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Something Deceptively Simple May Be Holding You Back
My work is developed around the idea that people develop beliefs that organize their world and give meaning to their experiences. These beliefs may be called meaning systems and different people create different meaning systems.
Wow, I was blown away, I never thought I’d hear a psychologist talk about the importance of beliefs. Many years ago I became disillusioned with the professional field of psychology because it would not study such things. The profession preferred to treat people like a black box studying what went in and what came out (of the black box) without bothering to assess what was going on inside. I loved Neurolinguistic Programming from the start because NLP gave an organization to what happened inside the mind.
I have wondered if psychology would ever change. About five years ago, I attended a graduation dinner for a friend’s daughter. When I learned that she had majored in psychology, I went up to her and asked if she was taught anything in her courses such as, “your beliefs shape your reality and your experience.” Her response was, “Oh, I don’t believe that!” That was enough to suggest to me that nothing had changed. Then suddenly, I read Dweck’s great book on psychological research spanning 20 years that was really all about beliefs. I was blown away.
Much of the book centers around a very simple idea: intelligence. What do you believe about intelligence? Dr. Dweck lists a questionnaire for adult intelligence in the appendix so you can take the test and score yourself. Use the following table:
And then rate your response to each statement:
_____ 1. You have a certain amount of intelligence and you can't really do much to change it.
_____ 2. Your intelligence is something about you that you can’t change very much.
_____ 3. No matter who you are you can significantly change your intelligence level.
_____ 4. To be honest you cannot really change how intelligent you are.
_____ 5. You can always substantially change how intelligent you are.
_____ 6. You can learn new things, but you can’t really change how intelligent you are.
_____ 7. No matter how much intelligence you have you can always change it quite a bit.
_____ 8. You can change even your basic intelligence level considerably.
To score the questionnaire —
First add your total for statements 3, 5, 7, and 8 and put it in the space here. _____
Then add your total for statements 1, 2, 4, and 6 and put it in the space here. _____
Now subtract the second sum from the first sum to calculate your total score. _____
Your total score can range from +20 through -20. High positive and negative scores are obviously in one camp or the other. Scores close to zero are ambiguous.
Those with a positive score tend to believe that intelligence is malleable and can be developed. Dr. Dweck says these people have an incremental theory of intelligence — meaning you can change it. Those with a negative score tend to believe that intelligence is fixed and cannot be changed. She says these people have an entity theory of intelligence … meaning it’s a fixed entity that you can’t do anything about.
The research she has done with these two ideas is amazing. Here’s an example. Suppose you have two groups of students and both groups show equal intelligence initially with a test. One group believes in the incremental theory while the other group believes in the entity theory. Now suppose you give them a series of six easy tasks and then follow those up with a hard task. The hard task is something that children of their age should not be able to do. The net result was that while doing the difficult task, the incremental theory group developed a mastery pattern which included:
Gave themselves instructions to improve their performance and did self-monitoring.
Said things like “I love a challenge” or “Mistakes are my friends.”
Taught themselves new strategies for mastery.
Did not consider themselves as failures.
In contrast, the entity group, when doing the difficult task, developed a helplessness pattern which included:
Constantly putting themselves down by saying “I’m no good”
Viewed their prior successes as a failure, despite evidence to the contrary.
Became bored and disinterested
And, of course, showed large drops in performance.
It turns out that people who have an entity model of intelligence become concerned about proving or hiding their intelligence. As a result, these people tend to concentrate on looking good. To prove this Dr. Dweck did a study in which those with an entity model of intelligence and those with an incremental model of intelligence were given a choice of three different tasks. Those were: 1) it’s an easy task and you won’t make mistakes; 2) it’s a lot harder than what you are used to, but you will likely do well. These two tasks were considered performance goals with easy and hard levels. The third choice was a challenge goal; 3) your task will be hard, new and different where you might make mistakes but you’ll learn new things.
The research showed that 80% of those with an entity model chose one of the performance goals with 50% of them choosing the easy task and 30% the difficult task. Only 20% chose the challenging task. In contrast, 60% of the people with the incremental model of intelligence chose the challenge task and only 40% chose one of the performance goals.
It turns out that one’s model of intelligence even changes the meaning one gives to words such as effort and failure. Fixed entity people believe failure means having a low IQ and that if you have to work hard on something, then that means that you have a low IQ. In contrast, those who believe intelligence is malleable believe that failure is a signal to try something new. Furthermore, they have an opposite definition of effort in that they believe that effort turns into intelligence.
It also turns out that those with an entity model, feel smart when 1) they don’t make mistakes; 2) they turn in their test papers first; and 3) they get work that seems easy. And if they don’t do well, they are anxious, show symptoms of depression, and think of themselves as dumb — despite the fact that they might have had confidence in their intelligence prior to doing poorly. Having an entity theory of intelligence can impact how you work in school, what classes you select, what major you select, and even what career you select. In other words, a simple meaning given to a concept can change everything about one’s life.
Research shows that you can reverse these effects when you simply educate people to develop an incremental theory of intelligence. So if you have an entity model of intelligence, research how you can grow your intelligence and how you can develop new skills and abilities. In fact, we show in our workshops that even genius can be learned and cultivated. Within the next 18 months, we plan to have a new workshop entirely focused on how you can develop trading genius.
What’s amazing about this research is that a psychologist has devoted her life work to show the impact of meanings and beliefs have on people. And the results are incredible.
Understanding Intelligence and IQ
Most people go through school thinking that they have some level of intelligence, they get a number score that measures their intelligence, and then that’s it. The number is fixed in stone for their life. I definitely heard this a lot while I was growing up. In my case, I was lucky because I definitely believed that I could make my high IQ score higher. I had a friend who had a higher IQ and I always felt my job was to do better than he did, no matter what. With effort, I started to do that so my experience overcame what others told me.
There seem to be deep misunderstandings about IQ. Alfred Binet developed the first IQ test in Paris so he could assess the current state of the schools in Paris and thus DO SOMETHING TO IMPROVE IT. He never developed the test around the idea that anyone’s IQ was fixed. One Nobel Laureate, after he won the prize, discovered his first IQ test score which was average at best. He commented that had he known his score, he might never have undertaken some of the complex work he did that led to his Nobel Prize.
As a youngster, Dr. Dweck was actually put in an advanced student’s class. In that class, the teacher was enamored with IQ believing it to be both important and fixed. She organized the seating in the classroom by IQ score and treated everyone according to what she believed their score to be. I would guess this experience stimulated Dr. Dweck to research this area.
Late in her book, Dr. Dweck also applies her research to personality traits. For example, if you think your personality or some aspect of it (such as likeability) is fixed, then you can become helpless when confronted with issues regarding it.
To me this says a lot about motivation problems, procrastination, and any number of other psychological problems. What happens to you when you encounter something difficult? What if you realized that you could change your reaction to difficulties just by changing how you define the word intelligence?
Intelligence Level and other Nominalizations
Intelligence and personality traits are both examples of what NLP calls a nominalization — where language turns a verb into a thing. IQ is a verb (a performance on an IQ test) that has been turned into a noun and then given a lot of meaning. The same goes with personality traits. Personality or even individual personality traits are actually ongoing processes.
When our language turns verbs or processes into nominalizations, all you have is an illusory concept that we have invented and to which we have given a lot of meaning. Richard Bandler used to say that if you couldn’t put it into a wheelbarrow (no matter how big), then it was a nominalization. Interesting words like truth, performance, feelings, map of the world, etc. are all nominalizations. They are not real nouns but just concepts we have invented.
Dr. Dweck’s book got me thinking that if a difficult challenge can trigger people into helplessness and even depression, then what happens when people have to go through real suffering as can be the case in doing self-work? Perhaps all nominalizations that we believe are fixed lead to some sort of helplessness behavior. There are huge implications to many fields in this idea.
If the meaning people give to intelligence is so important, then what about the meaning they give to words like suffering or level of consciousness? How would they deal with personal challenges such as identifying non-useful beliefs or feeling stuck feelings? If the meaning they give to a challenging task throws them into helplessness because they think IQ is fixed (and all the implications that go with that), then what if they think that their personal psychological issues are fixed? What additional meanings do they give to that? Wow. My guess is that it is a major part of what causes people to stop working on themselves.
One of my ongoing projects is to model success in the Super Trader program. That’s why we keep improving it. In that project, I constantly ask, “What’s different about those who excel in the program and those who encounter a roadblock and stop?” Some reasons I’ve heard from stuck Super Traders include:
It’s so painful to think about that.
I just keep procrastinating.
I’m just not motivated to tackle that.
I’m just so busy.
And the list goes on and on.
After reading Dr. Dweck’s research, however, I’m convinced the primary reason for being stuck is some sort of nominalization they believe is fixed such as “my psychological issues are fixed.” As a result, I’ve developed a number of new Tharp Think concepts that I think will help people do their self-work once they get these beliefs into their neurology.
In the book Trading Beyond the Matrix, I listed the fifty-five original Tharp Think Concepts. (If you haven’t read this book yet, remember we are giving it away for free until our supply runs out. See below) Our new Tharp Think list now includes 113 critical concepts for trading success.
Tharp Think now includes these new concepts:
The material involved in working on yourself is about personal evolution. It is required course for all souls. Only the time you take to do it is optional (perhaps a million lifetimes of doing the same thing over and over again).
The purpose of working on yourself is to clear all non-useful beliefs, frames, parts, and charges that lower my consciousness.
Finding a new one of these is an adventure and a chance to increase my consciousness and advance my personal evolution.
Doing this work regularly will make me more aware; happy for no reason; and infinitely wealthy.
Resistance persists. It locks me in place in my level of consciousness. I will be aware of any resistance that surfaces and work on it through feeling release.
I welcome negative feelings and am willing to feel them until they are gone. Doing so is just another experience.
Each step I take along this journey gives me feedback. Blocks are just a new challenge and a sign of beliefs I need to get rid of and feelings I need to release.
There is only feedback no failure. Resistance and suffering are a clear message telling me what I need to become aware of and clear.
Secrets, things we are unwilling to share, are a sign of negative charge. If I am a secretive person, I will start looking for why things are secretive for me and look at it as an opportunity to become aware of my issues.
I am a meaning maker. The meaning I give to life, to God, to myself, and to my experience is all important.
I will become aware of my meanings and change them so they produce happiness, success, and freedom.
I will measure my progress by the number of clearings (of non-useful beliefs, misapplied frames, and stuck feelings) that I go through.
My performance, my consciousness, my happiness, my success and my awareness are under my control. They can be improved continually and it is my destiny to do so.
Self-mastery makes trading mastery and wealth mastery easy.
I must get these beliefs into my neurology through the mind-to-muscle pattern.
The highlighted concepts are probably critical to master in order to complete the Super Trader program as well as in order to do a lot of self-work on your own. We are going to include such mastery principles in future Peak 101 workshops (including the Peak 101 workshop this weekend).
Each Tharp Think principle could require a complete article to explain fully. I plan to create a series of videos on these Tharp Think principles and the others so that you can develop your own program of working on yourself. Remember our mission is transformation through a trading metaphor. Hopefully, we can change the consciousness of tens of thousands of you, one trader at a time.
About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his 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 www.vantharp.com.
The $700 Early Enrollment Discount Expires TODAY on:
Special event for Swing and Core home study users!
Swing and Core Systems Update!
May 4, 2017
Ken is excited to meet his elearners in person and update you on the latest developments to the Swing and Core systems you have studied, and maybe are already trading. Ken’s extensive market knowledge and energetic, dynamic teaching style offer attendees much more than just the one-day event. Read on for more details. . .
Very Special Benefits
Attendees will also receive:
A pre-workshop preparatory video lecture,
A homework package,
Ability to submit specific questions to Ken before the course, and
A follow up webinar afterwards.
This gives you numerous ways to learn the system updates and clarify any questions you have with Ken directly.
Students should walk through the VTI classroom door having studied each of the courses, and with some knowledge and experience with the systems contained within. Dr. Long will have a lot of new ground to cover during the course so he will concentrate on intermediate and advanced questions relating to the systems. To maximize everyone’s time in the classroom, Ken will focus on his latest discoveries, and as such he will be unable to re-teach content readily available in the elearning courses.
Ken will present the elearning course update, and on the following day, he will launch into teaching his new Adaptive Swing Trading Workshop. In this three-day intensive workshop, Dr. Long presents a series of advanced, adaptive swing trading systems and strategies that work well for holding periods from two days to two weeks.
Adaptive Swing Trading
May 5-7, 2017
In this new three-day workshop, Dr. Ken Long will present a series of advanced, adaptive trading systems that work well in the swing period holding time-frame — from two days to two weeks.
Adaptive rules require a better understanding by the trader of price action, of self and of the market. These systems can also take more time to monitor and to execute.
Regression Lines – An Adaptive Framework
For years, Ken has been looking at regression lines to help him understand the broader trends in the market. Recently, he started applying linear regression methods to individual indexes and to individual stock prices to see what he could find. Ken is constantly finding what works and then extending it. He knew that a regression line gave the best linear description of a data set using its slope, and its R2 figure provided very helpful information. Don't worry if you don’t understand these terms or basic statistics—just know that regression lines can be very useful when applied in an appropriate trading system. In simpler language—they work!
As have most traders, Ken has heard plenty about moving averages crossover based systems over the years. The idea has plenty of merit for finding shorter term opportunities within longer term trends. That is, when there are trends. A major problem for moving average crossover systems lies in the flat periods. Traders can get “chopped up” when the price moves up and down causing the averages to cross and then cross back again. Ken wondered if regression lines would work better. They did – but not good enough to have a great trading system yet.
After more thinking, a good amount of research, and testing various strategies, Ken found two additional inputs that added a lot of confidence for his entry and exit signals. Ken first paper traded the concept for a while and then started a prototype trading test with small positions of real money and intraday holding periods. As he traded and evolved the concepts, they gained more clarity and evolved into a framework for a kind of trading with several possible entries and several possible exits. Today, he trades several variations of regression line crossovers (RLCO) on an intraday basis with a “production level” position sizing strategy.
When I was 12 years old, I had a traumatic experience — I found out that I had to get braces to straighten my teeth.
The trauma was not based on any fears that I would be called “metal mouth,” “tin grin” or “fence face.” My trauma was caused by the anticipation of the terrible pain I had heard I would experience. My friends with braces told me tales of the agonies in their mouths. They couldn’t chew solid food, they couldn’t sleep, and more.
And so before the braces went on, I waited in dreadful expectation of the aching that was to come… the funny thing was once I had braces — the pain never really amounted to much at all.
Kind of like our recent losing streak in the markets?
We just had eight straight losing days in the Dow. This hasn’t happened since 2011.
The Trump/Ryan health care reform bill had to be pulled before the vote because the Republicans in the House could not generate enough support for the quickly thrown-together bill — all the while, the market was dropping.
Certainly, this signaled the end of post-election rally. The press made it sound like Armageddon was just around the corner . . . the funny thing was — the drop never really amounted to much at all.
One Streak After Another…
In last week’s newsletter, I wrote about a very interesting streak that had just finished in the U.S. markets. Since October 11th of last year, the market went an amazing 109 trading days without a 1% close-to-close drop. An occurrence rare enough that it has only happened seven times in the last 63 years.
And then for the last week, we have had this streak of 8 straight down days in the Dow. Interesting? Yes — but also important. In the last 17 years, this has only happened three other times — and they were all smack in the middle of big down markets runs in 2001, 2008 and 2011.
And yet this “scary” nine day pullback — a pullback which many have been predicting since the post-election bull run began, took the market down only by a measly 1.9%.
If you are like me, you are probably curious about how this drop compares to the other recent 8- down-day streaks. Here are some stats from one of my favorite quants, Ryan Detrick of LPL Financial:
Detrick also notes that in the last 117 years, there have been 29 separate 8-day losing streaks in the Dow. Only one of the 29 (in 1941) has been smaller than this one.
More importantly (and this is key) — NONE of the other 29 instances have happened so close to an all-time high in the index (this one is within 2.7% of the high set on the first day of March).
I’ve tried to guide you over recent weeks with information that says this bull run is not over. And what is one of the main reasons I say that? Markets just don’t make significant dives from all-time highs. Trader/investor psychology develops major tops into price charts with a rounded shape. We would expect to see modest drops followed by failed retests of old highs. That is the pattern that we have seen for tops over and over again — especially in modern-day markets.
Last week I said —
“I expect we’ll get some additional selling over the next week as the data above suggests. But unless something else in the external economic environment changes, I believe this pullback will be yet another buying opportunity.”
So far, so good.
The tiny nature of this 8-day pullback signals that the narrative of optimism in the market is still in place until further notice.
Your thoughts and comments are always welcome — please send them to drbarton “at” vantharp.com
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
About the Author: Dr. Ken Long retired from the Army as a Lieutenant Colonel and teaches at the U.S. Army Staff College. He is a proud father of three, a husband, teacher, student, martial artist and active trader. Ken also instructs dynamic trading workshops for the Van Tharp Institute.
Ken's next workshop is just around the corner. Watch this video to hear two testimonials from students of Ken Long.
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