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

• Article My New Book: Trading Beyond the Matrix by Van K. Tharp, Ph.D.
• Trading Education Ken Long Has A New Day Trading Workshop in April
• Trading Tip Sports Illustrated Swimsuit Indicator — Oh My...by D.R. Barton, Jr.
• Video Van Talks About His New Book by Van K. Tharp, Ph.D.

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Article

My New Book: Trading Beyond the Matrix

By Van K. Tharp, Ph.D.

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I have a new book coming February 25th and I cannot remember the last time I was so excited about one of my books being released.   Let me tell you why!

1) First, it is very personal, as I’ve really opened myself up and said a lot of things that very few people know about me.   While most people might feel vulnerable about sharing their personal life, I feel excited.

2) I once called myself a psychological coach for traders. Except for some aspects of Super Trader, I don’t consider any of the books I’ve published through McGraw Hill to emphasize the “you” factor; but this one does it in spades.  I think it’s about time for that.

3) While I would put most of the books I’ve written on a list of recommended books for traders, this one is my favorite out of all of them … by far.

4) Lastly, this book is really easy to summarize and explain.   Are you familiar with the movie the Matrix?  In the movie, everyone is programmed like a robot but doesn’t realize it.   Well, it’s true; there is a real Matrix.   Everyone is programmed by their beliefs, and this book is your red pill– It’s that simple.

Transformation

So let me tell you a little bit about it.  I’ve known since I became a full time trading coach that my mission was transformation through a trading metaphor.  My whole staff thrives on the comments that we constantly receive, like: “You have changed my whole life for the better, thank you.”   

Occasionally, however, I hear people say things like, “If Van Tharp knows so much about trading, then why doesn’t he just trade?”   Well, the assumption behind that statement is that the “be all and end all” of life is the money you get from trading.  That is not the case for me.  My mission is transformation. 

At a staff meeting several years ago, we decided we should promote this mission more and one person suggested that perhaps I should write a book about transformation.  I got really excited about that.   I’ve already written a five volume course on peak performance trading and I really didn’t want to discuss psychology in a yet another book published by a major company.   Up to this point, none of my books have been what I would call an in-depth, personal psychology book until this one.  However, transformation gave me a new angle to really talk about the “you” factor in trading and what the process of transformation looks like.

We believe that we take our clients through three levels of transformation; this is what’s covered in the book.   The first level is about all of the core beliefs that come out of my modeling work with top traders.   You have to share top traders’ beliefs to become one.   I’ve never seen anyone else provide all of this material together, so we call it “Tharp Think”.  The first section of the book (five chapters) is about how traders transformed themselves using Tharp Think principles.  Chapter six summarizes all of the Tharp Think principles.   I’ve never published the complete list of these methods in a book before.

Many people, however, can’t easily adopt Tharp Think principles in their trading as soon as they learn about them.   Instead they have to transform themselves to some degree before they can internalize these core principles.   So the second part of the book goes through various transformation techniques that will help you adopt Tharp Think.   

To help you do that, I took a unique approach with this book.  Most of the chapters were written by individual Super Traders, describing how they used some core transformational techniques and how they worked.  Their stories read like adventure book which helps convey the actual experience of using the techniques.  I believe this is a great way to present this material.   There are chapters on beliefs (recognizing and changing your beliefs), feeling release (how to release the charge that locks some beliefs in place), parts negotiation, how to find your Inner Guidance and turbocharge your transformation, and how to use your Inner Guidance to help with non-useful parts.  This is my favorite section of the book.  The summary chapter even includes nine steps for working on yourself!

Lastly, if you do a lot of personal transformation, your level of consciousness will change.   For example, everyone knows what happens when you trade out of “fear” or “greed,” which are rather low levels of consciousness.   Now, imagine what would happen if you traded from a mental state of “acceptance,” which is at a much higher level on the consciousness scale.   Your results would vastly improve.   What if you could go further and trade from an “enlightened state” in which you have no internal chatter and you just see the market as it is?   The Super Trader who wrote Chapter 16 trades from such a state and her results are phenomenal.   In addition, I think you will find what I included at the end of the book very helpful… a complete checklist for what you need to develop your personal trading plan.

The mini version of my book, which is now available on our website, contains the preface, the introduction, the first chapter in its entirety, and a summary of all 18 chapters. If you haven’t downloaded it yet, you can do so now, at www.Matrix.VanTharp.com.

In addition, we are hoping to launch this book on the best seller list during the week of February 25th.   So don’t order the book now.   If you order it on the release date, next Monday, February 25th (but not before), we have some huge bonuses for you.   Again, the details are at Matrix.VanTharp.com. If you liked my other books, my hope is that you will LOVE this one.

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, will be released next week.

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Trading Education

Workshops

Ken Long Has A New Day Trading Workshop in April!

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Trading Tip

Sports Illustrated Swimsuit Indicator – Oh My…

by D.R. Barton, Jr.

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It’s only human nature.  Our brains are hardwired to produce decision-making shortcuts based on patterns from our prior experiences. We want to simplify everything. 

And simplification is good– well, up to a point.  For example, lots of problems crop up when we try to apply the time-honored strategy of simplification to complex systems like the financial markets.  We want something to tell us what the market is going to do so we create or find simple stock market “indicators.”  I put that word in quotes because many characteristics of indicators for financial market performance indicate nothing at all; they’re merely interesting coincidences.

Today, let’s review an indicator that seems whimsical but has received the “royal treatment” by some very legitimate sources.   In honor of the annual issue hitting the news stands this week, we’ll cover The Sports Illustrated (SI) Swimsuit Indicator and see what we can find.  Before we get to the indicator, however, let’s review some basics about cause, effect, and coincidences.

Questionable Cause

In the past, we’ve looked at some indicator’s characteristics and other so called predictors that seemed to lead to an outcome but really didn’t.  We classified these under the logical fallacy known as “questionable cause.”  The Latin version of this fallacy can be stated, “Post hoc, ergo propter hoc” translated as, “after this, therefore because of this.”  In short, every correlation that can be discovered did not come from a cause and effect relationship - some are mere coincidence.  We have debunked many “indicator” myths in this space before including “The first 5 days of January,” and the related “January Effect.” 

Of course, most of the indicators that tie two completely unrelated things together are discussed tongue-in-cheek.  People certainly talk about the “Super Bowl Indictor” without any seriousness. (This indicator holds that a win for an original NFL team is a bullish sign and a win for an old AFL team is bearish.) 

The depth of data being offered for the SI swimsuit indicator, however, shows that people are giving it more than a just a casual look.  In fact, the highly reputable Bespoke Investment Group prints an annual summary of the indicator, with data going back to 1978. 

So, without further ado, let’s take a look at (pun intended) the SI Swimsuit Indicator.

How the SI Swimsuit Indicator Works

Out of the 35 years Bespoke analyzed, an American model has appeared on the cover of 18 issues and the other 17 showed a model from another country.  In the years when an American model appeared on the cover, the market averaged 14.4% returns with an 88.9% occurrence of an up market for that year. 

So, a cover with a U.S. model gives the bulls an edge.  In addition, if U.S. model Kate Upton’s second straight appearance on the magazine’s cover is any indication (and we have no reason to believe it is…), then this should be another banner year for the bulls.

Of course, the small size of the two data sets tell us that, from a statistical standpoint, it doesn’t matter who shows up on the SI swimsuit issue cover.  For starters, the standard deviation of the S&P 500 returns over the last 35 years is a whopping 16.7%!  Which means that the minor variations of a few percentage points, as shown in Bespoke’s data, are totally meaningless. 

Well, at least the folks at CNBC have something interesting to talk about for a while as the market continues to grind slowly higher and higher…

Next week, we’ll continue to dig more into the uncertainty inherent in trading and investing in our series on Luck and Trading. Until then, I welcome your comments and feedback.  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".

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