an Honest Self-Appraisal
K. Tharp, Ph.D.
Think about the last loss
you had in your trading. What
caused it? Who was
responsible for it?
your response was anything other than yourself (e.g., the
market, my broker, bad advice, etc.), then you are not taking
responsibility for your results.
And the consequences of not taking full responsibility for
your results, is that you will repeat mistakes
over and over again.
the other hand, if you are willing to accept total responsibility
for your investment results, you begin to understand all of the
mistakes that you’ve made and then you are able to correct them. The market will become your
Financial University. Moreover,
you will realize that you are the most important factor in your
trading or investment success. When you do that, you are way
ahead of the crowd.
I once had a call from a
gentleman in England who had been working with my Peak Performance home study course. He said, “I’ve
been working through the course for over six months.
It’s helped me realize a lot about myself, but there is one
thing it hasn’t done. It hasn’t given me a positive expectancy
system.” The ironic thing about that statement is that I had not
even attempted to give a methodology in that particular course. That
course is about how to become a peak
performance trader/investor not system development.
There are several reasons
for focusing on behavior rather than systems:
If you want to be good, you must
design something that fits you. That is only possible if you design
Psychology is far more important than
methodology. In fact,
psychology is part of methodology. For example, when we attempt to
help people develop a reasonable method that works, they resist it
strongly because they have so many biases that keep them focused on
the wrong aspect of trading—areas that have nothing to do with
success. And it is very difficult to show them the correct
The best thing
you can do for yourself to increase your income from the market is
to determine how you are blocking yourself.
This should be done at two levels. Whenever you develop a
trading business plan a great deal of that plan should have to do
with introspection. Take a look at all of your beliefs. Are they
useful beliefs or do they hinder you in some way? What are your
strengths and weaknesses? What about you can’t you see clearly
because you are part of it? You should look at doing this sort of
assessment at least once each quarter.
The second self-appraisal
you need to make is at the beginning of the day—and perhaps even
hourly throughout the day. What’s going on in your life? Are you
ready to face the markets? How are you feeling? Is there some sort
of self-sabotage surfacing in you? For example, are you starting to
get too confident? Are you starting to get too greedy? Do you in any
way want to override your system? The best traders and investors are
constantly doing this sort of self-assessment. If you want to make
more money in the market, then perhaps you should start doing the
About the Author: Trading
Coach Dr. Van K. Tharp, is widely recognized for his best-selling
book Trade Your Way to Financial Freedom and his classic Peak
Performance Home Study Program for traders and investors. Visit
him at www.iitm.com for a FREE
trading game or to sign up for his free weekly newsletter.