Van Tharp HomeProductsWorkshopsBack IssuesContactAbout Van TharpSite Map —————————

Tharp's Thoughts Weekly Newsletter

  • Article: Market Type Suddenly Went to Strong Bear with Normal Volatility by Van K. Tharp, Ph.D.
  • Workshops: Early Registration Discount Ends Next Week For Forex!
  • Tip: Our First Market Correction Since 2011—Why It Matters by D.R. Barton, Jr.
  • New! Swing Video!: Ken Highlights His Swing Trade of the Week

$700 Discount Expires Next Week, September 2nd!

with Gabriel Grammatidis

A Trend Toward Forex

Over time, Van has seen that the majority of traders taking his courses tend to focus primarily on one market. In the 1980s, most of Van’s clients were commodity traders. Then there was a shift to equities—where most traders have focused for a long time.

Van has seen another shift underway for the last few years and this time traders are moving to currencies. In fact, most of the attendees at several recent workshops have been Forex traders—something Van has never seen before this year.

These people probably perceive the benefits from trading Forex caused in part by countries around the world trying to use their currencies to gain economic and strategic advantages; China’s central bank's recent move to devalue the Yuan is a perfect example. Actions like that promote trending prices which follow through for the longer term in currencies. The liquidity and 24 hour market make price gaps largely unheard of in Forex trading.

To help traders transition to Forex, we have developed an outstanding workshop in Forex trading. The trend oriented systems you will learn in this workshop are applicable on multiple time frames from intra day to moves that evolve over several months. You pick which time-frame works best for you.

Join us September 11-13, 2015 in Berlin, Germany for our next Forex Trading Systems Workshop and walk out the door with three individual forex trading systems! We typically hold workshops in Europe just once each year, and Berlin has proven to be a great central location for many of our European clients to attend. Register soon while you still qualify for the $700 early enrollment discount. After you have learned these systems in the first workshop, you may also consider staying for two additional days, September 14-15, to trade the systems LIVE with Gabriel.

Forex Students Share Their Workshop Experience

forex trade


Feature ArticleDR

Market Type Suddenly Went to Strong Bear
with Normal Volatility

by Van K. Tharp, Ph.D.

Click here to resolve formatting problems

This is not my normal monthly update but we rarely change two market types within a five day period. On Wednesday, August 26th, we are in a Strong Bear Normal market type. The market shifted into this type at the close on Monday August 24th after a 3.94% drop in the S&P 500. Over the weekend, I mentioned on my Facebook page that the market type had moved to bear and that the market could either plunge or just deviate quickly and go back to sideways quiet. Monday made it look like the beginning of a plunge, yesterday was inconclusive, and we’ll see what we get today. Either way, the bears are now playing.

As of the close on Tuesday, August 25th, the S&P was down 9.64% over the last 100 days. We have had six straight down days and the change over the last six days was -11.17%. Normally when the S&P drops 10%, that’s considered bearish, but we did that and more in just five days.

Volatility has spiked up and it looks like my suggestion to buy the inverse S&P 500 ETF (SDS) or volatility (VXX) was a good one. Over the last five days, VXX went up 66%. That would have been good protection if your position size was big enough to offset your portfolio decline.

While I have no idea what will happen today or tomorrow (although I’d guess an up day is coming) or over the next few months (I guess the bear could continue), I think the strength of this move should give you a warning. Go to cash or at least hedge your portfolio.

Whatever you decide to do, think about the following story. Two woodsmen went into a trading post and saw a sign, "$20 bounty for dead bears.” These woodsmen knew a forest with lots of bears so they hatched a plan to get some. They went deep into that forest where they set up their tent and slept for the night. The next morning they woke up to a lot of growling sounds. One of the men looks outside and sees 100 ferocious upset grizzly bears. The other woodsman says, “What’s happening?” The first guy says, “We are going to be rich!”

Next week, I’ll follow up with the regular monthly market update newsletter.


September - In Berlin, Germany

Our Only European Location This Year

September 11-13


Forex Trading Systems

with Gabriel Grammatidis

September 14-15

Live Forex Trading

with Gabriel Grammatidis

October 9-11

Peak Performance 101 Workshop

with Van Tharp and RJ Hixson

October 13-16

Peak Performance 202 Workshop

with Van Tharp, Lilbby Adams and RJ Hixson


November 6-8

Day Trading Systems Workshop

with Ken Long

November 9-10

Live Day Trading

with Ken Long

November 12-14

Trading in a Bear Market Workshop

with Mark McDowell

December 2-10

Super Trader Summit

Exclusive Events for Super Trader Program Students

2016 Sneak Peek

A forecast of things to come...scheduling may change.




How to Develop A Winning Trading System

Blueprint For Trading Success

Dates firm and ready to take registrations!


Tentative, more info coming soon.

Forex Trading Systems

Live Forex Trading

Oneness Awakening


Tentative, more info coming soon.

Sydney, Australia

Peak Performance 101

Blueprint for Trading Success

How to Develop A Winning Trading System


Tentative, more info coming soon.

Day Trading Systems

Live Day Trading Systems

Combo Discounts available for all back-to-back workshops!

See our workshop page for details.

Trading Tip

Van Tharp

Our First Market Correction Since 2011—Why It Matters

by D. R. Barton, Jr.

Click here to resolve formatting problems

Throughout the fall of last year and this spring, my market analysis has supported taking a “business as usual” view that the grinding bull market we have had for a long time would continue. Then over the last few weeks, my last three articles have presented the case for being on guard—the “wheezing bull” could turn into a bear.

  On July 29th I showed you a breadth chart that gave us a look at how poor the participation levels have been as the NASDAQ hit new all times. I showed that same chart back in October 2007.
  On August 12th we took on the Chinese currency devaluation that was one of the biggest shots fired in the ongoing global currency wars. About China’s devaluations, I warned—
    “Reverberations could grow dire quite quickly. This has the potential to be the straw that breaks the proverbial global-economy’s back. If there was a trigger that could finally lead to a 10% correction (or more), this has all the hallmarks.”
  And last week, we looked at how quickly the catalysts for “tail risk” of outsized moves had changed over the last few months but concerns now were all about China.

The outsized move came, and it came very quickly.

Not Since World War II …

Many people are writing about the magnitude of the market’s current drop, however, I want to focus our attention on the stunning abruptness of the shift from slow grinding bull to bear. To do this, let’s use a statistical tool that tells us how far the market moves outside of a more “normal” range—the price move stated in terms of standard deviations away from the average.

Institutions and traders broadly watch the 50 day moving average because it represents a good intermediate-term market trend. The down move that we just had drastically pushed prices away from this benchmark. Take a look at this chart and note that the Bollinger Bands are set at four standard deviations width, not the default setting of two on many platforms. We’ll dissect the chart a bit more below:

Click Here to View Larger Image

Quite simply, the S&P closed lower more than 4 standard deviations away from the 50 day simple moving average for three consecutive days! That’s a pretty darned impressive stat! Read on to find out how impressive this kind of move has been.

Last week, I was on a CNBC’s Closing Bell segment with Paul Hickey, the co-founder of I have the greatest respect for Paul who is a great thinker and incredible researcher. After exchanging pleasantries on the show, I reached out to him via email—and found out that he’s also gracious one-on-one! Yesterday Paul’s group tweeted:

In the middle of May, 1940, uncertainty ruled the globe as the tide was swinging wildly in the Axis Powers’ favor during the early parts of World War II. I thought the price chart for the market move then might be interesting to see and I also wanted to know what kind of follow-up happened after that kind of drop. The chart below shows the 50 day moving average and Bollinger Bands with four standard deviations for the Dow Industrials index:

Click Here to View Larger Image

Are you wondering how long prices took to recover after the May 1940 drop? The market didn’t reach its pre-drop price again until June of 1944.

What We Can Learn

Because this kind of event has happened only once before in the last 75 years, a sample of two is not even remotely statistically significant. The 1940 move could inform us, however, that this drop may not be over yet. Regardless, the last week has brought us a structural change in the markets on several levels. For now, rallies are suspect and volatility will continue to be the rule of the day.

Please let me know your thoughts and opinions on the article. Send your comments to drbarton “at”—I always enjoy hearing from you!

Great Trading, D. R.

About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured analyst on Fox Business’ Varney & Co. TV show (catch him most Thursdays between 12:30 and 12:45), on Bloomberg Radio Taking Stock and MarketWatch’s Money Life Show. He is also a frequent guest analyst on CNBC’s Closing Bell, WTOP News Radio in Washington, D.C., and has been a guest on China Central Television — America and Canada’s Business News Network. His articles have appeared on and Financial Advisor magazine. You may contact D.R. at "drbarton" at "".

NEW! Swing Trading Systems E-Learning Course

Swing with Ken Long We are excited to announce that our new Swing Trading Systems home study course is now available! Learn with Dr. Ken Long as he teaches his Swing Trading Systems Workshop via streaming video!

This new e-learning course includes Ken Long's Swing Trading Workshop, 5 swing trading systems and a bonus workshop featuring Van Tharp on Tharp Think principles. The course also includes extensive downloadable files to support your learning.

You can complete this course at your own pace, from the comfort of your own home or office, and access the materials as many times as you wish during your 1 year subscription period.

Take a look at this video from Ken to learn more about this course.

van tharp

We have extensive information about the Swing Trading System e-learning course, including how to the link below!

Learn More....

In the following 5 minute video, Ken highlights his swing trade of the week. Recognizing the broader trend in price, watching the regression line crossover, and getting a 5 days down failure signal generated a short entry in EWZ on July 22. Ken goes on to detail how the trade has been working out through this most recent Monday—August 24th.

van tharp


Matrix Contest

MatrixEnter the Matrix Contest 
for a chance to win a free workshop!

We want to hear about the one most profound insight that you got from reading Van's new book, Trading Beyond the Matrix, and how it has impacted your life. If you would like to enter, send an email to [email protected].

If you haven't purchased Trading Beyond the Matrix yet, click here.

For more information about the contest, click here.

Ask Van...

Everything we do here at the Van Tharp Institute is focused on helping you improve as a trader and investor. Consequently, we love to get your feedback, both positive and negative!

Send comments or ask Van a question by clicking here.

Also, Click here to take our quick, 6-question survey.

Back to Top

Contact Us

Email us at [email protected]

The Van Tharp Institute does not support spamming in any way, shape or form. This is a subscription based newsletter.

To change your e-mail Address, e-mail us at [email protected].

To stop your subscription, click on the "unsubscribe" link at the bottom left—hand corner of this email.

How are we doing? Give us your feedback! Click here to take our quick survey.

Call us at: 800-385-4486 * 919-466-0043 * Fax 919-466-0408

SQN® and the System Quality Number® are registered trademarks of the Van Tharp Institute and the International Institute of Trading Mastery, Inc.

Be sure to check us out on Facebook and Twitter!


Back to Top


August 26, 2015 #748


Our Mission




Van's Top-Twelve Favorite Trading Books


Van's Favorite Non-Trading Books





Viewing on-line eliminates spacing, and formatting problems that may be unique to your email program.



Trading Beyond the Matrix

Ongoing Contest: Learn how you could win a $50 coupon and a grand prize of a free workshop!





Long Term Systems

"I base my long-term, monthly rebalancing [core] strategies on research into relative strength and momentum as it relates to broad asset classes."-K Long








ST expanded

A Must Read for All Traders

Super Trader








How are we doing?

Give us your feedback!

Click here to take our quick survey.

From our reader survey...
"I think the newsletter is extremely generous and it is a resource I utilize constantly. I have saved every single one since I first subscribed."







Trouble viewing this issue?

View Online. »


Van Tharp You Tube Channel



Tharp Concepts Explained...

  • Trading Psychology

  • System Development

  • Risk and R—Multiples

  • Position Sizing

  • Expectancy

  • Business Planning

Learn the concepts...







Read what Van says about the mission of his training institute.









The Position Sizing Game Version 4.0

Have you figured out yet how to pick the right stocks? Are you still looking for a high win-rate trading system? When you’re ready to get serious about your trader education, download the Position Sizing Game to learn some true fundamentals of trading success. Learn more.

To Download for Free or Upgrade Click Here


Download the first three levels of Version 4.0 for free:

Register now. »



Trouble viewing this issue?

View Online. »






Dr. Tharp is on Facebook



Follow Van through

Twitter »



Check out our home study materials, e-learning courses, and best-selling books.

Click here for products and pricing


What Kind of Trader Are You? Click below to take the test.

Tharp Trader Test


Back to Top


Position Sizing

Introduction to Position Sizing™ Strategies E-Learning Course

Perfect for auditory/visual learners who learn more effectively from an instructional format that is full of interactive features!

Only $149

Learn More

Buy Now



SQN® and the System Quality Number® are registered trademarks of the Van Tharp Institute