The Van Tharp Institute

May 26, 2005 — Issue #221

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In this Issue:

Feature Article

Achieve Success Faster – Focus On the Right One, By John P. Strelecky

Recommended

Business Planning for Traders and Investors CD Program 

Trading Tip

Crude Oil Prices – What the Fundamentals Say About Prices, by  D. R. Barton

Listening In...

IQ and Trading

View this newsletter on-line, or read back issues

 

Feature

 Achieve Success Faster – Focus On the Right One

By John P. Strelecky 
Author of The Why Are You Here Café

As an expert on how to achieve maximum success in life with minimal effort, I am always on the lookout for ways in which a single small change can have a giant positive impact. Making the decision to “Focus On the Right One,” is that kind of change. 

Picture a week in which you interact with 100 clients.  Eighty of them are very appreciative of your help and tell you they are very pleased.  Nineteen of the clients can’t stop gushing over you, and insist that you are the best they have ever met at what you do.  One client tells you they are very unhappy and they can’t imagine how you ever got your job. 

At the end of the week, which client do you think about the most?  Which conversation do you replay in your mind? 

Every person I have ever posed this question to tells me they think about the one unhappy client.  That means they are focusing on the one, but it is the wrong one.

We have a limited amount of time and energy each day.  The level of success we achieve-- however we individually define success-- depends on how we allocate that time and energy.

So why when we are faced with the 100 client situation described earlier, would we spend the majority of our time and energy focusing on the one interaction that was not positive.

Why not focus all our time and energy on one of the ninety-nine that were positive.  Better yet, why not focus all our time and energy on one of the nineteen that went as good as they could have gone?

Imagine you are trying to get from Orlando, FL to Chicago, IL.  As a matter of fact, imagine your life depends on you getting from Orlando to Chicago and you have to arrive in less than 36 hours.  You have been bitten by the rarely encountered but very lethal 36-hour snake.  Its bite leaves you perfectly functional for 36 hours and then at one minute past, you fall over dead.  For some strange reason, the only anti-venom is in Chicago, and it has to be administered in the special Chicago anti-venom hospital.

Luckily for you, moments after being bitten by the 36 hour snake, you turn the corner and happen to walk into the Orlando to Chicago travelers convention where one hundred people are talking about their recent journey from Orlando to Chicago. 

The travelers have segmented themselves into three groups.  The first group is composed of nineteen people who successfully completed the trip in eighteen hours or less.  The second group is composed of eighty people who successfully completed the trip in eighteen to thirty six hours.  The last group has just one person named NoGo.  NoGo did not successfully complete the trip, and he swears it is impossible.

Which group are you going to go talk to?  Which group are you going to focus all your time and energy on? 

“Focus On the Right One” is about focusing all your time and energy on only that which will help you achieve your goal.  If your life truly depended on getting to Chicago, would you spend your time learning the reasons why NoGo was unsuccessful?  Would you break down all the components of his trip and try to find the one or two changes he could have made that would have made the trip successful.  Or, would you focus on one of the people who made it to Chicago in less than eighteen hours and find out what they did? 

What if you tried a particular route to Chicago and five hours into the trip it became obvious you were heading in the wrong direction?  Would you sit and be depressed?  Would you spend time analyzing how you got where you were or who the appropriate person is to blame?  No.  With your life on the line, you’d find an expert, ask for advice, and then focus all you’re time and energy on your goal.  You would be focusing on the right one -  the person or course of action that would get you to where you needed to go.

This technique has applications in all facets of life, and in all types of settings.  Imagine you are a trader.  Instead of dealing with 100 clients, you conduct 100 trades in a week.  Eighty go pretty well, nineteen are outstanding, and one is terrible.  Which one are you thinking about when the next week begins?  Why?  Why focus your time and energy lamenting that one trade that didn’t go well?  Why not redirect that energy and celebrate one of the ninety nine other trades.

How do you feel when you think about the one trade that didn’t go well?  How do you feel when you think about one of the outstanding trades?  How do you want to feel each day?  So why spend time dwelling on the trade that didn’t go well?  If there is a problem, find it, fix it, and move on.  If it was a mistake, realize it for what it was, move on, and try not to make it again.  The key is to always get back to focusing on what is going well. 

Stop doing what produced the failure, let the emotions associated with that go, and do more of what produced the successes.  Focus on the right one.

There is one final component to the “Focus on the Right One” technique.  It is something that Wayne Dyer calls the Law of Attraction.  Whether it is a component of quantum physics, God, the Universe at work, or something else, the fact is, the more we focus on something, the more we get of it. 

It is almost as if some force looks at where we focus all our time and energy, and makes the assumption that since we are spending so much time and energy on that, we must really like it.  Therefore the force gives us more of it in our lives. The more time and energy we spend on what is going well, the better things go.  The more time and energy we spend on what is not going well, the more things go poorly.

Successful people know this.  That is why when they focus - they “Focus on the Right One.”

It is easy to test the “Focus On the Right One” technique in your life.  For one-week focus all your time and energy on what is going right as you strive for your goals.  (Ideally your goals should be something linked to your Big Five for Life™.  If you are not familiar with the Big Five for Life™, visit www.bigfiveforlife.com)

If something goes wrong, just fix it, let it go, and refocus on what is going right.  At the end of the week decide for yourself how much the technique has helped you achieve success faster.  I guarantee you will be pleased with the results.

John P. Strelecky is the international best selling author of The Why Are You Here Café, (www.whycafe.com) and creator of the Big Five for Life™ technique (www.bigfiveforlife.com).  

John is an expert on “How to Achieve Maximum Success in Life with Minimal Effort,” and is the opening presenter on the Van Tharp Institute new home study course, Make Money Work For You.

 

Recommended:

Business Planning For Traders and Investors
CD Series 

Presented by Van K. Tharp

In this comprehensive CD series, you’ll learn all you need to know about setting up a viable business plan for your trading. Van Tharp interviews a variety of special guests and provides you with weekly exercises designed to assist you in preparing your plan as the series progresses. 

  • Part 1: Commitment, Purpose, and Understanding the Self.

  • Part 2: Understand How Your System Fits Into the Big Picture.

  • Part 3: Build Discipline into Your Plan.

  • Part 4: Basic Trading Knowledge: Learn the key factors that are essential for any system..

  • Part 5: Understanding Personal/Business Finances: You need more than just trading systems. Learn about seven key systems required for any trading business plan..

  • Part 6: Understanding Personal Edges: Learn some of the key factors that will give you an edge in your trading business plan

  • Part 7: Understanding How Systems Work and Perform Under Various Conditions.

  • Part 8: Review and Critique of Listeners’ Plans: Compare your work with other plans.

Get Started Now...

Trading Tip: 

Trading Tip

Crude Oil Prices – What the Fundamentals Say About Prices

by  D. R. Barton, Jr

Back on April 26th, I presented some technical analysis of the crude oil market that explained why I thought near-term prices were headed for a correction [click here to read that article.].  That analysis has proved useful for playing the intermediate top that happened then.  With crude oil price retreating, there has been much talk about a return to “normalcy” in the crude oil world, with some talking heads suggesting that crude should drop back down to $30 per barrel when crude oil production is allowed to rise to meet demand.

The “crude prices go back to where I always remember them” view seems shortsighted to me for three key reasons.  I’ll review them below.  But first I’ll have to admit that any reading and research in the area of energy in general and petroleum in particular is so charged with political and special interest agendas that it’s tough to discern what’s credible and what isn’t.  I’ve tried to wade through some of the issues and cut to the core of what the most likely supply and demand scenarios are.  Here are the three that have the highest probability for driving crude oil prices:

1.      Increasing demand.  Estimates show that crude oil demand grew between four and five million barrels per day over the last two years.  It’s easy to find those who will argue that the economic growth rates in China and India are not sustainable.  But one thing is certain – if a natural resource like crude oil is impeding that growth, then those countries will continue to bid up the prices to get what they need to sustain economic growth.  I see little that will appreciably slow the growth of these new juggernauts.

2.      Availability of known reserves.  Even if you’re optimistic about extracting known reserves, the discovery and recovery of light sweet crude (as opposed to high-sulfur “heavy crude) are not keeping pace with the growing demand.  Since heavy crude is more difficult and costly to refine, the price of light sweet crude will continue be bid up.  This is especially true given the third issue…

3.      Lack of refining capacity.  A good article in the Wall Street Journal (WSJ) on Tuesday discussed the issues that surround the refining of crude oil.  While oil demand continues to increase, refinery capacity has been added at a rate equal to less than one-sixth of the increase in demand.  At the same time, refineries are able to demand to a higher price for their services (which has not been the case for quite some time).  And while the ministers of oil-rich companies can decide to increase the rate of pumping (at least in the short term), there is no such quick fix for the refining bottleneck.  New refining capacity takes a long time to bring online, with timelines counted in years not weeks.  In addition, the capital intensity and environmental restrictions for refining make it a difficult business to enter or expand.  The WSJ article states that no new refining plants have been built in the U.S. since 1976 – a figure that is staggering to a good ol’ chemical engineer like me.

Petroleum based energy prices will continue to be volatile and near term pumping decisions will still affect prices in a violent manner.  But I can’t see a long term return to sub 30-dollar prices anytime soon given the factors described above.  As investors, the best bets would seem to be sectors and companies that can most easily handle oil prices that are likely to remain north of the magic $30 per barrel price for the foreseeable future.

 

D. R. Barton, Jr. will be teaching the upcoming Proven Tactics of Swing Trading Course, August 2005 and is a featured speaker in the Van Tharp Institute Course, Make Money Work for You

He is the Chief Operating Officer and Risk Manager for the Directional Research and Trading hedge fund group. D. R. has been actively involved in trading, researching and teaching in the markets since 1986.  D. R. has taught extensively in many investment areas including intra-day trading, swing trading, and cutting edge risk management techniques. 

His writing credits include co-authoring Safe Strategies for Fin-ancial Fre-edom and co-creator and contributing author on Fin-ancial Fre-edom Through  Electronic Day Trading. He also writes a stock screening newsletter called Ten Minute Trader.

Listening in....

Excerpts from Dr. Tharp's Mastermind Discussion Forum

IQ and Trading 
Author: Ezen

Did anyone from IITM found correlations between IQ and trading?
I'm sure there must SOME level of influence (most likely negative but maybe positive). 
In system development it must be a positive, anyone have data on this?

Reply To This Message 


Re:
IQ and Trading  
Author: Robin 

I think now EQ is much more important, though not in the traditional sense, but more in terms of self control and discipline.

One does need IQ to explore new techniques, but EQ is critical in executing the trades as planned systematically.

Reply To This Message 

Re:
IQ and Trading 
Author: Van Tharp

Good traders tend to have certain kinds of skills that are a little unique.

For example, on the Myers Briggs, they tend to be NTJs.

They tend to be good at games.

They tend to be good at mathematics

(the last two tend to correlated with IQ) but only certain aspects of it.

They take personal responsibility for what happens to them.

The are disciplined and willing to consider that they are the most important factor in trading.

They tend to be rebellious, non-conformists types.

Van 

Click  here to read more   post on Dr. Tharp's Forum. 

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