locks a belief in place, then you must use some sort of feeling release process to get rid of the charge before you can change the belief. Once you release the charge, then you can simply discard the non-useful belief or replace it with a more useful one. It’s that simple.
Transformation in This Context
The first transformation is awareness. It is awareness of the thoughts going through you. It is awareness that those thoughts are not you. It is awareness of when you attach to or believe in one particular thought flowing through you. It is awareness of the usefulness of a belief onto which you have grasped. It is awareness of a belief with charge — and when a belief has charge, then it probably isn’t useful at all.
When I observe an obviously charged reaction in one of my clients, I usually point it out, especially if that person is open to change. For example, if someone replies to something I said with some emotion that sounds anything like, “You are so disrespectful!” then that reveals a charge. I’ll probably point it out perhaps asking, “Do you have a charge on that?” If the person is aware, then they’ll notice it and say “Yes, that’s something for me to work on.” If the person has lower awareness, then they might respond, “See, that’s another example of your lack of respect. I try to point out something you shouldn’t say and all you do is come back with a trivial question.” That’s enough to tell me the person has a very low level of awareness and I will back off.
The second level of transformation is getting rid of charge and non-useful beliefs — that is you become aware of charged, non-useful beliefs and you transform them into something much more useful under a broad set of contexts. That’s what will allow you to perform at a super-human level in the Matrix. Imagine what would happen to your level of consciousness if you were to transform 500 to 5,000 non-useful beliefs.
So let’s think about the market. The market is a verbal utterance to which you give meaning — and the meaning you give it might not be the meaning I give it. The verbal utterance — “the market” is also just a symbol for some sort of ongoing process. “The market” is a map — but it doesn’t represent the territory. “The market” is not even a structural symbol for the territory of the market. A candlestick chart might perform that task a little better but even then you must ask yourself, “How have I distorted reality by representing the market with a candlestick chart — let alone the indicator I have at the bottom, a MACD?” Does a candlestick chart (or the MACD) in any way resemble the structure of many thousands of people trying to fulfill orders at a certain price right now? And is “that” the market? Perhaps the market also includes the attitude of many thousands of others who have open positions and will take a profit or become scared and want to get out at some other price. And how do you represent the attitude of many thousands of others who might be thinking about opening a new position sometime soon? Is all of that represented structurally by a candlestick chart with a MACD?
Moving Beyond the Matrix
In the movie, "The Matrix", Neo gets reprogrammed and learns to operate in the Matrix at a superhuman level. He is able to fight Agent Smith effectively at this superhuman level but still, he is operating in the Matrix. At the end of the movie, however, Neo learns that even the Matrix is just an illusion. Suddenly, he’s able to go beyond the Matrix. He can slow down time and stop bullets coming at him. He’s gotten outside of the Matrix.
Is there an analogy here for trading? Can you trade "Beyond the Matrix"? I think you can.
On a quantum level, everything is vibration and/or particles. It’s all similar, all pure potential that’s being influenced by consciousness. Or another way of putting it might be that God is everything. A Course in Miracles can be summarized by its beginning statement. “Nothing real can hurt you. Nothing unreal exists. (Meaning what you make up with your thoughts). Herein, lies the peace of God.”
In our Peak 202 Workshop, Libby Adams presents the following model — you are a collection of parts called little “i”s who masquerade as you. These little “i”s speak for you a lot and they surround your Higher Self (Your Inner Guidance or Divine) which Libby calls the Big “I”. Libby presents a process she calls Transformational Mediation™ (shortened to TfM) which exposes the problem-causing little “i” parts to the Big “I”. The little “i” parts then either merge with the Big “I” or they are tossed aside. The result is a massive clearing. (See chapter 11 of Trading Beyond the Matrix.)
If you do this process enough, then you begin to trust your inner guidance more and more. Your inner guidance can begin to lead you. And if you do the process enough, then theoretically, all that’s left is the Big “I” or your Higher Self. When your Higher Self begins to advise you on how to live life, then if you are trading still, you are Trading Beyond the Matrix. And this is the third level of transformation.
References
Anonymous. A Course in Miracles, 2nd Edition. Mill Valley, CA, 2003.
Korzybski, Alfred. Science and Sanity, 5th Edition. Fort Worth, TX: Institute of General Semantics, Inc. 1954 825 pages.
Tharp, Van K. Trading Beyond the Matrix, New York: Wiley, 2013.
About the Author: Trading coach and author Van K. Tharp, Ph.D. is widely recognized for his best-selling books and outstanding Peak Performance Home Study Program—a highly regarded classic that is suitable for all levels of traders and investors. You can learn more about Van Tharp at www.vantharp.com. His new book, Trading Beyond The Matrix, is available now at to our subscribers at no charge. Request your copy by clicking here.
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Trading Tip
The Roller Coaster Market
by D. R. Barton, Jr.
Click here to resolve formatting problems
I’m guessing that you grew up with a person (or three) who could never decide what they wanted to do with their career. I had friends who were really bright but had no real direction. One of my friends was so indecisive that we started asking about his “career choice of the week”. He bounced from lawyer to doctor to who knows what other areas but eventually, he became a pilot.
I wasn’t that guy. I had a clear picture of what I wanted to do from an early age (marine biologist) since I loved science and animals. That career choice did change once. When I was a junior in high school, I started interviewing marine biologists. I found that their lifestyle and disillusionment with their field, in general, made me want to switch gears. After a good deal of research and one influential teacher, I chose chemical engineering because that career fed my science inclination and also gave me lots of flexibility.
Sometimes the market is like that — fairly intentional or directional about where it’s going. Today, however, we’ll see the market’s version of the high schooler who couldn’t choose a direction — communicated in quite a nifty graphic.
The Most Useful (and Interesting) Graphic I’ve Seen All Week
One of the market technicians I follow is Jon Krinsky at MKM Partners. This week he posted the most interesting chart I’ve seen in a while. It shows what a roller coaster we’ve been on the last nine months:
Click here for larger version.
This is such a great graphic representation of market action because it shows the relationship between time and distance for the last four major market moves. If your timeframe for trading or investing is longer than a couple of weeks, the chart explains why the last nine months have been extremely tough. Here is Jon’s note:
Since last July, the market has been trending for 25-30 days before pausing, and then switching directions. Over the last 26 trading days, the SPX has rallied 13%, bringing it just shy of the late December high (2081). This is almost an identical move in magnitude and duration to the September to November rally. If recent history is any guide, at a minimum, we should see a pause here.
I do agree with his analysis and there are some other interesting things that pop out as I look at this chart:
- Notice that during the last nine months, we’ve been making consistently lower highs.
- We’ve also been making generally lower lows.
- Both of the rally phases on the chart have followed this series so far — rally-pause, rally-pause, rally-pause. The first move (Sept.-Nov.) then had one final rally followed by the rollover. If the current move up follows that same rhythm, we would be in the final rally now — and approaching a rollover.
If this chart helps us learn nothing else, we can at least become aware of the recurring 5-6 week trading cycle pattern so that we can monitor its progression. That is, we can monitor the pattern until it is broken.
Please let me know your thoughts and opinions on the article. Send your comments to drbarton “at” vantharp.com — I always enjoy hearing from you!
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 analyst on Fox Business’ Varney & Co. TV show (catch him most Thursdays between 12:30 and 12:45), on Bloomberg Radio Taking Stock and MarketWatch’s Money Life Show. He is also a frequent guest analyst on CNBC’s Closing Bell, WTOP News Radio in Washington, D.C., and has been a guest on China Central Television — America and Canada’s Business News Network. His articles have appeared on SmartMoney.com MarketWatch.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at "vantharp.com".
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