Independent Trading: Pros & Cons

On rereading these I thought I must post them on the blog if I haven’t already.

 

Independent Trading: Pros & Cons

Sunday was "Independence Day" in the United States where we celebrate the birth of our country and declaring independence from Britain. It also got me to thinking, as I usually do on market holidays, how fortunate I am to be doing what I do for a living in this country. While America faces many, many challenges and uncertainties, I'm proud and happy I live here and thankful for the opportunities this country has provided me and my family!

In fact, there's probably no better time than the present to talk briefly about the pros and cons of being an "independent trader."

As someone who has worked independently for most of my professional career, you can say I place a tremendous value on "doing my own thing." As I've often said, at least for me it has been a combination of personal choice (what I want in both life and career) and also necessity (as I don't play well with others). Indeed, there are some tremendous positives for trading independently. After all, I wouldn't be doing this if there were not some significant advantages from doing so!

Here are a few things that first come to mind:

• As an independent trader, I set my goals and I'm in charge of my own destiny. I don't rely on any other person for how much money I make or how I make it. Other people's opinions of me are irrelevant to my own destiny. At the end of the day, bottom line trading results (not office politics) are all that matters.
• Most people in "normal jobs" don't have the opportunity to set out on their own and do something they really want and love to do and also make plenty of money doing it.
• I spend most of my time every day doing things I really like to do (trading, reading, researching, running screens & mentoring others). These are things I would do even if I were not paid to do them because it is what I like to do the most! Every day I plan my work on things I want to work on, not what others want me to work on. That level of professional autonomy is rare.
• The sense of accomplishment when you achieve success in the markets independently is unparalleled. There's nothing like finding and taking a good trade that produces lots of upside gain. This is especially true when that trade is unpopular and unforeseen by the herd.
• Through my research I've been able to learn about many things, many industries, many countries, and many people. At this point, I can have a conversation with just about anyone no matter what they do for a living or where they live because I know something we can probably talk about based on what I've learned and know about others.
• It is always interesting and I'm NEVER bored. It is so true there is no better drama on Earth than following and being a participant in the markets daily.
• There are no meetings. People, often in corporate America but in many walks of professional life, waste so much time on so many irrelevant things like business meetings. At least if I'm going to waste time, it will be something worth wasting it on!
• There is no commute or dress code. I fall out of bed at 5AM and go to work in shorts and a tee shirt. I don't have to dress up or even take a shower. In fact, I only own one dress suit and that's because I may have to go to an occasional funeral or wedding. Finally, I don't have to spend an hour or more in the car every day just going to and from work. That's a good way to live and work!
• I can live and trade from just about anywhere in the world. Although we have found a little slice of heaven living here in Southern Utah (Cedar City) where the people are nice, the weather is great, housing costs are low, plenty of excellent golf courses nearby, we have dozens of national parks for hiking within a day's drive, Vegas is not too far away, and so on - if and when we tire of it, we can move anywhere we want to and I can still earn a good living.
• Trading independently offers level of personal freedom that isn't present in most jobs. If I want a day off to play golf, help a friend, visit with family, I do it. I don't have to ask anyone for permission! However, offering a paid members-only website places some severe limitations on that freedom!

So, now I've talked about the positives, what are the downsides to trading independently?

While many people think I have a dream job and, in many ways I do, there's no career choice that doesn't also have its own set of unique negatives. Frankly, if most of you actually had to do what I do every day to reach your financial and career goals, I think quite a few of you would begin to question whether "trading for a living" is really the right way to go.

There are many misconceptions about trading out there primarily due to shady marketing practices by those who sell investment services and trading products. Many in this business unfortunately propagate to their own benefit the view that trading for a living is an easy way to get rich without any time or effort. The truth is that it can often be, and has been, a challenging career choice and one frankly that is less than ideal for many people I encounter.

As for the downsides, here are a few you should be familiar with if trading for a living is a career you seek:

• You've got to bring your A game to the table each and every day. There is no sitting in a cubicle playing solitaire, visiting with facebook friends, talking with others in the break room about fantasy football, etc. that is going to get the job done for you. Your efforts, whatever they may be, will be directly related to your bottom line returns!
• Past success means absolutely nothing. You are only as good as your next trade, your next week, your next quarter, etc. In addition, what you do next always has the potential to unravel whatever success you've acquired previously. Few careers offer you the potential for self-destruction so quickly the way trading for a living provides.
• The pressure to perform will create unbelievable amounts of negative stress and energy you'll have to deal with daily. Most people don't have to worry or fear that being wrong will cost them their paycheck. After all, just look at economists, bankers, and politicians!
• There will be little to no respect or understanding for what you do for a living. People will assume you're a "day trading gambler." Or, in my view, which is even worse, many idiots will express the view that they could also "trade for a living" if they decided to. This is true even in by those who've shown no consistent success in the markets on a "part-time basis."
• Working in isolation you'll often miss close human interaction and the lack of a competitive "team" like atmosphere. Also, building and holding outside friendships, especially for men later on in life, are often very difficult for those who don't meet a lot of people through their jobs.
• Sitting 12 hours a day every day at the computer will wreak havoc on your overall health and fitness. Many traders are overweight, have back issues, eyesight problems, etc.
• Like many highly skilled professions it requires constant education & learning. In many, but not all careers, once you've acquired a certain amount of skills and knowledge, little more is expected of you. In trading, you've got to always be in learning mode. In addition, what you think you know right now and what is working for you, will not someday in the future. That's the way of constant evolutionary state of the marketplace.
• You've got to be a jack of all trades. I've often said that if trading was the only thing I had to do, my life would be a whole lot easier. Instead, independent traders must spend time serving as their very own tax accountant and tech support guru. In my view, there's nothing worse than a hardware or software issue that takes you away from concentrating on the markets.
• There will be very long work days and work weeks. Those who say you can trade successfully in 10 minutes a week are liars and charlatans. Most independent traders put in between 50 to 60 hour work weeks and are considered "grinders" rather than trading "wizards." Remember, there are no holidays or weekends for professional independent traders - only more time to devote to charts, scans, research, and strategies!
• You've got to have money to make money. There are very high capital requirements involved in being an independent trader as it takes a lot of money set aside from your personal assets to produce a living wage for yourself and your family.
• Your "salary" will vary considerably based on things outside of your control like overall market conditions and how your strategy is in sync with the market. It is true, you'll make 90% of your income in 10% of your time. However, overhead costs will remain constant and there's nothing worse than having to grind out trades in an unreceptive market to "make the mortgage."
• Even when you make a lot of money and have experienced tremendous success, you've got to still live like a pauper. There are no golden parachutes, annual bonuses, etc. that are going to save you when you screw up in the future. And, trust me, you will screw up. You will make bad decisions. You will be on the wrong side of a trending market. It happens to everyone and it is never fun or profitable! Which is why when the sun is shining, we've got to always prepare for those future rainy days.
• Personal, family relationships can be difficult. Like most people, when things aren't going well, many will look for others to blame and take it out on their spouses and family members. Divorce rates are high among independent traders. The only way around that is to find endeavors that release this negative energy (like golf, hiking & daily exercise). In addition, I seldom see successful independent traders who don't also have a very strong family support structure in place. If your life is a mess, your trading will often be as well.
• Distractions at home will be both numerous and frequent. As independent traders who work from home, everyone else will think you can spare time for doing other things during the normal work day (i.e. like going to the grocery store, getting the house worked on, taking the cars in for repair, mowing the grass, taking kids to the doctor, doing laundry, etc.) In addition, there are things you'll want to do as well (like playing golf) when you should be looking through charts that are going to distract you constantly from achieving the results you desire.
• As an independent trader working a "zero sum game," nothing you do every day as a trader other than making money will be a benefit to others or society in general. While you will have plenty of opportunities to donate to charity in order to give back something, independent traders must work really hard at finding good and effective ways to make a "real difference" for other people. My late father once said to me that "when you die, the good Lord will ask you who on Earth you really helped freely and without personal gain. You better have a lot of names to give to him or you're going to be in big trouble son!" It is true - we all get caught up in our crazy game of beating the markets that we forget how others have to really struggle to "work for a living." Also, even the best of us fail to do enough to make a true, positive AND lasting difference in other people's lives beyond just donating some of our profits to charity.

While I know I've missed a few of the negatives and positives, I think this at least offers some perspective on what it means to trade independently as I have all of these years.

All in all, I have no regrets and I'm happy today as I've been in the past to do what I do for a living. Whatever you do, I hope you feel the exact same way and, if you don't - you have both the courage and conviction to make a real change for the better. Life is far too short for anything less than that!

The great thing about this country is that whatever you want to do, you're still free to do it. It is my most sincere wish that you enjoy and take full advantage of that freedom!

Posted by Kirk at 12:26 PM in Education | Bookmark | Feeds | Link | Email This

 

 

 

ONCE AGAIN THE DEBT MARKETS ARE LEADING THE WAY

I wrote this without thinking just feeling, it is what it is and I am not going to edit and check it:

 

I get the sense that trouble is around the corner, you are seeing with big time yield spikes in bonds across the globe, also you are seeing it with default insurance, I just came across this one

price of insuring against a potential U.S. default is spiking. Big-time. The one-year cost of insuring U.S. Treasuries is now over 0.37% — or 37 basis points.

My point is this feels like 2007 all over again, just like you had the calls saying that housing was a bubble, eventually you started getting people acknowledging that there was a problem but nobody was prepared to accept a worst case scenario, all the predictions were that there will be an adjustment but nothing epic. And so the reversal gathered momentum.

 

You get the same feeling at the moment with the sovereign debt crisis, everyone knows that it is there and that it is likely to be a problem but everyone just keeps thinking that someone else will solve the problem, like China is the cure for everyone or emerging markets are the future. Bulls…t Emerging markets are so far behind the technology boom all they have going for themselves currently is commodities and large uneducated populations.

 

Do me a favour one significant pullback in commodity prices will send these emerging economies back to their 3^rd world status, with disease and poverty and the all to present crime wiping out large portions of the population.

 

Sorry for my bleak outlook, but trouble is around the corner on an epic level. All that happened with the GFC round 1 was people became aware of tremendous financial insolvency. However, it only placed as a reference point to people changing their lifestyles it didn’t really have a meaningful impact in actual practise. The reason being, as people started comprehending the insolvency the central banks and government treasuries were able to create an optical illusion that kicked the can further down the road to serfdom. When the public who were awakened to the reality of insolvency in round 1, realise that all they have been living though is a failed Chapter 11 then the finale, round 2 of the GFC is likely to finally penetrate a much deeper level in the collective wisdom of the world.

 

A period of incredibly difficult restraint is almost upon us, yes there was always going to be a contraction in the global economy much like the business cycle to the Austrian economist is like night following day. The problem now is that by postponing the inevitable we are likely to experience a cold dark winter (metaphorically speaking) that is the only way to wash away the excesses brought about by a credit induced ailment of living beyond our means.

 

There is still way too much money in the hands of the rich relative to the poor for emerging markets to experience a true middle class boom. We also need to ask whether a middle class boom financed on credit is worth the bust that is inevitable. We are well passed the fancy economic theories of monetary and Keynesian economics or any such theory for that matter. We have entered the real world where theory has little place to answer someones need for food, shelter and clothing. It is time for common sense to prevail for leaders to dig deep and prepare their flock for the coming misery.

 

I live in the stable, commodity rich country called Australia, I live in a beautiful first world city called Sydney. This place is fast becoming unaffordable. No let me correct that it has been unaffordable for a long time, without further credit greasing the engine for growth there simply will not be room for the status quo to remain. Free society with the belief in mans ability to enjoy whatever he or she wants has placed an extremely onerus burden on staying on course. We have substituted a life of moderation for a life on a treadmill that is far more glamorous than middle of the road. The treadmill has every changing  scenery, but it is all a façade, in fact it is worse it isn’t even real, it is borrowed, it doesn’t belong to us, we have stolen from the future. Almost as if we believe we are able to stretch forward in time and take hold our future and enjoy it now.

 

But there is a problem here, just like when one is being naughty, deep down we stir feelings and emotions we know are not right, we don’t feel comfortable with it so we force ourselves to enjoy it while it lasts and therefore our feelings become ever so myopic as we fear the future and chose to enjoy the present. These contrasting emotions to our unconscious selves leave us wounded on a psychic level that just like Jung demands the individual to go through a process of individuation so too are we as a society to go through the collective individuation process as we experience the need to correct the wrongs of our past.

THE MIND

 

Having read quite extensively on the field of psychology I found myself struggling to find a unified model that can explain the “mind” or psyche. I have found many appealing theories but most don’t try and explain the psyche in a complete form, they touch on parts of the psyche and then conflicting theories touch on other aspects, so I have felt a need for some time to join a school of thought, that is just simply the way my mind works.

 

After reading quite a lot of Carl Jung in the original I found myself more and more drawn to his approach and his theories. He presents a wonderful topographical description of the mind which I find most useful, and as the father of “Analytical Psychology” he has left us with tools to reconcile many psychic / spiritual phenomena into our daily existence.

 

I recently came across a Jungian analyst John Betts http://www.jungian.ca/ who has the most fantastic well presented series on Jungs works, you can download his podcasts for free on his site or you can download them via iTunes app store by typing in his name or Jungian.

 

 

 

FW: I DO LOVE ACERBIC WIT :D))

What this country needs are more unemployed politicians.
        -Edward Langley, Artist (1928 - 1995)


"If you don't read the newspaper you are uninformed, if you do read the
newspaper you are misinformed."
        -Mark Twain

Suppose you were an idiot.
And suppose you were a member of Parliament....
But then I repeat myself.
       -Mark Twain

I contend that for a nation to try to tax itself into prosperity is like
a man, standing in a bucket and trying to lift himself up by the handle.
        -Winston Churchill


A government which robs Peter to pay Paul can always depend on the
support of Paul.
        - George Bernard Shaw


A liberal is someone who feels a great debt to his fellow man, which
debt he proposes to pay off with your money..
        -G Gordon Liddy


Democracy must be something more than two wolves and a sheep voting on
what to have for dinner.
    -James Bovard, Civil Libertarian (1994)


Foreign aid might be defined as a transfer of money from poor people in
rich countries to rich people in poor countries.
    -Douglas Casey


I don't make jokes. I just watch the government and report the facts.
        -Will Rogers


If you think health care is expensive now, wait until you see what it
Costs when it's free!
        -P..J. O'Rourke


In general, the art of government consists of taking as much money as
possible from one party of the citizens to give to the other.
        -Voltaire (1764)

The inherent vice of capitalism is the unequal sharing of the blessings.
The inherent blessing of socialism is the equal sharing of misery.
        -Winston Churchill


The only difference between a tax man and a taxidermist is that the
taxidermist leaves the skin.
         -Mark Twain


The ultimate result of shielding men from the effects of folly is to
fill the world with fools.
        -Herbert Spencer, English Philosopher (1820-1903)


A government big enough to give you everything you want, is strong
enough to take everything you have.
        -Thomas Jefferson

---

 

 

 

 

 

interesting article on life cylce of a crisis

Welcome to the Market Psych Report A key factor in investing success is the ability to recognize what other investors are thinking (Bruguier et al, 2010).  The MarketPsych Report analyzes the mind of the market using our proprietary  sentiment software.  Our software performs language analysis and quantifies specific sentiments (such as fear and excitement), topics (such as management changes and layoffs), and tones (such as uncertainty and urgency) in investors' online comments, the financial news, and  executive interviews.  This language data powered our outperforming MarketPsy Long-Short Fund LP, and we are launching this newsletter to share our accumulated insights with the investment community.  Readers will find investment recommendations and trading insights to help grow their bottom-line.  Today's edition focuses on optimal trading strategies after unexpected catastrophes like the recent Japanese earthquake.  We hope you enjoy! The Market Psychology of Natural Disasters At 1:40am on March 11, 2011 federal tsunami warning radios bleeped to life along the Pacific coast of the USA. The voice on the radio reported an earthquake off Japan and warned of a tsunami estimated to arrive in Santa Barbara at 8:24am and in Santa Monica at 8:39am. This tsunami was the direct result of the largest earthquake to ever hit Japan, and the fourth largest to strike the earth in recorded history at 9.0 on the Richter scale. Dr. Richard L. Peterson MD +1 (310) 573-8523 info@marketpsych.com   April 6, 2011 Report No. 1

 

That morning TV viewers watched a 30 foot wave washing over coastal villages in Japan.  Entire towns were lifted and crushed by the wall of water. Given that Japan is the third largest economy in the world, you might think that U.S. traders and investors would rush to sell risky shares, buy puts, hedge, or reposition until they could make sense of the damage. Not so.  By the close of trading on Friday March 11, 2011, the Dow Jones Industrial Average was up 60 points for the day. What were investors thinking? This question, and the opportunities it creates for investors, are discussed in today's MarketPsych Report.  An image of our MarketPsych Fear Index, showing the spike in investor fear due to the Japanese radiation scare, is below.

 

Bullish Sentiment and Momentum The Japanese earthquake occurred in the context of recent middle eastern instability.  Even as the governments of Tunisia and Egypt were overthrown by popular revolution in January and February 2011, the S&P 500 continued to move higher (represented as the blue line in the 9-month chart below). Investors' lingering negative sentiment - a hangover from the financial crisis - declined to pre-crisis levels in 2011.  Investors were expressing very little negativity about the economic recovery or the future of stock prices, and, overall negativity expressed in investor conversations (measured in social media) reached a 9-month low in mid-February 2011, as depicted in the chart below. Unfortunately, a monumental amount of energy was about to be released in an earthquake beneath the waves off Japan's northeast coast.

 

Chart of S&P500 (SPY) Blow-off Top

 

Uranium Stock Investors Anxious after Core Meltdown Following the shock of the Japanese earthquake and tsunami, most investors' initial reaction was one of denial.  The bad news was thought to be isolated.  However, over several days fears of radiation release grew, leading to investor panic. Particularly hard-hit in the panic were Uranium stocks such as Cameco (CCJ), a Saskatoon-based Uranium miner and nuclear power generator.  Fears of increased regulation and slowed approval of nuclear power projects frightened CCJ investors.  But as I noted above, investors had a few days to exit Uranium stocks prior the meltdown in their share prices:  see the "Sentiment hits new lows before price tumbles" comment in the CCJ chart below.   Observing the column on the right side of the CCJ chart below, you can see a list of "Language Alerts."  Language Alerts represent a large surge in a particular sentiment or topic in investors' conversations.  in this case, high levels of anxiety were being expressed by CCJ investors in mid-March. This is expected given that the future of the company is now less secure.   "But I'm a contrarian," you may be muttering to yourself, "does such high investor anxiety mean I should buy Uranium stocks while other investors are panicking?"  Short-term perhaps, long-term no.  The reason not to buy in this case is that 1) Investors' fears are grounded in a real shift in fundamentals, and 2) Investors who bought at the top will gradually turn sour as the price does not recover, and their selling will create a cap on CCJ's long-term price recovery. Ironically, in the CCJ chart below, you can also see that both flags B and C (investors discussing a share buyback) on the red line correspond with the price peak.  Wishful thinking for a stock buyback is symptomatic of investors' excess optimism (a contrarian indicator of a top). Preceding the bull run in the below CCJ chart is a series of positive sentiment spikes.  When a series of good news events occurs in succession, investors create a new mental "set-point" of where they think the stock price should be ("going up!"), and positive price momentum often ensues, pushed by optimism-fueled buying.

 

Commentary: The Market Psychology of Unexpected Disasters As can be seen in the CCJ example, It wasn't until Monday March 14, and again on Wednesday March 16, that investors reacted to the risks - such as radiation - that had emerged from the Japanese earthquake and tsunami. "What took them so long to wake up to the risks?" is a fair question to ask. Below I explain the psychological stages which drive investors and financial markets after unexpected events such as natural disasters and terrorist attacks.  The psychological response to such events follows three stages. Stage 1: Underreaction.  In this stage people don't realize the scope of the disaster. They believe the stock rally will go on as is, and they believe the official assessment of the situation - that all are safe.  This is a good time to be skeptical and to sell or short. Psychological Driver: Cognitive Dissonance and Denial. People have trouble processing new information that is out of their comfort zone. They need time to reconcile new facts with their established habits and beliefs, especially if they do not feel an immediate ongoing threat. Stage 2: Reaction. . Investors realize that significant dangers have emerged, and they take action. The Nikkei drops 14% in one day. The S&P 500 sheds its 2011 gains. This occurred in the second and fourth trading days after the earthquake. Fund managers sold the stocks of companies that were likely to be impacted negatively by supply disruptions and bought shares of those likely to benefit. Psychological Driver: Rational Reappraisal and Arousal to Action. We incorporate the new facts, and revalue securities accordingly. Stage 3: Overreaction.  This is where the situation gets interesting. Uncertainty and fear color investors' assessment of the facts.  Due to rapid changes in the nature and immediacy of potential threats, investors indiscriminately unwind their risky positions.  Stress hormones narrow investors' abilty to see long term, and they begin to follow every news announcement with increasing worry.  Stocks sell off, Potassium Iodide (KI) sells out off store shelves in California, and people sell their stocks because prices are dropping and the situation is unclear.  This is when indiscriminate risk selling occurs.  Psychological Driver: Fear, uncertainty, and feeling out of control. Radiation cannot be seen, is widely feared, and may spread beyond Japan. Perhaps most worrisome to investors, during the crisis there was no trusted authority who could explain the facts coherently - the Japanese government appeared to either not understand the situation or to be trying to prevent panic by hiding the true impact of events. All of those factors led to loss of trust and overreaction.  Such overreaction usually occurs about 4-5 days after a crisis and is seen as panic, when all risky assets are sold and safe assets are hoarded (even iodized salt sold out in many parts of China).  Real investment bargains emerge at this time.  it was a good time to buy Japanese construction and insurance stocks. While we've explained the stages of such a crisis, and the opportunities that emerge in each, our thoughts are with the victims in Japan.  We extend our sincere condolences to all whose family, friends, or lives have been affected by this terrible series of events.

 

RUSSELL

Yesterday he flip flopped and claims to have mistakenly called this a bear market rally in a secular bear market.

Could it be the legend has finally thrown in the towel at precisely the wrong time??

 

April 6, 2011 -- Operating in the markets often comes down to managing your risks. I've made mistakes in the past, and doubtless I'll be making mistakes in the future. Whenever I recommend anything on these sites I always gauge the risks, just in case I turn out to be wrong. In other words, what are the consequences if I am wrong.

There are two kinds of mistakes. One is to be wrong about the market or a stock and to miss a profitable advance. By far, the worst kind of mistake is to be wrong about an impending or ongoing decline, and then to fail to correct your mistake. This kind of mistake is the costly kind, and, in a way, it's stupid and unforgivable.

It irks me to make a mistake, any kind of a mistake. Thus, I keep mulling over my mistake in not "ordering" my subscribers to buy the DIAs back at around the November low of 2009. What was I thinking? I had my mind fixed on the great post-1929 recovery which followed the crash, a recovery which saw the Dow climbing back to within shooting distance of its 1929 high. That rally turned out to be a false move that had many investors thinking that it was a return of the bull market. In the end, when the market turned down in 1930 the market (it was a bear market) embarked on a vicious decline: More people were hurt in the 1930 bear market decline than were hurt during the 1929 crash.

I've often stated that my PTI "is smarter than I am." Subscribers may remember that my PTI never broke down and then headed persistently lower during the 2007 to 2009 market collapse. I ignored my PTI, and I ignored the persistently bullish Lowry's statistics during the 2007-2009 collapse. My mind was centered on the 1929-1930 situation, and I did not think buying at the 2009 low was worth the potential risk.

Happily, in another area my subscribers were building profits in the precious metals bull market all during 2007 to 2009, and that helped to assuage my damaged ego.

Correction lows can materialize suddenly, often in a single day, at a time when literally everything plunges to frightening lows. But major tops are another species. Tops are usually characterized by extended periods of distribution. Unlike bottoms, tops are seldom identified by a single upside climactic day. Tops are formed through a process that sees stock after stock top out, until such time as the entire structure of the market gives way, and the big stocks (the Dow) finally join the majority of falling stocks as the top is completed.

Where are we now? My studies tell me that we are still in a primary bull market. True, there is a good deal of deterioration going on, but I see nothing to suggest that the bull market is actually over.

If this market is going to turn primary bearish, I would want to see an orthodox Dow Theory bear signal. This would include a secondary decline, a good after-bounce, and then a second decline in which the two Averages (Industrials and Transports) smash below their preceding secondary lows, preferably on expanding volume.

TODAY"S MARKET ACTION:

My PTI was up 6 at 6270. The moving average at 6216, so my PTI is bullish by 54.

ARTICLE ON INTUITION

Guidelines for Inner Listening and Intuitive Access

by Lee Coit

Lee is an author and lecturer on the topic of spirituality and awareness.  Van has been friends with Lee for decades and in the early 90s, Lee taught  the Mental Strategies Workshop with Van.  While the content of this article should be familiar to long-term Van Tharp readers,  it comes from another messenger and  is always worth repeating.

Intuition is knowledge that you can access; however, it is not contained in the logical part of your mind. The logical part of your mind has been over-trained while the other valuable part of your mind where intuition resides most likely has been overlooked.  I believe all aspects of your mind have valuable and unique functions, so I’d like to share with you some ways you can increase access to your intuitive abilities.

Quiet your logical mind.  Your mind’s intuitive aspect will not overpower the logical side because you currently give more credence to logical thinking and the feeling of being in control.  You can encourage access to the intuitive side, however, by creating a tranquil atmosphere in which you remove stimuli for the logical part of your mind.  In the process, however, be sure that your logical mind does not become involved analyzing the beauty or activity that is happening around you. 

Sit in a comfortable position: one in which you can relax but won’t fall asleep.  There is no mystery in meditation; you simply create a neutral situation which does not stimulate your logical brain.  If you find it difficult to sit and meditate, try doing something you love such as gardening or walking. When faced with very difficult situations, I find it helpful to do something with enough physical effort involved to keep my mind busy. If this does not work, I increase my physical activity until I get tired. Then I sit down to meditate. One sure way to access your intuitive mind to place yourself in a situation in which there is no seeming logical solution.  An example would be one of imminent danger.  In such situations the logical mind gives up after running out of solutions, now the intuitive mind can be heard.  As effective as it is, I do not recommend people pursue imminently dangerous situations as a meditation method.

Watch your thoughts as you meditate.  Do not try to consciously stop thinking or try to block out thoughts. This will only raise your anxiety level. Close your eyes and watch your thoughts but do not hold on to them.  See your thoughts as a moving billboard, observe them and let them move on.  As you do this, you will eventually come to a place where you are not aware of thinking.  A helpful adjunct to this practice is to watch your breathing.  Inhale deeply and then let the breath out slowly.  Repeat this procedure for several minutes remaining aware of the inflow and outflow of air in your body.  If you get to the place where you see colors, hear sounds or buzzing in your ears, or are startled by the realization that you have not had a conscious thought for some time, you are doing very well. 

Create a routine for your meditation.  It is best to meditate early in the morning before the "busy-ness" of the day intrudes on you.  You can start by meditating for just a few minutes and then extend your time to 10, 15, or even 30 minutes.  It is good to keep a note pad beside you for both interrupting thoughts and insights. If thoughts occur to you as you meditate, write them down so your mind can let them go. You may want to follow up this meditation time with a few moments of writing in a daily diary.  This can create a nice stream of consciousness for future reference. Read what you have written down the following day.

Read from a spiritual or personally meaningful book before you enter mediation.  This helps to set your mind in a good place and to create a theme for your meditation that day.

Write down insights that you receive during mediation or later during the day.  This gives the insights more validity in your mind.  Whenever possible, act on these intuitive thoughts or at least take steps that will lead to their incorporation in to your life.  Meditation will always be a game if you treat it as such.  If you have questions that you want answered, write the questions down before the meditation and ask to have clarity concerning them.  Do not let them become the only reason for your meditation as this can focus your logical mind on problem-solving.  Your logical mind would love nothing more than to interrupt your meditation as it struggles to solve the problem.

Don’t problem solve while mediating.  Meditation is for quieting your mind and creating a clean slate on which you can receive new information.  The answers will come in their own time and in their own form.  They may or may not come in meditation and you may or may not recognize them when they arrive.  Have faith that intuition works and that solutions will come.  Often it has been my experience that I receive an answer  in a very different form than what I expected.  For example, I often find that the problem for which I am seeking a solution is not a problem after all.  I can assure you that intuition works very well.  Most of the great discoveries and technical breakthroughs are the result of intuition and not logic or formal experimentation.  As Einstein said, "You cannot solve a problem at the level of the problem."  Intuition and creativity are ways of rising above the problem so it can be seen in a new light and from a different viewpoint.

Intuitive solutions are different from logical solutions.  As I said before, intuitive solutions come in their own time and cannot be rushed.  You may think you need to have an answer but intuition does not provide the solution until all aspects of the "problem" are ready.  Intuition taps into universal knowledge and universal timing. 

The intuitive solution is inclusive and universal—the information you receive includes everyone and everything involved.  If you prefer, it is a cosmic or macro viewpoint.  Logical thinking tends to look at the "problem" from your individual or micro point of view.  Creativity looks at all aspects and all viewpoints and tends to see the total picture and not just one viewpoint.  Logical thinking can seem much more appealing because it gives us the feeling of control while the opposite is true of intuitive thinking. Since intuition includes everyone and everything in the situation, you may feel like you are involved in something larger—something knowable but not controllable.  The intuitive solution is quite different in form; it takes practice to recognize and utilize it.

Use your intuitive senses in small ways.  As you put intuition to use in your life, you will begin to see the benefits it brings to you in terms of abundance and happiness.  These benefits will increase your confidence in your intuitive ability.  As you use and learn to trust this ability, it will become more natural for you to use it in more complicated situations.  Again I caution you to not make this a game, a way of showing off, or a new form of behavior justification.  Keep your intuitive sense to yourself and nurture it through application and commitment. 

Be alert for intuitive information from all sources, all the time.  I call this inner "listening" because all the time I am "listening" for messages, clarity, and insights.  Discerning when you get these insights can be quite a challenge. The audio example I use is of an "Aha!" and the visual example is that of a light bulb going on.  These are positive experiences as if one is suddenly aware of a new twist or dimension.  They come as clarity or as all the pieces falling together in your mind.  The information may be in a stream of meaningless material of which one part sticks in your mind or carries a very definite image.  The source can be from what you may consider positive, but it also can arrive in a negative form.  Inner "listening" is not the same as a fearful or cautious thought, though it may be in the form of taking care and not proceeding with a project.  The hardest part is to differentiate between fearful or limited thinking and real intuition and insights.  The first is based on past experiences; the source is your limited mind reminding you of potential pitfalls.  Insights and intuition come from your contact with the unlimited source and leave you with a feeling of clarity and awareness. When I say be alert all the time, I mean while you are awake. Do not forego your sleeping time.  If you have a strong or reoccurring dream, "listen" to its message.  Make an effort to recall dreams in the morning and during meditation to ask if they held any messages.

Awareness is the key to inner "listening." Honesty is required of all who choose to follow the intuitive path because most problems, while seeming to be outside of us, come from our own blocks to receiving the unlimited potential awaiting us.  It is very easy to blame our problems on others or the current economic situation.  If we do this, we will never hear the answers that come to help us change our thinking.  We must also realize that we have the power to change our thinking and thereby our experience of any situation.  Intuition and inner "listening" show us the mis-thinking that caused our problem, but only if we are willing to honestly assess how we created the results we have.  

"Accepting" is an important step towards happiness and abundance.

Lee's books are available on Amazon.

About the Author: Lee has written books about his metaphysical journey, called Listening, Accepting, Being, and Awakening. Van wrote the foreword to Lee’s newest book Awakening, and we currently have some in stock in the office at $10 each. (Please email to order, info@iitm.com).

 

I HAVE QUOTED THIS BEFORE

By 1939, Treasury Secretary Henry Morgenthau conceded to Congress: “We are spending more money than we have ever spent before, and it does not work... After eight years of this administration, we have just as much unemployment as when we started... and an enormous debt, to boot.”

 

 

BREAKING RECORDS

As of this week, the S&P 500 has doubled from its March 2009 low, the infamous 666.
The Wall Street Journal was quick to note that it took place in just 707 days -- the fastest doubling of the S&P since 1936. Back then, it was a mere 501 days.

The Dow has a few hundred more points to go before it reaches the same milestone… but it’s climbed in less than two years from a low of 6,547 to 12,318 today:

 

I REALLY LIKE DAN'S DIAGONAL WAVE COUNT

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgm4gdD6eacZE1g34K4WKrN-QaTOHBeK-H5EL-pFGe0_LTmoEGC-pXjTLxa8aTbzQbrZqSxOou4x5NV5l_9HZVU4wFxtrSnSpfq23yp6c0V55Pf06iNAMxyYJFcwvx6gjDSJBPX/s1600/spx5.png

 

this stat was before the trade on 19 Jan 2011

The current buying stampede is legend with the DJIA experiencing no more than three consecutive days on the downside over the past 93 sessions

HOUSE PRICE DEFLATION NOT OVER

As per David Rosenbergs site today, I found this most interesting. Especially as I am a reversion to the mean type of guy.

 

 

Brilliant Essay by Van Tharp on Beliefs

What Most of Us Believe Is Probably Not Very Useful

by Van K. Tharp Ph.D.

How human beings work has always fascinated me. I received my bachelor’s degree in psychology in the 1960s when the field of psychology was dominated by behaviorism. The mantra was "Understand the stimulation one receives and you can figure out the responses you'll get." I, however, found this idea limiting; I didn’t believe it showed how we really work.

I pursued a doctorate in biological psychology to go beyond behaviorism, but I found out that behaviorism dominated that field also: “Stimulate this part of the brain and notice the responses you get.” “Cut out another part and notice the differences.” It was more of the same! I wanted something more.

Upon graduating with my Ph.D., I discovered it’s easy to get published if you write a paper that agrees with the scientific community, with perhaps a slightly different take. But if your ideas are too different, then getting published is very difficult. I remember reading, The Structure of Scientific Revolutions, which helped me make sense of this phenomenon. It detailed progress in science and how that usually comes from someone outside of the primary area of research, usually with great resistance.

While working as a researcher, I came across Neurolinguistic Programming (NLP). How people thought and acted finally made a lot more sense to me after that. As I had suspected, thinking and behavior had nothing to do with stimulus-response relationships. I discovered that that anyone could learn to do what others did through the process of modeling. Modeling requires that you find successful people in a particular area and learn how they think and what they do. By finding the three common elements in these people's tasks, an NLP practitioner can model and teach the same process to other people. The ingredients (i.e., the sequence of our thinking), for those of you who have not read The Peak Performance Course, are beliefs, mental states, and mental strategies.

Over time, I've modeled trading, wealth accumulation, system development, position sizing™ strategies, and even how top brokers perform. And I came to the conclusion that most people believe the opposite of what is necessary for success.

As an example, let's look at a few of the beliefs of mainstream versus successful traders.

Old Belief/Mainstream	New Belief/Success Modeling	Area Modeled
Learn how to pick stocks well.	Understand reward-to-risk ratios.	Trading
Asset allocation and diversification are critical.	You achieve your objectives through position sizing strategies.	Position Sizing Strategies
There is a magic system.	You need trading systems that fit you and the current market type.	System Development
Winning the money game amounts to having a lot of money.	When your passive income is greater than your expenses, you are infinitely wealthy.	Wealth
Analyze the markets well.	Analyze yourself well.	Trading
Risk it all under the right conditions.	Find a position sizing strategy that fits your objectives.	Position Sizing Strategies
Find high probability entries and setups.	You make money through your exits.	System Development
You can afford it if the down payment and the monthly payments are small.	What you own tends to eat you financially.	Wealth

I could go on and on, but you get the idea. Remember: you don’t trade the markets, you trade your beliefs about the markets.

After many years of study, it’s obvious to me that beliefs create your reality. It's as if the movie, The Matrix, has come true. Society tends to program you with certain beliefs, most of which are not true, at least as measured by their impact on success. Thus, taking the "red pill" amounts to determining how you shape your reality with your beliefs, which allows you to discover beliefs that are not useful and then reprogram yourself to have more useful beliefs.

As I began to understand the impact of beliefs, I also learned about belief hierarchies, which indicate that certain types of beliefs carry significantly more weight than others. Beliefs about yourself tend to be very influential as they determine your sense of "who you are." Beliefs about the universe tend to be even more important because they shape your reality. For example, if you believe the universe is a friendly place, you are open to everything because you are not afraid. If you believe that the universe is a dangerous place, you'll isolate yourself and build defenses to protect yourself.

When I studied psychology as an undergraduate, psychology was trying to be a science. In fact, it was modeling itself after Newtonian physics even though quantum physics as a general model had already displaced Newtonian physics. I pursued my Ph.D. 40 years ago so I recently spoke to a new psychology graduate to determine if the study of psychology had changed much since then. My first question was "Is psychology still trying to prove itself to be a science?" Her response: "Oh, we are a science." That response prompted me to check some of their assumptions, so I asked, "Are you taught that our beliefs shape our reality?" She responded, “Oh, I don’t believe that.” I didn’t bother to ask any more questions; nothing has changed.

The Belief Examination Paradigm

Since beliefs create our reality, I have a general set of questions you should ask yourself when examining your beliefs that I call the Belief Examination Paradigm.

1.    “Where did the belief come from?” It’s often useful to know how you came to have a particular belief.

2.    “What does that belief get me into?” And you should be able to list about 10 things that happen when you have the belief.

3.    “What does that belief get me out of?” Most people have trouble with this because they are stuck in the belief. Another way of saying it might be, “Who would I be without this belief?”

4.    “Is the belief useful?” and “Does it have charge?” If it’s not useful and doesn’t have charge, it is easy to change the belief. If, however, the belief does have charge, you must release the charge before you can change the belief.

It used to be hard for many people to change their beliefs. But people’s level of awareness has increased dramatically over the last 20 years and now most people can understand, for example, how some of the old trading beliefs in the above table are not nearly as useful as the new beliefs.

Let’s go a little deeper. What happens to you when you wear a belief? Here is an example of a belief that a trader might have:

“I’d be a great investor if I could just pick stocks like Warren Buffet.”

Let's run it through the Belief Examination Paradigm.

Belief Examination Paradigm

1. Who gave it to me?

a. Probably the media or the titles of various books. It’s what’s taught generally about investing: Warren Buffet is the world’s greatest investor. He’s a stock picker, so in order to be great, I need to pick great stocks, too.

Is there evidence for it?

b. Well, there are a lot of books promoting this concept. And Warren Buffet is a great stock picker… according to these books.

2. What does it get me into?

a. It gets me into trying to pick stocks.
b. It gets me into reading books about how to pick stocks.
c. It gets me into finding good criteria to pick stocks.
d. It gets me into wanting to be like Warren Buffet.
e. It gets me into buying Berkshire Hathaway stock so I can go to the annual meeting and hear Warren Buffet speak.
f. It gets me into thinking there is a magic formula for picking stocks.
g. It gets me into watching “stock picking” shows on the financial news media network.
h. It gets me into thinking that when someone’s picks don’t work out that he is a poor stock picker.
i. It gets me into thinking that I’m a poor stock picker because most of mine don’t work out.

I could go on and on, but you get the picture. Now let’s look at the third question.

3. What does it get me out of?

a. It gets me out of looking at what else might be important to trading:

i. me
ii. exits
iii. position sizing strategies
iv. reward-to-risk ratios

b. It gets me into thinking that Warren Buffet is a total genius and out of looking at his failures.
c. It gets me out of thinking short term.
d. It gets me out of thinking, “How would I know if I were wrong about this position?”
e. It gets me out of critical thinking.

Again, I could keep going. Most people have a lot of trouble with this question because they have trouble stepping out of themselves and seeing what life might be like without the belief.

At this point, you would answer the last question one of two ways: ”Yes, it is useful,” if you think that stock picking has something to offer to success or “No, it’s not useful,” if you really realize that other factors are more important.

I’ve seen people take beliefs, that almost everyone else would recognize as limiting, and defend them with every ounce of energy that they have. It is that important for them to be right. So when I say one of my criteria for a good trader is the willingness to work themselves, what I’m looking for is an openness to examine everything, including rigid beliefs at the identity and spiritual level. And this doesn’t mean that they accept my beliefs, it simply means that they are open.

Personal Responsibility and the Belief Examination Paradigm

I’ve always said that personal responsibility is the most important trait any trader can have because personal responsibility gives you the power to improve. However, there are many levels to this.

At the first level, personal responsibility means that you are responsible for your reactions to whatever happens to you. For example, you might notice that you get angry when the market does X. Well, not every trader gets angry when the market does X and that probably isn’t a useful response. When you are able to accept this, you can use the techniques we teach to change your beliefs and mental states.

At the second level, personal responsibility means that you create your reality through your beliefs and emotions. This idea has been around throughout history and it’s been recently popularized through Rhonda Byrne’s The Secret. If you take personal responsibility to this level, you literally believe you create your own reality. And obviously, if you realize this (and believe it), then you can create an amazing reality. And if you believe that you don’t, then you won’t, which means that you did. (That, by the way, is a paraphrase of one of my favorite quotes from Harry Palmer and it really fits here). Can you notice how important the word "belief" becomes in this context?

At the next level, if you believe that we do create our own reality through our beliefs and thoughts and emotions, then also we do this collectively in our cultures and societies. The reality we create is a collective illusion—one that is full of separateness and judgment. At their core, every spiritual path recognizes this illusory world.

Quantum physics offers an intriguing idea for this level—there is no difference between matter and energy (i.e., E = MC2). The universe is an unlimited field of pure potential through which creation happens. Neo came to understand the possibilities of this idea at the end of The Matrix when he suddenly realized that he could go “beyond the Matrix.”

When you begin to take personal responsibility to this level, all sorts of changes happen. You take trading to another level and at the same time trading itself does not even matter. But that’s another story.

I’d like to conclude with an excerpt from a beautiful PowerPoint full of quotes from A Course in Miracles. It’s called Jewels: http://www.youtube.com/watch?v=vzGFvb-IjuY

Part if of it goes as follows:

The oneness of the Creator and creation is your wholeness, your sanity, and your limitless power. This limitless power is God’s gift to you because IT IS what you are. If you dissociate your mind from it, you are perceiving the most powerful force in the universe as weak, because you do not believe you are a part of it.

If you have trouble taking personal responsibility to this level, then “you are perceiving the most powerful force in the universe as weak, because you do not believe you are a part of it.” And you don’t even have to believe that, at least for now. You just need to be open to the possibility.

About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his 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.iitm.com.  

 

ONE of MY GURUS

I have been following Dr Van Tharp for years, he is one of my gurus, and I was lucky enough to do one of his workshops, one of the most spiritual insightful courses I have ever been on. Talk about getting emotionally exposed in a group environment like none other I have been on, hey and I am an open guy.

 

What Most of Us Believe Is Probably Not Very Useful

by Van K. Tharp Ph.D.

How human beings work has always fascinated me. I received my bachelor’s degree in psychology in the 1960s when the field of psychology was dominated by behaviorism. The mantra was "Understand the stimulation one receives and you can figure out the responses you'll get." I, however, found this idea limiting; I didn’t believe it showed how we really work.

I pursued a doctorate in biological psychology to go beyond behaviorism, but I found out that behaviorism dominated that field also: “Stimulate this part of the brain and notice the responses you get.” “Cut out another part and notice the differences.” It was more of the same! I wanted something more.

Upon graduating with my Ph.D., I discovered it’s easy to get published if you write a paper that agrees with the scientific community, with perhaps a slightly different take. But if your ideas are too different, then getting published is very difficult. I remember reading, The Structure of Scientific Revolutions, which helped me make sense of this phenomenon. It detailed progress in science and how that usually comes from someone outside of the primary area of research, usually with great resistance.

While working as a researcher, I came across Neurolinguistic Programming (NLP). How people thought and acted finally made a lot more sense to me after that. As I had suspected, thinking and behavior had nothing to do with stimulus-response relationships. I discovered that that anyone could learn to do what others did through the process of modeling. Modeling requires that you find successful people in a particular area and learn how they think and what they do. By finding the three common elements in these people's tasks, an NLP practitioner can model and teach the same process to other people. The ingredients (i.e., the sequence of our thinking), for those of you who have not read The Peak Performance Course, are beliefs, mental states, and mental strategies.

Over time, I've modeled trading, wealth accumulation, system development, position sizing™ strategies, and even how top brokers perform. And I came to the conclusion that most people believe the opposite of what is necessary for success.

As an example, let's look at a few of the beliefs of mainstream versus successful traders.

Old Belief/Mainstream	New Belief/Success Modeling	Area Modeled
Learn how to pick stocks well.	Understand reward-to-risk ratios.	Trading
Asset allocation and diversification are critical.	You achieve your objectives through position sizing strategies.	Position Sizing Strategies
There is a magic system.	You need trading systems that fit you and the current market type.	System Development
Winning the money game amounts to having a lot of money.	When your passive income is greater than your expenses, you are infinitely wealthy.	Wealth
Analyze the markets well.	Analyze yourself well.	Trading
Risk it all under the right conditions.	Find a position sizing strategy that fits your objectives.	Position Sizing Strategies
Find high probability entries and setups.	You make money through your exits.	System Development
You can afford it if the down payment and the monthly payments are small.	What you own tends to eat you financially.	Wealth

I could go on and on, but you get the idea. Remember: you don’t trade the markets, you trade your beliefs about the markets.

After many years of study, it’s obvious to me that beliefs create your reality. It's as if the movie, The Matrix, has come true. Society tends to program you with certain beliefs, most of which are not true, at least as measured by their impact on success. Thus, taking the "red pill" amounts to determining how you shape your reality with your beliefs, which allows you to discover beliefs that are not useful and then reprogram yourself to have more useful beliefs.

As I began to understand the impact of beliefs, I also learned about belief hierarchies, which indicate that certain types of beliefs carry significantly more weight than others. Beliefs about yourself tend to be very influential as they determine your sense of "who you are." Beliefs about the universe tend to be even more important because they shape your reality. For example, if you believe the universe is a friendly place, you are open to everything because you are not afraid. If you believe that the universe is a dangerous place, you'll isolate yourself and build defenses to protect yourself.

When I studied psychology as an undergraduate, psychology was trying to be a science. In fact, it was modeling itself after Newtonian physics even though quantum physics as a general model had already displaced Newtonian physics. I pursued my Ph.D. 40 years ago so I recently spoke to a new psychology graduate to determine if the study of psychology had changed much since then. My first question was "Is psychology still trying to prove itself to be a science?" Her response: "Oh, we are a science." That response prompted me to check some of their assumptions, so I asked, "Are you taught that our beliefs shape our reality?" She responded, “Oh, I don’t believe that.” I didn’t bother to ask any more questions; nothing has changed.

The Belief Examination Paradigm

Since beliefs create our reality, I have a general set of questions you should ask yourself when examining your beliefs that I call the Belief Examination Paradigm.

1.    “Where did the belief come from?” It’s often useful to know how you came to have a particular belief.

2.    “What does that belief get me into?” And you should be able to list about 10 things that happen when you have the belief.

3.    “What does that belief get me out of?” Most people have trouble with this because they are stuck in the belief. Another way of saying it might be, “Who would I be without this belief?”

4.    “Is the belief useful?” and “Does it have charge?” If it’s not useful and doesn’t have charge, it is easy to change the belief. If, however, the belief does have charge, you must release the charge before you can change the belief.

It used to be hard for many people to change their beliefs. But people’s level of awareness has increased dramatically over the last 20 years and now most people can understand, for example, how some of the old trading beliefs in the above table are not nearly as useful as the new beliefs.

Let’s go a little deeper. What happens to you when you wear a belief? Here is an example of a belief that a trader might have:

“I’d be a great investor if I could just pick stocks like Warren Buffet.”

Let's run it through the Belief Examination Paradigm.

Belief Examination Paradigm

1. Who gave it to me?

a. Probably the media or the titles of various books. It’s what’s taught generally about investing: Warren Buffet is the world’s greatest investor. He’s a stock picker, so in order to be great, I need to pick great stocks, too.

Is there evidence for it?

b. Well, there are a lot of books promoting this concept. And Warren Buffet is a great stock picker… according to these books.

2. What does it get me into?

a. It gets me into trying to pick stocks.
b. It gets me into reading books about how to pick stocks.
c. It gets me into finding good criteria to pick stocks.
d. It gets me into wanting to be like Warren Buffet.
e. It gets me into buying Berkshire Hathaway stock so I can go to the annual meeting and hear Warren Buffet speak.
f. It gets me into thinking there is a magic formula for picking stocks.
g. It gets me into watching “stock picking” shows on the financial news media network.
h. It gets me into thinking that when someone’s picks don’t work out that he is a poor stock picker.
i. It gets me into thinking that I’m a poor stock picker because most of mine don’t work out.

I could go on and on, but you get the picture. Now let’s look at the third question.

3. What does it get me out of?

a. It gets me out of looking at what else might be important to trading:

i. me
ii. exits
iii. position sizing strategies
iv. reward-to-risk ratios

b. It gets me into thinking that Warren Buffet is a total genius and out of looking at his failures.
c. It gets me out of thinking short term.
d. It gets me out of thinking, “How would I know if I were wrong about this position?”
e. It gets me out of critical thinking.

Again, I could keep going. Most people have a lot of trouble with this question because they have trouble stepping out of themselves and seeing what life might be like without the belief.

At this point, you would answer the last question one of two ways: ”Yes, it is useful,” if you think that stock picking has something to offer to success or “No, it’s not useful,” if you really realize that other factors are more important.

I’ve seen people take beliefs, that almost everyone else would recognize as limiting, and defend them with every ounce of energy that they have. It is that important for them to be right. So when I say one of my criteria for a good trader is the willingness to work themselves, what I’m looking for is an openness to examine everything, including rigid beliefs at the identity and spiritual level. And this doesn’t mean that they accept my beliefs, it simply means that they are open.

Personal Responsibility and the Belief Examination Paradigm

I’ve always said that personal responsibility is the most important trait any trader can have because personal responsibility gives you the power to improve. However, there are many levels to this.

At the first level, personal responsibility means that you are responsible for your reactions to whatever happens to you. For example, you might notice that you get angry when the market does X. Well, not every trader gets angry when the market does X and that probably isn’t a useful response. When you are able to accept this, you can use the techniques we teach to change your beliefs and mental states.

At the second level, personal responsibility means that you create your reality through your beliefs and emotions. This idea has been around throughout history and it’s been recently popularized through Rhonda Byrne’s The Secret. If you take personal responsibility to this level, you literally believe you create your own reality. And obviously, if you realize this (and believe it), then you can create an amazing reality. And if you believe that you don’t, then you won’t, which means that you did. (That, by the way, is a paraphrase of one of my favorite quotes from Harry Palmer and it really fits here). Can you notice how important the word "belief" becomes in this context?

At the next level, if you believe that we do create our own reality through our beliefs and thoughts and emotions, then also we do this collectively in our cultures and societies. The reality we create is a collective illusion—one that is full of separateness and judgment. At their core, every spiritual path recognizes this illusory world.

Quantum physics offers an intriguing idea for this level—there is no difference between matter and energy (i.e., E = MC2). The universe is an unlimited field of pure potential through which creation happens. Neo came to understand the possibilities of this idea at the end of The Matrix when he suddenly realized that he could go “beyond the Matrix.”

When you begin to take personal responsibility to this level, all sorts of changes happen. You take trading to another level and at the same time trading itself does not even matter. But that’s another story.

I’d like to conclude with an excerpt from a beautiful PowerPoint full of quotes from A Course in Miracles. It’s called Jewels: http://www.youtube.com/watch?v=vzGFvb-IjuY

Part if of it goes as follows:

The oneness of the Creator and creation is your wholeness, your sanity, and your limitless power. This limitless power is God’s gift to you because IT IS what you are. If you dissociate your mind from it, you are perceiving the most powerful force in the universe as weak, because you do not believe you are a part of it.

If you have trouble taking personal responsibility to this level, then “you are perceiving the most powerful force in the universe as weak, because you do not believe you are a part of it.” And you don’t even have to believe that, at least for now. You just need to be open to the possibility.

About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his 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.iitm.com.