Author’s Note: I’ve written a paragraph or two about Van below. He was my friend, business partner, co-author, colleague, teacher, mentor, and supporter. I didn’t know at the time that I would work with Van and his amazing team for a continuous span that is now into a third decade. But that’s how Van has always impacted people. I hope and pray that, in whatever way you got to know Van, his gentle and kind spirit impacted you as well. I look forward to sharing more about this extraordinary man in future articles. There’s so much more to share…
When the instructor walked into the training room at the Crabtree Embassy Suites in Raleigh, NC, I couldn’t have been more surprised. It was the first time I laid eyes on Dr. Van K. Tharp. He was an unassuming guy. And soft-spoken to the point of me having to strain at times to hear him. But during that first day I spent with Van, his other-worldly serenity melded together with a confidence of delivery and absolute mastery of material. So much so that I was inspired—on the spot—to make a complete career change.
Soon thereafter, at another Embassy Suites across town, I had multiple personal and financial market breakthroughs – all in one weekend. To say that Van’s Peak Performance 101 Workshop changed my thought process is a true understatement. Perhaps the most important thing that Van put in my head that weekend long ago was that the “Tasks of Trading” are important by themselves, but when applied together, the whole becomes so much more than the sum of the parts.
I still apply that concept both in my life and in the markets. I distinctly remember how getting back to the basic building blocks helped me when coaching my son’s 10 and 11-year-olds basketball team. We were behind by four points to a team that had no business beating us. We were losing to a much taller, much slower team. As coaches often do, I gave a pep talk to the team at the end of the first quarter. I told them that it was the little things that were hurting us. We missed a few free throws. We didn’t hustle after loose balls. And we made some bad passes when players were open for shots. Minor things. Any one thing by itself was only a small problem. When added up, they meant that we were losing a game we should have been winning.
My son Josh and his teammates were classic underdogs—small guys and gals in a sport for giants. But they had speed, they had hustle, and they had heart. And they were undefeated. Undefeated because we had a plan that worked and because they almost always got the little things right.
It was fun to watch them play, actually. They looked like a bunch of little yappy dogs chasing the big dog that has the bone. And more often than not, they took the bone away. But not during this particular night’s first quarter…
Our team was getting complacent. They weren’t expending the extra energy needed to dive after the ball on the floor. Not concentrating on free throws. So, I reminded them what got them here—doing the minor tasks well. “Do one little thing well,” I urged each of them, “And the score will take care of itself.”
Soon it happened. A loose ball was ours. A crisp pass was thrown. Points started to add up.
This is the essence of the Top Tasks of Trading. Applying them can be just like that basketball experience—the minute we lose concentration on the minor stuff, those seemingly small things can turn into big losses.
Success: The Sum of Details
In trading, you need to have a low-risk idea that gives you an edge. But even with such a plan, you can watch profits evaporate or losses mount if you don’t get some of the minor parts of trading right.
Van was the first person to introduce me to a systematic way to apply the “little things” —the Top Tasks of Trading. They made a world of difference for traders and investors for decades. Here is one of those top tasks that Van taught me which I had never heard or seen laid out clearly before I met Van.
Practice the Fine Art of Stalking
Stalking for traders and investors is very similar to the stalking you see when you watch lions hunting on the Discovery channel. This is what happens after we’ve identified the prey (the instrument we’re observing—a stock, commodity, option, etc.) and are ready to pounce. The timing of our pounce (when we actually enter the trade) can make a big difference in our entry price. Here are the two most important points to me about stalking that I learned in Peak Performance 101 all those decades ago and still practice today.
- Decide that stalking is a good practice. This is the first and most important step – and most people skip it. Lots of new (and seasoned) traders decide that they will try on one of The Top Tasks to see if they like it. Don’t do it! Commit to The Top Tasks. They provide your daily and weekly roadmap with good trading practices.
- I can still hear one of the most important things that Van taught me: I don’t trade the markets. I trade my beliefs about the markets. And if I don’t believe that stalking is as important as other top tasks, I’ll skip it right at the moment that I most need it.
- The first thing that many people do when a trading idea they like shows up in a screener or a chart—they pounce! They enter right away. The excitement over the new pick is too great.
- Or they pounce quickly because, in today’s instant gratification society, the Fear Of Missing Out (FOMO) is a driving force for many trade and investment entries. Diligently applying stalking is the one of the best antidotes for a FOMO mindset. And that’s why this foundational top task is more important today than ever.
- Check that your entry strategy, indicating when to pounce, is based on your system’s style. Will you buy pullbacks or breakouts? Choose which one you’ll follow and only enter when the stock hits your area (a support level for a pullback or breaks through resistance for a breakout).
- For longer-term traders and investors, (those who hold stocks for several months or longer), one of the great stalking strategies is to wait until a stock moves in your direction before buying it. Van showed this clearly in our first book that we wrote together, Safe Strategies… We gave some numbers on how this simple practice can greatly improve long-term trading results.
To close the loop from the basketball game I described earlier—Josh’s team did the little things well for the rest of the game and beat a team that was on average half a foot taller per player. You too, can fell giants by keeping an eye on the little things that make a big difference.
As always, your thoughts and comments are always welcome. Please send them to drbarton “at” vantharp.com
Great trading and God bless you,
D. R.