Below is another article written by Dr. Van K Tharp, reprinted with permission.
He is a well known figure in the world of financial markets. I find his works to be very useful to my trading venture.
So, traders out there, do read this article and absorb as much as you can.
Make an Honest Self-Appraisal
By Van K. Tharp, Ph.D.
Think about the last loss you had in your trading. What caused it? Who was responsible for it?
If your response was anything other than yourself (e.g., the market, my broker, bad advice, etc.), then you are not taking responsibility for your results. And the consequences of not taking full responsibility for your results, is that you will repeat mistakes over and over again.
On the other hand, if you are willing to accept total responsibility for your investment results, you begin to understand all of the mistakes that you’ve made and then you are able to correct them. The market will become your Financial University. Moreover, you will realize that you are the most important factor in your trading or investment success. When you do that, you are way ahead of the crowd.
I once had a call from a gentleman in England who had been working with my Peak Performance home study course. He said, “I’ve been working through the course for over six months. It’s helped me realize a lot about myself, but there is one thing it hasn’t done. It hasn’t given me a positive expectancy system.” The ironic thing about that statement is that I had not even attempted to give a methodology in that particular course. That course is about how to become a peak performance trader/investor not system development.
There are several reasons for focusing on behavior rather than systems:
If you want to be good, you must design something that fits you. That is only possible if you design the methodology.
Psychology is far more important than methodology. In fact, psychology is part of methodology. For example, when we attempt to help people develop a reasonable method that works, they resist it strongly because they have so many biases that keep them focused on the wrong aspect of trading—areas that have nothing to do with success. And it is very difficult to show them the correct direction.
The best thing you can do for yourself to increase your income from the market is to determine how you are blocking yourself. This should be done at two levels. Whenever you develop a trading business plan a great deal of that plan should have to do with introspection. Take a look at all of your beliefs. Are they useful beliefs or do they hinder you in some way? What are your strengths and weaknesses? What about you can’t you see clearly because you are part of it? You should look at doing this sort of assessment at least once each quarter.
The second self-appraisal you need to make is at the beginning of the day—and perhaps even hourly throughout the day. What’s going on in your life? Are you ready to face the markets? How are you feeling? Is there some sort of self-sabotage surfacing in you? For example, are you starting to get too confident? Are you starting to get too greedy? Do you in any way want to override your system? The best traders and investors are constantly doing this sort of self-assessment. If you want to make more money in the market, then perhaps you should start doing the same.
About the Author: Trading Coach Dr. Van K. Tharp, is widely recognized for his best-selling book Trade Your Way to Financial Freedom and his classic Peak Performance Home Study Program for traders and investors. Visit him at www.iitm.com for a FREE trading game or to sign up for his free weekly newsletter.
Disclaimer: This article is not a specific nor general advice on managing or investing your money. This article does not constitute a recommendation nor does it take into account your investment objectives, financial situation nor particular needs.
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