Tharp's Thoughts Weekly Newsletter

• Article: Understanding Your Motivation by Van K. Tharp, Ph.D.
• Workshops: Workshops Added for November
• Tip: Slow Grinding S&P Bull — Stats And A Chart for Guidance by D. R. Barton, Jr.
• Matrix Contest: Enter For a Chance to Win a Free Workshop!

$700 Early Enrollment Discount Expires Next Week on
Ken Long's Day Trading Systems Workshops

Dr. Ken Long begins this workshop by teaching you two day trading systems, which he calls the Frog and RLCO. Through his lectures you will gain an understanding of each system's interpretations of the market's movements, rules, and variations.

Ken has been a long-time active trader and observer of the markets. He's noticed the consistent habit of prices for particular issues to move a certain amount. Much like a frog jumps when it hears a loud noise, prices tend to move a certain amount before they pause or move again. Different frogs are able to jump different distances, but each one tends to jump about the same distance as it did last time. Would it be possible to know about how far a stock’s price would move on any given day?

Learn how to trade these two great day trading systems, with Dr. Ken Long's expert guidance. After three action-packed days of instruction, you can opt to stay an additional two days and trade these simple-yet-profitable systems live! Students will see in real-time how these systems work in the markets, with an experienced and successful coach in the room.

Learn More....

To register or to see the full workshop schedule, click here.

Feature Article

Understanding Your Motivation

by Van K. Tharp, Ph.D.

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Elon Musk might be one of those people who could be a great role model for anyone. First, he founded and developed Paypal which he then sold to eBay. By doing so, he made himself incredibly wealthy when he was in his early 30’s. How many people can do that? But that’s not what distinguishes him.

What’s more impressive is to think about Elon Musk today. He is only 43 years old. He is the CEO of Tesla Motors, Inc., Space-X, and Solar City. All three companies are based on a vision of the future. Tesla and Solar City are based upon a vision of better energy, reducing pollution, and saving the planet. Space-X is built upon a vision of private enterprise building a colony to live on Mars. The last vision really blows my mind that anyone would even consider it, much less start a company with that as the objective.

In my recent 8,000 mile trip in my Tesla, I visited the Tesla Factory in Freemont CA. Most people cannot tour it, but owners are given that option. At one point, we were shown a four story press (I think it exerted 45 tons of pressure) that originally cost some American car company about $60 million. Musk bought it for less than 10% of that but then had the task of getting it from Detroit to California. The company that built the press said they would have to take it apart, move it and reassemble it which they estimated would take about a year. That was unacceptable to Musk so he had his own people do it in about 3 months. Now think about the decision making and know-how that goes into accomplishing that feat. How does someone who founded a finance company handle that? But he did.

What does a solar company, or a state-of-the-art auto company, have to do with a privately owned space exploration company? Think of the kind of money that it will probably take to put a human on Mars, much less built a colony! And where does that money come from? How many trillions of dollars did our government spend to put a few men on the moon, which is much closer? Yet Musk has said that when he has the Model 3 in full production he will probably step down as the CEO of Tesla motors and devote most of his time to the Mars project.

So how do you explain a man like Elon Musk? What separates him from the rest of us? Imagine his vision and his ability to get things done. And when you think about that, you begin to get into what’s important in Self-Actualization Psychology. Self-Actualization psychology is very important to us at the Van Tharp Institute. Our goal isn’t to fix broken people but to take exceptional people, give them a road map, and show them what they really can do. Imagine the impact on the world if we could unleash several more Elon Musks.

In the 1950’s, a young college student named Abraham Maslow noted that two of his professors could not be explained by anything he’d learned in psychology. They were not driven by the needs most people seem to have. Maslow basically began the Human Potential Movement in order to understand these sorts of people. He wanted to understand people who really excel rather than try to understand abnormal, neurotic people, which was the focus of psychology at that time.

Maslow developed what he called a Self-Actualization Pyramid that’s shown in the figure below. The basic need for all humans, shown at the bottom of the pyramid, is survival. You need air, clothing, shelter, sleep, food, and water. And when you have those needs met, you can stop thinking about them and move up to the next level.

The second level of need for Maslow is security. Here you are concerned about safety from the elements, from predators, from other humans, etc. for yourself, for your family and for your property. The need for safety will predominate your life if you don’t have it as is the case in many war torn countries around the world. Once you have it, however, you stop thinking about it and move on up the scale.

The next level of need is social. It’s the need for love, intimacy, friendship and companionship. You want to feel valued by others.

Lastly, is the need to feel good about your self — to have self-esteem. Here you want the respect of others, confidence in what you do, and have achievement.

None of these levels, however, explain Elon Musk. He’s accomplished so much the first decade and a half of his adulthood — way more than even most multi-millionaires accomplish in a lifetime. At this point, he’s a billionaire - but he keeps going. Why?

Furthermore, Musk is working to accomplish things that most people would think were impossible. For example, even five years ago, I could not imagine the existence of the Tesla P85D I now own, much less driving it 8000 miles across the country. But I did and it’s all possible because of Elon Musk.

Maslow calls the first four levels on the pyramid D-needs which stands for deficiency need. Once a D-need has been satisfied, the motivation for it goes away — it might be called purposeful. Beyond the D-needs, however, Maslow discovered another type of motivation — Self Actualization. This is what Maslow would call a “BE” need or an expressive need where you are not trying to get anything.

As shown in the figure, the need for self-actualization involves morality, creativity, spontaneity, problem solving, and the acceptance of “what is.” These needs express what’s inside of you and they never go away. They are what happens when your consciousness moves above a certain level. Self-actualization happens when you awaken to your inner world and reflect that in the outer world.

When you satisfy a BE-need, you get more expansive. The more that awake or self-actualized people satisfy their BE-needs, the more they have. They just seem to expand internally. And this is the essence of real abundance. Real wealth comes from inside.

I’m seeing this now in the Super Trader program. Super Trader 1 is designed to awaken people. To help them become happy for no reason and to find their purpose. And once they have this (which is real wealth) then they can express themselves through trading or whatever they want.

Let me give you my own example of this. Sometimes I hear people comment that if Dr. Tharp knows so much about trading why doesn’t he just trade? So notice the assumptions here. It assumes that the be-all-and-end-all of life is money. Get a lot of money and that’s all that’s important. Make the Forbes 400 list or be #1 on the list.

Well, I’m very well-off. I certainly have enough money and if that’s all that was important to me, I’d retire tomorrow. Why would I want to keep working? Some of you might say for more money, but what’s the point?

Instead, I’m motivated by a vision and a purpose. Our company’s mission is “Transformation through a Trading Metaphor.” And what really excites me is when I hear over and over again … “You have changed my life, Dr. Tharp, thank you so much.” And I think it’s what drives every member of my staff. They all are extremely gratified by the comments that we continually get of this nature. It drives us. Furthermore, we don’t stop when we hear it once; we want to share it with more and more people.

When people have D-needs, they want therapy and hypnosis or a magic cure. A number of our clients are at this level. They can’t understand why they can’t pull the trigger, make enough money, or find a system that fits them. They want a great trading system that will make them a ton of money right now. And if this seems to describe you, just notice it, realize that it is. It’s okay to be there, but you probably won’t find a Holy Grail system to make you a ton of money.

Do you want to know a secret about the Holy Grail? It is inside you. You have an internal map that helps you navigate in the world. The map is not the territory. The map will never be the territory. But for people on that level, it’s important to help them understand that they have all the resources that they will ever need and that those resources come from giving themselves more options with their internal maps.

Let me give you a simple example of this kind of change in one’s internal map:

You come into trading wanting to be right and not willing to tolerate losses. If, however, you transform your internal map and understand the importance of reward-to-risk, then you realize that you can be wrong 7 times out of ten (each a -1R loss) and still make money if your wins are +3R or bigger. For example, the net result of those trades is +2R ((7x-1R) + (3x+3R)). If each of the winning trades, however, happened to generate +10R, then the net gain becomes +23R. So you can see how a simple change in your internal map can change everything. In both cases you make money yet are wrong 70% of the time. We have numerous examples of these Tharp Think internal map changes detailed in my book Trading Beyond the Matrix.

When you make enough of these kinds of changes, then you start to move up the hierarchy of needs and at some point you become happy for no reason. You realize that abundance comes from inside. This sort of person has the potential, especially if it is achieved early, to be another Elon Musk.

Perhaps you now understand why we focus on psychology and transformation. Also, if you ever wondered why we have Super Trader 1 (psychology) and then Super Trader 2 (application), you might see why now as well.

Self-actualizations actually involves two processes — 1) making rich internal maps with lots of meaning and 2) translating those maps into action. But that’s another story.

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 matrix.vantharp.com.

Update to the Super Trader Program

Recently, Dr. Tharp announced a price increase coming soon for the Super Trader Program. And, you still have time to apply and be accepted into the program at the current rates!

There are two opportunities to attend qualifying workshops in order to be considered for the program before the price increase takes effect. One is the Oneness Awakening Workshop in just a few weeks and the other is Peak 101 in August.

Click here to read more and see the deadline for the old prices...

Workshops

Combo Discounts available for all back-to-back workshops!

See our workshop page for details.

Trading Tip

Slow Grinding S&P Bull
— Stats And A Chart for Guidance

by D. R. Barton, Jr.

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Traditionally, the markets have two periods of low volatility each year — the end of summer and the week between Christmas and the New Year. This year, though, the markets didn’t even wait for the end of summer. By the official first day of season, we had already been stuck in a morass of sideways market slumber that hasn’t been seen in 21 years.

Market technician Ryan Detrick tweeted the following chart which was then picked up at Business Insider:

As you can see, the last time the S&P 500 went eight weeks in a row with no Friday close to Friday close moves of at least +/- 1% was in early 1994! I was really surprised that we didn’t experience one of those long stints in the grinding bull of 2003 — 2007.

Yet Another Measure of Our Slow Markets

The folks over at Bloomberg chipped in with a chart that shows the number of days of 2% moves in the S&P 500 during the first half of the year. Enjoy the symmetry of this data:

So if you can’t exactly tell from Bloomberg’s graph — we’ve had zero days with 2% moves in the S&P this year.

One thing that strikes me is how well this graphic describes the “breathing of the market” — by which I mean the transitions from low volatility (2003 — 2007 grinding bull) to high volatility (2008 — 2009 great recession) and back to low (our current grinder).

Just So We Don’t Get Lulled to Sleep by Low Volatility…

One thing is for certain. Periods of low volatility like the one we’re currently enduring will give way to periods of high volatility. And then we’ll go back to lower volatility. Lather, rinse and repeat.

To be fair, low volatility periods have typically lasted for a very long time over the past decade and a half. In this slow moving market, where can we turn for some guidance on market direction? Let’s go to a chart of the S&P 500 cash index:

Since the October 2014 lows, price action has stayed inside a parallel channel that markets the intermediate slow grinding trend. And in the even shorter term:

The market is slowing by bits. Violation of the smaller inner channel will give us some guidance of market direction, but until the outer channel is broken, we’re stuck in a sideways mildly upward market that will continue to frustrate trend followers.

Your views and comments are always welcome — please send them 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".

Matrix Contest

Enter the Matrix Contest 
for a chance to win a free workshop!

We want to hear about the one most profound insight that you got from reading Van's new book, Trading Beyond the Matrix, and how it has impacted your life. If you would like to enter, send an email to [email protected].

If you haven't purchased Trading Beyond the Matrix yet, click here.

For more information about the contest, click here.

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