This newsletter is called Tharp’s Thoughts so I thought some of you might want to know more about what I think about on a personal level. One of my hobbies these days is working on my family tree. It’s interesting for me although everyone else in my family seems mostly indifferent. Today with the vast amount of information stored on the internet and the ability to DNA testing, you can find out things that were impossible to learn even 25 years ago. One reason I find my family tree interesting […]

Trading at a peak performance level requires that you know exactly how to react under any circumstances. What happens if you are holding 8,000 shares of IBM and it suddenly drops 3 points? What will you do? What if you are day-trading S&Ps with about five open contracts when suddenly you get a call from the hospital and learn that your spouse has just been in an accident and is in serious condition? What would you do? What will you do if there is a major stock market crash? Will

I’m now 70 years old, but, if I can, I plan to continue to do what I do for at least another 25 to 30 years. Warren Buffet is still running Berkshire Hathaway at 86 and his partner, Charlie Munger is still effective and 92. So I plan to do the same. Effective this year I am required to take social security income and a minimum retirement distribution, but I do so reluctantly. Why? Because I absolutely love what I do. It’s my passion. Furthermore, I have a great staff

Some readers might recall that Dr. Ken Long and I developed a Systems Thinking Workshop last summer. The initial reason for that course was that Ken Long has a master’s degree in systems thinking and a doctoral degree in decision making under uncertainty. We realized that a good understanding of systems thinking really helped people understand Ken’s systems better. I delivered the second version of the systems thinking course at the annual Super Trader Summit last year and that experience really helped me understand it and even evolve it more.

One of my clients gave me a book by Carol Dweck called Theories of Self: Their Role in Motivation, Personality, and Development. In it, Dr. Dweck states: My work is developed around the idea that people develop beliefs that organize their world and give meaning to their experiences. These beliefs may be called meaning systems and different people create different meaning systems. Wow, I was blown away, I never thought I’d hear a psychologist talk about the importance of beliefs. Many years ago I became disillusioned with the professional field

In any endeavor in life, you have up and down periods. Dealing with the market has many such up and down periods. In order to profit from the up periods, you have to tolerate or even “enjoy” the down periods. I’m an NLP modeler. That means if someone does something well, I can figure out the essence of what they are doing by understanding their thinking. Thus, when such a person goes from A to B easily and effortlessly, I can determine how they do it and teach that skill

One of the key exercises I have my Super Traders do is a full life review. The essence of the exercise is to write down as many memories as you can for each year of your life. Furthermore, you also look at the beliefs you formed in each year of your life. When confronted with this exercise, most people might say something like, “Well I can’t possibly remember what I did or what happened in 1986.” Also, I don’t believe people who want to use the excuse, “I’m old and

Most people don’t understand that they need a trading system if they are to make money in the markets. Most importantly, that system must fit you, your objectives, your psychology, and your beliefs, for you to be able to trade it effectively. Furthermore, that system, at minimum, needs an abort signal (when you know you were wrong about the trade), a profit-taking exit, and a position sizing strategy to meet your objectives. Without those criteria as a minimum, you don’t have a system. Money is made by cutting losses short

I first started this business of helping traders and investors in 1982. Those first years in business coincided with the start of the great bull market in stocks that lasted from 1982 through 1999. My first clients, however, were mostly futures and option traders; we had very few stock traders. Equity traders really didn’t make a significant portion of our customers until the mid-1990s. Fast forward to the year 2000 when we were teaching a workshop on trading stocks. One of my Super Traders developed a version of CANSLIM with