SUPER TRADER by Dr. Van K. Tharp Introduction:The Five Steps to Consistent Profits(2) Part 1: Working on Yourself Everything you do is shaped by your beliefs—in fact, your reality basically is shaped by your beliefs. What’s a belief? Every sentence I’ve written (including this one) reflects my beliefs. Every sentence that comes out of your mouth reflects your beliefs, and your beliefs shape your reality. Even who you think you are is shaped by your beliefs.Let me give you an illustration of how this works. My niece from Malaysia came to live with us when she was 19 years old (my wife and I were putting her through college in the United States). After she’d been with us for a year, one day she said to me, “Uncle, in my next lifetime, I would like to be born beautiful and talented.” My niece is very artistic (she sailed through an art course) and sings like she was born to sing. Coming from a liberal arts background, she got a degree in biomedical engineering, graduating cum laude. I think she passes the talent criterion with flying colors. As far as beauty, I’d describe her as one of the most stunningly beautiful women I’ve ever seen, and everyone who meets her comments on how beautiful she is. Thus, here was an incredibly beautiful and talented woman who because of her beliefs didn’t think she had those qualities at all. Your reality is shaped by your beliefs. By the way, I’ve been working on those beliefs of hers since she’s been living here, and she’s finally coming around.Similarly, who you are is shaped by your beliefs about yourself. In addition, you do not trade the markets. Instead, you trade your beliefs about the market. One of the key aspects of working on yourself is to examine your beliefs to determine whether they are useful. If they are not useful, find beliefs that are. This is a key aspect to working on yourself. You probably will never be free of limiting beliefs or all aspects of self-sabotage during your lifetime, but I consider this step complete when you transform about five very limiting aspects of your life and feel very differently about each one. Once you’ve accomplished five such transformations, I consider you capable of generally overcoming the future roadblocks that may come up in your trading. Part 2: Developing a Working Business Plan The business plan part of trading includes step 1. In fact, a good business plan includes a thorough examination of the person who is doing the trading: beliefs, issues, strengths, weaknesses, goals. Everything you can think of about yourself should be included in this document.However, the plan also should include many other important things: Your assessment of the big picture and how you’ll keep up with it. For example, I wrote about the possibility of a huge secular bear market in 2001 when I first started working on my book Safe Strategies for Financial Freedom.1 I decided that the big picture should include (1) a general assessment of the stock market in the United States and worldwide, (2) a general assessment of the strongest and weakest areas of the world for investments, (3) a general assessment of the strength of the dollar (or your home currency if you are not using the U.S. dollar), and (4) a general assessment of inflation or deflation potential in the future. I also developed ways to measure each of these elements, and my way of keeping up with them is to write a market update on the first Wednesday of each month in my newsletter. Business systems: how you will do research, monitor your data, market yourself (to your family or clients), monitor yourself, manage your cash flow, and keep track of your trades and performance. Basically, running a trading business involves many systems other than trading systems. To have a successful trading business, you’ll have to master those other systems. Several strategies that fit the big picture and that work when conditions change. For example, strategies that work in volatile bear markets (e.g., 2008) are quite different from strategies that work in quiet bull markets (e.g., 2003). A worst-case contingency plan so that you’ll be prepared for anything major that could upset your trading business. This sort of planning often takes as long as six months to complete.
Posted on: Sat, 18 Oct 2014 09:06:10 +0000
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