A Message from Van K. Tharp About His Peak Performance Home Study Course
Dear Traders and Investors,
Many students want to know, what is the best possible step I can take to expand my understanding of the best trading practices. By far, my recommendation is my Peak Performance Home Study Course. At $795 my students tell us over and over what a bargain it is when compared to the many thousands of dollars the knowledge gained from the course saved them in trading mistakes.
But for many, there is a lack of understanding of exactly what the Peak Performance Home Study is about. So today I want to share with you this excerpt from the course. I think it will help shed some light on how you can benefit from this course.
I believe that each person produces the results he or she gets in life. This occurs in all aspects of life, but it is especially evident in trading. The results you get in the market are exactly what you program yourself to get. Most traders battle the market for many years before they begin to come to this conclusion. More conservative investors seldom reach this conclusion. In a sense, you are lucky because what happens to you in the market is a terrific mirror to what is going on inside your head. People in other walks of life also have such mirrors, but they are not always so obvious.
My goal in developing the Peak Performance course is to teach you how to make money in the markets the easiest and most painless way possible—by developing a sound game plan and the discipline and self-control to carry it out. In the process of doing so you will learn how the best traders and the most seasoned investors think. You will not be able to duplicate their success unless you can duplicate their thinking.
I am most interested in the qualities of successful people that produce lasting results. Those qualities, it turns out, are also the qualities that generally produce successful lives. As a result, if you develop the kind of self-control and self-understanding necessary for market success, you probably will also have a more successful and happier life. I think that’s a wonderful by-product of this material.
IS THE COURSE MATERIAL RIGHT FOR YOU?
You might ask the same question about physical exercise. If you do it, you’ll have more energy. You’ll feel better, and you’ll perform better. You can probably get along without it, but not without a significant sacrifice in the quality of your life. Exercise is physical conditioning. This course is a form of mental conditioning. You can make money without it, but doing so will require more effort, and you will probably sacrifice much of your personal life.
When you first read through the course, you might think that the material only applies to speculative trading. I sometimes get calls from people who purchase the course saying that they only invest in mutual funds so the course material does not apply to them. Others claim that the course material doesn’t apply to them no matter what kind of trading they do. When I first created the course, about 90% of those who purchased the course were commodity and option traders, so you will see specific language in the course geared toward them. However, the exercises, the self-insight, and the game plan development are appropriate for all investors and traders. The material is equally applicable to day traders in futures and to conservative long-term mutual fund investors.
For example, people think that successful speculators and conservative investors have differences in terms of the risk they are willing to take. That difference may apply when losing speculators are contrasted with conservative investors. But the top traders abhor risk and take very little. That’s one reason why they last and make consistent profits.
Others may think that speculators differ in terms of decision-making needs. Again, this is a misconception. The development of a game plan and the discipline needed to carry that plan out are equally applicable to the floor trader and to the investor who doesn’t want to touch his investment for 10 years. In fact, sometimes the latter individual will use his long-term orientation as an excuse for not needing a game plan. Yet if he puts his money into an investment that does not perform well and keeps it there under the guise of having a long-term orientation, then he is making just as big a mistake as the day trader who decides to hang on to a loss overnight. Unfortunately, the long-term trader takes ten years to make a mistake and may not even realize that it is his mistake at the end of ten years. If a mistake lasts ten years, you may only get a few chances to repeat it. Since people tend to repeat mistakes several times, he may run out of time before he can correct it. The day trader who hangs on to a loss may get forced out of the market and lose all his money, but sooner, rather than later, he realizes that he has made a mistake. Since he still has time on his side, he can rebuild his capital and correct those mistakes.
Every other important aspect of this course—stress management, internal conflict mastery, developing useful beliefs, goal setting, decision making biases, etc.—applies to all facets of investing and trading. If you understand and apply these concepts, then you can make a lot of money consistently. If you neglect these areas, then you probably will join the crowd and lose money. Thus, whatever kind of trading or investing you do, this course is applicable to you. It is a form of mental conditioning. You can probably do without it, but consistent application of the principles can dramatically improve your life and your finances.
If you call yourself an investor, rather than a trader, then I would suggest that you switch. A trader is someone who is concerned about market direction, market timing, and obtaining the best possible position. He might be buying a stock market index or IBM, while shorting the Swiss Franc, and buying a gold position. In contrast, the investor is always on the long side of the market. He concentrates on the investment that has the best possible chance of outperforming the market, and he tends to hold on to positions. When he makes a major change in position, it usually amounts to how fully invested he should be under current market conditions. In my opinion, the trader has more choices (profit opportunities) than the investor. Since successful people tend to be successful because they give themselves more choices, I strongly suggest that investors give themselves more choices by playing both sides of the market—in other words, become traders.
Throughout the remainder of this course, I will primarily use the word “trader.” However, I am generally referring to both traders and investors when I use it. In addition, since males constitute about 90% of the readership of this course, I will generally refer to traders with masculine terms such as he, him, and his. This in no way reflects on the ability of women to be successful traders.
HOW YOUR COURSE IS ORGANIZED
SAM, the Trading Tiger, will assist you on your journey through this volume and through future editions of subsequent volumes of this course. SAM is now one of the world’s top traders, but he also lost all of his trading capital when he first began trading. As a result, he understands your problems, and he can also show you how to become more successful.
The complete course consists of five volumes and four audio CDs. In addition, you may purchase a personal profile of your psychological skills and weaknesses as an investor/trader, which we call the Investment Psychology Inventory Profile.
The Five Volumes. Volume One provides you with a basic understanding of the course material, how to use the course, and how to use risk. You will also explore the psychology of money management (Position Sizing™) and risk control. Lack of understanding in these two areas is the downfall of so many traders.
The second volume is a complete stress management course. Most people worry about stress because of its potential threat to one’s health. In Volume 2, you will learn that stress has an immense effect on human performance, especially trading performance. You will be able to evaluate the areas in which your stress is high and in which your stress protection is low. Volume 2 provides you with specific instructions for managing stress. Stress management is important for successful trading, but I also recommend that you find the cause of your stress and eliminate it. In most cases, stress results from internal conflict. You will learn specific techniques for dealing with internal conflict in Volume 3.
The third volume deals with the beliefs and attitudes necessary for successful trading. In addition, you will learn about unconscious internal parts or personalities that you or any other normal human being may have. Having all of your parts working together is important to successful trading and eliminating the possibility of self-sabotage.
You will learn how to develop discipline and self-control in the fourth volume. Having the right mental state is essential for success in any area of endeavor. In Volume 4 you will learn many techniques for developing the right state of mind for the task at hand. In addition, I provide specific suggestions for dealing with compulsiveness—the most deadly mental state for traders. Volume 4 will help you evaluate whether compulsiveness is a problem for you and will teach you what to do about it.
Finally, in the last volume, you will learn how mental strategies and decision biases influence your trading. This volume will provide specific techniques for evaluating how you make decisions and how you can improve that process. Volume 5 also provides you with the guidelines for developing a complete game plan for trading, using all of the principles you will have learned in the course.
The Four CDs. The four CDs to the course contain exercises designed to supplement the material in the books. Each CD has a specific purpose. The first CD teaches you how you think and gives you the opportunity to evaluate your capabilities in each type of thinking. In addition, CD 1 provides an introduction to the concept of internal parts or personalities. Listen to CD 1 regularly, follow the suggestions provided, and you will begin to understand your parts better and the messages they give you.
The second CD is a relaxation CD. If stress is a problem for you, then play CD 2 a few times and discover how easy relaxation can be. Listen to it every day for two weeks, and you will discover that you can relax at will.
The third CD is designed to keep you from repeating mistakes. A mistake occurs when you do not follow your rules. It has nothing to do with making or losing money. CD 3 is designed to be played when you discover that you’ve made a mistake, and you want to avoid repeating it. Once you have a set of tested rules, use CD 3 as part of a daily debriefing whenever you do not follow them.
Finally, the fourth CD is designed to give you confidence in yourself. Play it regularly, and you will be able to access confidence whenever you need it. However, only certain traders need confidence. If you tend to be compulsive, then you should avoid CD 4. As a result, I recommend that you avoid using CD 4 until you have completely finished the course.
HOW TO USE THE COURSE
You are about to begin a journey of self-evaluation and self-discovery. Although you may have some initial shocks about where you are now, proceed with enthusiasm and commitment, and you will find the journey very rewarding. Your objectives in going through the course are to develop insight about how you produce your trading results, to devise a complete game plan for making money, and then to use the course and your game plan to continue to improve.
People frequently ask me how long it takes to go through the course. If you are overweight, how long does it take to get yourself in shape through diet and exercise? Only a few months if you begin a daily conditioning program and stick to it! This course is a daily conditioning program for your mind. You can probably make a dramatic improvement in your trading in a few months of work, but you must continue to apply the principles. Would you expect your body to stay in shape if you stopped exercising? No. Similarly, you cannot expect your mind to perform well in trading if you stop the regular program we recommend in this course. This course provides you with a form of coaching to help you achieve peak performance. It is a lifelong process of conditioning.
The first step in the journey, unless you are a novice to the markets, is to take the Investment Psychology Inventory. It will provide you with your first insights. Your scores, once you enter them into the spaces provided earlier in this chapter, will also guide you to the most essential elements of this course for you.
You can start the course once you have sent the test to us for scoring. Begin by going through Volume 1 in detail. Whenever you encounter an exercise, do it immediately. If you proceed in the manner suggested, most of you should have your profile back by the time you complete this volume.
If you have not made money consistently in the market, then I recommend that you immediately suspend trading (or at least avoid opening new positions in the market) until you have completed the course and developed a written game plan for trading. YOU WILL PROBABLY SAVE YOURSELF THOUSANDS OF DOLLARS BY FOLLOWING THIS ADVICE. On the other hand, if you consistently make money and you just plan to use the course for improvement, then continue trading.
Once you have your profile, you can proceed with the course in two ways. The best method is simply to go through each volume in order and complete each exercise when you get to it. When you have completed the five books, then devise a complete game plan for your trading. Once you have that game plan, ask yourself if you could convince me (or someone else who might have an astute eye for low-risk plans) to invest in you. If you think the answer is “yes,” then resume trading. Otherwise, continue to work on it.
The next best way to complete the course is to concentrate on your weak areas based on my recommendations from your profile. Do all of the exercises in those areas and then read the remainder of the course. Once you finish the reading and exercises, develop your complete game plan that would satisfy the above criteria. When you have it, then resume trading.
You are not finished with the course when you complete your game plan. In fact, the course will have the most value for you once you have your game plan. At that point, you can begin to apply the principles in the course most effectively. Start using a trading diary, and use the results of your trading as a means to improve yourself. As you trade, you will discover new insights about yourself. You can use the course material to avoid repeating mistakes and to develop more self-control. Traders who get the most out of the course continue to review the books regularly.
Your game plan must involve feedback so that you can evaluate mistakes and continue to work on becoming a more effective trader. As a result, the course is something you should be using for the rest of your life. I recommend that you redo the course exercises at least once a year.
The course will be of little value to you if you just skim the books or just put it on the shelf as reference material in case you need it someday. Even if you read the books thoroughly, but avoid doing the exercises, you will be cheating yourself. TAKE THE TIME TO DO EVERY EXERCISE. In fact, once you’ve gone through the course the first time, notice the parts of it that you tended to neglect or put off. Those portions of the course are probably the ones that you need to work on the most.
SPECIAL INSTRUCTIONS FOR NOVICE TRADERS
If you are a novice in the investment world and have chosen to go through the course prior to entering the market, then you are exceptional. You will probably do very well in the trading business. Most people choose to make mistakes and lose money before they realize that they are the cause of those mistakes.
My first recommendation for the novice trader is that you do not trade until you go through the course step-by-step and develop a complete game plan. DO NOT ENTER THE MARKET UNTIL YOU HAVE DONE SO. Some exercises, such as the compulsive trader exercises, will not apply to you at first. Just skip those and concentrate on getting as many insights about yourself as you can, so that you can develop an effective game plan. That game plan will help you shortcut many mistakes, minimize losses, and earn consistent profits.
Your initial game plan will probably have some weak areas because there is no substitute for real market experience. Nevertheless, you probably can circumvent many problem areas, and your initial game plan will provide a solid foundation for personal growth.
Once you have a game plan, make about 20 to 40 (even fewer if you only plan to make a few trades each year) low-risk trades. These should involve a very small percentage of your overall capital (e.g., 0.5% per trade). If you invest in stocks, then consider buying 10 shares. You may lose money even after you’ve completed a game plan. That is part of your education as a trader. Why lose large amounts of money when you are just beginning? Even if you have a large trading account, only risk small amounts while you are learning. Learn by making mistakes that do not cost you much money. Under-trade until you have a proven game plan!
After you have completed your 20 to 40 low-risk trades, then stop and re-evaluate. If you have lost money, consider those trades to be part of your education. If you have made money, then re-evaluating yourself is probably even more important. A big ego is the worst thing you can bring to a trading business.
Consider taking the Investment Psychology Inventory as the first part of your re-evaluation. Also, go through the course again. At this point, you will have the foundation and experience to build a solid game plan. If you follow this method of growth and education, instead of the “School of Hard Knocks,” then you will probably save thousands of dollars in your tuition.