Van Tharpを読む
Van K. Tharp バン・K・タープ
Trade Your Way to Financial Freedom
新版 魔術師たちの心理学―トレードで生計を立てる秘訣と心構え
Super Trader: Make Consistent Profits in Good and Bad Markets
タープ博士のトレード学校 ポジションサイジング入門
Van Tharp's Definitive Guide To Position Sizing Strategies
Trading Beyond the Matrix
トレードコーチとメンタルクリニック 無理をしない自分だけの成功ルール
📺「Books by Dr Van Tharp」
📺「How Important Is Your Trading Psychology?」
📺「Key Mindset Strategies That Can Give You An Edge」
📺「Trading Beyond the Matrix With Dr. Tharp」
📺「Dr. Van Tharp: Transforming Traders Through Their Beliefs | Interview」
📺「TRADE YOUR WAY TO FINANCIAL FREEDOM」
📺「Trade Your Way To Financial Freedom - 3 SECRET TAKEAWAYS」
📺「Trade Your Way to Financial Freedom by Van Tharp: 5 Top Takeaways to Become a Better Forex Trader」
📺「SUPER TRADER - Make Profits In Good & Bad Markets」
📺「Trading Strategy Analysis using Darwinex & Van Tharp's R-Multiples」
📺「Estimating Trading Strategy Returns | Van Tharp's Expectancy Metric」
📺「How to Improve your Trading Strategy using R-Multiples | Van Tharp」
📺「Research Study | How does Van Tharp's SQN (and Expectancy) perform in Optimizations?」
Van K. Tharp（1946年8月15日～2022年2月24日）
トレーディング心理学という、なんともスリリングで奥深い世界。その道に光を差し込んだ一人の人物がいる。1982年からずっと、トレーダーや投資家たちに向けて語りかけ、手を取りながら歩んできた人だ。どうやって成功するトレーディング戦略を作るのか、そもそもその戦略を崩壊させてしまうのは誰でもない自分自身なのだと気づくのは、いつなのか。その気づきから逃げず、心理的な壁を一枚一枚越える方法を、まるで人生の師のように伝え続けてきた。きっと、誰もが一度は抱える「負けたくない」っていうあの感情――それをどう扱えばいいのかを、教えてくれる人だったのだろう。
心理学の博士号を持っていて、さらに神経言語プログラミング、通称NLPのマスター実践者でもあるなんて、どれだけ多才なの？ そんな専門知識をフルに活かして、数々のトレーディングモデルを開発してきたこの人物。成果もバッチリ出してきたあたり、ただの理論派じゃないところがまたすごい。
それだけじゃない。彼が繰り返し語るのは、トレードの世界で見落としがちな「リスク管理」と「ポジションサイジング」の大切さ。とくに印象的なのが、「トレードプランを持つこと、そしてそれに忠実であること」の重要性を、これでもかと説くその姿勢。そしてリスクについても「1%以下に抑えるのが賢明」と、具体的な数字まで挙げてくれるあたり、現実的で説得力がある。まさにトレード界の頼れる先生って感じ。
でも彼の一番の核心はここ。「私たちが本当に向き合っているのは市場そのものではなく、市場に対する自分の信念だ」っていう考え方。この一言で、何人ものトレーダーが膝を打ったんじゃないかな。市場そのものじゃなくて、自分自身。それがトレードの本当の相手だって気づかせてくれるなんて、ちょっと哲学的ですらある。このメッセージ、響かないわけがない。
このnote記事は、資金管理（Position Sizing）が中心。
Vanさんのトレード心理学に関しては
「Trading Beyond the Matrixを読む」で。
Let’s think about trading or investing in terms of the following variables:
1. Reliability, or what percentage of time you make money. For example, if you made 10 stock trades and made money on 6 of them, then your reliability is 60 percent. It’s the number of winning trades you make divided by the total number of trades. Sometimes, reliability is called the “hit rate.” Basically, it is the percentage of time you get to be “right” in your system.
2. The relative size of your profits compared with your losses when traded at the smallest possible level (i.e., one share of stock or one futures contract). For example, the relative size of your profits and your losses would be the same if you lost $1 per share on losing trades and made $1 per share on winning trades. However, the relative size would be quite different if you made $10 per share on winning trades and only lost $1 per share on losing trades. It would now be 10 to 1. You can get a good idea of the relative size of your profits to your losses by taking the average size of your winning trades and comparing that with the average size of your losing trades. This will give you a rough idea of relative size. However, you might have one giant profit and many small losses, so this is not an exact measure. A more exact measure would be to think of your gains as multiples of the initial risk (R) that you took in the trade. Thus, your gains might be a whole series of R multiples. For example, let’s say you are willing to risk $500 on a trade (i.e., you’ll get out immediately if you have a $500 loss so that it doesn’t get any bigger). Your basic risk is $500. Thus, a $1,000 gain is a 2-R multiple and a $5,000 gain is a 10-R multiple. And if by some misfortune, you have a $1,000 loss, then you’ll have a 2-R loss. You’ll learn more about R multiples later in this chapter.
3. Your cost of making an investment or trade. This is the destructive force on your account size whenever you trade due to execution costs and brokerage commissions. Quite often, people simply include these costs when figuring the average gain or the average loss. However, it is also wise to be aware of just how big these costs are for you.
4. How often you get the opportunity to trade. Now imagine holding the first three variables constant. Their combined effect depends upon how often you trade. Let’s combined effect of the first three variables is that you make 20 cents per dollar risked. That means that if you make 100 trades, each risking $100, you will end up with a total profit of $2,000.’ However, now imag- ine that it takes one day to make 100 trades. You’d make $2,000 per day. Now compare that with a system that makes 100 trades each year―you’d only make $2,000 per year trading. The opportunity factor makes a big difference.
5. The size of your trading or investing capital. The effect of the first four variables upon your account depends significantly upon the size of your account. For example, even the cost of trading will have a significant effect on a $1,000 account. If it costs $100 to trade, then you would take a 10 percent hit on each trade before you’d make a profit. You’d have to average more than 10 percent profit per trade just to cover the cost of trading. However, the impact of the same $100 in costs becomes insignificant if you have a million dollar account. 6. Your position-sizing model or how many units you trade at one time (i.e., 1 share of stock versus 10,000 shares of stock). Obviously, the amount you win or lose per share is multiplied by the number of shares traded. Different trades probably will have different risk levels, or different Rs. Thus, a 1-R loss probably will not be the same for trade X as for trade Your reaction might be to say, “What good is the con- cept of R if it varies all over the place?” The value comes in through position sizing. For example, if you risk a constant percentage of your equity, like 1 percent, then you will be equating each 1-R risk. If you have $100,000, then you would only take a $1,000 risk (i.e., 1 percent) on each position. Thus, if 1 R is a single dollar on one trade, you would purchase 1,000 shares. If 1 R was $10 on another trade, then you would purchase 100 shares. In each case, your 1-R risk would be a constant, representing 1 percent of your equity. We’ll be discussing position sizing in much more detail later in this book. Would you want to focus on just one of those six variables? Or do you think that all six of them are equally important? When I ask the question in that manner, you probably agree that all six vari- ables are important.
信頼性
全取引のうち、利益を得た取引の割合（勝率）。
例：10回の取引で6回利益を出せば、信頼性は60％。
「ヒット率」とも呼ばれ、システムの「正解率」を示す指標。
利益と損失の相対的な大きさ
1単位（株1枚や先物1枚）での利益と損失の比率。
例：損失が1ドル、利益が10ドルなら比率は10:1。
平均利益と平均損失の比率で概算できるが、正確には「R Multile」を使用する。
R Multiple：損益比のこと。2Rは損益比1:2。
取引コスト
手数料や実行コストが収益に与える影響。
平均利益や損失に含めて計算することが多いが、コストの大きさを把握しておくことが重要。
トレード回数
トレードチャンスが多いほど利益が増加する可能性がある。
例：1日で100回トレードし$2,000を得るのと、1年で100回トレードし$2,000を得るのでは大きな違いがある。
投資資金の規模
資金規模が変数の影響を大きく左右する。
例：$1,000の口座で$100の取引コストがかかると10％の負担となるが、$1,000,000の口座では影響が小さい。
ポジションサイズの管理
1回の取引でどれだけの単位を扱うか。
R（許容損失）を一定割合（例：1％）に設定することで、各取引のリスクを均等化できる。
例：$100,000の口座なら、1％リスク＝$1,000。1株あたりのリスクが$1なら1,000株、$10なら100株を購入。
1️⃣信頼性は、いわゆる勝率のこと。ほとんどのトレーダーがこれを最重要視するけど、実はこれつて全然どうでもいいつて云ふのがVan Tharpさんの主張。
2️⃣利益と損失の相対的な大きさ
普通、損益比とか損益比率つて云はれる、あれ。2R = 損益比1：2、10R ＝ 損益比1：10。1️⃣の勝率より2️⃣を重視。
One of the cardinal rules of good trading is always to have an exit point before you enter into a trade. This is your worst-case risk for the trade. It’s the point at which you would say, “Something’s wrong with this trade, and I need to get out to preserve my capital.”
熟練トレーダー（熟年ぢやないよ）なら、値動きを見て裁量で判断ができるけど（ケメコがよく云ふ「相場の呼吸」）、初心者の場合は、株取引では、買つた価格より75%下がったら損切りするといいよつて云ふのがVanさんのアドバイス。1株5000円の株なら、3750円まで下がつちやつたら手仕舞ふ。このとき、5000円-3750円＝1250円が「1R」 になるんだよ。先物では、期間「20」のATRの3倍を目安に。ちなみに、小次郎講師流タートルズ資金管理手法では、ATRの2倍だね。
ちなみに、この2️⃣で重要になつてくるのは、手仕舞ひだよ。利確。こいつをいかに効率よく実行するか。それつてトレード技術のことだけぢやなくて、メンタルとかトレード心理学が絶大に影響してくるよね。うんうん。
具体例
SLを20 pipsに設定してトレードした結果、30 pipsゲット
R＝20 pips R Multiplier＝1.5（30÷20）
SLを200円に置いてトレードした結果、-50円の損失
R=200円 R Multiplier＝-0.25（-50÷200）
「損益比1:2」とか云ふ代はりに「R Multiplier=2」つてすることの利点は、これを基にいろいろ計算できるから。R Multiplierの平均（mean）が、Vanさん式のExpectancy（期待値）の算出方法。R Multiplierの標準偏差（standard deviation）が0.25以上だつたら、そのトレード手法は大丈夫つて判断できる。
3️⃣取引コスト
税金もこれに含めて考へたいところ。
4️⃣トレード回数
勝率なんて低くていいから、2Rとか3Rのエントリーを100回200回300回ひたすら繰り返せば、資金は増えるよつて話。これつて「大数の法則」にも深く関わる話で、トレードを「確率論的期待値のゲーム」つて定義するVanさんは、1回でも多くトレードした方が有利になるつて考へるんだよね。
上位足の方向がとか、3つのオシレーターのサインが揃つたらとか、そんなんで機会損失しちやふよりかは、ガンガン入ってバンバン負けてつて方が、結果的にはよかつたりするよってVanさんは云いたいんだよね。
複利効果についてVanさんは触れてないけど、それも考へ合わせると、資金を増やすにはとにかくトレード回数を多くするのがいいつてなるよね。1億まではスキャルピングで稼げるつて云つてゐるテスタくんは、9時-3時の間に毎日300-400回トレードしてたつて云うものね。
5️⃣投資資金の規模
3️⃣と4️⃣と密接に関係することだけど、トレード回数が多ければそれだけ手数料などのコストが大きくなるよね。手持ち資金が少ないうちは厳しい戦い。さらに、次の6️⃣にも関はつてくる。資金が1000万ある人にとつての1％つて、100万円でトレードしてゐる人の1％に比べて、10倍差なわけだし。持てる者と持たざる者（The haves and the have-nots）の差はデカいんだよ。
6️⃣ポジションサイズ
10連敗することつて確率論的に普通に起こり得る。だとしたら、10連敗を喫しても退場に追い込まれないやうにポジションサイズを管理しなきやだよね。ここにも「確率論的期待値のゲーム」つて考へ方が根底にあつて、10連敗だらうが30連敗だらうが、資金が尽きてしまはないで繰り返トレードが続けられたら、「大数の法則」つていふ”勝利の女神”がやがてその手を差し伸べてくれて、最終的には資金を増やすことができる、つてことなのよ。「負けなければおのずと勝ちになる」つて、あれ。だから、ポジションサイズの肝は、いくら稼げるかぢやなくて、いくらまでなら負け続けてもトレードを続けられるか。
Vanさん式ポジションサイズの計算式は
P = C/R
Pは、ポジションサイズ。取引枚数/ロット数ね。
Cは、投資資金のいくらまでのリスクを取るか。Vanさんは1％を推奨。100万円の1％なら1万円、2%なら2万円。
Rは、1回のエントリーのリスク。たとえば、10 pipsなら0.1円。
2万円÷0.1円 ＝ 200000
つてことは、20万通貨（2ロット）がポジションサイズ。
金標準先物を例に考へてみると
C=20万円（1000万x0.2）
R＝15円（5分足のATRx2）
P=20万÷15円
ポジションサイズは、1万3000、つまり13枚になりますね。
アプローチが違ふだけで、この計算式で求められるポジションサイズは、小次郎講師流タートルズ資金管理手法のユニットと同じです。つてことは、Van式ポジションサイズつて、結局タートルズ。資金管理は、タートルズしか勝たん！
Vanさんが提唱する”聖杯”システムは
勝率はずば抜けて優秀でなくてもよいから
2R以上を平均的に確保できて
取引コストを極力抑えつつ
大数の法則を発動させるために
トレードチャンスがいつぱいあるやうなシステム
それで、可能な限り潤沢な資金で
その資金の1-2%をリスクに晒しながら
かういふシステムで運用すれば楽勝ぢやね？
つていふのがVanさんの考へ。
がんがんエントリとか、頻繁にトレードとか云つても、「ポジポジ病最強」つてことぢや全然ない。そうぢやない。「確率論的」だからトレード回数が多ければ多いほど有利なんだけど、「期待値のゲーム」なんだから、期待値がプラスのときにだけトレードするつていふのが大原則、大前提、絶対条件。
Your system must have a positive expectancy to be tradable. There are many, many ways to make money through trading but all of them must have a positive expectancy; if you don’t understand and pay attention to it, you will be trading blindly. Your account will blow up.
A positive-expectancy system usually comes from the Golden Rule of Trading, which is to cut losses short and let profits run. The first key is to always know your initial risk, defined as 1R. Your average loss should be smaller than 1R, and your profits should be much larger.
The second key to creating a positive expectancy system is to make trades only when you think the potential reward is at least two times the size of the initial risk.
The third key is to understand that exits are much more important than entries, because it is through exits that you control your reward-to-risk ratio.
The fourth key is to understand a system as a distribution of R-multiples with a mean expectancy and a standard deviation.
The fifth key is to favor simple systems with a few logical, robust variables over highly optimized systems.
Vanさん式Expectancyの求め方を上で書いたけど
「期待値」の計算式はこれでもOK
期待値＝勝率ｘ勝ち平均-負け率ｘ負け平均
勝率の求め方は
勝ちトレード数÷全トレード数
勝率つて、33.3%以上あれば大丈夫。
負け率の求め方は
1-勝率
つまりは、勝率の逆のこと
勝率＝A
勝ちトレードの平均利益＝B
負けトレードの平均損失＝C
とすると
Expectancy = (AxB)-((1-A)xC))
厳密に計算するためには、手数料などをBから引いてCに足すといいよ。
要するに、期待値つて、1回あたりの平均損益だね。これがプラスなら、トレードすればするほど資金は増へるし、逆に、マイナスなら、トレードするとお金が減つちやふ。期待値（Expectancy）がプラスだつてわかつてゐるなら、損切りや連敗なんか気にしないで、がんがんトレードすればいいんだよ。長いスパンでみたら、最終的に収支はプラスになるんだから。
Rの求め方も書いておくね。
勝ちトレードの平均利益÷負けトレードの平均利益
これが1なら1R、3なら3R。2以上ないとダメ。
トレードすればするほどお金が増える条件は
勝率ｘ勝ち平均 ＞ 負け率ｘ負け平均
R ＞ (1-勝率) ÷ 勝率
数式で書けば
A x B > (1-A) x C
R > (1-A) ÷ A
Vanさんの本にはないけど、ついでだから、V率のことも書いておこうかね。V率（V=Victory）つて小次郎講師の造語なんだよね。勝ち組トレーダーか、
そうではないかを測る数値。V率＝50％以上を勝ち組トレーダーと認定。
計算方法は
勝率＝A
勝ちトレードの平均＝B
負けトレードの平均＝C
V率＝AxB÷(AxB+(1-A)xC))
Trading Simulator
Analyse potential returns & drawdowns based on expected or historical data.
Monte Carlo Simulation（モンテカルロシミュレーション）
ランダムな変数を使って複数の可能なシナリオを生成し、トレードの結果がどのように変動するかを分析するための方法
● ポートフォリオのリスク（ドローダウンの深さや頻度）はどれくらいか？
● どのくらいの確率で特定の利益や損失に達するのか？
● システム全体が失敗するリスク（破産リスク）
以下の情報が必要
トレード履歴：過去のトレードデータ（利益、損失、勝率、リスクリワード比など）
統計的パラメータ：
勝率（Winning percentage）
平均利益と平均損失
トレード数
連続勝ちトレードや連続負けトレードのパターン
具体的なステップは以下の通り
Step 1: ランダムなデータの生成
過去のトレードデータに基づき、トレード結果をランダムに生成します。この際、勝率や平均リスクリワード比を維持しながら、ランダム性を導入します。例えば、過去の統計が「勝率50%、平均利益が2%、平均損失が1%」の場合、その比率を維持した上でランダムにトレード結果を作成します。
Step 2: 複数のシナリオをシミュレート
数千～数万回のシナリオを生成し、それぞれのトレード結果を積み上げていきます。これにより、以下が分かります
ポートフォリオの成長曲線（資産曲線）がどのように変化するか
最大ドローダウンや連続損失のリスク
Step 3: 統計的分析
シミュレーションから得られた結果を統計的に分析
資産の最終値の分布（利益がどの程度の範囲に収まるか）
最大ドローダウンの分布
特定のリスク許容度に対する破産確率
リスクリワード比と期待値
トレードシステムの期待値をシミュレーションによって確認し、収益がポジティブであることを検証する。
平均的な損失と利益、勝率の組み合わせが、トレード全体の成功にどう影響を与えるかを把握。
ポジションサイジングとの統合
モンテカルロシミュレーションを使い、異なるポジションサイジング（資金管理戦略）が最終パフォーマンスに与える影響を分析します。
例えば、固定リスク法やリスクの％ベース法が、破産リスクやリターンの分布にどう影響を与えるかをシミュレーションで比較します。
リスク耐性の評価
シミュレーションを通じて、トレーダー自身のリスク耐性を測ることもできます。連続損失や深いドローダウンがどれだけ頻繁に発生するかを知ることで、メンタル的な準備も整えられます。
具体的な例
例えば、以下のような過去のトレードデータがあるとします
勝率：50%
平均利益：+2%
平均損失：-1%
トレード回数：100回
このデータを使い、モンテカルロシミュレーションを行うと以下のような結果が得られることがあります：
平均的な最終資産：元本の+50%
最大ドローダウン：-20%（最悪のシナリオで）
破産確率：0.1%（ポートフォリオがゼロになる確率）
90%の確率で得られるリターン範囲：+30%～+70%
12 Tasks of Trading
1. Self-analysis to determine if you are okay to trade
2. Mental rehearsal to prevent mistakes
3. Daily focus to point you toward your goals
4. Developing a low-risk idea (which is done way before the trading starts
5. Stalking, moving down to a shorter time frame to lower the risk even more 6. Action that requires commitment and no thought
7. Monitoring to keep the risk low
8. Aborting if the trade goes against you
9. Taking profits when the reason for the trade ends
10. A daily debriefing to monitor and prevent future mistakes
11. Being grateful for whatever went right
12. Doing a periodic review to make sure everything is working
What these rules seem to have in common is a statistical approach to markets
that relies on thinking about reward-to-risk rather than being right. They also
emphasize that great performance is a function of the market, your system, and you.
🔹Van Tharp 語録🔹
The Most Important Factor in Your Success: YOU!
Yet money is made by developing your own ideas and following a method that is designed to fit you.
I’ve argued for a long time that trading is 100 percent psychology, and that psychology includes position sizing and system development.
People make money by finding themselves, achieving their potential, and getting in tune with themselves so that they can follow the flow of the market. Getting in tune with yourself means finding an inner peace inside. It means finding a balance between profits and losses.
A trading mistake is defined as not following your trading rules.
If you follow your rules, you can focus your efforts on the process of trading and let go of the tension created by always trying to be right.
“Efficiency,” not “rightness,” is the key to keeping performance high.
You are not predicting what the market will do, you are making a reasonable estimate that your risk-to-reward ratio is at least 2 to 1. If that’s the case and you’re right at least 50 percent of the time, then you’ll have a positive expectancy system.
Trying to be right is a sure path to disaster because of the psychological issues involved, and trying to predict is a path to disaster because, in my opinion, no one can really do it. Paying attention to reward-to- risk, on the other hand, makes it much easier to be net profitable after a number of trades.
People generally are programmed to do everything the wrong way. They have internal biases that seem to lead them to do the exact opposite of what is required for success.
If you want something, you must practice “being” it. Being, in other words, comes before doing or having. In my opinion, most people want to trade well, but their primary concern is how to do it and have success. You must practice
being a successful trader first. From that state of mind you will get information about what to do, and that will produce what you want to have.
Many traders have what I call the perfectionism—complexity complex. In other words, what you have is never quite good enough. It can always be improved in some way. There is always another exit or another entry that will make it better. What this means is that you always will be struggling with new ideas. Consequently, you never will get to the real issue of trading and just being a trader, doing trading. Instead, there is always one more thing to test—always one more thing to do—and never enough time to just relax and trade. Give up complexity and move toward simplicity. The best traders are always those who practice simplicity.
The key to all these issues is to understand yourself and realize that you are the root cause of your results in trading.
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. It is very difficult to show them the correct direction.
Great traders make a lot of money, but a person has to be willing to do what it takes to be successful. This requires that you have a goal in mind and an intense desire to reach that goal so that you’ll do whatever it takes to get
there. This is the essence of commitment.
The most important trait that any trader can have: personal responsibility
One of my beliefs is that YOU are the most important factor in your trading. It’s not your system because YOU both produce and execute your system. It’s not position sizing because YOU must execute the proper position sizing algorithm to produce results to meet YOUR objectives. And it’s not the market, because you don’t really trade the market, YOU trade YOUR BELIEFS about the market. You produce the results you get as a trader. When you
understand that, you realize that you must make changes if you want more effective results. YOU must produce the changes.
There are many possible responses to the question “Why did you lose money in the game?”
It was the fault of the guy who pulled all the losing trades.
This is a stupid game, and it doesn’t reflect real trading.
It’s random chance and has nothing to do with me.
I didn’t have a good system.
I’m a stupid idiot.
All those responses are excuses, and they won’t help you improve. There is only one response that will help you improve: “I risked too much money on a number of the trades. My position sizing strategy was inadequate. That’s why I lost money or went bankrupt.” When you understand that, you can fix the problem. When you give any of the other excuses, you just compound the
problem and will repeat those mistakes. Now are you beginning to understand why taking personal responsibility for your trading is so important?
If your trading isn’t working, change what you are doing. If your trading system isn’t working, change how you approach the system (your exits and your position sizing). If your life isn’t working, change the way you approach your life. Ask yourself—whatever it is you are facing—“Is it working or is it
not working?”
Life is a process. There is no success or failure, only feedback. You’ve been getting feedback about what you’ve been doing for a long time. Are you willing to change now?
It’s never too late. You’re never too old. Today is always the first day of the rest of your life, so begin now.
It’s possible for traders to tap into one of three general attitudes when they approach the market. The first attitude is one of pessimism, the second is one of randomness and/or neutrality, and the third is one of empowerment. The first attitude never works, the second attitude seldom brings much success, but the third attitude, when properly done, guarantees success.
You must believe in yourself and in your trading. You must know deep in your heart that you have won and feel grateful for your success. Faith is like a magic power that propels you to greatness.
I used to avoid using a lot of spiritual references because I found that many people’s beliefs about spirituality were both very strong (the essence of who they were) and very narrow (if you went beyond their boundaries, you entered dangerous territory). However, my objective is to help people change, and I’ve found that the most powerful change is at the spiritual level. Thus, it is time to begin to open up the spiritual basis of trading.
When you have faith, you take personal responsibility (even if it amounts to God acting through you) to another level. When you operate at that level, you are definitely a peak performer.
You do not trade the markets—no one does. That may sound surprising to many of you, but what you really trade are your beliefs about the market. Furthermore, your ability to do that is tempered by your beliefs about yourself.
In any endeavor in life, you have up and down periods. Dealing with the market has many such periods. To profit from the up periods, you have to tolerate or even enjoy the down periods; to enjoy the profits, you have to get through the losses. Perhaps it would be useful if you could celebrate your losses.
If you’re in the market, one of biggest obstacles you’ll face is the wall of losses. It’s fairly difficult dealing with the markets if you are not willing to lose. It’s actually almost impossible. It’s like walking but wanting to use only your left foot, avoiding your right foot. That doesn’t work, and neither does trading without losses. When you want to be right, you’re not dealing with the
obstacles. Instead, you’re forcing things. When you want to make a profit out of today’s trade even though it’s a big loser, you’re not dealing with today’s obstacle. Enjoy the obstacle—embrace it—and be willing to accept it. If the market tells you it’s time to get out at a loss, do that.
Good traders typically have some point in the markets at which they know they must get out of a position to preserve their capital. Taking this loss is essential. It preserves your capital, and so you should enjoy doing it.
The loss has nothing to do with being right or wrong.
What would happen if you could just pay attention to what the market is doing right now? You’d be totally in the present with no preconceived ideas or biases to influence you. If you did that, your trading probably would accelerate to a new level. You can trade that way if you practice mindfulness.
They can’t watch what is going on because their heads are so full of chatter. The solution is to trade through mindfulness.
You simply quiet your mind and then “watch your thoughts” as they come up. When a thought pops into your mind, you notice that it is there and then release it.
Mindfulness is a state of being in which one is likely to be (1) creating new categories, (2) welcoming new information, (3) looking at things from multiple perspectives, (4) controlling the context, and (5) putting the process before the outcome.
Every outcome is preceded by a process. You will not make money trading unless you follow a predetermined plan and stick to that plan. That’s why you should pat yourself on the back every day if you can honestly say that you totally followed your rules throughout the day.
What can you do to practice mindfulness in your trading?
Do a 20-minute mindfulness meditation each day for at least a week. If you practice watching your thoughts (and releasing them as soon as you notice them), you can be satisfied that you are doing the exercise appropriately.
Keep a regular diary of what is going on in your life. Do it for a few days before you start the mindfulness meditation and then keep it up. When you’ve completed a week of mindfulness meditation, look at your diary and notice how your life is different.
Bring mindfulness into your trading and investing by doing the following:
Imagine yourself taking the other side of every trade that you actually take. What does that position feel like? Also imagine yourself being a neutral observer who watches as you and the other person both take a
position in the market. What do you think that person would think?
Look for new information about each new trade What information are you normally accepting and what information are you normally rejecting?
When you do something you don’t like in your trading, notice the context in which you are interpreting not liking it. How else might you
interpret that behavior? What other intention might cause that behavior? Perhaps those other intentions are something you value highly.
Concentrate on the process of trading—following your rules. In fact, at the end of each day ask yourself a simple question—“Did I follow my rules?” If you did, pat yourself on the back. If you don’t have any rules, you obviously didn’t follow them. Think about it.
Emotions have nothing to do with reality. They are simply coming from you.
Great quarterbacks have claimed to have the perspective of being above the entire football field (even while they are playing) so that they can see the entire field in a detached manner.
Michael Jordan has claimed to be able to imagine floating over the basketball court and from that perspective seeing everything that is going on.
A fundamental presupposition of NLP is that if one person can do something, everyone else can do it too.
Here is a simple exercise for when you feel that you are not trading well. Simply stand up and walk away. Move to a different part of the room and observe yourself. Notice what you looked like sitting there in the state you were in. What did you do with your body? How did you hold yourself? What did your face look like? What was your breathing like?
After you’ve observed all those things, notice how you feel now. You are no longer in that body. Instead, you are watching yourself from a dissociated perspective. All the feelings and emotions should be gone. If they are not, make sure you are watching yourself.
Now ask yourself some questions: What resources do I need to be able to handle this situation like a Super Trader? Do I need confidence? Do I need the courage to get out? Do I need some perspective? How would I look if I had those resources?
Imagine yourself in the same situation with those new resources. See yourself sitting there full of those resources and notice how different the situation is when you bring those resources to the table.
Chances are that things are quite different. Now we’ll find out the real application of this exercise. Go back to the situation and become what you were just imagining. What is that like?
Chances are that it’s an entirely different perspective on the situation, and chances are that you are performing at a totally different level.
That’s the power of dissociation. Practice this technique at least once a day for the next week. The more you do it, the easier it will become.
We live in a world of polarities: good-bad, up-down, young-old, happy-sad. The “win versus loss” polarity is just one example among many. In most cases, we tend to judge the polarity in that we prefer one side and dislike the other side. However, one of the secrets to life is to make both sides of the polarity okay.
You cannot be a successful trader if you are not willing to have both profits and losses. Both are a significant part of the trading process.
They want to be right all the time. They want to make money on every trade. Yet that will not happen because losses are a part of the trading/investing process. When you understand this relationship, you can come to terms with losses and make them okay. A natural part of the trading process is to have a point at which you must unload a position or trade at a loss to preserve your capital. Those losses happen to most people about half the time or more, and you must make them okay or neutral.
You can’t put too much importance on gains. People who value profits too highly tend to take them quickly. Why? Because if they don’t take them, they are afraid the profits will get away from them.
One part of the trader says, “Get out of the trade; it has hit your exit point, and you need to cut your losses.” Another part says, “Stay in the trade; it’ll turn around, and you don’t want to take a loss now.” Usually the result is a stuck state.
We want to achieve the dream or goal, but we also want to avoid the pain that it takes to accomplish the task. The result is “e-motion”—a lack of motion outside ourselves and an intense motion (e-motion) inside ourselves.
Ed Seykota said in The New Market Wizards8 that people get what they want out of the market: excitement, punishment, and a justification for their emotions.
Imagine that you are 100% accurate on every trade. You know every top and
every bottom on every stock. You are never wrong about a trade. Suppose you just entered the market and made $10 billion in a year. Would you keep going if it were that easy? Would $10 billion be enough? Would you keep trading?
Perhaps your response is, “Sure I would! I’d get all the money in the world.” Would that be interesting? I tend to doubt it. Trading is interesting only because of the possibility of losing. You are now in a position where you can buy anything or do anything because you will never lose money on a trade.
Would you still trade? Why or why not?
If you cannot be perfectly content with nothing, you obviously cannot be content with anything.
If you cannot be happy with nothing (i.e., just BE happy), you’ll have trouble being happy as a result of some sort of doing or some sort of having.
Children take joy in the simplest things: walking through the woods, taking a deep breath of fresh air, being with someone who is fun, seeing a sunset, splashing in the rain. Adults tend to ignore all that wonderment. Instead, we work for money, security, and an improved lifestyle.
Good traders are into simplicity and the joy of life. That’s part of what makes them good traders. When you can learn to “be” these things, you’ll find that your trading will improve as a result of just being.
A critical difference between good traders and average traders is that good traders thrive on simplicity and not knowing. They simply go with the flow of the markets. If the markets tell them it’s time for stock prices to go up, they buy. They may be wrong 60% of the time, but that is part of the game. They’ll get out when the markets are no longer going up. They do this by simply observing what is happening and are joyful because they are going with the flow. They allow themselves to let their profits run because it’s okay to be in the market when it is going up. They also allow themselves to get out because it’s okay to get out when the markets start to do something else.
What I’ve just described is pure trading. Its essence is simple. It doesn’t require a lot of time. Instead, it gives you lots of time to play. It also involves seeing all possibilities and being in the flow of what is happening right now. You cannot do this if you are preoccupied with being right, doing hard work, or having money or profits. You can do this only when your mind is pure and you can be at one with what is going on around you.
Give up being right and embrace every possibility. You’ll find that by not predicting the markets and enjoying the uncertainty, you are better able to observe what the markets are doing right now.
Mark Twain once said, “I’ve had many fears in my life, most of which never happened.” So too, in my life I’ve noticed that I’ve had many worries, most of which never happened. Nevertheless, I can spend a lot of time being concerned about them. Yet the simplest solution is to concentrate on the
opposite: What are your blessings, right now? What are you grateful for now?
Everything you think about and everything you worry about are in the past. When you release them and concentrate on the now, you’ll find that everything is beautiful and peaceful. It’s only our thoughts, based on our interpretations of what happened in the past, that cause upset and struggle. When you realize this, I believe that you’ll have an enormous breakthrough in
understanding who you really are.
Try this out: Take 15 minutes each day to enjoy the magnificence of the moment. Find something beautiful and take in the sights, sounds, smells, and so on.
A healthy soul is a happy soul that experiences joy, laughter, and lightness. This doesn’t mean that you must avoid looking at the suffering that occurs all around us, but it does mean that you avoid letting that suffering steal your joy over the many blessings God presents to us. The opposite of joy is not necessarily sorrow; it’s unbelief in the true nature of your soul or the essence of God.
My solution was to make a God Box. We keep this box in a special place in the house. Whenever something seems to really bother me, I do the following:
First, I notice that I am spending a great deal of time in illusion and that it is not food for my soul.
Once I’ve noticed the impact this item has on my life, I take a small piece of paper and write it down.
As I write down what’s bothering me, I give it to God.
In addition, I give thanks to God, knowing that He will take it from me.
I then put the piece of paper in my God Box and forget about it.
I’ve noticed that an amazing thing happens when I do this exercise. A problem that once dominated my thinking suddenly disappears. If it doesn’t, the problem usually changes in some way and then I give the new problem to God the same way. To date, I’ve never had the same problem recur after I’ve offered it twice.
Occasionally, I might have a thought about the problem, but then I realize, “You just gave this to God. Are you now taking it back?” The answer is usually no, and I automatically drop it.
What do you love to do? You probably should be doing more of that. What do you hate to do? You probably should be doing less of that.
Make a list of what you love to do and what you dislike. If you love something, decide how you can do more of it. If you dislike something, determine how you can turn it over to someone else. You’ll probably find that this simple act makes a tremendous difference in your life.
If you think about the essentials of life, the body can live without food for at least a month. You can do without water for several days, but you can do without air for only a few minutes. Air is absolutely essential for life, so why not promote it?
I suggest that you do the following exercise: At least once each day, take 10 deep breaths.
Breathe in the following manner: Inhale for five seconds, starting the breath deep in your abdomen with your diaphragm. Now hold that breath for 20 seconds to help it oxygenate your blood and activate your lymphatic system. Finally, breathe out for 10 seconds.
What impressed me the most was the purity with which he could watch the market and still do what it was telling him to do. This means he’d buy what was going up and sell it when it stopped going up. He’d also sell short what was going down and buy it back when it stopped going down. All his money was earned through trading simple principles.
Divide a goal into specific steps. It’s much easier to accomplish small steps that you can imagine doing for the rest of the year (or the rest of your life) than it is to fulfill a giant goal. Start with something that is easy and make sure you can accomplish it.
If you are trying to stop taking trades that have nothing to do with your system, concentrate on the joy of following your system and making money. Concentrate on the joy of the new behavior instead of the negative thing you are trying to overcome. You’ll find that moving forward is much easier.
I know of three feeling release exercises that are fine for you to do right now:
🔲Welcoming the feeling
🔲Just releasing it
🔲The park bench exercise
Think about one of the beliefs you’d like to get rid of but cannot. Let’s say there is some rejection involved in that belief. It’s charged with rejection. Think about the belief and releasing it. When you notice rejection coming up, welcome it. Open your arms wide and just welcome the feelings you have. I personally find this exercise to be quite powerful. Feelings are meant to pass through you, not be stored inside you.
The second exercise amounts to releasing the feelings as they come up. Just feel it and let it go. It’s that simple. Actually, the only time it is difficult is when you resist doing it. The resistance magnifies the feeling, and you then have to deal with the resistance. If the feeling seems like a category 5 hurricane, it means you are resisting it strongly. Notice that you are resisting it; then just welcome it and let go of the resistance. Once you have done that, releasing the feeling should be easy.
I advocate using the third method—the park bench technique—when a feeling you are resisting is dominating your life. Let’s say a loved one died and you are preoccupied with grief. Let’s say you are spending 15 hours a day grieving over your loss. If this is happening, I recommend the park bench
technique, in which you actively commit to the feeling. You are spending 15 hours a day with it, so why not commit one hour each day to really feel the feeling?
Find a neutral spot, such as a park bench. Sit down on the bench and commit to feeling the feeling as strongly as you can for one hour. What you’ll find is that you probably can do it for 20 minutes, but then the feeling gets boring and starts to dissipate. However, you must do it for an hour. After the first day you may find that you are not thinking about it so much.
The next day you decide to spend 45 minutes on the bench thinking about the feeling. And after 15 minutes it gets boring, but you must do the whole 45 minutes.
The next day you reduce it to 30 minutes, then to 20, then to 10, and then down to 5 minutes. Pretty soon it seems to go away instantly, and you are not thinking about it all day. Why does this happen? It happens because you’ve been willing to feel it actively.
Now ask yourself, “What are five major issues I have had in my life? How did I produce those issues, and how did I make them nonissues?” When you can answer this question from a position of transformation, it’s safe to move on.
A trader would be much better off trading out of “acceptance” (much higher level of consciousness) than “fear” or “greed” (both low levels of consciousness).
Low levels of consciousness are steeped in illusion whereas higher levels of consciousness tend to move out of illusion toward the Truth.
Think about these different levels and how you might trade at each level. How do you think you’d perform as a trader if you were feeling “guilt,” “shame,” “fear,” “grief,” “anger,” or any of the other lower emotions? It should be clear that you wouldn’t do that well. You need to be at a minimum level of “acceptance” to expect to have much chance of successfully trading the markets. You can also think about levels of consciousness from this perspective. Do you want to know your level of consciousness? Then ask yourself, “Where do I spend most of my time?” Can you elevate your consciousness so that you are at least at a level of acceptance, which would allow you to accept both wins and losses?